British Columbia Hansard — 29 May 2018, p.m., Issue 145 (41st Parliament, 3rd Session)

20180529pm-Hansard-n145

British Columbia — Debates (Hansard)

Third Session, 41st Parliament OFFICIAL REPORT OF DEBATES (HANSARD) Tuesday, May 29, 2018 Afternoon Sitting Issue No. 145 THE HONOURABLE DARRYL PLECAS, SPEAKER ISSN 1499-2175

PROVINCE OF BRITISH COLUMBIA (Entered Confederation July 20, 1871) LIEUTENANT-GOVERNOR Her Honour the Honourable Janet Austin, OBC Third Session, 41st Parliament SPEAKER OF THE LEGISLATIVE ASSEMBLY Honourable Darryl Plecas EXECUTIVE COUNCIL Premier and President of the Executive Council............................................................................................................... Hon. John Horgan Deputy Premier and Minister of Finance............................................................................................................................Hon.

Carole James Minister of Advanced Education, Skills and Training..................................................................................................... Hon. Melanie Mark Minister of Agriculture.........................................................................................................................................................Hon. Lana Popham Attorney General.................................................................................................................................................................Hon.

David Eby, QC Minister of Children and Family Development............................................................................................................ Hon. Katrine Conroy Minister of State for Child Care......................................................................................................................................Hon. Katrina Chen Minister of Citizens’ Services.................................................................................................................................................... Hon.

Jinny Sims Minister of Education............................................................................................................................................................ Hon. Rob Fleming Minister of Energy, Mines and Petroleum Resources...............................................................................................Hon. Michelle Mungall Minister of Environment and Climate Change Strategy.............................................................................................Hon.

George Heyman Minister of Forests, Lands, Natural Resource Operations and Rural Development..............................................Hon. Doug Donaldson Minister of Health.....................................................................................................................................................................Hon. Adrian Dix Minister of Indigenous Relations and Reconciliation ......................................................................................................... Hon.

Scott Fraser Minister of Jobs, Trade and Technology............................................................................................................................ Hon. Bruce Ralston Minister of State for Trade...............................................................................................................................................Hon. George Chow Minister of Labour...................................................................................................................................................................Hon.

Harry Bains Minister of Mental Health and Addictions............................................................................................................................ Hon. Judy Darcy Minister of Municipal Affairs and Housing.................................................................................................................. Hon. Selina Robinson Minister of Public Safety and Solicitor General........................................................................................................... Hon.

Mike Farnworth Minister of Social Development and Poverty Reduction..............................................................................................Hon. Shane Simpson Minister of Tourism, Arts and Culture.....................................................................................................................................Hon. Lisa Beare Minister of Transportation and Infrastructure................................................................................................................ Hon.

Claire Trevena LEGISLATIVE ASSEMBLY Leader of the Official Opposition................................................................................................................................Andrew Wilkinson, QC Leader of the Third Party ....................................................................................................................................................Dr. Andrew Weaver Deputy Speaker................................................................................................................................................................................

Raj Chouhan Assistant Deputy Speaker................................................................................................................................................................... Linda Reid Deputy Chair, Commi ttee of the Whole................................................................................................................

Spencer Chandra Herbert Clerk of the Legislative Assembly ....................................................................................................................................................Craig James Deputy Clerk and Clerk of Commi ttees.................................................................................................................................

Kate Ryan-Lloyd Clerk Assistant — Commi ttees and Interparliamentary Relations ..........................................................................................Susan Sourial Sessional Law Clerk...............................................................................................................................................Loredana Catalli-Sonier, QC Sergeant-at-Arms ................................................................................................................................................................................. Gary Lenz

ALPHABETICAL LIST OF MEMBERS Ashton, Dan (BC Liberal)........................................................................ Penticton Bains, Hon. Harry (NDP)...............................................................Surrey-Newton Barnett, Donna (BC Liberal)................................................... Cariboo-Chilcotin Beare, Hon. Lisa (NDP).............................................Maple Ridge–Pitt Meadows Begg, Garry (NDP) ..................................................................... Surrey-Guildford Bernier, Mike (BC Liberal).......................................................

Peace River South Bond, Shirley (BC Liberal)......................................... Prince George–Valemount Brar, Jagrup (NDP)..................................................................... Surrey-Fleetwood Cadieux, Stephanie (BC Liberal)....................................................... Surrey South Chandra Herbert, Spencer (NDP) ..................................... Vancouver–West End Chen, Hon. Katrina (NDP).....................................................Burnaby-Lougheed Chouhan, Raj (NDP) ............................................................... Burnaby-Edmonds Chow, Hon.

George (NDP)............................................... Vancouver-Fraserview Clovechok, Doug (BC Liberal)................................ Columbia River–Revelstoke Coleman, Rich (BC Liberal)...............................................................Langley East Conroy, Hon. Katrine (NDP)......................................................... Kootenay West Darcy, Hon.

Judy (NDP) ............................................................New Westminster Davies, Dan (BC Liberal)..........................................................Peace River North de Jong, Michael, QC (BC Liberal)............................................ Abbotsford West Dean, Mitzi (NDP)...............................................................Esquimalt-Metchosin D’Eith, Bob (NDP) ...............................................................Maple Ridge–Mission Dix, Hon. Adrian (NDP)......................................................Vancouver-Kingsway Donaldson, Hon.

Doug (NDP).....................................................................Stikine Eby, Hon. David, QC (NDP).............................................Vancouver–Point Grey Elmore, Mable (NDP)....................................................... Vancouver-Kensington Farnworth, Hon. Mike (NDP) ...................................................... Port Coquitlam Fleming, Hon. Rob (NDP) .....................................................Victoria–Swan Lake Foster, Eric (BC Liberal)........................................................... Vernon-Monashee Fraser, Hon.

Scott (NDP) ................................................ Mid Island–Pacific Rim Furstenau, Sonia (BC Green Party) ........................................... Cowichan Valley Gibson, Simon (BC Liberal)................................................. Abbotsford-Mission Glumac, Rick (NDP)........................................................Port Moody–Coquitlam Heyman, Hon. George (NDP).............................................. Vancouver-Fairview Horgan, Hon. John (NDP) ...............................................

Langford–Juan de Fuca Hunt, Marvin (BC Liberal).......................................................Surrey-Cloverdale Isaacs, Joan (BC Liberal).........................................Coquitlam–Burke Mountain James, Hon. Carole (NDP)...................................................Victoria–Beacon Hill Johal, Jas (BC Liberal)...............................................

Richmond-Queensborough Kahlon, Ravi (NDP)..............................................................................Delta North Kang, Anne (NDP)..................................................................Burnaby–Deer Lake Krog, Leonard Eugene (NDP) ..................................................................Nanaimo Kyllo, Greg (BC Liberal)............................................................................ Shuswap Larson, Linda (BC Liberal).............................................Boundary-Similkameen Lee, Michael (BC Liberal)......................................................

Vancouver-Langara Leonard, Ronna-Rae (NDP) ....................................................Courtenay-Comox Letnick, Norm (B C Liberal)............................................Kelowna–Lake Country Ma, Bowinn (NDP)................................................... North Vancouver–Lonsdale Mark, Hon. Melanie (NDP) ..................................... Vancouver–Mount Pleasant Martin, John (BC Liberal)...................................................................... Chilliwack Milobar, Peter (BC Liberal)....................................

Kam loops–North Thompson Morris, Mike (BC Liberal)..........................................Prince George–Mackenzie Mungall, Hon. Michelle (NDP).................................................... Nelson-Creston Oakes, Coralee (BC Liberal)...........................................................Cariboo North Olsen, Adam (B C Green Party)........................... Saanich North and the Islands Paton, Ian (BC Liberal)......................................................................... Delta South Plecas, Hon.

