Let ICBC face real competition
By Paul Willcocks
VICTORIA - You should be looking for a quick explanation for the government's apparent cold feet on allowing real competition for ICBC.
Because without real competition, you'll never know if you're paying too much for your car insurance.
The Liberals' campaign platform promised "greater competition in auto insurance, to create increased choice and reduce motor vehicle premiums." A reasonable person would expect that meant that ICBC's monopoly on basic insurance coverage would be ended. Private companies would have the chance to compete for your business, offering lower prices or better services or cleverer coverage. That's also completely consistent with the Liberals' stated belief in the effectiveness of competitive markets.
It looks like that won't happen. Finance Minister Gary Collins is responsible for ICBC. He says the "core review" of ICBC should be ready for presentation to the public before year-end.
But Collins isn't sounding like a man in a hurry to end ICBC's monopoly grip on the market. The timing isn't good, he says, because private insurers are having trouble and aren't eager to compete.
That's news to them. The Insurance Bureau of Canada says companies are eager to enter the game here. One company, Pembridge Insurance, has just closed its B.C. office, laying part of the blame on the government's foot-dragging.
They want to compete. The Liberals say they like competition. What's the problem?
Collins offers a clue. This would be a bad time to sell ICBC, he says. Tough times for the industry have depressed the Crown corporation's value.
The Liberals never said anything about selling ICBC during the campaign. But it could be that the core review has suggested a rewarding path to competition. Instead of opening the market, and letting ICBC compete, why not offer ICBC for sale first. It would be still be a competitive market, but the wining bidder - or bidders - would start with a customer base giving them 100 per cent of the market. What's it worth to know you have $2.5 billion in annual premium revenue the day you open your doors?
And if that's the plan, the desire to put things off for a few years makes more sense. A delay could mean a much bigger cash windfall for the government.
That leaves some questions, including whether that approach would really allow competition, or simply exchange a privately owned monopoly for a public one.
And in the meantime, what about us, the drivers who will still be waiting for real competition and choice by the time the next election rolls around?
It doesn't look good. ICBC sailed a 6.6-per-cent rate increase through cabinet one year ago. The corporation just released its third quarter financial results, and is talking about another rate increase this Jan. 1. Claims are costing more, investment income is down, the corporation's own operating costs are down 12 per cent so far this year, and more than 1,000 jobs have been chopped. So it wants more money from customers.
Sounds reasonable, although I've never really looked at ICBC's numbers with as much confidence since the corporation claimed it was on the brink of financial disaster when it wanted to force no-fault insurance on us, then miraculously recovered once the battle was lost.
But the Liberals haven't yet set up an independent rate review process. Instead, this proposal will head back to cabinet, a process that Forest Minister Mike de Jong complained last year "defies logic."
Twelve months on, and things aren't any more logical. And it's no clearer when - or if - British Columbians will get a free insurance market.
Footnote: One reason claims are up, says ICBC, is that crashes are happening at higher speeds. That raises interesting questions about the Liberals' decision to kill photo radar, the most likely explanation for the increased speeds and higher costs.
Paul Willcocks can be reached at willcocks@ultranet.ca

New deal for tenants strikes a fine balance
By Paul Willcocks
VICTORIA - Despite the flap from both sides, the Liberals have done a pretty fair job of changing the rules for renters in B.C.
Tenants will run the risk of much larger rent increases, especially when apartments to rent get really scarce in a community. That's an immediate risk in Vancouver and Victoria, where the vacancy rate is already extremely low.
But the trade-off should be an improved supply of housing in future.
The Liberals have dumped the old rules, which allowed any tenant to appeal a rent increase to an arbitrator. The landlord then had to show why the hike was necessary.
It wasn't a terrible solution. Landlords knew not to push too hard; tenants theoretically knew they had options beyond moving if they faced a big increase.
And it was a potentially useful weapon for tenants in bad buildings. Landlords seeking increases knew they better be able to show at least some repair and maintenance costs.
But the reality was that most tenants, especially most tenants in bad housing, weren't likely to use the arbitration process.
