Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

MONDAY, JUNE 23, 1997

Afternoon

Volume 6, Number 3

Part 1

[ Page 4627 ]

The House met at 2:06 p.m.

Prayers.

Hon. P. Priddy: I'm very pleased today to introduce 24 people -- actually, elected people -- from the Federation of Swedish County Councils, who are being hosted by the Ministry for Children and Families and the Ministry of Health on their week-long visit here. The chair of the group is Mr. Ilmar Reepalu, who is the chair of the Public Health Program Committee of the Federation of Swedish County Councils.

Interestingly enough, Sweden has piloted our B.C. Healthy Schools program over the last several years. They are here spending another week in British Columbia. We have in common our desire to make schools in British Columbia, Sweden and, obviously, throughout the world healthy, safe places for children to be. So I would ask people, please, if they would say v�lkommen or welcome to the delegation.

G. Campbell: Hon. Speaker, I know that Members of the Legislative Assembly will have already started hearing the early results of the Wimbledon tennis championship's opening rounds in England today. But, of course, they have been focusing far more on the annual tournament for the valued and prestigious Speaker's Cup. I know that many members of the Legislature look to that cup with great admiration, and hope the legislative team will be able to secure that cup year in and year out.

It will come as no surprise to Members of the Legislative Assembly that the press gallery tried to squeeze around the rules and to recruit one of the most prestigious tennis tournament players in Canada for their team. Naturally, within all of the rules, known as MacMinn's rules, we followed all of the rules, and we were able to offset that real ringer with the recruitment of Alec Macdonald, QC, a former Attorney General of British Columbia.

Needless to say, the weekend's tournament was hard fought. One member of the press gallery received an injury to the head when he was struck by the racquet of one of his team members. It was a simple lob, and they were fighting over it; it was nothing serious. But the knees of another member of the gallery started to go on him as we reached the sixth and seventh hour of play. For all of that, I simply want to point out that once again the legislative team has defeated the press gallery team in an event which . . . . The magnitude of this victory is what is most important: the Legislative Assembly team, 148; the press gallery, 57.

P. Calendino: In the gallery opposite me today is a very well behaved group of 44 grade-4-to-7 students from Aubrey school, l'école bilingue . With them is their teacher, Mrs. Virginia Barteluk, and one of the administrators for Burnaby, Dr. Raya Fransila. They're also accompanied by a couple of generous parents, Mrs. Janine Thompson and Mrs. Cheryl Archibald. Would the House please make all the students and volunteer parents welcome.

J. Dalton: Visiting us today are 50 grade 5 students from Chartwell Elementary in West Vancouver, accompanied by several parents and three teachers: Ms. Kerry Fairburn, Mrs. Fran Jones and Mr. Philip Hurst. Would the House please make them all welcome.

Hon. P. Ramsey: Joining us in the gallery today is Mr. Lee Doney. Mr. Doney chaired an advisory committee of business, labour, educators and government representatives, who recommended to government the establishment of the Industry Training and Apprenticeship Commission. Mr. Doney will be serving as interim chair of that commission after the legislation -- which is going to be introduced by my colleague the Minister of Labour -- is passed later today.

R. Masi: It's my pleasure today to introduce Mr. Surjit Kooner, a longtime colleague, friend and political activist from Surrey. Would the House please make him welcome.

S. Orcherton: Joining us in the gallery today are a number of the members of the executive of the Victoria Inter-Cultural Association. The members should know that over the next ten days in Victoria, just across the way, across the Inner Harbour, Folkfest '97 -- the twenty-fourth -- is occurring, an opportunity for all of us to join and share in the different ethnic and cultural backgrounds that we all come from. The folks that are joining us today have spearheaded this particular project over the last 24 years.

With us today in the gallery are Ben Pires, president of the ICA, and joining him: Charlayne Thornton-Joe, Nelson Lah, Miklos Fisi, Daralynn Monita, Gurdeep Sundher, Michael Nation, David Law, Lauren Sprague and Nora Butz, the honorary Folkfest mayor. I'd ask the House to make them welcome and to also partake in the events happening at Folkfest '97.

K. Krueger: It's my privilege today to introduce some very important people, constituents of my colleague from Shuswap, who has graciously allowed me to introduce them, in that they're all related to me -- even though they number six, which is almost the margin of victory in the contest of last May 28. They are: my sister Alana Harper, her husband Brian and my magnificent nieces and nephews Jeremy, Reisha, Becky and Chris. Would the House please make them welcome.

F. Gingell: I only have one person to introduce, but he's very special. It's the son of the member of the Legislature for Shuswap. I would like all members to join me in making Brant Abbott welcome.

S. Hawkins: I have two special guests to introduce to the chamber today. Marion Bremner is a city councillor with the city of Kelowna, and with her is Cathy Williams. Would the House please make them welcome.

Hon. J. MacPhail: I notice in the gallery Lin Rubin, who has been a longtime community member contributing at all levels of government and in political life. I ask the House to make her welcome, please.

[2:15]

Introduction of Bills

INDUSTRY TRAINING AND

APPRENTICESHIP ACT

Hon. J. Cashore presented a message from His Honour the Lieutenant-Governor: a bill intituled Industry Training and Apprenticeship Act.

Hon. J. Cashore: Hon. Speaker, in conjunction with my colleague the Minister of Education, Skills and Training, who

[ Page 4628 ]

shares with me the responsibility for administering this act, I move that Bill 43, the Industry Training and Apprenticeship Act, be introduced and read a first time now.

Motion approved.

Hon. J. Cashore: This act establishes the Industrial Training and Apprenticeship Commission to govern a new industry training and apprenticeship system. The creation of this commission results from the consensus recommendations of the key partners in the system: business, labour, education and training providers, and government.

The commission will be responsible for creating an industry-driven training and apprenticeship system for the twenty-first century which is relevant, accessible and responsive to industry needs and priorities. The act sets out the governance structure, including the mandate and operations of the commission, the appointment of commission members, staffing, financial administration and accountability, and the establishment of advisory committees to assist the commission with its mandate.

The act sets out the powers of the commission to designate trades and occupations which will have established industry training and apprenticeship programs. It also provides the commission with the power to grant credentials to individuals who have successfully completed an industry training or apprenticeship program or who otherwise meet the qualifications established by the commission.

The power to require compulsory certification in a designated trade or occupation rests with the Lieutenant-Governor-in-Council. The act sets out the general provisions, including an independent appeal mechanism, entry and inspection powers, industry assessments, and offences and penalties.

I want to say, hon. Speaker, that I thank the former Minister of Labour and Education, Skills and Training for setting up the process that has led to this very significant event, which is historic in British Columbia -- indeed, it's the most significant apprenticeship legislation in all of North America.

Bill 43 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral Questions

CONSULTATION ON SECTORAL BARGAINING

G. Campbell: On a number of occasions in the past, the NDP has promised not to bring in sectoral bargaining without full consultation with all those involved. We now know that after consulting with building trades supporters, the NDP is planning to impose sectoral bargaining in the construction industry in British Columbia. Once again the people in this province are asking if they can trust anything that this government says.

My question is to the Minister of Labour: will you live up to your promise and undertake to carry out full, open public consultations prior to imposing sectoral bargaining on any industry in the province of British Columbia?

Hon. J. Cashore: Once again the opposition leader suffers from a very bad case of poor research -- and also a serious case of premature expectation. [Laughter.]

I would like to call on that hon. member to take his time, wait for the legislation to be introduced, pour himself a glass of milk and sit down with a couple of cookies, and study, learn and then really digest.

G. Campbell: I hadn't thought it would be premature expectation to expect the government to tell the truth, hon. Speaker. But I must admit that after seeing this government perform, it is obviously something that the government doesn't feel people should expect.

The IWA says that sectoral bargaining in the construction industry "sacrifices democracy and the fundamental right of workers to freely choose their bargaining agent." Sectoral bargaining takes away workers' rights to choose. Last year this government's own report, the Kelleher-Ready report, recommended against sectoral bargaining in the construction industry.

Can the minister tell this House when he decided to structure a special sectoral bargaining deal for the NDP supporters in the construction unions?

Hon. J. Cashore: Once again we see this legacy of negativity coming from the opposition, an unwillingness to look at the positive aspects of a government that is diligently working with all the communities in British Columbia to bring forward legislation that will be progressive and far-reaching and bring stability.

G. Campbell: It's a sad thing when the Minister of Labour is in fact killing jobs in the province of British Columbia instead of trying to help build new jobs. This NDP government's policies have taken B.C. from being number one in economic growth per capita in the country to number ten. Small businesses have constantly told this minister, this government and those members on that side of the House that their job-killing taxes and job-killing regulations are driving businesses out of business and jobs out of the province.

The Labour Code is consistently pointed to as an obstacle, and the government promised business that they would be included in any discussions with regard to sectoral bargaining for any workers in the province of British Columbia.

My question to the Minister of Labour is: when will this government stop taking away people's rights and stop killing jobs in the job-creating sector of this economy -- small businesses?

Hon. J. Cashore: Well, that again describes the difference between that side of the House and this side of the House, and it explains why they didn't get elected and why we did. We know who they represent: the banks, the corporations. We know the communities of interest they want to represent.

What I think is needed on the part of this Leader of the Opposition is for him to wait until the legislation is introduced, study it and then contribute to a constructive discussion instead of forming his conclusions before he's even seen the legislation.

J. Dalton:

Section 3 of the Labour Relations Code provides for the appointment of a committee of special advisers to undertake a continuing review of the code. On June 22, 1994 -- three years ago yesterday -- the then Minister of Labour said the following about that section: "Since the Labour Code provides for a process of review, I think we should use that."

[ Page 4629 ]

To the Minister of Labour: why is he ramming these changes down the throats of British Columbians before workers and business have had any say in those changes?

Hon. J. Cashore: Hon. Speaker, I make no apology for the fact that we talk to all segments of society in British Columbia. We don't just represent the interests that the opposition represents.

Just to take the kind of messaging they gave when we brought in the Labour Code, they said doom and gloom, yet their dire predictions didn't come true. When we brought in the Fair Wage Act, they said the same thing, and their predictions didn't come true -- and also with the minimum wage. So I say to the opposition: take your time, wait until you see the legislation, and then let's have a meaningful debate.

J. Dalton: Another quote on that same infamous day, June 22, 1994, from the then Labour minister: "I think it is important that we put a committee out at some point, as committed to under the code, and that we look at issues that may exist out there, get advice back from people who represent the variety of interests in the field . . . . " No review has taken place -- none. The only person this government has consulted with is Ken Georgetti.

To the Minister of Labour: in the interest of fair play, will the minister shelve the planned legislation and today strike a committee under that

section 3 and conduct a review that all interested parties can contribute to?

Hon. J. Cashore: Let's be very, very clear, hon. Speaker. The hon. member just said "shelve the planned legislation," and he hasn't even seen it.

Interjections.

The Speaker: Order, members.

GOVERNMENT POLICY ON GAMBLING

K. Krueger: The NDP's negligent handling of gambling expansion has been exposed by one of the most respected economists in Canada, Prof. Richard Lipsey of Simon Fraser University. This report shows that the NDP has dramatically overstated the benefits of gambling expansion and has not taken into account the long-term social costs.