Darryl (Ind.) ..........................................................Abbotsford South Polak, Mary (BC Liberal)............................................................................ Langley Popham, Hon. Lana (NDP)..............................................................Saanich South Ralston, Hon. Bruce (NDP) .......................................................... Surrey-Whalley Redies, Tracy (BC Liberal)..................................................... Surrey–White Rock Reid, Linda (BC Liberal)................................................

Richmond South Centre Rice, Jennifer (NDP) ............................................................................ North Coast Robinson, Hon. Selina (NDP) ....................................... Coquitlam-Maillardville Ross, Ellis (BC Liberal)..................................................................................Skeena Routledge, Janet (NDP) .................................................................. Burnaby North Routley, Doug (NDP) ................................................Nanaimo–North Cowichan Rustad, John (BC Liberal)..............................................................

Nechako Lakes Shypitka, Tom (B C Liberal).............................................................Kootenay East Simons, Nicholas (NDP) ........................................Powell River–Sunshine Coast Simpson, Hon. Shane (NDP)................................................ Vancouver-Hastings Sims, Hon.

Jinny (NDP) .............................................................Surrey-Panorama Singh, Rachna (NDP) ........................................................Surrey–Green Timbers Stewart, Ben (BC Liberal)................................................................Kelowna West Stilwell, Michelle (BC Liberal)..............................................Parksville-Qualicum Stone, Todd (BC Liberal)........................................

Kam loops–South Thompson Sturdy, Jordan (BC Liberal).......................................West Vancouver–Sea to Sky Sullivan, Sam (B C Liberal)...............................................Vancouver–False Creek Sultan, Ralph (BC Liberal)......................................... West Vancouver–Capilano Tegart, Jackie (BC Liberal)................................................................ Fraser-Nicola Thomson, Steve (BC Liberal).....................................................Kelowna-Mission Thornthwaite, Jane (BC Liberal).............................

North Vancouver–Seymour Throness, Laurie (BC Liberal)..................................................... Chilliwack-Kent Trevena, Hon. Claire (NDP) .............................................................. North Island Wat, Teresa (BC Liberal)................................................Richmond North Centre Weaver, Dr. Andrew (BC Green Party) ......................... Oak Bay–Gordon Head Wilkinson, Andrew, QC (BC Liberal).............................. Vancouver-Quilchena Yap, John (BC Liberal)..........................................................

Richmond-Steveston LIST OF MEMBERS BY RIDING Abbotsford-Mission ..........................................................................Simon Gibson Abbotsford South ..................................................................... Hon. Darryl Plecas Abbotsford West.................................................................... Michael de Jong, QC Boundary-Similkameen.....................................................................

Linda Larson Burnaby–Deer Lake ...............................................................................Anne Kang Burnaby-Edmonds ..............................................................................Raj Chouhan Burnaby-Lougheed................................................................... Hon. Katrina Chen Burnaby North................................................................................

Janet Routledge Cariboo-Chilcotin............................................................................Donna Barnett Cariboo North .................................................................................. Coralee Oakes Chilliwack.............................................................................................. John Martin Chilliwack-Kent..............................................................................Laurie Throness Columbia River–Revelstoke........................................................

Doug Clovechok Coquitlam–Burke Mountain................................................................. Joan Isaacs Coquitlam-Maillardville..................................................... Hon. Selina Robinson Courtenay-Comox ................................................................. Ronna-Rae Leonard Cowichan Valley............................................................................

Sonia Furstenau Delta North ...........................................................................................Ravi Kahlon Delta South.................................................................................................Ian Paton Esquimalt-Metchosin.............................................................................Mitzi Dean Fraser-Nicola........................................................................................

Jackie Tegart Kam loops–North Thompson............................................................Peter Milobar Kam loops–South Thompson ................................................................Todd Stone Kelowna–Lake Country....................................................................Norm L etnick Kelowna-Mission.............................................................................

Steve Thomson Kelowna West.........................................................................................Ben Stewart Kootenay East.....................................................................................Tom Shypitka Kootenay West...................................................................... Hon. Katrine Conroy Langford–Juan de Fuca............................................................. Hon. John Horgan Langley....................................................................................................

Mary Polak Langley East.......................................................................................Rich Coleman Maple Ridge–Mission ............................................................................ Bob D’Eith Maple Ridge–Pitt Meadows ..........................................................Hon. Lisa Beare Mid Island–Pacific Rim .............................................................. Hon. Scott Fraser Nanaimo...............................................................................

Leonard Eugene Krog Nanaimo–North Cowichan.............................................................. Doug Routley Nechako Lakes...................................................................................... John Rustad Nelson-Creston.................................................................. Hon. Michelle Mungall New Westminster......................................................................... Hon. Judy Darcy North Coast..........................................................................................

Jennifer Rice North Island............................................................................ Hon. Claire Trevena North Vancouver–Lonsdale................................................................. Bowinn Ma North Vancouver–Seymour......................................................Jane Thornthwaite Oak Bay–Gordon Head..........................................................Dr. Andrew Weaver Parksville-Qualicum .....................................................................Michelle Stilwell Peace River North..................................................................................

Dan Davies Peace River South............................................................................... Mike Bernier Penticton................................................................................................ Dan Ashton Port Coquitlam .................................................................... Hon. Mike Farnworth Port Moody–Coquitlam .....................................................................Rick Glumac Powell River–Sunshine Coast.....................................................

Nicholas Simons Prince George–Mackenzie..................................................................Mike Morris Prince George–Valemount.................................................................Shirley Bond Richmond North Centre ........................................................................Teresa Wat Richmond-Queensborough.......................................................................Jas Johal Richmond South Centre........................................................................

Linda Reid Richmond-Steveston.................................................................................. John Yap Saanich North and the Islands............................................................Adam Olsen Saanich South............................................................................Hon. Lana Popham Shuswap .................................................................................................... Greg Kyllo Skeena.........................................................................................................

Ellis Ross Stikine ..................................................................................Hon. Doug Donaldson Surrey-Cloverdale...............................................................................

Marvin Hunt Surrey-Fleetwood...................................................................................Jagrup Brar Surrey–Green Timbers ......................................................................Rachna Singh Surrey-Guildford....................................................................................Garry Begg Surrey-Newton.............................................................................Hon. Harry Bains Surrey-Panorama........................................................................... Hon.

Jinny Sims Surrey South...............................................................................Stephanie Cadieux Surrey-Whalley........................................................................ Hon. Bruce Ralston Surrey–White Rock............................................................................. Tracy Redies Vancouver-Fairview ............................................................ Hon. George Heyman Vancouver–False Creek.......................................................................

Sam Sullivan Vancouver-Fraserview .............................................................Hon. George Chow Vancouver-Hastings.............................................................. Hon. Shane Simpson Vancouver-Kensington ..................................................................... Mable Elmore Vancouver-Kingsway ................................................................... Hon. Adrian Dix Vancouver-Langara.............................................................................. Michael Lee Vancouver–Mount Pleasant................................................... Hon.

Melanie Mark Vancouver–Point Grey...........................................................Hon. David Eby, QC Vancouver-Quilchena......................................................Andrew Wilkinson, QC Vancouver–West End....................................................Spencer Chandra Herbert Vernon-Monashee...................................................................................Eric Foster Victoria–Beacon Hill................................................................ Hon. Carole James Victoria–Swan Lake .................................................................. Hon.

Rob Fleming West Vancouver–Capilano................................................................. Ralph Sultan West Vancouver–Sea to Sky ..............................................................Jordan Sturdy Party Standings: BC Liberal 42; NDP 41; BC Green Party 3; Independent 1

CONTENTS Tuesday, May 29, 2018 Afternoon Sitting Page Routine Business Reports from C ommi ttees...................................................................................................................................................... 5095 Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills Commi ttee, report on Bill Pr401, May 2018 M.

Elmore Second Reading of Bills .......................................................................................................................................................... 5095 Bill Pr401 — Canadian Chinese School of Theology Vancouver Act T.

