Good case for bigger rate cuts from ICBC

VICTORIA - You can make a pretty good argument that’s ICBC’s rate cut should be four times what has been promised, and paid out to more customers.
The Crown corporation has announced a rate reduction, but only for those customers who buy optional insurance from ICBC. The rates for the basic insurance - where ICBC has a monopoly, will stay the same.
And the amount going back to customers - about $130 million - is looking tiny given ICBC’s robust profits and big reserves. The average rate cut will be worth $61. The corporation can afford something closer to $250, critics argue convincingly.
ICBC has made profits in each of the last three years, including a record $389 million last year. On the same day it announced the rate hike, the corporation reported it was ahead of last year’s record pace after the first three months of this year.
ICBC has now piled up about $1 billion in special reserves. That’s beyond the large reserves required to be available for future claims.
In a normal company, that money wouldn’t be sitting there. Managers might use it to invest in some new project, or pay down debt. If they didn’t have a use for it, they would be expected to return it to shareholders.
But ICBC isn’t a normal company. It doesn’t have debt, or the prospects of making estraordinary investments. And it’s forbidden from returning profits to the government, a principle intended to make sure no politicians starts eying ICBC as a way to boost revenues.
That leaves two options - hang on to the money, or cut rates for customers. And the purpose of ICBC is to deliver low-cost insurance to British Columbians.
There’s a case for a cushion. ICBC has been profitable 11 of the last 15 years, but it has lost as much as $250 million.
But there’s not enough volatility in ICBC’s situation to justify a $1-billion cushion. Claims have been rising fairly modestly - about three per cent a year over the last four years - and there’s no reason to expect that to change. Private insurers may grab more of the optional insurance business, hurting profits. The corporation earns about $400 million in investment income, so a weaker economy could be costly.
Still, consider all the factors and a $500-million cushion would be enough to protect drivers from any quick rate increases.
The refunds also came under quick criticism because they only applied to optional insurance policies.
ICBC has a monopoly on the mandatory basic insurance required of all drivers, which provides benefits for people hurt in crashes
But private companies are allowed to compete for optional insurance - protection against vehicle damage, or higher maximum coverage, for example.
It hasn’t been much of a competition. ICBC has about 85 per cent of the optional market, in part because it’s just easier for people to tack the coverage on to their main ICBC policy.
But the private insurers say it’s not a fair fight, despite the Liberals’ 2001 campaign pledge to introduce more competition in car insurance.
They say the Liberals still haven’t implemented important parts of a bill they passed in 2003 that would level the playing field.
And they will argue before the Public Utilities Board later this year that these optional rate cuts are unfair, claiming ICBC is shuffling profits from basic insurance to subsidize the optional policies.
That will be a tough case to make. The board has already, after a long review, approved, ICBC’s cost allocations between optional basic insurance. The corporation says it can show that its profits have come from the optional side, so those customers should get the break.
But that still leaves ICBC facing intervenors who a much bigger rate cut.
The good news is that - thanks to the Liberals - the utilities board will provide an independent review, something that was never allowed to happen under the NDP.
Footnote: The utilities board only has authority over basic insurance. That means drivers will have to trust ICBC about the fairness of the rate cuts. Vancouver Island drivers, for example, are getting smaller break; drivers in Prince George and the Peace more. The biggest savings will go to drivers with good records, driving fairly new cars.