My question is to the minister responsible for casino promotion: will he now rip up the report by Peter Clark and KPMG and halt the gambling expansion program?

Hon. D. Miller: Mr. Speaker, I'm curious. Does the member advocate that we use this report as the basis for moving forward?

K. Krueger: I'm flattered that the minister asks what I advocate. The opposition advocates that we definitely abandon this gambling expansion plan -- a massive expansion with huge social costs.

Professor Lipsey raises very serious questions regarding the integrity of the KPMG gambling report, which cost double what KPMG projected it would cost. This Lipsey report proves that the NDP's gambling expansion plan is based on distortion and half-truths.

My question is to the Deputy Premier, the minister responsible for gaming in British Columbia. Will he show some leadership, listen to his caucus and to the public and please halt this ill-conceived gambling expansion plan?

Hon. D. Miller: I'm not surprised that the member equivocated in response to my very simple question. Upon my cursory examination of this report, it's premised on VLTs in the province, and we're not doing that; it's premised on a major casino, and we're not doing that; and it's premised on a 1.56 percent tax increase across all taxes in British Columbia. I'm surprised that that opposition would stand up today and suggest that we simply raise taxes. It's not something this government is prepared to do. We think the modest expansion that we've outlined is one that will bring some benefits.

We canvassed it thoroughly under the estimates, as the member well knows. I don't think the report is really germane to the issues that we're dealing with.

GOVERNMENT POLICY ON GAMBLING

AND SECURITY AGAINST CRIME

G. Plant: Mr. Speaker, during the estimates debate on April 29, 1997, the Attorney General was asked about the increased potential for crime which would result from the NDP's massive gambling expansion. The Attorney General repeatedly said that he would be "monitoring this very, very carefully," yet on Saturday, just a couple of days ago, the Attorney General said that reports about problems of increased crime following gambling expansion came "as a complete surprise" to him and that he was going to ask for a briefing on these issues.

My question is for the Attorney General: which of his statements is true, his statement in the estimates debate that he was monitoring the issue very, very closely, or his statement two months later that reports of gambling crime came as a complete surprise?

[2:30]

Hon. U. Dosanjh: There is no question that my ministry has been monitoring this issue. Hon. Speaker, the gaming audit and investigation office of my ministry has eight special constables attached to it. There is going to be an increase in those special constables in the very near future. There are 20 personnel attached to the Gaming Commission to deal with monitoring and investigations. Two of those are special constables, and there is going to be some increase in those numbers.

So in addition to the current two CLEU members that deal with these investigations, there are ten other special constables available now, there will be more in the very near future, and this government is committed to providing additional resources to deal with any modest expansion in gaming.

G. Plant: According to Prof. Bill Thompson from the University of Nevada, "Every card cheat in the United States is up in Vancouver taking advantage of the increased limits, and [B.C. doesn't] have the resources or the expertise to deal with it." It is astonishing that the Attorney General is asking for his first briefing on the criminal effects of gambling expansion -- after the expansion has begun.

My question is to the Attorney General: what concrete steps has he taken to prevent an onslaught of gambling-related crime?

[ Page 4630 ]

Hon. U. Dosanjh: The United States gambling industry is entirely different from what's envisaged in British Columbia. Those members opposite want to take lessons from the U.S. The situation in the U.S. is entirely different from what we envisage it to be in British Columbia. We're going to have modest expansion in British Columbia, and this government . . .

Interjections.

The Speaker: Order, members, please.

Hon. U. Dosanjh: . . . is committed to providing additional policing and prosecutorial resources, if need be. My ministry -- the gaming audit and investigation office -- has had four meetings with the B.C. chiefs of police to determine what additional resources would be required to deal with the situation, and we would provide those resources.

G. Plant: Well, there is the statement of commitment, and then there is the question of real action. One of the Attorney General's own detectives from the CLEU says: " . . . there is little support from the government to control illegal gambling. Everything from illegal lottery ticket resellers to illegal casinos run by motorcycle or Asian gangs are operating in B.C. with impunity."

The question is: what action will he take now in order to bring this problem under control?

Hon. U. Dosanjh: The police enforce the law on the ground. I have said time and time again that we will monitor the need for an increase in resources, if that's the case, and that we would be providing those additional resources.

In terms of the briefing, those members opposite do their research from the newspapers, where they can't make head nor tail of the particular

article that they read. Let me tell you, hon. Speaker, and let me tell the House that I was referring to the need for a briefing with respect to poker clubs and the like. In August of 1996, on the advice of the Gaming Commission and the law enforcement agencies, we delicensed social clubs, and I had not been informed until a couple of days ago that there were continuing problems with respect to those social clubs.

The Speaker: The bell terminates question period.

Tabling Documents

Hon. J. Cashore: Hon. Speaker, I wish to table the annual report of the Ministry of Aboriginal Affairs for the year ending March 31, 1996.

Hon. J. Pullinger: I have the honour to present the annual report of the Ministry of Small Business, Tourism and Culture for the year ending March 31, 1996.

Petitions

B. Barisoff: I seek leave to present a petition.

Leave granted.

B. Barisoff: On behalf of 340 residents of the Queen Charlottes, I present a petition: "Why Are Roads on the Queen Charlottes in Such Bad Condition?"

J. Kwan: I seek leave to make an introduction.

Leave granted.

J. Kwan: On behalf of the Premier, actually, I am making an introduction today and ask the members to welcome Lord Beaconsfield Elementary School. There are 45 grade 7 students here, and they are accompanied by their teachers Mr. Ernest Ewert, Mr. Les Rowe, Ms. Helga Hamilton and Ms. Donna Cannon. Would the House please make them very welcome.

Orders of the Day

Hon. J. MacPhail: In Committee A, I call Committee of Supply. For the information of the members, we will be debating the estimates of the Ministry of Human Resources. In this House, I call Committee of Supply. For the information of the members, we will be debating the estimates of the Ministry of Finance.

The House in Committee of Supply B; G. Brewin in the chair.

ESTIMATES: MINISTRY OF FINANCE AND

CORPORATE RELATIONS AND

MINISTRY RESPONSIBLE FOR

INTERGOVERNMENTAL RELATIONS

(continued)

On vote 31: minister's office, $348,000 (continued).

D. Jarvis: We were talking the other day about what I contended was a write-off of software development in the financial statements. Looking at Hansard afterwards, the minister definitely stated that there was no such write-off. As I said before, in the back of my mind I find that I keep hearing people tell me, first of all, that the program which the software stuff was built up for with the agents was of no value whatsoever; it was about a $40 million drain right down a hole. The minister says it wasn't a write-off in the statement of operations.

Not being an accountant is, I guess, probably a disadvantage in this sense. I go back to page 23 of the statements, and under "Property and Equipment," where last year the software development was up around $14 million, this year it's down around $4.7 million. In effect, there's about a $9 million difference there.

If you'll just bear with me, Madam Chair . . . . On page 17, where you show a write-off of $37.678 million, there are a couple of questions I wanted to ask. Was there any cost in the software development of the program for the agents program? I guess it's what they refer to as NGIS; I guess the expression could be used in that way. But this NGIS program . . . . Are there any expenses in the claims expenses that could be considered to be taken up by the software or by the administration end of it? Perhaps you can even explain to me whether or not the motor vehicle branch picked up any of those costs.

Hon. A. Petter: I'll do my best to try to answer. If I can provide further clarification, I'll either try to do so orally . . . . But because of the complexity of some of these matters, I think it might be easier just to provide the member with this information by way of a direct briefing or some written documentation.

As I understand it, first of all, there was not a write-off. A write-off implies that the investment produced something that

[ Page 4631 ]

was of no value. In this case, the investment produced something of considerable value. In fact, we talked last day about how it will be put to its first application in the very near future. What happened was that a decision was made to expense the costs in relation to the investment to date because of the change that took place in the way in which this was financed -- originally a partnership and now moving to a different financing operation. That expensing is what brought the amount into the fiscal year in the large sum that it did.

In respect of the move to the $4.7 million, this is where I will have to get back to the member, either orally now if he wants a follow-up or in detail if he wants more detail. It is my understanding -- and I think I said this last day -- that the expenditure does not relate to NGIS; it relates to other software development. The NGIS development is not included within that number.

[2:45]

D. Jarvis: If we went back onto the NGIS end of it, the development costs there with IBM are, I have been told, up in the high $70 million and $80 million range. This is quite a concern, because I don't see anything in the statements whatsoever under that

section where there are any costs attributed to the NGIS. I wonder if you could clarify what costs are attributed to the NGIS program, which they use -- the specific costs.

Hon. A. Petter: Again, I think this answer was given last day, but just to make sure that we pick up where we left off, the specific costs to the end of last year were $37.6 million or $37.7 million. Those were the total costs with respect to NGIS to that point.

D. Jarvis: Going back to what my first question this afternoon was, I've been informed that if an item has to be expensed, then it is in fact a write-off.

Interjection.

D. Jarvis: Okay, I'll go on. What's it considered as, then, if an expense is not a write-off?

Hon. A. Petter: The question of whether an item is capitalized or expensed has to do with the accounting treatment of that particular item. If it's capitalized, as the member knows, an investment is made, and the accounting treatment then attracts the amount that's paid to retire the principal plus interest. If it's expensed, then the actual payments over time to retire the total costs are accounted for in the time in which the expenditures are made. It does not have to do with the question of whether it's written off or not.

That question has to do, as I am informed, with whether the investment is one that proves to be productive or not productive. If it turns out that the investment is one that has no value -- it cannot be utilized -- then there will be a write-off, and that will show on the books as such. That will reflect the cost and remove from the books the accumulated cost.

That's not what's happening here. What's happening here is that ICBC is expensing -- that is, accounting for the payments that were made in the years in which they occurred -- rather than capitalizing with respect to an investment that does have value. And that value will be reflected in the fact that this software is going to be put into application as soon as September of this coming year.

D. Jarvis: Going on to another subject now, I refer to it, using a little bit of alliteration, as the six-point Petter program that was brought out in the June 12 press release. I appreciate that the minister said that he didn't want to get into the specific dollars and cents of this program he is proposing for ICBC, because of the fact that it is still being proposed. I want to know a few things about it, such as ICBC's feeling towards it. One would be on the $250 they propose for property damage claims in the future, and if they propose to index it.

I was told some time ago about a 1920 insurance manual down in the United States which showed the real cost of a $100 deductible in those days. Today it would reflect somewhere up around the $3,000 mark. So if there's going to be a deductible, I was wondering if they have given any consideration towards indexing it.

Hon. A. Petter: If, as I believe is the case, the member is referring to the material-damage deductible that is proposed in legislation before this House, then I really think the appropriate time to debate and consider that is when the legislation is before us. It's not appropriate for us to be debating the legislation, and that's an issue which speaks directly to the substance of the legislation and the regulations that flow from that legislation.