Wat Commi ttee of the Whole House............................................................................................................................................ 5095 Bill Pr401 — Canadian Chinese School of Theology Vancouver Act Report and Third Reading of Bills......................................................................................................................................... 5096 Bill Pr401 — Canadian Chinese School of Theology Vancouver Act Orders of the Day Commi ttee of Supply .............................................................................................................................................................. 5096 Estimates: Ministry of Attorney General(continued) J.

Yap Hon. D. Eby S. Furstenau M. Lee L. Throness S. Bond P. Milobar Proceedings in the Douglas Fir Room Commi ttee of Supply .............................................................................................................................................................. 5129 Estimates: Ministry of Advanced Education, Skills and Training (continued) S. Gibson Hon. M. Mark J. Tegart R. Sultan J. Thornthwaite D. Barnett S. Bond S. Cadieux S. Sullivan Estimates: Ministry of Energy, Mines and Petroleum Resources Hon. M. Mungall T. Shypitka S. Bond A. Weaver

TUESDAY, MAY 29, 2018 The House met at 1:32 p.m. [Mr. Speaker in the chair.] Routine Business Reports from C ommi ttees PARLIAMENTARY REFORM, ETHICAL CONDUCT, STANDING ORDERS AND PRIVATE BILLS COMMITTEE M. Elmore: I have the honourto presenta reportof the SelectStandingCommi ttee on Parliamentary Reform, Ethic- al Conduct, Standing Orders and Private Bills. I move that the report be taken as read and received. Motion approved. M. Elmore: I ask leave of the House to move a motion to adopt the report. Leave granted. M. Elmore: I’d like to make some brief comm ents.

The Canadian Chinese Schoolof Theology VancouverSociety is seeking authority to continue the Canadian Chinese School of Theology Vancouver Society, previously incorporated underthe Societies Actas the Canadian Chinese Schoolof Theology VancouverSociety, and to allow itto grantdegrees, diplomas and certificates in theology, including honorary degreesin theology withinthe provinceof British Columbia.

On May 28, 2018, the Parliamentary Reform, EthicalCon- duct,Standing Orders and Private Bills Commi ttee metand considered the proposed private billand asked questions of the designated solicitor and a representative of the associ- ation. I’m pleased to note thatthe recomm endation for the private bill to proceed was unanimously supported by the commi ttee. Mr. Speaker: The question is the adoption of the report. Motion approved. Second Reading of Bills BILL Pr401 — CANADIAN CHINESE SCHOOL OF THEOLOGY VANCOUVER ACT T.

Wat:I move that the bill be now read a second time. [1:35 p.m.] This private billwillenablethe Canadian Chinese School of Theology Vancouver Society, previously incorporated underthe SocietiesAct,to be continued as a schoolof theo- logy for Canadian and international students under the name Canadian Chinese Schoolof Theology Vancouverand will be able to grant degrees, diplomas and certificates in theology, including honorary degrees in theology, withinthe province of British Columbia. Mr. Speaker: First, shall leave be granted? Leave granted. Mr. Speaker: The question is second reading of the bill.

Motion approved. T. Wat:By leave, I move thatthe billbe referred to aCom- mittee of the Whole House to be considered forthwith. Leave granted. Motion approved. Bill Pr401, Canadian Chinese School of Theology Vancouver Act, read a second time and ordered to proceed to a Commi ttee of the Whole House for consideration forthwith. Commi ttee of the Whole House BILL Pr401 — CANADIAN CHINESE SCHOOL OF THEOLOGY VANCOUVER ACT The House in Commi ttee of the Whole (Section

B) on Bill Pr401; R. Chouhan in the chair. The commi ttee met at 1:38 p.m. M. Hunt:I wouldlike to seek leave to make an introduc- tion. Leave granted. Introductions by Members M. Hunt: I recognize that we set a record on that this morning. Butin the gallery this afternoon willbe three dif- ferent groups coming from Frost Road Elementary in my riding of Surrey-Cloverdale. This is one of those cute anom- aliesthat we have in Surrey. These young peopleall think they live in Fleetwood, butbecause of the way the boundar- ies are drawn in Surrey, the eastsideof Fleetwood is called Surrey-Cloverdale. I just want to introduce them and letthe House make them feel welcome. 5095

Debate Continued Sections 1 to 13 inclusive approved.

Preamble approved. Title approved. T. Wat:I move thatthe commi ttee rise and reportthe bill complete without amendment. Motion approved. The commi ttee rose at 1:39 p.m. The House resumed; Mr. Speaker in the chair. [1:40 p.m.] Report and Third Reading of Bills BILL Pr401 — CANADIAN CHINESE SCHOOL OF THEOLOGY VANCOUVER ACT Bill Pr401, Canadian Chinese School of Theology Vancouver Act, reported complete without amendment, read a third time and passed. Hon. M. Farnworth:In this chamber, I call continued debate on the estimates of the Ministry of Attorney General.

In the Douglas FirRoom, Commi ttee A, I callthe estimates of the Ministry of Advanced Education, Skills and Training, to be followed, when that’s complete, by the Ministry of Energy, Mines and Petroleum Resources. Orders of the Day Commi ttee of Supply ESTIMATES: MINISTRY OF ATTORNEY GENERAL (continued) The House in Commi ttee of Supply (Section B); R. Chouhan in the chair. The commi ttee met at 1:43 p.m. On Vote 14: ministry operations, $470,469,000 (continued). J. Yap: Just before the break — I appreciated the debate with the minister — we established that, yes, there is an issue with money laundering.

But the minister agreed that based on the statistics from FINTRAC, the federal agency thattracks reporting of suspicious transactions, in fact,casi- nosrepresent,atlastreporting, about7½ percentof reported money laundering. And the vast majority, 93 percent, is in other venues, and the minister agreed. I wouldlike to justshare with the House some comm ents thatthe ministermade.

As I’ve said earlier, he has been vocal publicly about the problem of money laundering in casinos. [1:45 p.m.] Forexample, on January 10, 2018, the ministerwas inter- viewed on the Jon McComb Show, and he said this: “Hun- dreds of millions of dollars in cash thatwe know of thathas passed through Lower Mainland casinos was unregulated and lacked oversight.” On Voice of B.C. on March 1, the ministersaid this: “I’ll crack down on this.

We are anticipating that there will be a financialimpact,and the impactis significant.We’re talk- ing $40 million to $60 million of impact,because there was $400 million to $600 million worth of gambling activity, apparently, thatwas taking placein this.” These are whatthe minister had stated publicly. Given his comm entsand, generally, his sense of urgency about what he assertsis the problem of money laundering in casinos…. The interim report from Dr. German made two recomm endations.

One we canvassed just before the break: thateffective imm ediately, meaning December2017, there wouldbe, on a 24-7 basis, a regulatorfrom GPEB, the government regulator, at every casino, or at least the high- volume casinos. We’ve heard from the ministerthatthathas nothappened. I wonder if the minister can comm ent on this. Hon. D. Eby: It’s hard to know where to startto disagree with the member, butmaybe I’llstartwith whatwe agree on. I agree that there is a sense of urgency in this government thatis new to governmentin British Columbiaon this issue, and unfortunately so.

The issueof transnationalmoney laun- dering in British Columbia was so pervasive, so serious, thata professor in Australia who was training anti-money- laundering officials in that country, Professor Langdale of Macquarie University, taught them about something called the Vancouver model of money laundering. I don’tknow whatthe member’s definition of serious is. It seems like he’s trying to advance a theory thatthis is nota serious issue or perhaps thatI have blown itoutof propor- tion. Thatone factalone aboutthe Vancouvermodel, I think, should illustrate the seriousness of the issue.

In any event, the member conflates reporting with FIN- TRAC with criminal activity called money laundering, which is attempting to concealthe source of funds thatare generated through some kind of illegal activity. Simply because you provide a report to FINTRAC does not mean that money laundering has taken place. FINTRAC collects reportsfrom all kinds of different organizations, including casinos and gaming facilities. That does not mean, when a report’s filed, thatmoney laundering has taken place.