And the prospect of a permanent and uncertain constraint on rent increases made investors unwilling to put up new buildings. They were left with the risks of building ownership - a recession which forced down rents or left them with vacant units. And they didn't have the chance to cash in when vacancies got tight.
Now the Liberals have allowed landlords to increase rents by four to six per cent a year without facing any challenge. They can even put off increases for three years and do them all at once, bad news for tenants who could face a 20-per-cent hike in one year.
No one on either side of the landlord/tenant divide seems delighted with the change.
Tenants fear they'll face increases beyond what they can afford.
Landlords - supported by many Liberal MLAs - wanted a true free market. If rents start to rise, they say, more apartments would be built. And then rents would stabilize or fall.
I'm keen on the effectiveness of free markets.
But the Liberals' change recognizes that markets aren't perfect and some controls are needed in an area as critical as housing. Markets work slowly. In a growth period, the lag between rent increases and the arrival of new buildings could leave families homeless or in desperate economic trouble.
Effective markets also require honest buyers and sellers. I offer my goods - say a car I've made - and people decide if they will buy them at my price. If they don't, I stop making the car or cut the prices. If they snap them up, I raise the prices. It's a good balance.
But that falls apart if I can't be trusted. If I rig the prices with other carmakers, or promise people new cars but deliver them junk.
The housing and development industry in B.C. has forfeited its right to a free market. Thousands of people spent their life savings on homes which the builders, and government, presented as adequate quality housing. Instead they got condos that leaked and fell apart.
The Liberals have also come up with a decent compromise on the question of pets in rental units, the other hot topic.
Pet owners wanted landlords to be forced to accept animals. Landlords wanted to retain the right to decide if dogs and cats could live in their buildings.
The Liberals' solution is to allow landlords to collect an extra half month's security deposit if they accept pets.
The change may provide people with pets more options; it may just bump up security deposits. It's worth a one-year trial.
There's lots of smaller puts and takes in the bill. Security despoits weren't increased; landlords may have gained too much power to enter apartments.
But on balance, give the Liberals good marks on this one.
Paul Willcocks can be reached at willcocks@ultranet.ca



Attacks on forest code changes unfair
By Paul Willcocks
VICTORIA - It's far too early to be predicting disaster because of the changes to the Forest Practices Code.
Despite the eye-glazing details involved in the code, it's worth paying attention.
Make the rules governing logging in B.C. too tight, and companies aren't going to bother with any marginal operations. That means fewer jobs and damaged communities.
Make the rules too loose, and some companies will cut corners, damaging streambeds or cutting roads that end up as giant eroded slashes down the hillside.
The NDP - supported by the Liberals - dramatically increased regulation of the industry in 1995.
It wasn't just an act of concern for the environment. B.C. forest products were facing the threat of an international boycott over logging practices. Action was needed to head off a devastating international campaign.
Most British Columbians back moves that will make sure that logging doesn't do permanent harm.
But how far you go, and the way you choose to get there, are still up for debate.
The NDP code, which they later conceded was a tangle of red tape, attempted to regulate every aspect by setting out, in great detail, what companies could and couldn't do.
The Liberals are moving to a results-based approach. Instead of saying no logging within five metres of a stream bed, they will have a regulation that says you can't harm streams. If companies can find a way to log within two metres without doing harm - or if the stream is dry - they can go ahead. If they do harm the stream, then penalties will be imposed.
Sounds good. But there are a few big worries.
One is that the damage is done before anything is detected. Fines don't return a stream to health.
Another is that the Liberals have left a big loophole in the law. If a corporation can establish that it believed it was doing the right thing, it can avoid penalties even if there is damage.
And a third is that the systems depends on active enforcement and tough penalties. Unless inspectors are on the ground, checking, they won't know whether damage is being done.
That's a worry as the Liberals slash the forest ministry by one-third and close 24 regional offices. Forests Minister Mike de Jong says there will be 300 dedicated enforcement officers. But officials can't say how that compares to past enforcement efforts.
Those weaknesses should make British Columbians nervous.