D. Jarvis: I thought that was exactly what the minister would say. With regard to the change in the program for cancelling the no-fault, I wonder if the minister would be prepared to consider telling the House what their feeling is towards a change of rates with regards to insurance premiums. The freeze will be off as of December of this year, I assume. The purpose of the post-product change was to hold rates from rising. If that's the case, then the product change will sensibly reflect an increase in premiums in the future.

However, with the other safety and road initiatives coming in, we would possibly be looking at a saving. Certainly their business plan shows that they feel there's a saving. I'm wondering if the minister is prepared to reflect on that in any way.

Hon. A. Petter: I'd be happy to reflect or even to ruminate a little bit, but I don't want to protract the debate in this House, because we have talked about this to some extent. The government has been very successful in recent years in keeping ICBC premiums from increasing. That has been a major contributor to keeping inflationary pressures down in the province, as indicated in recent Statistics Canada reports. Even in the two years preceding the freeze, the rate increase was only 3.5 percent in 1994 and 1.75 percent in 1995. So the average rate increase over the last four years has been something like 1.33 percent.

We've made it clear that we want to keep rates affordable in the future. We're not prepared to go back to the bad old days when rates went up at a huge rate in excess of growth in the economy. For that reason, the Premier announced the rate freezes and the process of consultation took place, which we discussed at length last day. I'm determined, and so is the government, that we keep rates affordable. That doesn't mean there will not be rate increases.

There may well be some rate increases, and as we discussed last day, there may be adjustments within the rate structure to better reflect and apportion the true costs of premiums. But at the end of the day, our commitment to keep rates affordable is one that we stand by.

There are changes within the package of legislation we'll be debating very shortly in this House that affect the product, including net income and material-damage deductibles. And, of course, there is the most aggressive traffic safety initiative ever undertaken in this province, which we believe can effect significant savings. How significant and how much those

[ Page 4632 ]

savings contribute to rate stabilization are matters that are debatable. But clearly there will be significant savings, and our intention is to maximize those savings as quickly as possible with the support we have from all stakeholders and to ensure that those savings translate into premiums that do not rise unduly for the motoring public.

D. Jarvis: Could the minister reflect on what the cost of the freeze actually was as far as ICBC goes? What did it cost ICBC, or what is it going to cost?

Hon. A. Petter: I think we discussed this last time. We talked about the fact that had rates gone ahead as previously proposed and had the freeze not taken place, there would have been an increased payment by consumers of some $60 million a year. That $60 million saving is directly attributable to the government's action to prevent rates from increasing in each of the last two years.

D. Jarvis: In the '96 operating plan of ICBC, it said that the road improvement action program is a four-year program and that they hope for a benefit of around $54 million. Does that pretty well hold true with what you're expecting with the proposed . . . ?

Hon. A. Petter: I'm not quite sure what estimate the member's referring to, but it would not pertain in any event. This package, which has come together after extensive consultation, goes well beyond anything previously contemplated or announced. It does include some product changes, as indicated, that will save the corporation dollars and improve equatability in terms of pay-out. It also includes traffic safety measures that go well beyond anything previously costed or anticipated. For that reason, of course, it's difficult to predict with absolute accuracy what the savings will be.

ICBC is now working on implementation plans, and our focus is to maximize those savings and use them to avert rate increases in the coming years.

D. Jarvis: With regards to that same operating plan ICBC has, I want to get into the impaired-driving program a little bit. They were going to speed up the number of impaired-driving roadblocks and things like that -- the CounterAttack program. I think the best overall net savings on CounterAttack has been around $5.5 million, and possibly it's saving $15 million in the way of preventing accidents. I want to ask the minister if he can tell me what figures they have now on impaired driving versus what they had for the year prior to that -- the number of convictions, I guess we would have to say. Percentagewise, is it up or down?

Hon. A. Petter: I can do no better than quote the annual report of last year, which indicated that investment in CounterAttack programs will save the corporation as much as $18 million in insurance costs. That, of course, was based upon a far less ambitious program than the one we're now proceeding with, which will include much more restrictive restrictions on new drivers, which includes a policy of removing licences altogether upon a third conviction.

For those reasons, the program is anticipated to increase the savings substantially beyond the ones that are referred to, based on the current already aggressive -- but not as aggressive -- CounterAttack program and the number in the annual report I've referred to.

D. Jarvis: The minister and everyone else in this country knows that drinking-driving is causing a considerable amount of costs and heartache, and all the rest of it. We had that lady at Gibsons in December '95 . . . . One woman was dead and the driver got six years, and actually had two previous drinking-driving charges against him. In November '91 my own cousin was killed, along with her husband and two of her three children in her car, by a drunk driver who had already had one previous impaired charge and who wasn't carrying a licence because he was on his second drinking-driving charge. While waiting for the trial after killing these four people, he had another drinking-driving accident.

I just wonder where the government is going to go. We hear of all the methods that are available to stop drinking-driving. We could have mouthpieces mounted on the dashboards, so before an engine will start they have to blow into it. Has the government experimented with that or looked at the experiments they've had down in the United States with regard to situations like that? That would save millions and millions in expenses and heartaches, as I said. Plus the fact that . . . . I don't know if they're readily available.

Would the government be able to look into the aspect of financing it or giving credits on your insurance premium if you have one mounted on your car? I don't know what the costs would be. I wonder if the minister could make some comments with regard to whether ICBC or the government are doing any lobbying.

[3:00]

Hon. A. Petter: The corporation is aware of some of the devices that have been experimented with elsewhere, including in other Canadian jurisdictions. Utilizing some of those devices to, for example, enforce the three-strikes-and-you're-out policy that's reflected in the legislation we're going to debate sooner rather than later, hopefully, is certainly a possibility.

But I'd also say that reflected in the legislation -- and I want to give credit to the opposition, in particular to the justice critic for the opposition -- is also opportunity for the superintendent of motor vehicles or for the courts to require remediation and rehabilitation on the part of those who are guilty of impaired driving. That's certainly something which this side supports. But I also know that legislative proposals have been put forward by the official opposition. So when we get to the legislation, we can debate all of this.

Let me say to the member that I share, as I think do all members in this House, the revulsion at the rate of deaths that occur on the highways, particularly through drunk-driving, but from other causes as well. Our determination, in any way that is possible, to reduce the rate of accidents and the number of victims is central to this whole traffic safety focus. That is one of the reasons why it is important that we make traffic safety the central initiative that it has become, and that we throw all of our energies and resources into making it work, not only to save costs but, more fundamentally, to save lives.

D. Jarvis: I want to ask the minister . . . . He brought up the subject. Have they given any consideration to . . . or why would they consider three strikes and you're out? What's wrong with one strike and you're out?

Hon. A. Petter: The member is trying to draw me into a legislative debate again, and this is really something that is in the legislation and that we can debate. There's always a balance between trying to provide a regime that deters, on the one hand, but provides an opportunity for people to rehabilitate themselves on the other. I look forward to the debate concerning whether or not we have struck the right balance in the legislative proposals that are before this House. They correspond to similar proposals in other provinces.

[ Page 4633 ]

At the end of the day, I think we want to make sure that we have created the right amount of disincentives and incentives for people to not drink and drive and, if the problem is one of addiction, to allow people a chance to overcome those addictions -- and if the problem is one of social behaviour, to make sure the incentives are there so their social behaviour will change.

I look forward to that debate. I think we share a common objective. If the member feels we haven't been tough enough, I look forward to his suggestions when we get to the legislation.

D. Jarvis: Through the CounterAttack program, could you tell me how many vehicles last year were actually . . . ? I was going to say stopped and impounded. Could you give me the difference as to how many cars were found to have drinking drivers and how many were issued warnings, how many were given roadside suspensions and how many were convicted?

Hon. A. Petter: The figures I have available to me -- and if the member wants the fuller numbers that he's asking for, I'd be happy to undertake to obtain those for him -- are from the annual report. Page 11 of the report indicates that more than 20,000 roadside breathalyser tests were administered and that 9,832 people were charged with alcohol-related offenses. I guess the member wants to know how many people were stopped and what kinds of alternative action was taken in the form of people having their licence temporarily suspended. I will try to get that information for him.

If I can't provide it during the course of this debate, I'll make sure that we provide it to him in written form as soon as I can.

D. Jarvis: In the report -- I apologize, because I obviously should have read that in there -- the cost was approximately $6 million. Could you tell me if they have a percentage as to the effect of CounterAttack versus the previous year?

Hon. A. Petter: I'll help the member with his previous question, because had I gone back half a sentence in the annual report, it indicates that more than two million vehicles passed through roadside checks in 1996. The information he is now asking, which is comparative information on this specific program . . . . Clearly there's been an increase in both investment in and benefit from the program. But to make sure the member gets a full and accurate answer, I would ask that I provide that to him in writing, because the information is not before me in a form that enables me to share it with him at this time.

D. Jarvis: Could the minister tell us the cost to the police? I guess it's broken down into RCMP and municipal police. My understanding is that it's mostly in overtime -- that ICBC pays for all of the costs of CounterAttack . . . . Or is that just the overtime amounts that they pay to those police?

Hon. A. Petter: As I understand it, there are two aspects to the CounterAttack program. There's the regular CounterAttack program, which is part of the regular responsibilities of the police, and then there's the enhanced CounterAttack program, which has been given funding assistance through ICBC. With respect to the latter, I will again be happy to get the kind of detailed information that can be more responsive to the member's question. At this time, if he wants the information on the basic CounterAttack, then presumably that information would be available through the Attorney General's ministry.

D. Jarvis: Earlier in the spring ICBC put out a memo to the effect that a 15-member team of officers from the RCMP and other police forces in the province would be formed in the next few months to basically deal with auto theft. It was reported that about $1.5 million was going to be allotted to that program. Could the minister tell me if those moneys have been spent yet? With respect to the police, how advanced is this crackdown on the theft of vehicles?

Hon. A. Petter: I believe the initiative the member is referring to is one that was announced three or four months ago: a proposal from ICBC that an investment of $1.6 million might well be appropriate and beneficial, in terms of an auto-theft initiative. What has happened since then is that that has formed the basis for discussions with the Attorney General ministry and with the police. I understand that there is work ongoing by the Attorney General ministry to see if such a program can now proceed as part of the general approach to community policing.

I note, in response to previous questions, that again the annual report does help the member somewhat in terms of what it says about investment in CounterAttack programs: "In 1996, ICBC spent more than $6 million to enhance drinking-and-driving enforcement." The member wants to have a projection of the coming year, as I understand it. That number will certainly increase. We'll get that number and the differentials for him.

D. Jarvis: Have ICBC and the ministry looked at the aspect of interlock transmissions and whether the cost of that . . . ? They had that program down in Texas, in which all cars needed a special combination number or some type of voice code to start vehicles. The rates of theft in Texas were cut by 41 percent with interlock transmissions. Has the minister looked at that at all, with regards to what the possible costs would be? Could you, say, reduce your insurance premiums if you had an interlock transmission system installed?

Hon. A. Petter: Certainly ICBC has been very aware of the Texas experience. The Texas experience has been looked to in developing the proposal to invest some $1.6 million in an auto theft initiative, part of which would go towards enhancing police resources. But another part of that might be well targeted towards providing inducements, incentives, for people to use a variety of devices that would discourage theft. Again, when we get to the legislation, the member will see, I think, that that's provided for, along with disincentives for people to leave their cars unlocked with the keys in the car as an invitation to theft.