Liberals kept multi-million ad budget over-runs secret

VICTORIA - Somebody hung Carole Taylor out to dry in her first big appearance as finance minister.
It was mostly a good news announcement down in the underground Press Theatre at the legislature. The Public Accounts - the final tally of the last fiscal year ‘s results - showed a record $2.6-billion surplus, a big payment on the debt and the fastest growing provincial economy last year. All in all, pretty upbeat.
But the numbers hadn’t changed much since the budget, so not much of the information was new or surprising.
And the journalists had some waiting questions.
All through the last year the Liberals refused to say how much of your money they were spending on those slick ad campaigns saying what a great job they were doing. All the information would be in the year-end Public Accounts, they promised.
Everyone knew that wasn’t true. The accounts tell you an ad firm got $2 million, or $20 million, but they don’t reveal the cost of specific campaigns - like the government ad blitz that reminded you that the Olympics are coming.
The people in government paid to worry about such things could have anticipated tough questions for Taylor about the promised ad spending information.
Especially because that morning Vancouver Sun columnist Vaughn Palmer had written about “potential embarrassment” in the numbers.
“Rumours persist that the Liberals, in their enthusiasm to tell the public about the great job they were doing, overspent the advertising budget,” wrote Palmer. “They may have found some way to hide it. But that's no way for Taylor to begin her time as finance minister.”
If you’re working for the minister - or the government - you should anticipate a problem here. Taylor is certain to be standing in front of cameras, facing difficult questions.
But when the time came, she didn’t have the answers.
Palmer was right. The Liberals had budgeted $12 million for advertising under the Public Affairs Bureau, in the premier’s office. That was down from the previous year, they said, because of the new ban on non-essential advertising in the four months before an election.
Partway through the year, Campbell and company suddenly decided that they needed to spend a lot more money on advertising. You had to be told B.C. was the best place on Earth, over and over and over.
The government could have announced that, and tapped the contingency budget for the extra $7.5 million in ad money.
But that would have meant acknowledging the over-spending before the election. So instead the premier’s office sent bills out to other ministries to cover the over-run.
That looks sneaky. And it shatters the already dubious claim that none of the advertising spending comes at the expense of patients, or students. The health ministry got a bill that it hadn’t expected, because the premier’s office wanted to spend more on ads. That’s money that could have paid for more hip surgeries.
Taylor struggled with the questions, defending the ads as necessary to encourage investment, suggesting people don’t want to know what each campaign costs and promising to look at the issue.
Two hours later, she committed to releasing the information within the next couple of days.
It was a good recovery, and a good start for Taylor’s tenure as finance minister. She put the principle of openness about how the government spends your money first, and ended the slippery secrecy around ad spending.
But a lot of questions remain.
Taylor has to wonder why no one in government thought it might be good to warn her this was an issue, so she could prepare. (And she has to wonder why she ended up explaining dubious decisions taken eight months ago in the premier’s office.)
And taxpayers have to wonder why the Liberals abandoned openness, and the principles behind their ban on pre-election advertising, and spent millions of your money on feel-good ads, all the while keeping the spending spree a secret.
Footnote: ``What this government does with taxpayers' money, wasting it on propaganda like this, is obscene. With children on surgical waiting lists, why should they be spending anything on advertising?'' Nope, not a cranky New Democrat on the latest scandal. That’s how Gordon Campbell felt about government ad campaigns when he was in opposition.

BC Hydro $120-million failure demands an inquiry

VICTORIA - The collapse of BC Hydro’s plans for a Vancouver Island power plant - and the loss of more than $120 million of your money - deserves a way closer look than it’s likely to get.
It may be that the loss of all that money, and the 11-year trail of broken relationships and misleading public statements, was just one of those management missteps. No obvious errors along the way, just a collective stumbling into disaster.
But it also may be that big mistakes were made.
This all turns into a bit of a snarl, with the necks of both NDP and Liberal governments tangled in the loops.
Flash back to 1994. Forrest Gump was the big movie, and the Harcourt government told BC Hydro to look for new power sources on Vancouver Island. Hydro started negotiations on two projects, for Port Alberni and Campbell River. After four years of talks, a gas-fired plant plant for Campbell River got the green light.
It took two more years of shuffling before Hydro pulled out of talks with Atco on an Alberni project . (That’s six years, and a tonne of money, on a project that never got built. Meanwhile, Port Alberni got caught up in a kind of Music Man dream of an aluminum smelter.)
Undaunted, BC Hydro pressed on in 2000 with a new partner, Calpine. But then Port Alberni wouldn’t deliver needed rezoning, and the dream died.
We’re up to 2002, eight years after government started the process. Hydro and Calpine look to Duke Point, south of Nanaimo. A proposal for a new undersea natural gas pipeline to supply the plant, with another private partner, is working its through approvals.
Vancouver Island’s power security is threatened, warned Hydro, unless the plant is in operation by the end of 2004. "We are on a tight time line, we have to move," said a spokesman. Otherwise, brownouts may hit and Islanders will be shivering in the dark.
Those kind of warnings start coming more frequently. Urgent need, power supply at risk, got to start taking shortcuts.
Meawhile, BC Hydro dumps Calpine - with no explanation - and says it’s going to build the plant on its own.
Enter the Liberals’ 2002 energy policy, which rightly requires the BC Utilities’ Commission to review the Duke Point plant to make sure it’s needed, and the best deal for Hydro customers.
That takes 10 months, and the commission - after hearing opposition from the big industrial power users and environmentalists - rules Hydro’s plan doesn’t serve customers well.
So, closing in on the tenth anniversary of the whole effort, Hydro abandons the gas pipeline project, gives up on building its own power plant, and calls for proposals from private companies.
The accountants do their work, and BC Hydro writes off $120 million spent on the two projects, a loss that will be tacked on to customers’ bills.
Now it’s 2005. The lights aren’t flickering, and BC Hydro has selected Pristine Power as the preferred builder-manager. The utilities commission says yes.
But then, this month, the big industrial users file one more appeal. And BC Hydro kills the project.The private partner feels betrayed. Nanaimo Mayor Gary Korpan is furious that all the work the city did is wasted.
And Hydro now says it can do without the plant - previously essential - by improving transmission cables from the mainland.
It’s not the fast ferries, but it’s in the ball park. More than 10 years of work for nothing, three private partners burned, $120 million wasted, alarmist talk about power shortages.
It is a hopelessly bad record.
Premier Gordon Campbell seems relaxed about the whole debacle. Lessons to be learned, maybe, he says, but no need for an independent inquiry.
But really, is that what he would have said in opposition?
The auditor-general needs to be on this one. Because otherwise, this could all happen again.
Footnote: The NDP started this, but the Liberals paid little attention through their first year while Hydro sank deeper into the goo on Duke Point. Consumers - giant industry and individual - pick up the costs when BC Hydro spends too much. The Liberals deserve full credit for restoring BC Utilities Commission oversight of Hydro.