What itmeans is thatthe thresholdforreportinghas been metthat requires reporting under the law. 5096 British Columbia Debates Tuesday, May 29, 2018

The membersaid thatI said a numberof thingsthatI did notsay. I encourage any memberthat’s curious aboutwhat I did say to referto Hansard. I disagree with the memberif his thesis is thatthere is nota serious issue here, and I share the concern with the memberthatwe are notyet24-7 in the facilities. I’ve hada conversation with the regulator. They have had a challenge in hiring peoplewith the background required. They’ve hired three people. They are hiring two more. The necessary staff they need to deploy this, that they need to train up, is six to eightpeople. They’ve hired three.

They’ve gotoffers goingto two more. Ithas beenachallenge forthem to getthrough the PSA process and getpeoplehired up and trained, partly due to the background that’s required forthis kind of work, partly due to the fact that unemployment in British Columbia — in our economy, which is doing very well— is less than 5 percent,butnotbecause there is a lack of urgency on this issue. I doappreciate the member’s question aboutwhy we’re not there. I share his concern on that.We’re movingas quickly as we can. I think the memberwillbenefitgreatly by reviewing Dr.

German’s report— and I’m trying to getitoutas soon as possible— justto lethim know, apparently, aboutwhathas been happening in British Columbia,which was the key task that I assigned to Dr. German, whose background is anti- money-laundering law and policing. I asked him a numberof questions. What’s been happen- ing? How did we gethere? Whatcan we do to fix it?Has it affected any other areas of the economy? [1:50 p.m.] Here’s another area of agreement that I have with the member.

We can address this issue in the casinos, but that does not mean that it will not move somewhere else, nor does itmean thatitwasn’ttaking placesomewhere else. This type of activity can take placein parallelin differentareas, in luxury cars as wellas in casinosas wellas in realestate, allat the same time. You can displaceitfrom the casino and push on it like a waterbed, and it goes to other areas. So unless you’re ensuringthatyou have the resourcesto pursueit,then itwilljustmove, and you willnothave addressed the issue. Peoplehave described itas Whac-a-Mole, and I think that’s an accurate description.

The bottom line on money laundering and the transna- tional money laundering that has made international offi- cials in this area concerned aboutwhat’s happening here is thatwe need two things.We need the provincialgovernment to be working togetherto address that.We’ve gotthe regu- latorand B.C. Lottery Corp. Ourserviceproviders are allon side, allworked with Dr. German on his report,allprovided him with allthe information he needed to make the neces- sary recomm endations, and all have commi tted to support implementingthose recomm endations. Everybody is on side to deal with this. That’s one piece.

The second pieceis we need astrong federalpartnerhere. To thatend, I travelled to Ottawaand madeapresentation to an all-party commi ttee, the FinanceCommi ttee. I said to the federalgovernment:“Allparties.This is anon-partisan issue. We need the federalgovernmentto dedicate more resources to the RCMP. There are serious financial crime investiga- tions. There are internationalcrime investigations.

You need to pay attention to what’s happeningin the LowerMainland.” I’m worried thatthe message wasn’tgetting overthe Rock- ies. “In addition, we need you to use the Canada Revenue Agency, and we need to make sure that you’re dedicating resources.” I feel like these FINTRAC reports that the member is interested in getfilled out.Everybody has good compliance on getting those forms in. Then where do they go? What happens with them then? Do they just sit in a warehouse? Whatgood is thatto anybody? I took thatmessage to Ottawa because we need a good federalpartneratthe tableon this issue as well.

The memberasked alotof questions orhadalotof asser- tions on that.Obviously, I agree with some. I disagree with others. ButI am gratefulforhis interestin this issue because I do think it’s a serious issue and one that we need to deal with in British Columbia. J. Yap: Thank you. I appreciate thatfrom the minister. I heard him say thatthree 24-7 regulators have been hired, and I heard him say a few m ore are going to be hired. How m any regulators willbe needed with this program to ensure that, on a 24-7 basis, there will be a regulator on site at the casinos? Hon. D.

Eby: The gaming policy and enforcement branch is on theirfourth posting of hiring for these posi- tions. Part of the challenge for hiring has been that these have been notperm anentpositions. The reason they’re not perm anent positions is…. Dr. Germ an m ade an interim recomm endation on this. There is certainly the possibility of restructuring, and then you’ve gota bunch of peoplein a position that’s going to be replaced by som e otherposi- tion. So the recomm endation was notperm anent.Thathas led to challenges in hiring. The gaming policy and enforcementbranch has 18 invest- igators currently.

They have offers prepared and going out to two more additional investigators. Theirtargetis two to three more. [1:55 p.m.] The actualrecomm endation is risk-based 24-7 ratherthan absolute 24-7. We don’t want somebody sitting by them- selves at5:30 in the morning atthe RiverRock Casino. We wanted…. When I say we, Dr. German wanted investigators to be there atthe peak times and to focus on the risk-based and to be availableoutsideof Monday to Friday, nine to five. Thathas been achieved.

Whathas notbeen achieved is to get the gaming policy and enforcementbranch to the fullcohort thatwe wouldlike to see to maximize thatrisk-based pres- encein the casinos. We’re on ourway, butI share the mem- ber’s concern thatwe’re notthere yet.Work continueson this important area. Tuesday, May 29, 2018 British Columbia Debates 5097

J. Yap: I heard the ministerconfirm thatwe don’thave the resourcesyet,butI also heard the ministersay justmoments ago thatthis is notgoing to be the implementation as perDr. German’s recomm endation, atleastfrom whatwe’ve heard. The government’s news release stated…. I’llreaditdirectly: “Governmentregulators mustbe seen on site atlarge, high- volume facilities on the Lower Mainland and available” to the serviceproviders. Then itsays here: “In the LowerMain- land on a 24-7 basis.” I’llreadagain.

This is adirectquote from the news release: “Our government has made clear the urgency around addressing issues of money laundering atB.C. casinos, and we willensure these firsttwo recomm endations are notonly implemented as soon as possible but enforced on the ground.” He goes on to say: “We can take imm ediate action to end criminal and suspicious activity in B.C. casinos.” It sounds to me that, according to the minister’s news release, this was seen as an urgentmatterrequiring imm edi- ate action. Butwe’ve justheard the ministersay two things: that that recomm endation from Dr.

German has not been implemented and, it sounds like, that it’s being changed somewhatto a risk-based basis. I wonderif the ministercan confirm that’s what’s happened. Hon. D. Eby: The gaming policy enforcementbranch met with Mr. German on implementation of his recomm enda- tion. During those meetings,the discussion was about:does this mean thatyou need a regulatorin every one of the casi- nos, 24 hours a day, seven days a week — every one of the five casinosthatI was talkingabout?The answerwas no. You need to be available 24-7 at the high-volume facilities.

The issue — from his perspective, from my perspective and from most people’s perspective — was that previously, a physicalregulatorwas availableMonday to Friday, nine to five. Peoplecouldreach out. But this is a change in policy. That part of the recomm endation has been met. Gaming policy enforcement branch still does not have the cohortthatwe wouldhope for, so they have reassigned regional resources to make this recomm endation reality. They’re tryingto hire two to three more peoplein orderto be ableto fulfil this recomm endation.

The challenge has been thatthese are interim hires as we begin the work of imple- mentingthe German reportrecomm endations on aperman- entbasis, notjustthe interim recomm endations butthe per- manent recomm endations that may have implications for these particularpositions. You don’twantto hire peopleon a permanentbasis if there’s going to be some kind of restruc- turing. That’s the issue. I disagree with the member’s assessmentthatthe recom- mendation has not been fulfilled. It has been. It’s not been fulfilled to the level that I wouldlike, which is that GPEB is notreallocating resourceshere and there.