D. Jarvis: I want to get into the aspect of fraud and all the rest of it. But another member wants to revisit another scene. I wonder if I could yield to the member for Oak Bay-Gordon Head.

I. Chong: I appreciate my hon. colleague from North Vancouver-Seymour yielding to me. I wasn't going to participate in the debate until I heard some of the responses from the minister regarding the software development costs. I've been reading Hansard to make sure that I follow along closely with the original debate and the questions, and then reading the notes to the financial statements as well.

I am somewhat confused. As the minister is aware, I have some fairly strong technical background in these areas. I'm

[ Page 4634 ]

asking the minister if he could just confirm once again -- and confer with staff on this if necessary -- regarding the software development expenditure that's listed here: some $37.6 million in the financial statements for 1996.

Reading note 2 . . . . I recognize when you capitalize items and when you expend them. But I find it odd that in one year we should be expending some $38 million. When you take a look at the past two years' comparative figures in note 4, even at those times the maximum amount that was capitalized, on the books anyway . . . . In one year -- 1995 -- it was $13 million; in another year -- 1996 -- it's written down as $4 million. So obviously you've removed those which have been fully amortized.

My confusion is: why would we, in previous years, have capitalized up to $13 million and have it amortized over a period of time?

Whereas in one year alone, we would be writing off over $37 million. What kind of software development costs would that comprise? I'm curious if the minister is able to provide perhaps more clarification and understanding as to why there's such a particularly large amount in 1996.

[3:15]

Hon. A. Petter: We did cover this at some length last day. First of all, the $37.6 million represents the cost over two years. The decision to expense it was taken in the last year, and therefore that expense reflects the total cost that previously was being capitalized. But for accounting reasons, it was decided to now move to an expense basis, and the expense was brought onto the books and was therefore based on the two-year expenditure for NGIS. That's why the number is as large as it is, as I understand it and am informed.

Secondly, this is a major investment by ICBC in terms of software -- and some associated hardware -- development. But it's principally software development to put the corporation on a new software footing in terms of its ability to operate throughout the province. Therefore, while it represents a very substantial investment, it's an investment that is substantial because of the substantial activities that ICBC undertakes. Therefore a change in software to put ICBC into a better position in respect of its technological delivery is one that is going to be large and, in this case, has been large.

But as I said last day, the investment, while it has not proceeded as far as had originally been hoped at the stage that the decision was made to go from this partnership agreement to a contracting situation, has nevertheless provided a very useful basis on which ICBC can now develop further. An application of this software will proceed, as I understand it, initially sometime this September.

I. Chong: As I said earlier, I'm not trying to be repetitious here, and I did check Hansard . Unfortunately, last Wednesday, when we were last here . . . . There isn't a lot of information that shows that it was fairly heavily canvassed. The transcripts obviously state that there was some $37 million, and we're talking $80 million regarding various costs and those kinds of things. But it doesn't allude specifically to what this kind of software is. Given that the minister has now stated that it's over two years, I would be curious to ask the minister where it was included in the first year, in 1995.

In the 1995 statements, if it had been capitalized -- and you've now removed it from being capitalized . . . . There was only $13 million capitalized in 1995 as the total book value, yet we're writing off $37 million. I know the minister doesn't like to call it a write-off, but in a sense, I would have to agree to disagree with the minister. That is a substantial amount of expenditure, and in the case where you've changed your accounting policy, it would have to be considered a write-off of some expenditure or program that was no longer viable.

I would like to ask if the minister could advise, if this is a two-year program -- a two-year cost, two-year contract, two-year partnership or whatever he would like to call it -- where it was included in 1995, so that I can better look at the comparative figures.

Hon. A. Petter: If the member wants a more detailed briefing on this, it might be more productive, given her particular interest in this issue and the expertise that exists on either side of me -- and not in the middle -- on these kinds of accounting issues . . . . As I understand it, the original decision was to capitalize the costs, and they showed up originally as a capitalized cost. I think that's reflected on page 23 of the annual report, where about $8 million of $13.243 million of net book value in 1995 is shown.

Then the decision was taken in response to the development of this contract and to some accounting directives that were received, corresponding with a change in the way this development was proceeding, that it would be better to expense the development of this software. Because it was a longer-term project that involved significant research and development components, the advice was that it was more appropriate to expense it.

ICBC acceded to that advice and went back and expensed it, but because it had been capitalized in the previous year and not expensed in the previous year, the expense that took place had to be reflected in the past year's accounts with respect to the costs that have been incurred over two years. That's the reason.

If the member wants a more detailed account and a more sophisticated explanation from the accounting perspective, perhaps the problem is in the transmission. I'm sure it's not in the information I'm receiving or in the member's understanding of these matters. It may be in the transmission, in which case I'd be happy to organize a more specific briefing of this accounting treatment for her benefit.

I. Chong: I appreciate the minister's efforts to try to detail the accounting policy and practices and changes for me. I have to say that the explanation does somewhat clarify it.

I understand that about $8.6 million -- and that was the figure I saw in 1995 -- was suddenly removed in 1996, as it states on page 23 in note 4 of the notes to the financial statements. The $8.6 million was capitalized and therefore removed, and I understand it being listed on the 1996 statement. Ordinarily, I would have expected some prior period of adjustment, but I won't get into that. Again, that's another technical term. However, being that it's $37.6 million being written off and that $8.6 million of that was in 1995, then the difference -- about $29 million -- was, I suppose, the cost that was accumulated in 1996. Can the minister confirm that at this point?

Hon. A. Petter: Yes, I can.

I. Chong: So $29 million was accumulated in this two-year partnership program in year 2. Can the minister advise if is this the extent of this particular software development venture? Will we be seeing amounts in 1997, or has this software development cost now been abandoned?

Hon. A. Petter: As I explained last day, hon. Chair, the answer is yes. This is in terms of a venture, if by venture the

[ Page 4635 ]

member means the partnership arrangement that existed between IBM and ICBC. There is need for further software investment to take this development now and put it to application, and that is now being managed by ICBC directly through contracts involving IBM and others. But the venture -- that is, the partnership arrangement -- was brought to a conclusion. Therefore, if that's what you mean by venture, the answer is yes, understanding that there are additional investments to develop this software further and bring it to the application stage. Initially, as I indicated last day, the expectation is that that will occur in September.

I. Chong: Again, for clarification -- and I won't try to refer to it as a venture, then -- if these development costs are still being incurred for 1997, and if it is anticipated that this will be put in use in September, can the minister advise as to the expected or anticipated cost for 1997? Are we looking at another $29 million, or less? In that particular case, will those costs be capitalized, or will they also be expended on the 1997 statements when those are drafted?

Hon. A. Petter: I'm informed that ICBC has allocated some $7 million to bring the current software to the application stage and have it applied in one initial instance. That investment will take ICBC through to September 30. There will then be an evaluation of that application and a decision will be made on further costing, which will relate to then extending that application to other parts of the province and other applications. So it's $7 million through to September 30, which will bring it to the application stage, and then further costs will be determined according to how quickly ICBC wishes to proceed to extend that application in a broader fashion.

I. Chong: When this venture -- and I now will refer to it as a venture -- was first undertaken two years ago, was there an agreement or a contract as to what the total cost would be? It just seems a fairly large amount -- $37.6 million over a two-year period -- even though it's being expensed. Can the minister advise whether there was an original contract and whether this amount was in line with that?

Hon. A. Petter: The arrangement, as I understand it, was that of a partnership in which fee-for-service was provided for by IBM as one of the partners, as part of this partnership contract arrangement. The estimated total cost at that time was thought to be in the range of about $35 million, I'm informed.

I. Chong: That's a fairly large amount of expenditure for software development. I do appreciate the clarification I've received to date as to the timing and how it has been treated; I may not agree, but . . . . At this particular time, can the minister be clearer as to what specifically was provided within that $35 million?

I see, in note 2 on page 22 of the financial report from ICBC, that development costs include preliminary research design, development expenses relating to leading-edge information technology projects and that kind of thing. I appreciate that those all have costs to them, but surely for $29 million in one year and $8 million in another year, with an expected $35 million project cost, there must be something more that the minister can advise as to specifically what we were going to be getting for this $35 million -- now $37 million, soon to be $44 million.

Hon. A. Petter: Of course, this kind of software development is always a difficult area to estimate with respect to trying to tailor software to the specific needs of a particular corporation. But the original hope was to try to move forward on a broad range of applications with respect to the major insurance systems of ICBC.

What has happened through refinement is that now the approach is going to be to proceed one application at a time -- the first application, as I understand it, is in respect of licensing and insurance decals and the like -- and then to build from there on a building basis. But initially, the original work had looked at a much fuller range of comprehensive applications. It became clear that that approach was not going to be the most cost-effective, and therefore the decision was made to proceed forward and start to move the system into delivering in particular application areas.

That indeed is where we're at today. The system will start to serve a useful function in terms of its application and licensing area initially, and then it can be built upon from that platform to serve in other applications and eventually throughout the ICBC system.

[3:30]

I. Chong: I thank the minister for that bit of clarification. My concern, of course, is the fact that a project was undertaken to significantly change a number of the operations within ICBC. What I'm hearing -- and the minister can certainly advise if I'm incorrect here -- is that essentially a $35 million undertaking has now been abandoned for breaking it down into segments.

I see the minister shaking his head. However, I want to say that I'm concerned, because $37 million in costs is so significant. Would it not have been more advisable or more productive to have done a report -- as the government always does -- breaking these segments down and realizing what the costs are, as opposed to developing $37 million worth of software which essentially . . . ? If there is no benefit to the extent that we expect it to be capitalized, then we've merely wasted $37 million in costs.

My concern is that . . . . Was this, in fact, the approach that was anticipated at the beginning, or did the minister anticipate that the costs were going to be so much higher that this had to be abandoned in year 2?

Hon. A. Petter: I'm certainly not an expert in software -- or hardware, for that matter, or computers generally -- but, as I understand it, when you have a major new application of computer technology and software technology to what is, in effect, the largest insurance corporation in North America -- at least, operating in a single jurisdiction -- to upgrade a system that is 23 years old to service a whole range of new functions, you can't just go with shelf or some predetermined set of specifications.

One enters into a relationship -- in this case with one of the leading providers of software development in the world -- and tries to establish an approach. In this case, it was referred to as an object-oriented-technology approach to try to bring forward software development that would meet the needs, and applications associated with those needs, of a massive insurance undertaking. As this works, one proceeds forward with a range of different objects in mind, and then as the process unfolds one makes decisions about which applications to proceed with, which to hold back on and how it will be developed.

Far from abandoning or -- to go back to the term used by the member's colleagues some time ago -- writing off this initiative, what was decided instead was that the development to this point has provided a useful basis on which to now proceed. The decision to proceed was . . . . Rather than trying

[ Page 4636 ]

to proceed on all fronts at once, let us proceed and bring it to application in areas where it can start to service the corporation, be tested and then be built upon and extended.