Food, cleaning woes symptoms of major health care problems

VICTORIA - Check into a hospital in B.C. today, and you’ve got a one-in-four chance of ending up in a place that’s too dirty to meet basic standards.
That’s the grim finding of a new independent audit ordered by the six health authorities around the province.
The results back up the widespread complaints that conditions have grown worse in hospitals and seniors’ care centres in B.C., and that the problems are most serious in centres where cleaning was contracted out to private corporations.
It’s not just cleanliness.
Complaints about bad food - cold, badly prepared, not nutritious, even inedible - have also been mounting. Generally, the concerns have been dismissed by government and the health authorities.
But the Vancouver Island Health Authority has just announced the astonishing news that the largest hospital kitchen in the region has been slapped with a high health hazard rating by inspectors.
And the Interior Health Authority - which got high marks in the cleanliness audit - has released a report identifying major problems with the food it is serving up to patients.
It’s a bleak picture.
I don’t really care who cooks hospital meals, whether they work for a corporation or the government, or if they are in a union. I just want to know that if someone in my family ends up in hospital or a seniors’ home, the place will be clean, the food will be OK and the services will be delivered in a cost-efficient way.
That’s not happening.
The cleanliness audits found problems across the province, with 26 per cent of the health facilities failing to meet the accepted standard. (Some of the failing grades came close, but almost clean is a lame boast.)
More than half the institutions in the Fraser Health Authority - including the Surrey Memorial Hospital, which has been subject to huge attention over infection problems - failed to meet the standards. More than half the centres on Vancouver Island fell short, and about one-quarter of the centres in the North and in the Vancouver Coastal Health Authority failed the audit.
The bright spot was the Interior Health Authority, with more than 90 per cent of facilities passing the audit.
But when it comes to food quality, the IHA has nothing to brag about. It released a report last week - credit to the authority for that - which outlined major problems.
Consider just a couple. The review found that unless they had a family member to help them, seniors in care homes waited as their meals, not great to start with, grew cold. Acute care patients were served food that was cold, and fell short of meeting nutritional requirements.
And health inspectors were worried about food safety problems.
Just as they were in the Vancouver Island Health Authority, where the main kitchen - serving several hospitals - has just received a “high hazard” rating for health violations. Kitchen staff weren’t wearing proper gear, the inspection found, and food wasn’t protected from contamination. There was “inadequate cooling and refrigerated storage of potentially hazardous foods,” temperatures weren’t monitored and the place was dirty - broken floor tiles were trapping dirt in the kitchen, while mould and mildew were taking hold on the walls near the dishwashing area. Walls were chipped to the point that inspectors feared bits of them could fall into the food.
Is contracting out to blame? The Vancouver Island Health Authority fired its food preparation staff and hired a British-based corporation, the Compass Group. People doing the work now are paid about $10 an hour, instead of the former $18. Turnover is high, and training a constant challenge.
And health regions that contracted out cleaning have far worse results than those - like the Interior - that kept the services in-house, and under their control.
These results are alarming. Patients can’t judge most aspects of their care.
But they know when the rooms are dirty, and the food grim, and the basic health care promise is being betrayed.
Footnote: The big question is why the government encouraged or forced high-speed privatization and re-organization. The Interior food review found the authority had rushed plans for central food preparation without adequate planning. Privatization deals with big corporations were pushed across the province instead of more sensibly being tested in one or two settings.