Itisn’tfulfilled in the way that the member interpretsit, which is not the way thatitwas interpreted in discussions withgamingpolicy enforcement branch and Dr. German and, at first blush, it might appear in the recomm endation, which is that there shouldbe a regulator presentin allfive casinos, 24 hours a day, seven days a week. [2:00 p.m.] The recomm endation, as it is understood by gaming policy enforcementbranch based on theirconversations, is thatthe regulatorneeds to be availableand thatone regulat- or can move between the differentcasinos and be available as required. J.

Yap: I appreciate the ministersharing that.That’s not what the news release says, but I’ll m ove on. I wouldlike to know…. The ministerhas said today thatthere are five high-volume casinos thatwillhave 24-7 risk-based cover- age of regulators. Can the ministeradvise which five casi- nos those will be? Hon. D. Eby: The Hard Rock, the RiverRock, the Parq, the Grand Villa and the Starlight. J. Yap: Earlierthe ministermentioned thatthere willbe…. We shared some quotes of the minister that he had made publicly regarding the impact on revenue with the imple- mentation of the banning of $10,000 cash buy-ins.

Can the ministerclarify if thatsuggestion to ban $10,000 cash buy- ins at casinos has been implemented? Hon. D. Eby: The recomm endation was that necessary steps be taken, when someone brings in more than $10,000 in cash, to actually confirm where the cash came from — not just,“Oh, you know, I gotitfrom here,” butactually ensure that we know where the funds came from. I can tellthe memberthatthe B.C. Lottery Corp. prepared theirprojections aboutthe impactof a policy change on the assumption that there couldbe a ban on cash transactions above $10,000.

That was the basis for theirattempt — and itis an attempt;it’s a challenge to projectthese things — to projectthe impactof a reduction in gambling activity based on additional anti-money-laundering controls. When they had that forecast done for them by a third party, the assumption forecast a reduction in netwin rev- enue of $60 million, which is a netrevenue contribution to government of $30 million — reduction. Just to provide a littlebitmore detailaboutmy earlieranswerand to fillin on this answer, if the memberis interested in revenueto govern- ment, the impact is $30 million netincome from BCLC.

If the memberis interested in the reduction in netwin revenue at BCLC, it’s $60 million. These figures are allfor the 2018-19 fiscalyear, and they were based on an admittedly crude measurement, but the bestavailable. Itwas a totalban on cash transactions above $10,000. The interim recomm endation was to create an obligation to find the sourceof the cash that’s showing up in the facility before you acceptit.Itwasn’ta totalban. Itwas “establish the source.” 5098 British Columbia Debates Tuesday, May 29, 2018

J. Yap: The minister referred to his visit to the Finance Commi ttee in Ottawaatthe House of Comm ons, and I’d just like to share one quote. The ministersaid this on the record: “Large, suspicious cash transactions continued unabated from 2009 until late 2017, when our new government instructed casinos that they…no longer accept large cash transactions when they didn’t know where the cash was coming from.” That was the minister’s comm ent on the record in Ottawa. I am sure the ministerknows thatsuspicious transactions, in fact,have dropped, from 2015 to 2017, by about60 per- cent.

Will the ministercorrect this comm ent that he made on the record in Ottawa? [2:05 p.m.] Hon. D. Eby: The memberhas chosen one sentence. I do believe that I expressed quite clearly to the commi ttee that the peak, the now notorious peak underthe previous admin- istration, of $20 million in a singlemonth in suspicious cur- rency transactions, in July of 2015, was in fact the peak and that the average monthly suspicious cash transactions ranged between $3 million and $5 million.

Some months exceeded — June 2016, somewhere in the neighbourhood of $12 million; February of 2017, somewhere in the neighbour- hood of $6½ million in suspicious currency transactions. I can tell the m ember about the effectiveness of the m easures thatwe’ve taken. In February of 2018, $200,000 in suspicious cash transactions. In March of 2018, $200,000 in suspicious cash transactions. Compare thatto when we took overgovernment.Itwas $2.3 million in July of 2017 in just $20 bills, $5.5 million in suspicious cash transactions in that month.

We’ve gone from $5.5 million, when we took over gov- ernment,to now $0.2 million in the mostrecentmonth for which we have data, in March 2018. Itis an unfaircompar- ison, I’llacknowledge, because it’s notmonth to month, year over year. If you look at March 2017, $3.6 million in sus- picious cash transactions. In March 2018, after we put the measures in place, $0.2 million, or$200,000. So I think we’re on track. J. Yap: The ministerhas often referred to hundreds of mil- lions of dollars laundered through B.C. casinos. I wouldjust like to ask what evidence the minister is referring to. Hon. D.

Eby: The German report will certainly provide more detailto the member, butthis issue of suspicious cur- rency transactions has been an issue in British Columbia since 2011-2012. The issue and the publicconcern aboutit has been an issue for a while, butthatis when, in my opin- ion, the growth really started. I can tell the member that in 2011-12, total suspicious cash transactions, $64 million; 2012-13, $82.4 million; 2013-14, $118 million; 2014-15, $176.4 million; 2015-16, $119.1 million; 2016-17, $66.3 million; and 2017-18, $34.6 million.

The peak was 2014-2015, at$176.4 million in suspicious currency transactions. I’llunderline forthe memberthatnotallof those transac- tions willbe money laundering. Some peoplejustwillhave brought in a lot of cash to the casino. But when you add up allthose totals, that’s a lotof money. And there are con- cerns thathave beenraised aboutbank draftsand othernon- currency instrumentsas well. These are only suspicious cur- rency transactions I’m giving the member figures for. J. Yap: So the minister…. I heard him say thatsuspicious transactions do notnecessarily mean money laundering. Is that correct? [2:10 p.m.] Hon.

D. Eby: Yes. The mistake thatthe membermadein his earlierquestion was conflating a reportwith FINTRAC with actualmoney laundering. The two are notthe same. A reportmightbe generated to FINTRAC around a currency transaction thatmay have indicia thatmake iteithersuspi- cious or meet the legislated requirements for reporting. It may not be money laundering. Othertransactions mightnotbe reported to FINTRAC. If someone shows up with a bank draftthatthey boughtfrom somebody else for cash, thatmightnotbe reported to FIN- TRAC. Itmightactually be money laundering.

So itis afalse equivalency to equate FINTRAC reportsor suspicious cur- rency transaction reportsor any reportsto FINTRAC with money laundering. They are notnecessarily one in the same. Whatyou can do, though, is you can look attrends. You take the information from law enforcement. You take the information from the regulator. You take the information from the B.C. Lottery Corporation — the concerns that they’re raising, the issues that they’re raising, the activities thatthe operators are seeingand thatthey’re reportingto the B.C.

Lottery Corporation, that they’re reporting to govern- ment.And you can say, “Okay, something’s notrighthere,” when someone’s showing up with this cash or when they’re having cash dropped off to them at the casino — $20 bills bound with elastic bands, the indicia of money laundering. The challenge with prosecuting money laundering, as I’ve learnt,is thatit’s quite difficultto tie the cash to what’s called the index offence. Money laundering, as the activity, is con- cealing the sourceof the funds thatwere generated through some sort of illegal activity. But what illegal activity?

And beingableto tieabundleof 1,000 or10,000 $20 bills to aspe- cificcrime or series of crimes or tax evasion or some other kind of illicitactivity is quite difficult.And in orderto prove money laundering, you have to actually prove thatthis cash is tied to that specificoffence and, as I understand it, that the individualwho’s attempting to money launderhas some knowledge of that, which is a challenge. So it is difficult. If the member’s point is…. It’s like globalwarming. Can you definitively prove thatperson X’s carbon emissions are leading to a forest fire somewhere? Very difficult to prove.