That kind of work -- proceeding forward, testing applications, developing the software to meet particular needs -- I believe is not unprecedented. In fact, in an undertaking of this kind, there is a necessary ongoing interaction between a software development company and ICBC. That interaction is indeed what has brought us to the stage we're at. Certainly more has been spent than was originally intended, and obviously I would prefer that that wasn't the case. But on the other hand, what has been spent can now be usefully applied.

ICBC has taken over the responsibility of working with IBM and also with others now, through contract, to manage the application of what has been developed for specific uses, starting in September.

I. Chong: Certainly I can appreciate that whenever you're upgrading a 23-year-old system, there will be some significant and major costs involved. However, my concern is the fact that this particular cost of $37 million was perhaps undertaken with a view to upgrading the entire operations, as I understand it, and now we are only going to be dealing with applications in certain segments that can be put in use at this particular time. My concern is that the development that was done may not be useful in the future.

We all know how fast technology changes; we know how fast demands are placed on our financial and computer systems. So if in fact we have made this expenditure prematurely, without being able to use some of those applications five years from now when the balance of the applications will come into use, have we lost the benefit of that $37 million? If the minister can assure me that we haven't, I would be most grateful.

Hon. A. Petter: When you're operating with a system of the kind ICBC now has -- which, as I indicated and the member acknowledged, is a quarter of a century in age -- that system is simply not able to meet the demands that ICBC now faces. So ICBC had the challenge of developing a whole new software development system. In the course of that development, strategic decisions had to be made. Do you try to move forward on all fronts, and to what stage? Or at some stage do you then decide to push forward to particular applications, test those out and use those as a basis for then extending the system into other areas? This is a strategic question amongst experts, of which I am not one.

But let me assure the member that the goal of this development -- resulting in applications that will service ICBC, in terms of the myriad of functions it performs -- is unaltered. It's simply a strategic and technological issue as to how best to achieve that goal. The decision was made to now build on the general base of software development that has been achieved at this time, to push forward in specific areas of application, to test that and to use that opportunity of testing those applications to provide information that will then assist in the extension of applications into other areas.

The overall goal remains the same. The strategic decision has been made to proceed in this way. I can only assume, and I am informed, that that decision was taken to maximize the cost-effectiveness of the system and to ensure that we do achieve all of the goals this system originally had, but do so in an orderly and cost-effective way.

I. Chong: I would have to agree with the minister that we all want to see things proceed in an orderly and appropriate way. I want to be assured by the minister that in fact these costs which have been incurred -- this $37 million to date -- are not wasted dollars; that they are, I guess, the basis of the technology, the basis of the program development, and will be able to be used in the future.

If I could phrase it another way: are we going to see this kind of cost again? Can the minister advise? If the $37 million was spent to lay the groundwork for the upgrading of the system and to provide ICBC with an ability to move forward in upgrading all of the system, then I'm satisfied with that. But if we are going to be looking at tens and twenties of millions of dollars again, three or four years from now, then I will have to look back at this particular time at these dollars having been a wasted cost. I'm wanting to get from the minister some assurance that we will not see this kind of expenditure in the next five years.

Hon. A. Petter: Let me see if I can give the member the reassurance she's seeking. As I understand it, once the software development had reached a particular point, there was an evaluation done by ICBC. As I indicated the last day, Coopers and Lybrand was brought in. The determination was made that the investment to date was an investment that could now be productively used and best productively used if it was brought to application in particular areas.

The additional investment this year is designed to bring it to application utilizing the existing software, which is therefore not being wasted -- the investment to date. If that application is one that is successful, as we anticipate it will be, then yes, there ought to be additional dollars spent. But those dollars will be on the side of utilizing the same software base and bringing it to application in other areas. In that sense, there will be additional dollars spent not to duplicate what has been spent to date but to build upon it in transforming the software development to date into its application in a number of different uses within ICBC.

I. Chong: I do appreciate the minister's efforts to provide me with some assurance. I was looking to ensure that there was in fact no duplication or potential duplication in the future. As I say, so often we undertake to change, alter or upgrade systems, and as soon as we do, they're obsolete.

In this particular case, when you're talking about $37 million, we would hate to see that it had a useful life of only two years -- which is perhaps one of the reasons why it was highlighted in the financial statement, showing that it was expended as opposed to capitalized.

So there are those concerns -- whether there is usefulness to that. I appreciate the minister's efforts. In the future I will be watching software development costs, and I appreciate that they will only be minimal in the next few years.

I have one last question for the minister before I yield to the member for Richmond-Steveston. Can the minister advise whether at this point there are any other contracts existing with any other firms similar to IBM? If there are, can he advise of the amounts?

Hon. A. Petter: As I understand it, there are no other contracts for software development at this time. There may well be contracts to buy off-the-shelf applications for particular uses.

I just want to say that, like the member, I will be watching very closely, as well, as minister responsible, as this software moves to application and as it's evaluated and considered for further application. I'll certainly be monitoring that and the costs associated with it.

[ Page 4637 ]

F. Gingell: I'm just going to slip in first to ask a couple more questions with respect to the computer systems. I apologize if the question has been asked before. Are you currently millennium-compliant?

Hon. A. Petter: As I understand it, the applications that come from the system we just discussed will, of course, be millennium-compliant. ICBC is, on an in-house basis, reviewing its other systems and determining -- where it's relevant, obviously -- that it also has the capacity for being millennium-compliant. There is an in-house project to ensure that compliance is achieved before the millennium.

F. Gingell: Does ICBC have any inventory of those systems that are not currently millennium-compliant and of what the cost will be to bring them into conformity?

Hon. A. Petter: Not all systems are millennium-compliant, as I just indicated. I am informed that this project to review compliance is not at the point yet where a budget has been determined, but there will be costs associated with bringing systems that are not millennium-compliant to date into millennium-compliance in time for the millennium.

[3:45]

F. Gingell: Could the minister give us assurance that when the evaluation of the current status is complete, with an evaluation of costs, we will be so advised -- with all the numbers?

Hon. A. Petter: I'm informed by the corporation that they will be making that known publicly, and obviously I'll make sure the member is informed once that announcement is made.

G. Plant: I want to ask questions on a couple of subjects that are different but that both relate to the Insurance Corporation. Both spring from the public controversy over the past number of months around what has sometimes been euphemistically referred to as product change. It did look at one point as though it were a debate happening in a particular way about the possibility that British Columbia would be faced with some form of or variation on no-fault insurance. It's really the context of that debate that gives rise to my questions.

I want to remind the minister, if I may, of a couple of episodes in the course of what passed for our public discussion of this issue. Both occurred in January of this year. In the first of them, on January 30, on a radio show hosted by Bill Good, Mr. Ken Hardie, whom I understand to be a public relations official for ICBC, was being asked questions about the advertising and the apparent campaigning around proposals to change the way automobile insurance is structured.

There was a discussion about the legal system and the judicial role in the legal system, because apparently that has had some relevance, from Mr. Hardie's perspective, to the question of whether some kind of no-fault insurance proposal should be made. During the course of his remarks on the radio, Mr. Hardie talked about the judges -- the members of the superior courts of British Columbia -- who decide motor vehicle accident claims. He said: "This is the same justice system that makes deals with criminals."

I want to come back to that in a moment, but give the minister a bit more of the same. A week before that, an individual who, as I understand it, is a consultant with the KPMG firm that had authored some reports -- I think his name is Ray Healey -- was also on the same radio program, again discussing this interesting question of what the legal system does in respect of motor vehicle accident claims. He said this:

"When judges are making their decision and determining the sizes of their awards, they know reasonably closely what that amount" -- i.e., lawyers' fees -- "is going to be, and intuitively they have decided that $80,000 is the amount that would satisfy your claim because they know that $20,000 is going to the plaintiff's lawyer, and that is a cost of the system."

So it was obvious to all those listening to Mr. Healey that he is apparently a person of some significance, from the point of view of the government, in terms of looking at whether or not there should be some change made to our insurance scheme. It was obvious that Mr. Healey, a highly paid consultant, believes that judges in our province inflate personal injury awards to provide for fees to lawyers, and I'm sure the minister realizes that that is entirely false.

Both of those statements -- the one by Mr. Hardie and the one by Mr. Healey -- did excite some comment and have, over time, excited some comment. In fact, I think the treasurer of the Law Society recently said some things about these statements to a group of newly called lawyers. I must say that at the time I thought both of these statements were thoroughly offensive and, in fact, were a disgrace to the corporation and to its consultant.

I thought it was appalling that we should have something like an excuse for a public debate about motor vehicle insurance change in a context where people who are important participants in this debate clearly don't even begin to understand how our legal system works and, furthermore, appear to have some fairly negative views about it.

I must admit that at the time I was a little bit disappointed that I didn't hear anybody from the government step forward and say: "Well, those are the private views of those individuals. I very much regret the fact that they said the things they did, but I want all members of the public to be reassured that these views do not represent the position of the government."

Months have passed, but I suspect that the debate is not forever behind us. As part of the process of going forward with the debate about whether or not our motor vehicle accident system works and can be improved, I wonder if we could have the assurance of the minister -- who is a lawyer himself and is a law professor who has taught law to many hundreds of young British Columbians, as well as being the minister responsible for ICBC -- that these views don't in fact represent the views of the government with respect to the way the legal system works. I apologize for the length of the question, but I want to give the minister the full context.

Hon. A. Petter: I didn't have the opportunity to hear either of the programs. I don't know if the member has more time than I do to do so. I guess I've learned, in respect to comments made by all sorts of people, including members of the opposition, on hotline radio shows in which there are heated exchanges, not to comment on quotes that may or may not be accurate and which may or may not be taken out of context. I haven't seen the transcripts, and it wouldn't really be appropriate for me to comment on those remarks.

What I would say is that I think even the Canadian Bar Association has acknowledged, without getting into the particular elements the member is referring to, that court costs are a contributing concern in terms of automobile insurance costs. Indeed, because of that concern, the Canadian Bar Association recommended that government look at an aggressive alternative dispute resolution process in order to minimize those

[ Page 4638 ]

costs. As a result, within the initiatives we brought forward, there are proposals for mediation and other forms of alternative dispute resolution as a way of trying to minimize some of the costs that parties incur in trying to resolve these matters -- in particular, some of the costs associated with more formal dispute arbitration which, I think, has been an ongoing concern of the bar and of those who have commented on dispute resolution.

I'm very pleased that we've gotten very broad agreement for that. I hope that the bar, who recommended this, will support it. I know that in Washington State, for example, where mediation is used extensively to resolve these matters, a fair bit of that mediation is provided for minimal cost or on a pro bono basis by the bar. Through representatives I have asked the bar here to consider whether, as their contribution to minimizing costs, they might not do the same.

Obviously these are individuals, and they made whatever comments they made. But without seeing the context, I don't want to subscribe to or disassociate myself from them.

I think it's much more constructive to say that while I believe the courts play a very important and useful -- indeed essential -- role in our society, I don't think it's inappropriate to suggest, as the Canadian Bar Association has, that we can minimize costs by finding alternative dispute resolution mechanisms that may not require one to have to utilize the more expensive system of the court -- one that distracts the court from other important business -- where those dispute resolution processes protect the rights of litigants, provide them the ultimate opportunity to go to court and provide a useful alternative.