And the Liberals' commitment won't be certain until the regulations setting out the detailed results expected of forest companies are released over the next few months. Again, that's a concern. Those standards should have been included in the legislation, rather than left up to the shifting standards of cabinet.
But all that said, it's a little galling to hear environmental groups already talking about a new international boycott.
Sure, there are concerns.
But nothing in the forest practice code changes announced so far justifies that kind of extreme, damaging response.
Companies will still have to prepare forest stewardship plans, approved by the government. And they will have to have site plans available for inspection by the public. If the government ensures an adequate level of detail is provided in those plans, the public interest will be protected.
I don't know how the new act will ultimately balance the competing interests of industry efficiency and environmental protection. No one can really say until the details of the regulations are released.
But there's nothing so far that justifies an alarmist attack on the B.C. industry, or an international boycott based on fear, not facts.
We need an efficient, sustainable forest industry in B.C. The previous forest practices code was an unnecessary barrier. And so change is justified.
Let's wait and see how well they work before we leap to man the old barricades.
Paul Willcocks can be reached at willcocks@ultranet.ca

In or out, Nettleton makes his point
By Paul Willcocks
VICTORIA - Even after talking to him, I'm not sure Paul Nettleton meant to poke such a sharp stick right in the eye of Premier Gordon Campbell.
Nettleton has always struck me as a thoughtful MLA, a good representative for his constituents in the stunning country north of Prince George. If you were betting on the Liberal MLA most likely to speak his mind - carefully - he'd be on your list.
So it wasn't a total shock when Nettleton weighed in with a critique of the Liberal approach to BC Hydro, sent to all his party's MLAs.
Lots of people share at least some of his concerns about the government's plans to hand one-third of the Crown corporation over to a private operator, break the rest into two pieces and invite private companies into the power business.
But Nettleton didn't just disagree with the policy direction. He placed himself firmly in the camp of the people who think the Liberal leadership has a secret agenda, and can't be trusted.
And even if Campbell forgives, he's not going to forget.
Lord knows we need more backbenchers who are prepared to say what they think, instead of biting their tongues, rolling their eyes and hoping for better days. For most of the NDP government's long, slow journey on to the rocks, MLAs stood loyally on deck, saluting the captain. Liberals MLAs have watched as the government shredded their communities or broken promises.
It's a bad system, for governments and for the public, and some straight talk would be welcome.
But Nettleton went much farther.
"I am firmly convinced that this legislation is only the opening move in a strategy whose ultimate goal is the wholesale privatization of the utility," he said in his letter. Going ahead in the face of public opposition betrays "the sort of arrogance I recall, now with some chagrin, denouncing from the Opposition bench."
"I think we have just become infected with the same sort of ideological blindness that once plagued the NDP," he continued.
Nettleton will find out Monday or Tuesday whether he's out of caucus. He says he stands by his letter, so he's likely gone.
What about Nettleton's actual critique, the substance of his concerns?
He goes too far. Nettleton argues that splitting Hydro into two companies, one to make and sell power and one to take over the transmission lines, will inevitably sound "the death knell for BC Hydro." Letting power companies sell to the highest bidder could mean British Columbians would pay soaring prices if California had another crisis.
But splitting the Crown corporation in two makes sense. Letting Hydro control the transmission lines and the power plants is like letting one car manufacturer decide who gets to use the roads. No one else could ever compete.
It could work well - given a good regulatory framework and a strong commitment to maintaining the benefits of low-cost power for all British Columbians.
That's the Liberals' real problem. People do not trust them to deliver those controls. They do not believe that Campbell will keep his promise not to privatize Hydro.
That suspicion has been reinforced by the secretive approach taken by the Liberals. Energy Minister Richard Neufeld has had a major task force report on energy, including Hydro, for about eight months. He could have released it - we did pay for it - to allow public participation in the debate, while the government worked on the policy. He could have shared the briefing on splitting Hydro up that caucus got three months ago. The debate could have been public, and the Liberals could have made an effort that they do listen to concerns.
Now they're left with a hard question. If the Liberals can't even convince their own MLAs that they're playing this straight, how can they ever convince the public?
Paul Willcocks can be reached at willcocks@ultranet.ca