Butcan you look atbroadtrends? Can you look atthe infor- mation from serviceproviders, from the Crown corporation, Tuesday, May 29, 2018 British Columbia Debates 5099

from the gaming policy and enforcementbranch and from the policeand identify a very serious issue, to the level of international concern, about what’s happening in Vancou- ver? Yes, you can. I’ve given the m embersom e of the numbers thatraised the concerns, and appropriately so, withinthe B.C. Lottery Corporation and the gaming policy and enforcement branch and the serviceproviders aboutactivities thatwere taking place. J. Yap: The ministerreferred to the suspicious cash trans- actions reporting, and I agree with him that a suspicious cash transaction does notnecessarily mean money launder- ing.

But it is, as he says, worthwhile tracking trends. Again, to whatwe canvassed earlier, accordingto the FIN- TRAC reporting of suspicious cash transactions, the vast majority — at last report, 93 percent — of suspicious cash transactions reported have beenoutsideof casinos.The min- isterdid agree thatthere are othermodes thatcriminalele- mentsuse. He mentioned cars. He’s mentioned real estate. Butthe factis, according to FINTRAC, the vastmajority of suspicious cash transaction reports to FINTRAC are from the financialinstitutions — from the banks, from the credit unions, from the trust companies.

Wouldthe ministeragree that,in fact,if we agree thatthey are a proxy for potential concerns with money laundering, the vastmajority of money laundering likely happens some- where else than in casinos? [2:15 p.m.] Hon. D. Eby: So a couple things. FINTRAC requires reporting from alarge numberof differentindustries— real estate, banks, creditunions, casinos,allkinds of these differ- entindustries thatdealin cash.

The reason why they collect the reports,I’m told, is so thatlaw enforcementcan use the information to develop intelligenceaboutpotentialcriminal activity and FINTRAC itselfcan identify trends of concern and raise those issues with law enforcement. Now, I worry aboutthe connectbetween the information that FINTRAC collectsand actual enforcement activity on the ground. I’ve raised that concern many times. I can tellthe memberthatwhileI am giving him figures forsuspicious currency transactions — and this is estimates; we try to give concrete numbers — whatraised the concern of the B.C.

Lottery Corp., the gaming policy and enforce- mentbranch and the policewith the reportsthatwere com- ing in wasn’t just the fact that there were a lot…. These are big numbers. I mean, when you’re talking $5 million a month, which the member calls a reduction, in suspicious cash transactions, that’s a lot. In any event, it wasn’t just the numbers. It was who’s involved. Are these peoplethat are known to be associates of peopleinvolved in criminalactivity? Are they peoplewith no known sourceof income thatwouldjustify them bringing in this levelof cash?

The nature of the transaction — is the cash being dropped off in a paperbag, wrapped with elastic bands, in the parking lotof the facility? Whatdoes the cash look like? Is it coming with a bank wrapping on it, or is it coming wrapped with elasticsand in allkinds of condition? What is law enforcement saying about what’s happening? When you putallthese thingstogether, thatis whatraised the concern of the B.C.

Lottery Corporation and the gaming policy and enforcementbranch.That’s is why, whenI showed up as ministerresponsible, I said:“Man, this is aserious issue that we need to get a handle on.” If someone hadsaid to me, “You know, these are standard numbers in terms of reports generated,” I’d say: “Fair enough.” Butthe information I was given was thatthere are concerns from law enforcement. There are concerns by a third party business firm thatwentin and did a review ata facility in British Columbia and madea numberof findings of concern.

There are concerns aboutthe nature of the way this cash is comingin, in hockey bagsorin boxesorin paper bags, and how it’s being passed. When you put all those concerns together, and then the concerns of law enforcement and who’s involved, that is when the concern is generated. I understand the m emberbeing inclined to: “Well, there are 100,000 reports from the banks, and there are only 5,000 reports from the casinos. Doesn’t that m ean that there’s m ore m oney laundering at the banks?” Maybe; m aybe not. Maybe they’re just doing that m any m ore transactions involving cash.

You need to look atotherindiciaas well. You can’tlook at just one in isolation. J. Yap: Atthe Standing Commi ttee on Financein Ottawa, March 27, the minister, during his presentation, stated: “Gamblers couldwalk into acasino with illicitcash, fillouta form, buy chips, gambleand then cash outand geta cheque or walk out with chips.” Based on our research, a gambler wouldnotbe ableto geta cheque thatwouldhave cleaned the money, which is whatI assume the ministerwas alleging or suggesting. In fact,whatcasinos confirmed to me….

Theirpracticeis to ensure thatwhatcash is broughtin thatremains, notthe winnings, will be returned in cash, not a cheque, and that winnings, if any, could be in the form of a cheque. Can the minister clarify his statement? Hon. D. Eby: Absolutely, thatis whatshouldbe happen- ing. When somebody brings in cash to a casino, gamblesa nominalamountand then attemptsto cash out,they should getthe same cash back. They shouldnotreceive anegotiable instrument. Ithas been a practiceto provide a cheque thatis marked “notwinnings” — areimbursementorsome marking of that kind — in some cases, to individuals.

There has been con- cern aboutthe ability of peopleto walk outof facilities with chips — notcash, the chips. So turn difficult-to-manage $20 bills into chips. Some of the work of loss prevention and security and the 5100 British Columbia Debates Tuesday, May 29, 2018

regulatorand BCLC is to try to track how many chips come and go in the facilities, and if someone shows up with a bunch of chips thatwe don’tknow where they came from, to address that issue on the floor. [2:20 p.m.] If the memberis asking, “Is itimpossibleto geta cheque in this situation?” the answer is no. The practice, when a cheque is issued, is to mark on it — letme get the exact wording: “Not gaming winnings.

Return of funds.” If, let’s say, law enforcement,down the road, is doing an investiga- tion and the person said, “Oh, I’ve justbeen very lucky atthe casino,” they can pull the cheque, and then the cheque has the indication on it,“Notwinnings.Return of funds,” so law enforcement knows those aren’t actually casino winnings. I shouldtellthe memberthatthe nature of the Vancouver model outlined by Professor Langdale of how the money laundering works, because I had the same tutorial that the member did, is a very devious and a very ingenious way to getaround these regulations. A criminalgang is notthe gambler.

The criminalgang facilitates transferring bulk cash to the gambler, who is coming from a jurisdiction where there are cash or currency restrictions that prevent them from bringing money outof the country — namely, China. So if you’re coming from China,you can’tbring money with you to gamble. You’d like to gamble. The criminalgang providescash to you. You transfermoney to an accountin the controlof the criminalgang. Whatthe ganghas done is they’ve unloaded a bunch of $20 bills thatare difficultto manage. They’ve man- aged to getthatmoney into abank accountthatthey control.

Whatthe gamblerhas done is they’ve gotthe cash to gamble with. They are the ones who walk the cash into the casino. They are the ones who actually gamble with it. I’lltellthe member— I hope this doesn’trevealtoo many secrets; I hope BCLC isn’t upset — the house always wins. Interjection. Hon. D. Eby: Yes,yes.Don’ttellanyone. The house always wins. They walk the money into the casino to gamble. They gamble. They lose. They actually lose some money; some- times they win. You can always win, butin the vastmajority of cases, you’re going to lose. The odds are in favourof the house. So they go and gamble.

They lose some of the money. They’re legitimately gambling. Allthe activity is gambling activity. They’re losing money. So it was always an under- standing: “Well, how couldthis be money laundering if the person is gamblingand losing?” If they getachequethatsays “Notwinnings,” it’s nota big deal, because the person who’s gambling is nottrying to foolsomeone aboutwhere the cash came from. They’re justtrying to getsome money to gamble with, because that’s whatthey like to dowhen they’re visiting Vancouver.

That is the devious and problematic nature of it, and it’s why the safeguard of marking “Notgaming winnings” may nothave been sufficient— itclearly wasn’tsufficient,in my opinion — to deterthe kind of activity thatI’m talkingabout. It’s also why BCLC, gaming policy and enforcement branch, service providers and law enforcement were con- cerned aboutwhatwas taking placeand why we needed to take the action thatwe didaround the sourceof funds — the interim recomm endation of Dr. German around source-of- funds declarations. Where did this cash come from?