I would also point out to the member -- because I think his introduction needs a little clarification -- that I hope the member doesn't ignore the fact that our current insurance system includes elements of both fault and no-fault.

Part 7 benefits do provide universal coverage, regardless of fault. And thank goodness they do, because we do have instances where people get severely injured and are unable to find a party at fault, even though they themselves may have been, I suppose, inadvertent in some way or, in some cases, not inadvertent at all. Yet there are benefits within our current insurance package -- and I understand the bar supports those very strongly too, and I hope the member opposite does -- that do provide some benefits, regardless of fault, as part of the basic insurance package.

G. Plant: Is the minister saying that it's inappropriate for him to have a position with respect to the appropriateness of public statements made by the public relations officer for the Insurance Corporation of British Columbia?

Hon. A. Petter: No. What I'm saying is that all I have is the member's assertion of statements. I have not seen transcripts of those statements; therefore I am not really in a position to either validate the member's concerns or to contradict them. The member has voiced his concerns. As I have indicated, I am someone who has spoken consistently about the value of the courts in resolving disputes. But I also encourage the member to consider that there are sometimes alternative dispute resolution and more formal legal processes which the bar itself has put forward.

I prefer to engage in that debate and state my own position rather than try to second-guess what might or might not have been intended, based on third-hand accounts of what people did or did not say in the context of hot-line shows that I did not happen to listen to.

G. Plant: I can assist the minister in one respect. I'm reading from a transcript rather than recalling from memory something that I never heard either, for that matter. But I do have a transcript, and in that respect the issue is not whether there are useful alternatives to the judicial process, as the minister has stated. The issue is whether we will ever have an intellectually honest debate about that.

And at the moment, I have to say that those who spoke on behalf of the corporation -- at least throughout the context of this particular program on two occasions and perhaps on others -- were not in fact prepared to have that debate. That's what appears not only from the words I quoted but also from those words taken in their entire context, which may, of course, be the cut and thrust of an open-line radio show.

The minister knows better than I what an unpleasant experience -- or at least intellectually rigorous experience -- that can sometimes be, but occasionally the truth comes out a little bit more forcefully, if occasionally a little bit accidentally, when people are pushed. Rather than deal with the specific remarks, I think I am as keen as the minister is to move forward in this discussion.

I will decline the invitation he gave me a moment ago to engage in a debate on the legislative proposals that he has put before the House, but I simply want to have the minister's assurance that as this debate moves forward, he will at least maintain the balanced perspective that he has just expressed in respect of the role of the judiciary throughout the debate. I think it will be a positive step forward in this debate if we acknowledge that the judiciary plays a valid role but, at the same time, that it is perfectly legitimate to look at alternatives.

Hon. A. Petter: I'm more than happy to assure the member -- I thought I already had -- that indeed I am not only prepared to but I encourage a balanced debate. We all despair about various participants in the debate over the last year who may not have been fully balanced, but I take tremendous pride in the fact that I think the proposals we will be debating -- I'm not inviting this debate now on the legislation -- do reflect a balance and an understanding of proposals that were put forward. Some of them address concerns about court costs, which I've already referenced, and others address other concerns.

I personally think the way the government is proceeding, in respect of putting its priority on traffic safety and some associated changes in process and in product that are fully endorsed by most stakeholders, reflects the very balance the member asked me to endorse -- and which I'm happy to endorse.

[4:00]

G. Plant: The second aspect of this topic I want to pursue has to do with radio and print advertising that appeared with frequency and regularity over the past year. Much of this was advertising by the Insurance Corporation of British Columbia, not about the various safety programs it has underway, not attempting to explain its product as it is delivered, not attempting to convey information to the public about different ways to purchase this product; but rather, advertising which conveyed and advocated a particular position about how our society, how our government, should move forward or make changes in the area of automobile insurance products.

[ Page 4639 ]

I recall, for example, one particular print ad that caused me a certain amount of distress. It had a picture of a man in a wheelchair in front of the law courts of British Columbia, on Smithe in Vancouver. The headline in the newspaper ad, and the whole text and tenor of the ad, was essentially an attack on lawyers and the judicial process and had a fairly strong undercurrent of advocacy for a particular perspective on how to change insurance products.

That being the context . . . . I have to say that I was encouraged in this by an enthusiastic correspondent. But I went and had a look at the ICBC statute, because I know it's important that Crown corporations have purposes, objects, powers, and the ability to conduct business, and it's also important that when we draft bills around Crown corporations we are careful to ensure that Crown corporations engage in fairly specific activity. I don't think, for example, that we want the Insurance Corporation of British Columbia to be engaging in the business of the transmission of hydroelectric power. That's what we have B.C. Hydro for.

So I read through the statute, which is the Insurance Corporation Act, to see the kinds of objects and the kinds of powers that the corporation might have in relation to what I'm going to call advocacy advertising. That is advertising in which the corporation puts forward a vision of itself and a vision of what it would like to do. It seems to me that it is not the function of a Crown corporation to participate in a public debate about what it should do.

It is the function of a Crown corporation to explain to the public what it does, and it is the function of a Crown corporation to engage in information and education around what it does in a way that might inform consumers who use its products so that they'll use its products better. But I don't think it is philosophically consistent with the position of a Crown corporation to be an active player, up front on the main stage, in what its simple and driving purpose should be.

That's for the rest of us. I think that's for those of us in this chamber, and I think that's for those of us out in the public who want to engage in that debate: what should ICBC do? The government could look at the question of product reform; the government could look at drafting bills and introducing them; the people could respond to those proposals. But the one player that I think really has no role of any consequence in that debate is the corporation itself. The corporation is the object of that exercise, rather than an advocate for a particular perspective.

That is a long introduction to a couple of questions. Is it the view of the minister, as informed by ICBC, that in fact ICBC does have the power and the capacity to engage in advocacy advertising? If so, on what is that information or position based?

Hon. A. Petter: Well, we had a bit of a discussion -- in fact a fairly extensive discussion, I think -- the other day on the question of ICBC's advertising. I would invite the member to review that discussion if he hasn't had a chance to do so. I must say, I think perhaps he's allowing his own professional position to perhaps encourage him to be a bit thin-skinned about his response to some of this advertising.

Be that as it may, I believe ICBC's obligation, obviously in addition to informing the public on issues such as road safety, which is where the bulk of its advertising goes, is also to explain to the public some of the challenges it faces on the fiscal side and some of the options it faces. What ICBC did, during the course of some of the advertising the member is referring to, was to try to provide that kind of information to members of the public. I view that as a service and as consistent with ICBC's mandate to provide information to the public.

That information may be communication of some of the legal costs associated with processing ICBC claims, which, if one includes the costs of providing legal services to claimants, exceed $200 million a year; or it may be to explain that there are various steps ICBC might take in order to keep costs down and to prepare the public for a debate concerning those steps.

I could review some of the advertising with the member, but I think if he reviews it fairly, he'll see that in fact the majority of things that were put forward in those ads were proposals that not only excited public interest but also produced the kind of package and agreement that was achieved and recently announced, and which will help ICBC to keep rates from increasing, which is certainly in the public interest.

I'm reading from one ad right here, where it says: "There are six steps for improving the car insurance system in B.C.: (1) get tougher with bad drivers, (2) invest more in road safety, (3) make the injured victim the priority, (4) focus on helping people recover faster, (5) reduce fraud, abuse and auto theft, and (6) keep rates stable and affordable." So a number of proposals were put forward in the form of information on some of the costs of and obstacles to keeping rates down.

From that information, the public and interest groups responded in the forms that were available, and the government benefited from that input. As a result, we now have what I think is a very forward-thinking and successful product of an extensive consultation process. If the member is saying that ICBC should have been less forthright in identifying some of the options and some of the costs, I simply don't agree.

G. Plant: Well, I just want to pursue the thought one more step -- recognizing that it is hypothetical, but I hope it might engage the minister's interest. It always occurred to me when I saw these ads to try and think about what might be an analogy. An analogy would be to see an ad for B.C. Hydro advocating its privatization. There we would have a Crown corporation that is, loosely speaking, pretty important in the power business, taking a public position on an important issue of public debate, one that members in this House maybe would have different perspectives on.

It may be one where we would all agree, but it would be an issue about what that corporation should be doing and perhaps a situation where the board of directors wanted to stir a little public debate around the privatization of B.C. Hydro. I would think that that kind of advertising would be totally inappropriate, because you'd have a Crown corporation essentially advocating a position with respect to law reform, legislative change and government policy.

Who is ICBC, in this context, advocating to? When ICBC, or the minister himself -- because the minister himself, at a fairly late date, became the . . . . The ministry became the author of the ads. We have ICBC talking about keeping rates down, as a key successful step to reform. Well, who is it that sets rates? It isn't anybody on this side of the House; it isn't anybody out there in the public. It's the government that sets rates. If ICBC thinks it's a good idea to keep rates low, then the president of ICBC can write a letter to the minister and say, "Dear Mr.

Minister, why don't you keep rates low?" instead of spending premium dollars -- hundreds and hundreds of thousands of premium dollars -- engaging in an advocacy campaign to try to stir up public debate on a subject that it's the government's responsibility to stir up public debate on.

I want to leave it with the minister on the basis -- because I assume he has approved of all these ads, and because it's clear he's familiar with them -- that he rethink whether it is in fact appropriate for a Crown corporation to be an active participant in a public debate about itself.

Hon. A. Petter: I wish the member could have been here earlier when other members of his caucus were complaining that there wasn't sufficient information provided to the public and that that the public wasn't well enough aware of some of the issues.

G. Plant: There was no public consultation process, ever.

[ Page 4640 ]

The Chair: Order, hon. member.

Hon. A. Petter: Well, methinks the member doth protest too much, and maybe he needs to consider why he's doing that. In any event, hon. Chair, there were complaints by colleagues of the member opposite that perhaps the public was not adequately informed about some of the choices that were being contemplated, and now the member complains that ICBC made some of those choices known to the public.

The government made it very clear as a matter of government policy that rate increases that were exorbitant would not be permitted -- certainly in the period of the freeze, which was announced government policy, and beyond it. ICBC was expected to take steps to prevent that from happening. In the course of doing that, there were a series of processes in which information was gathered through KPMG and then through the Allen process, and various stakeholders and members of the public were invited to make their views known.

During the course of that process, ICBC engaged in advertising, letting the public know both the outcome of some of those processes, in terms of some of the identifiable costs that were contributing to potential rate increases, and some of the options that were available. Because of that, I think people and the stakeholders were in a better position to judge, and we had some very excited and productive input from stakeholders and others. That has resulted in an excellent public policy decision concerning the package that's been introduced.

You can't have it both ways. You can't on the one hand complain that there isn't enough information and then complain that there's too much. If this advertising hadn't taken place, I suspect the argument would have been that the government or ICBC or someone else was hiding the ball. I guess we just can't win.

