Attorney General David Eby might be talking his government into a deficit with all the warnings about ICBC’s financial crisis.
The government auto insurer is charting new depths when it comes to losing money. The only ways to fix it are to radically redesign coverage at the expense of customers or jack the rates up by a staggering amount. Eby is insisting a massive rate hike is not on, so the first option is the priority, although he stressed that will take time to show up on the bottom line.
So a big bailout of the corporation might be in order. B.C. is operating with a surplus margin of a few hundred million dollars, and it would take more than that to set ICBC straight.
Eby deferred questions on the impact of such a rescue mission to Finance Minister Carole James. She is likely well into the calculations. If the situation is as bleak as he insisted Monday, it isn’t hard to imagine the NDP slipping into the red ink to cope with the mess the BC Liberals left at ICBC.
It would be a stark contrast with the multibillion-dollar surplus the BC Liberals marked before they were pushed out the door. But the NDP is intent on putting an asterisk beside the Liberal surpluses by noting how much money was siphoned from ICBC and other Crown corporations during rosier times to accomplish the trick.
An independent watcher of Crown corporations, Richard McCandless, has calculated there was a point about nine years ago when ICBC had so much money in the bank it could have offered free insurance to everyone for a year. Those days are gone.
The financial moves are always bewildering but there’s no confusion over the fact the public auto-insurance plan is a mess. It was brought on by hugely expensive accident claims, rocketing legal costs and the time-honoured political meddling designed to protect politicians from having to cope with the blowback from imposing huge rate hikes.
Even with the previous government doing everything it could to avoid raising rates, they went up 8% in September.
Eby said the Crown corporation’s books are a “financial dumpster fire.” So he pulled the fire alarm again Monday with abandon. It’s no coincidence that nearly everyone he fingered for the fiscal nightmare happens to be running for the BC Liberal leadership, which is to be determined this weekend. He has been ringing the bell ever since he was handed responsibility for the mess last summer. The latest panic seems aimed at getting BC Liberal voters as rattled as he is.
He went out of his way to lay an especially lurid picture of the disaster at the feet of former ministers Todd Stone and Mike de Jong. ICBC obliged its minister by posting an interim financial statement — on a Sunday, no less — that set up his Monday news conference.
The corporation confessed to a $935-million net loss over nine months ending Dec. 31 and projected it would grow to $1.3 billion by the end of the fiscal year, March 31 — and that compares to the absurd estimate a year ago of a paltry $11-million loss.
The new projection might be hyped by Eby’s directive to the corporation to go back in the files and itemize all the outstanding claims for “potential liabilities” but it’s not likely overestimating by much. The worsening financial picture is one thing. Eby said the coverup is another.
The BC Liberals, meanwhile said they had an independent report ready before the change of government and Eby is just deflecting from the fact he hasn’t done much in seven months.
There would be some cosmic irony in the government having to hand over a big chunk of cash to ICBC because usually it’s the other way around. The BC Liberal government extracted more than $1 billion from ICBC over the years in “dividends” when it was on a much sounder footing.
What goes around comes around, and the taxpayers/drivers see it coming and going.
Les Leyne is a columnist with the Victoria Times Colonist, a Glacier Media sister paper of The Tri-City News. • [email protected]