Where did this money come from, and can you prove it to a suf- ficient level? It’s also why we asked Dr. German to do this review and make recomm endations to us. S. Furstenau: I have a variety of questions, nottoo long, but I just want to ask a few things. Last week I metwith Ken Matthews. He’s the owner of Speedy Auto Glass in Duncan. They have five staff, really well-paid staff. These are peoplethatare going to spend their whole careers in his shop.

Ken and his peers have also heard thatRod’s Auto Glass and Upholstery in Duncan were distressed when they received aletterfrom ICBC atthe beginning of May inform- ing them of severalchanges to pricing and policy. For Ken, the most difficult was the increase to the NAGS part dis- count,which has been 11 percentand willsoon be 25 per- cent. He’s also concerned about the re-introduction of the best-price policy and the mould changes…. Interjections. S. Furstenau: ICBC. Hon. D. Eby: I’ve got a whole different set of staff for ICBC, so I don’t know if the member wants to maybe…. Interjection. [2:25 p.m.] Hon. D.

Eby: No, the members aren’t quite done with gambling yet.So I wonderif we can justwrap the gambling questions, if the timing will work for the member. Other- wise, I’m going to need to change my staff. J. Yap: We willbe getting to ICBC momentarily, butI do just have a couple more questions. We’ll go straight to this. The minister has, in his media work, referred to: “Ourprovince’s reputation is in tatters.” I think that was an exact quote. He referred again today to the so-called Vancouvermodel.

We have done an FOI to the minister’s ministry requesting information on whatthe Van- couver model is, but we haven’t received anything yet. I did hear the minister refer to, I believe, an Australian professor who did a presentation and referred to a scheme with the titleof Vancouver model. The minister today has referred a coupleof times, maybe three times, to it. Other than this Australian professor, has any other agency or organization or any otheracademicreferred to this scheme Tuesday, May 29, 2018 British Columbia Debates 5101

as the Vancouver model? Hon. D. Eby: There is a fullpresentation of this individu- al, who has done training. This person’s job, in addition to being a university professor, is to train anti-money-launder- ing officials in Australia. I don’t know how many courses, training sessions, Professor Langdale has done, teaching peopleaboutthe Vancouvermodel. I don’tknow the extent of his work on international presentations at conferences and so on. I don’t know how many people have cited his work thatdescribes this. He wouldbe a good person to ask about that.

WhatI can tellthe memberis thatI recallfilling an FOI requestfor this — the fullslidepresentation thatProfessor Langdale uses that was identified by Dr. German and broughtto my attention. Obviously, itcaused me agreatdeal of concern. I believe that I should be able to provide the memberwith thatpresentation. I know for a factthatI am mispronouncing the name of the university. It’s Macquarie University in Australia. I wouldencourage the memberto check in with Professor Langdale — at times, those are a little challenging — in terms of the extentto which he has educated peopleabout what he calls the Vancouver model.

I think that the issue, though, about whether it’s called the Vancouver model or anything else…. The factthatsomebody on the othersideof the globe knew about it, is teaching peopleabout it, raised concerns for me thathe was notthe only person, although others mightcallitthat,and itmay have been atopicof con- versation at a number of international venues.

In any event, it underlined for me the reasons why we needed to take action on this, even if there’s a fiscal con- sequence to government, which we’ve discussed, and espe- cially because we wantgaming to be a sustainableindustry in British Columbiathatreinforcestourism, thatis an enter- taining option for British Columbians, and that British Columbians, when there’s asuggestion thatafacility open in theircomm unity, can have confidence that it will be done properly. I know we have good partners in the gaming policy and enforcementbranch, in the B.C.

Lottery Corporation, in the serviceproviders and in law enforcementto make thatpos- sible. I have underlined, given the internationaldimensions of this, the importance of the federal government paying more attention to what’s happening here. J. Yap: The minister has had, I understand, the German reportsinceearly April. I wonderwhen we wouldexpectto see the report being released. Hon. D. Eby: My targetforreleasingthe reportwas before the end of the session.

We have hadsome challenges around ensuringthe protection of privacy rightsof individuals iden- tified in the report and ensuring that we don’t accidentally step on the toes of any law enforcement investigations. As soon as that is done, the report will be released. [2:30 p.m.] I don’tbelieve thatitwillbe ableto be released, unfortu- nately, before the end of the session, whichis too bad, butI’m hoping to getitoutas soon as we can. I’m hesitantto guess, just because it’s taken a lot longer than I thought it would to getitoutto the public,butwe do need to ensure thatwe don’t fun afoul of the law in releasing it. J.

Yap: I appreciate that. Can the minister advise if the recomm endations — I believe there are 48 of them — in the report will affect the Lottery Corporation’s three-year fiscal plan? Hon. D. Eby: We currently have staff having a look atthe recomm endations, and I don’t have any information yetto share with the member on any fiscal implications. J. Yap: I actually should have mentioned earlierthat I appreciate the ministeroffering to supply me with a copy of thatPowerPointpresentation orstudy by the doctorin Aus- tralia, and I look forward to receiving it.

My lastquestion on the Lottery Corporation is in regard to Dr. German’s work. How much has been spentproviding resourcesto Dr. German to gethis review done? How much more remains to be spent? Hon. D. Eby: It’s $200,000. J. Yap: With that, that concludes our discussion on the Lottery Corporation. If I may suggestto the ministerashort recess and allow the staff for ICBC to join us. The Chair: The commi ttee will be in recess for five minutes. The House recessed from 2:31 p.m. to 2:34 p.m. [L. Reid in the chair.] Hon. D.

Eby: Joining us is in the chamber are Lindsay Matthews, interim VP, corporate and stakeholder gov- ernance, and PhilLeong, corporate controller, both ICBC; to my left,Nicolas Jimenez, acting CEO of ICBC; to my right, Richard Fyfe, the deputy minister; and in the back corner there, on the right, Doug Scott, who is the ADM of Crowns. [2:35 p.m.] S. Furstenau: Now thatwe have the rightstaff, I’llcome back to ICBC. Last week, I heard from several auto glass shops in Duncan, and I went and visited Ken Matthews, who owns Speedy auto glass.

They had received a letter from ICBC atthe beginning of May announcing thatthere’d be several changes to what’s happening with ICBC, including the changes to the moulding allowanceprogram, increase in the NAGS partdiscountand the reintroduction of the best-price 5102 British Columbia Debates Tuesday, May 29, 2018

policy. In particular, the NAGS pricediscount,which is cur- rently at 11 percent and is going to 25 percent, is a great cause of concern for Ken and for the otherauto glass shops in town. I have a coupleof questions on this. Firstof all, Ken star- ted with raising the concern thatthere hadn’tbeen any con- sultation with the auto glass businesses. I’m wondering if the ministercan speak to the lack of consultation and then provide an explanation for these changes that have been brought forward. Hon. D. Eby: In 2011, there was a Competition Bureau ruling that, intentionally or otherwise, has limited ICBC’s ability….

I say limited, but it has eliminated ICBC’s ability to negotiate rates. Itis illegal, on the currentunderstanding, for ICBC to negotiate rates with materialdamage suppliers. That’s the industry term forautobody repair, glass repair, and so on. So ICBC is not allowed to negotiate rates. Thathas obviously presented asignificantchallenge. There was a pre-existing agreementwith the glass repairindustry. It had expired a coupleof years ago. The challenge is that now you’re in a position where you can’tnegotiate rates, yet something needs to be done around increasing average costs for glass repair.

ICBC’s glass repairand replacementcostshave increased significantly from about$40.4 million in 2008 to $96.1 mil- lion in 2017. There are two drivers of this. One is frequency. We’ve talked about distracted driving and issues around increasing claims in British Columbia. I’m sure the member has heard alotof discussion around that.The other, though, unfortunately, is the average costperclaim, which has been goingup as well. As technologiesgetbetterand as one would expect that costs were coming down, they are not.