G. Plant: First of all, hon. Chair, I want to apologize for the outburst a moment ago, because I was struck then, as I'm struck now, by the disingenuousness of the minister's answer. This is not a debate about public consultation. There never was any public consultation, and if any of my opposition colleagues have suggested that to the minister during the course of this debate, I fully support everything they have said. The minister's attempt to turn the question-and-answer into a discussion about public consultation is disingenuous. This was a discussion about advertising not by the government but by a Crown corporation.

It was a narrow, specific and focused answer. I have the minister's position on it, and I'm grateful for that. His view is that it's appropriate for a Crown corporation to stimulate the debate. That is as I understand it. The question of whether the ads chosen were appropriate for that purpose is a question that others will be left to judge. But I did not want the moment to pass without ensuring that the minister was clear on what my point was, because his answer in respect to public consultation is completely beside the point. I understand what his position is on consultation.

It's entirely unnecessary for him to repeat it, but it's entirely unrelated to the question of ICBC participating in an ad campaign.

Hon. A. Petter: Well, if one wants to split hairs, the fact is that it's difficult for the public to voice an opinion, be it through the Allen process or directly to government, without knowing what the options are. If the member thinks that that isn't the case, well, I leave him with his thoughts.

I also want to clarify that I do not regard this kind of advertising as advocacy advertising. I don't want to have the member mischaracterize my response as acknowledging that. I believe it is advertising in which ICBC, given a specific policy mandate by government -- namely, to contain costs, a policy mandate that I hasten to add is, in my view, wholly in the public interest -- then engaged in discussion with the public, through advertising, to inform the public of what those costs are in some cases and of some of the options that might be considered in dealing with them.

In both cases, I think the public benefited from that information, and it assisted the public in communicating back to government and back to ICBC. If the member chooses not to see that as a process of consultation, then he is the one who makes that choice, not I.

F. Gingell: I would like to move on briefly to the issue of the policies of ICBC in relation to dealing with, approving and authorizing vendors. I've had some preliminary discussions with ICBC people about the issue of glass repair, and I'd like to just follow that through.

My understanding is that every glass chip, if not properly treated, will become a glass replacement. I understand that roughly 25 percent of windshield claims are for the repair of chips and 75 percent are for replacements. That's only the number of claims. The dollars, in fact, are 4.16 percent for chip repairs and 95.84 percent for replacements. That's because a chip costs $47 plus tax to repair, and I know that on my own car, when the windshield was replaced, it was in excess of $1,300. This issue has come forward because I have been dealing with a company that is in the business of repairing of chips but not in the business of replacing glass.

[4:15]

I'm sure the minister will appreciate that replacing whole windshields is a process that had better be done right, because all kinds of liabilities can arise from improper installations. My understanding of the situation is that after the particular people I had been speaking to were approved in an informal manner and told they could go ahead and start doing work, and that on the form where it says "vendor number," they could put "applied for," they have subsequently been disenfranchised.

In September 1996, ICBC came out with a new policy statement, No. 96-15, in which for the first time and all of a sudden, new glass vendors must do both. They must do both repairs and replacements, and the people who used to do repairs must do at least 30 percent of their work in replacements and mustn't farm that business out to people who are more capable of doing that work. I wonder if the minister could advise me why ICBC came forward with this policy.

Hon. A. Petter: I think that the root of this goes perhaps to a disagreement with some of the assertions made by the individual the member refers to, as to the beneficial impact of chip replacement versus not chip replacement -- if I can put it that way -- in the sense that ICBC is, I understand, reviewing the extent to which chip repairs do in fact avert more serious damage to windshields. I take it that their view is not consistent with the view of this individual that chip repair is the great cost-saver in all cases. In fact, it may not prevent subsequent extension of damage.

In any event, I understand that ICBC's view is that having a new form of business emerge in which vendors would go out and seek, in shopping malls and the like, people with chips in their windshields -- essentially a "churn-up" business, to use a stock market term; churning business -- would in fact add to costs, not prevent them. Therefore they took action to prevent that new business from emerging.

[ Page 4641 ]

The particular case in question, as I understand it, involves an individual who may well have applied prior to the change in policy. Obviously that raises issues concerning his specific rights and ICBC's responsibilities. I don't want to comment on those, because those matters are currently being investigated by ICBC's ombudsman referral department in order to see if a satisfactory response can be provided to meet the individual's concerns. Those specific concerns are the subject of further discussion and deliberation.

As I understand it, ICBC is looking at the question of whether chip repair can assist in preventing further costs, and that will be part of their ongoing review of cost containment. But seeing a plethora of chip-replacers out there in the parking lots of the supermarkets of British Columbia was certainly not seen by ICBC as something that would contribute to cost saving -- quite the contrary. Therefore the change was undertaken.

F. Gingell: But I would take it that every chip repair that was presented to ICBC was a valid and legal claim.

Hon. A. Petter: We learn more and more each day. Apparently ICBC has a practice that with authorized glass repairers, a chip repair -- because of the administrative costs of overseeing that repair and giving authorization -- is essentially something in which the vendor is authorized to go ahead and make the repair. ICBC validates it afterwards, and usually there's no issue.

The procedure which I was testing in my discussions with staff, in response to the member's question -- because I think the member's question raised, at least implicitly, a point that occurred to me -- is: if ICBC retains control, what's the problem? Why not get out there and repair all these windshields? Apparently, because of the costs associated with ICBC giving prior authorization to every chip repair, ICBC's practice has been to allow discretion to vendors to proceed to chip repair and to authorize subsequently.

That would have required a change in that practice, particularly if someone was out there making their almost exclusive business out of doing on-the-spot chip repairs in malls. For that reason, ICBC took the steps that it did. I think it does raise the question about whether it's good public policy to have a very active chip-repair industry out there. It was something that ICBC did not feel it was prepared to support at this time, and because the regulations had this loophole, if you like, or this opportunity within it, ICBC moved to close that regulatory loophole.

F. Gingell: The minister didn't answer the question I asked. Does the policy provide a legal responsibility for ICBC to repair chip damage in windshields?

Hon. A. Petter: The answer is yes.

F. Gingell: Does ICBC have any other cost containment initiatives which involve avoiding your legal responsibilities?

Hon. A. Petter: I think the member is being a tad cute in his point there.

Let me use an analogy from the legal profession. People have all sorts of rights that they may choose to act upon, but it's still considered champertous and therefore inappropriate behaviour for a lawyer to go out and seek and solicit clients. Similarly, I believe, in an area that the member may be more familiar with than I, stockbrokers who go out and churn business may . . . . Now, there are two ways in which churning can be inappropriate because of the commission side, but also in terms of . . . . I'll abandon that example; it's too close to the member's expertise and too far from my own.

Let's stick with the lawyers. There's a fundamental difference as to whether the business practice is one in which people who have claims seek out ICBC to have their claims satisfied or whether someone on a bounty-hunting kind of basis goes out and tries to drum up business in a way that, essentially, allows people to make judgments on the spot without ICBC being able to supervise. Clearly the business practice that ICBC has developed over time with established glass vendors has been one of stability, in which the judgment of those vendors who do a full range of different kinds of services, as I understand it, is for the most part trusted.

The concern is that to move to a fundamentally different marketing practice in which someone would have a strong incentive to encourage people to undertake chip replacement and would be able to do so without ICBC's prior authorization, or that if prior authorization were required, it would entail an expensive administrative change in practice . . . . That was something that was not merely a question of people being able to exercise their rights; it was a whole change in marketing approach, which entailed costs.

The member can't disassociate people's rights to claim insurance from the way in which people market their services and how aggressively or passively they do so -- as indeed is the case with the legal profession.

F. Gingell: I'm sure that in the wild west in days of yore, bounty hunters were considered to do some good things. They reduced bank robberies in the future in exactly the same way I'm led to understand that fixing windshield chips reduces the subsequent replacement of those windshields at a substantially greater cost. So I take it that ICBC have done some form of study and have some statistics on the number of chip repairs that have been done and on the number of chip repairs -- where the chip was repaired -- that have turned into a subsequent windshield replacement.

Hon. A. Petter: I am informed that ICBC has been for some time, in fact, encouraging the development of the chip industry, because it can have beneficial effects under appropriate circumstances. It doesn't mean it does in every circumstance, and ICBC's initiative to encourage the use of a chips as an alternative to replacement of windshields and to prevent the need for replacement of windshields has been something that ICBC has been pursuing within a particular marketing environment. The proposal to change that marketing environment radically was one that caused concern within the corporation.

Outside of that controlled environment, ICBC was not satisfied that the use of chips -- which is not, as I understand it, a benefit in every case, and in some cases may in fact be a detriment -- would be carried out in the controlled way that ICBC was assured would effect the kind of savings the member is referring to.

However, this is a matter that ICBC continues to review. The particular case is one that, as I say, is being resolved within ICBC. If there are savings to be had through a more aggressive approach to chipping as opposed to replacing people's windshields, I'm sure ICBC will be happy to pursue that, but the evidence is not there. What was being undertaken here would have meant a fundamentally different approach to the whole marketing environment, through which ICBC's initiative, which is in the direction of chip replacement where appropriate, might well have been undermined.

F. Gingell: I'll just make one closing suggestion, then. I really do think the minister and ICBC are not suggesting that

[ Page 4642 ]

any of the repair people are carrying on criminal activities by putting forward claims for repairing chips that did not exist. It seems to me that the logical conclusion is that you should be encouraging . . . . You should maybe be paying a premium to someone who goes out and finds more of this business. It may be well worthwhile to see what happens statistically. A move of just 5 percent of windshield replacements into chip repairs, I am assured, will save the ICBC an amount in excess of $2.8 million. Let's not be so chippy, if I can use that . . . .

With that, I'll turn it over to Kamloops-North Thompson.

[4:30]

K. Krueger: If I can make my way through the puns that are flying around the House just now, I'd like to take up the questioning on this repair program a little bit. It sounds as if the minister may believe that this is a relatively new program, but it isn't; it's been around for years. For years, ICBC has been tracking how many people have their windshields repaired versus how many have them replaced.

There is a prevailing notion among some of the senior claims managers that there is potential for an avalanche, a flood, of repair claims if they were to allow the businesses that perform the repair to go ahead and market directly to those whose windshields they see chipped. Well, the fact is that throughout most of this province, where the weather is a little more inclement than it tends to be down at the balmy tip of Vancouver Island or in Vancouver itself, there are wild fluctuations of temperature that take place.

Frequently, when a windshield has a stone bruise, it will abruptly run when a person turns on their defroster or when the temperature changes. As soon as the windshield has run, it has no value and it has to be replaced.

The first question, then, is this. The numbers that I have in front of me suggest that the average repair bill -- and forgive me if this was covered when I stepped out for 15 minutes -- totals $47.28, and the average replacement bill for a windshield totals $366.50. Are those numbers accurate?

Hon. A. Petter: I don't have the specific number for windshield replacement as opposed to chip repair. The average in terms of chip and windshield, I believe, is in the range of $274. Staff advise me that the member's estimate, if we're talking about the windshield side of it, sounds to them to be in the ballpark, certainly.

K. Krueger: Then I just make the point to the minister that an insured, as ICBC refers to its premium-paying public, would have to make approximately eight windshield repair claims before they reach the average cost of a windshield replacement claim. I can assure the minister that most members of the public would never go through that amount of hassle willingly or frivolously.

ICBC had controls on who presented these claims, how they were checked and how they were paid, and used to have insureds bringing their vehicles through the claims office for visual inspection and completion of a form. The other day, the minister and I dealt with the question of how windshield claims are handled now. I believe he said that it's on a pilot-project basis, that the glass companies are allowed to handle the claims directly with the insureds rather than ICBC being the middleperson, the verifier of damage and of coverage and so on.

That, evidently, is a risk that ICBC has decided to take; it's an obvious risk. The minister appears to be expressing some suspicion of part of the industry, at least, that claims might be submitted for damage that wasn't really there. I'd suggest to him that one way of dealing with that, if that's a serious concern, is to go back to having the claims staff look at them.

But all things considered, it makes a whole lot of sense from a dollars-and-cents point of view and also from an environmentally friendly point of view to repair glass before it splits rather than replace it after it splits, because, of course, once a windshield's been replaced, there's the discarded glass to contend with.

I'd like to ask the minister if he would personally look into this question. I have to tell him that he can get blithe assurances from some of the ICBC managers who get to make these decisions that aren't necessarily backed up by anything but their suspicions as former adjusters. It seems to me that with a $52 million program -- that being the figure I'm given for the 1996 payout on windshield claims -- he could reduce that, not even necessarily by eight times -- which would be the severity number, apparently -- if everybody had a timely repair instead of an ultimate replacement.

If he could even cut his windshield claim expenditures in half, he'd be saving $26 million in the coming year. Would the minister give us that commitment -- to actually have this management opinion independently evaluated to see if it wouldn't make sense to, yes, turn these people loose on the parking lots and let them put their business cards on the windshields, assuring people that they can have their glass fixed for free and avoid the cost of replacement and paying a deductible?

Hon. A. Petter: The member for Delta South has already written to me on this matter, and I'll be responding to him. In the context of doing so, I certainly will be asking ICBC to provide me with information concerning the position that they adopt. I'm happy to say, for the member's benefit, that I will scrutinize that closely, and if I think there is cause for some further evaluation, I'll certainly do some. But if there is some potential for savings here, as the member suggests and the member for Delta South intimates, then clearly, above all, I want to make sure that that potential is realized.

I will review whatever response I am provided by ICBC in the course of responding to the member for Delta South with a critical and economical mindset.

K. Krueger: I do really appreciate that response from the minister; I know he means it. I've seen for myself in the past that he follows things up when he has committed that he'll do so.

On a somewhat related topic, for years ICBC paid the original equipment manufacturer's suggested retail price plus a percentage for parts. A lot of people never could understand why the largest customer in the province would pay a percentage in addition to OEM-recommended prices when the man on the street or a little body shop anywhere in the province could actually get a discount from OEM prices. Perhaps the minister could ask the experts with him what the current relationship is between ICBC and original equipment manufacturers' parts suppliers.

Hon. A. Petter: As the member may be aware, ICBC is looking at ways of saving costs in respect of parts, including looking for used parts where appropriate. I'm informed by staff that the policy the member is referring to dates back some time, and staff believe that it is no longer the case that a premium is paid for OEM parts.

But my question to the staff -- I'll share it with the member -- is: quite apart from paying a premium, why

[ Page 4643 ]

doesn't ICBC, as the largest purchaser, get a discount as a volume buyer? In anticipation that the member might put that question to me, I have asked staff to provide me with an account of what the policy is in this regard. I'll be happy to provide a written report to the member of what I find out in the course of what seems to me a very appropriate line of inquiry.

So at this point, likely that premium is not continuing to be paid, but I'll check and get back to the member. But I would like to know why, in fact, ICBC can't use its position to secure discounts. It seems to me volume buyers generally pay less, not more.

K. Krueger: It's gratifying to note that the minister and I are forming such a cosmic bond here that he not only anticipates my questions but agrees with them before they're put. I look forward to that advice, because it may be the case now that ICBC is -- as it should have been long ago -- enjoying a discount on OEM prices. But certainly it didn't for a long time.

Once again, it was a senior manager in charge of the material-damage side of the claims division who, for whatever reason, thought it made sense to pay prices that I believe ranged to 20 percent over and above OEM-suggested prices. It always seemed ridiculous. The minister, of course, is correct that there should be economies of scale. That's one of ICBC's own arguments as to why it's such a viable corporation and why it can deliver wholesale insurance coverage -- that it does have economies of scale. Certainly, in the area of parts, one would expect them to have the best prices in British Columbia rather than the worst. So I look forward to the minister's advice in that regard.

Turning briefly to the ICBC annual report again for 1996, specifically to page 14 and the "Performance Report," under the heading "Net Operating Income," the corporation offers this as its explanation of the $135 million loss: "The operational results are significantly worse than forecast as a result of increased claims and other expenses as explained above." But it doesn't mention the fact -- as the minister and I canvassed last week -- that ICBC had $60 million less premium income than it anticipated for 1996 because of the premium freeze and rollback by this government.

In fairness to the people who drafted this report, I'd like to know if the government ordered ICBC not to include that obvious explanation when it dealt with the $135 million loss, or in any way suppressed that being pointed out as an explanation for the size of the loss.

Hon. A. Petter: As I indicated on the last day we talked about this, yes, if we had increased premiums and made consumers pay an additional $60 million, that would have helped ICBC, but it sure wouldn't have helped consumers in this province. It was because of consumers' concerns that the freeze was brought about.

I also pointed out last day, of course, that there was this prior-year adjustment that occurred last year which deflated the loss picture of ICBC by something in excess of $100 million. So one can look at the numbers from both points of view.

What I did say on the last day that we discussed this was that I would provide the members -- and I hope they've received it -- with a copy of the third volume of the KPMG study, which looks at some of these numbers in terms of the accident incidence and costs, and looks at cost comparison year over year, rather than trying to sort out all these numbers in terms of the financial statements.

K. Krueger: But they're huge numbers, and that's why it's worthwhile for us to address them. Not in keeping with his normal forthright responses, the minister didn't actually respond to that question, which was, specifically: was ICBC told or pressured or in any way influenced to leave out of the reporting that the $60 million loss of income they had anticipated was a major factor in this $135 million loss?

Hon. A. Petter: Absolutely not, and if the member looks at the very top of page 14, he will see that the statement concerning premiums earned is qualified at the end by saying that the premiums were offset by the premiums refunded and rolled back as a result of the government-directed rate freeze. It's right there, and I think everyone in this province knows that was hardly a secret.

I'll be frank with the member. The one that was kept secret in this report -- and I think unfortunately so, because it led to a false impression -- was the fact that the bottom line of ICBC was made to look considerably better than it might have otherwise by virtue of this prior-year adjustment. Yet that was not specified here. I've made it very clear to ICBC that I believe that that should have been more fully reported, because it gave the impression that in fact some of the pressures on the personal injury side had somehow dissipated year over year.

That impression, of course, found its way into the media through some of the advocacy groups, and that impression is wholly incorrect, as the KPMG study shows. So the ball, in terms of premium refunds having an impact, was not hidden at all; it's right here. The one thing that wasn't well disclosed in this report -- and I'm not at all pleased about it; I made that very clear -- was the fact that the prior-year adjustment was not pointed to as a contributing factor to the fact that the deficit incurred by ICBC was relatively lower than it might have otherwise been.

[4:45]

K. Krueger: Well, just for the record, I'll read in the paragraph that the minister is referring to:

"Premiums earned are higher than forecast as a result of the response to Autoplan 12, the monthly payment plan, being greater than expected and more optional coverages being sold, offset by the premiums refunded and rolled back as a result of the government-directed rate freeze."

That is hardly a forthright declaration of the fact that ICBC had $60 million less income than anticipated, even though this is a report that's dealing in hard numbers.

But I don't wish to belabour that point; I just want to make the point that Crown corporations should be allowed to put it all out on the table when they're doing annual reports. And I have the sense that the somewhat debilitating effect of that so-called premium freeze has been suppressed in many ways from giving the public a clear understanding, even in this annual report, of how it affected the corporation and its bottom line.

Also for the record, I'd like to make the point to the minister, since he has repeatedly referred to the $100 million-plus saving, from his point of view, that ICBC enjoyed because of being able to, as I understand it, dump into their financial picture that sum of money -- $100 million or more -- that apparently was in claims reserves, and they found they didn't need it . . . . That is hardly something the corporation would want to brag about. Because if it had $100 million more in reserves for a previous year's claims than it really needed, then the public was charged $100 million more than it should have been at some point in the past, which is a huge sum of money.

We hear from constituents all the time who are hard-pressed to pay their premiums and to actually cover the cost

[ Page 4644 ]

of driving in British Columbia. We receive information from government that this is a wholesale insurance company and these are the costs to pay claims in spite of all the tremendous efforts that are put out to try and keep accidents down and claims costs down and so on. But if we had a $100 million return from what had been claims reserves, then there was a serious performance problem in those claims reserves.

I'd like to know what ICBC has done to deal with the fact that apparently that much money was essentially taken from the public -- it's not like people get to negotiate how they pay for ICBC premiums -- at some previous date, perhaps not long ago, and then was found not to be needed. What disciplinary action occurred?

Hon. A. Petter: Well, I won't debate with the member. KPMG has reviewed the performance of the corporation in terms of its projections and in terms of performance of what is a $5 billion base, and $100 million, against that $5 billion base, I take it, is an acceptable adjustment. I wish it had been more fully shared, because it did not help people understand that ICBC was insulated, to that extent, from increased costs. I also point out to the member that on page 7 of the report it's made very clear that the main contributing factors to the loss incurred by ICBC include "the effects of the government-ordered rate freeze."

If the member is as insistent on this point as he is, then let me assure him that in addition to sharing with British Columbians, as I said I would last day, his wish that those in the lower mainland have higher rates, I'll be happy to share with British Columbians his position -- and no doubt that of his caucus colleagues -- that British Columbians should have paid $120 million more in premiums out of their hard-earned dollars over the last two years.

I'm pleased that the official opposition has put that position forward, because it very clearly marks the difference in approach this government has taken -- which is to try to save those who pay premiums from those kinds of increased costs and to push ICBC to find savings -- as opposed to the member's solution, which is to regret the fact that $120 million wasn't taken out of the pockets of hard-working British Columbians. I regret that the member regrets that, but I'll make sure British Columbians know that he, along with his colleagues, regrets it.

K. Krueger: As I carry on, I'd like to express to the minister how much better a forthright answer looks on him than a facetious answer like the last one. What we dealt with on the last day that we had these questions between us was the effect of the premium freeze on various regions and the disruption of the rating process on the basis of the regional claims experience that occurred.

Surely the minister and the Premier didn't believe that we had a bunch of morons at ICBC setting the premiums at the rates they were -- quite the contrary. There's all sorts of feedback that the people who set the rates and make those decisions know what they're doing and that they emerged normally, at a fairly remarkable point, quite close to break-even on this $2.25-billion-a-year company. So to abruptly freeze the premiums