There was a challenge in thatICBC was paying forthings like the replacement of glass moulding, even when the moulding wasn’t replaced — so paying for something that wasn’tactually replaced. There were issues where ICBC was paying in excess of the cost charged by the original equip- mentmanufacturerfor a windshield, and the windshieldis available from the original manufacturer for less than the replacementwindshieldis available. One wouldexpectthat a replacementwindshieldis cheaperthan the originalman- ufacturer’s replacement windshield. These issuesneeded to be dealtwith.

I know the member is aware of the financial challenge that we face at ICBC. Nobody is excited about these kinds of things. They have realimpacts.The memberhas named a coupleof auto glass repairfirms in hercomm unity. There willbe additional reforms dealing with auto body repair that will similarly raise concerns as we cut costs at ICBC. [2:40 p.m.] We have hada lotof concerns raised by the TrialLawyers Association around the reforms related to how we treat minor injuries — thatitno longerwillgo to B.C. Supreme Court.They’re going to go to this tribunal.

They’re going to have a limit on the pain and suffering awards. Allof these savingsare meantto go to two things.Firstof all, to getICBC back into the black. The second is to ensure thatwe can provideaffordableinsuranceto British Columbi- ans, because the costs at ICBC have gotten out of control. Thatis the key policy change, in particular, and also why we’re making the changes. I can say to the member that I am very regretfulthatICBC is notableto meetdirectly with materialdamage suppliers to negotiate rates, because I think that wouldbe a huge advantage for everybody.

The federal government’s Competition Bureau decision and the implica- tions of that limit their ability to that. There’s also agroup called the Automotive Retailers Asso- ciation, and they engage government on behalf of material damage suppliers. There was ameetingof theirglass replace- ment members with ICBC yesterday. Discussions can take placebetweenICBC and servicepro- viders, but unfortunately, negotiation about rates cannot.

Thatmay be a distinction withouta difference, or itmay be allof the differencein the worldif allyou wantto talk about is the rates and ICBC tells you thatthey’re notallowed to do thatunderthe law. I find itvery frustrating, butthatis the state that we are operating in right now. S. Furstenau: It’s interesting to note thatthe meeting with ARA happened yesterday. Ken of Speedy Glass justrecently got their ARA certification for their business. I appreciate the minister’s comm entsaboutnotbeing able to negotiate rates.

In the discussions with ARA, is itpossible to look atotherways to mitigate these costsand to address these problems thatthe ministerhas identified? Also, is there some consideration for the impacts of these changes and how they’ll affect smallerbusinesses quite a bit more than they might affect the larger businesses? Can there be any plan to mitigate those impactsto the smallbusinesses, such as the ones that we’ve been hearing from? Hon. D. Eby: On these policy changes, the policiesare the policies. And that is not all.

There are additional reform s ICBC is looking at.We have worked with Pricewa- terhouseCoopers Canada around an operationalreview of ICBC thatidentified thatitscollision repair supplierpro- gram couldbe refined to improve savingsto ICBC and ser- vice to custom ers. ARA, the New CarDealers Association and ICBC willbe in discussions on this. One of the considerations thatICBC will be looking at is the rural versus the urban situation, which would include considerations that maybe in a rur- alarea it’s more likely to have a smaller, independentshop.

That’s on the table for that tiering discussion. [2:45 p.m.] In terms of this specificauto glass policy, though, that is the policy for ICBC going forward. Just so the member knows, I’ll go into a little bit of detail about the policy changes specifically. There are two main changes. One is around glass material sourcing and discount; the other is around the moulding allowance policy. Tuesday, May 29, 2018 British Columbia Debates 5103

For glass materialsourcing and discountcurrently, ICBC pays forreplacementglass based on an industry-established after-marketpriceindexminus an 11 percentdiscount.Sup- pliers can source replacement glass from any number of sources,and they can purchase itatsignificantly discounted rates — wellin excess of 11 percent— which assiststhem in running their business. Currently ICBC pays more for glass replacement than other Canadian insurers, including some B.C. private insurers. So not just an insurer out in Saskatchewan, but B.C. private insurers are paying less for glass than ICBC.

In fact, more than half the time, the current policy at ICBC allows glass suppliers to charge ICBC more forafter-market glass, as I said earlier, than the same glass from the original vehicle manufacturer. The new policy is going forward. ICBC willonly pay the lesser of either the after-market price or the price set by vehiclemanufacturers.

It won’t pay the higherprice; it will pay the lowerof those two prices.Atthe same time, they’ll adjust the current discount that appliesto the after-market price from 11 percent to 25 percent, which aligns more closely with what the private insurers are paying, some whom are using pricing structures thatresultin discountsof 30 percent, actually. So ICBC is not even at that level. ICBC is also aware of some large glass suppliers in B.C. that have an agreement with a rental vehiclesupplier to dowindshieldreplacement,materials and installation, for 250 bucks, regardless of the vehiclemake and model.

When they looked atten claims involving thatsupplier, itshowed thatICBC paid 126 percentmore — that’s $331 perclaim — than the supplier. So hopefully, this willaddress some of that. On a numberof occasions…. I can tellthe memberthatI receive letters on a regular basis where peopleexpress con- cerns aboutthe differencebetween,whenthey tellsomebody that the windshieldis being replaced through ICBC, what the cost is versus what the cost is if they’re paying out of pocket, and the cost gaps are significant. The second big policy change is around the moulding allowancepolicy.

Currently if the nationalglass-pricing cal- culator that suppliers use indicates that a new moulding may be required to complete the replacement,ICBC willpay an allowance of $45.26 even if the moulding isn’treplaced. Going forward, ICBC willno longerpay forthe moulding if it’s notactually replaced, which seems like agood, comm on- sense type of policy — forICBC to only pay forthe mould- ing if the moulding is actually replaced. Those are the two big policy changes. The projected savings from those are relatively m odest in the scope of ICBC’s financial concerns. It’s about $9 million annually.

But we are looking at items, big and small, to get costs under control at ICBC. S. Furstenau: Just one more. I really appreciate the explanations here and thatthe ministerexpresses some con- cerns aboutsome of the practicesthathave been happening in ICBC — priceinflation and this kind of thing. Butsome- times whathappens when we introducepoliciesto address some poor practicesis it can really impact businesses that aren’t engaging in those kinds of poor practices, and they suffer because of maybe the bad behaviour of others.

I’m hoping that there can be some recognition of that impactto, particularly, the smallfamily-run businesses and ways to ensure thatthey remain viableand ableto continue their operations, as they are so important — in our small towns, in particular. I’m notsure if the ministerhas anything thathe can addor provide or any thoughtson that,butI’d appreciate it. Hon. D. Eby: That is something that couldcertainly be canvassed as partof the tiering discussion taking placewith the New Car Dealers and with the ARA and ICBC. M.

Lee: I justwanted to acknowledge something thatthe Attorney said when we started estimates this morning. I just wanted to say that it’s come to my attention now, unfor- tunately, that there was a bit of a gap in comm unication between our two offices.The lineup for today was clearly spelled out but not for yesterday.

So apologies for that. [2:50 p.m.] In term s of ICBC, I justwantto startoff atleastthis set of questions by asking the Attorney to walk us through, from ICBC’s perspective, the process underwhich the rev- enue requirementsapplication was filed on September15, 2017, ultimately to getto a decision by the BCUC on Janu- ary 12, 2018. First of all, couldthe Attorney please comm ent on how long it typically takes for the BCUC to conduct itsprocess review? Hon. D.

Eby: In a typical BCUC revenue hearing, it’s an eight- to nine-month period that the Utilities Com- mission considers evidence from intervenors, asks ques- tions of ICBC and asks forreportsand numbers — quite a lengthy process. When you think aboutthe factthatthis is for an annualrate, the factthatittakes almostthe year to do it…. It’s a thorough process. The result of that is, actually, that the Utilities Commi s- sion approves an interim rate because ittakes them so long to getto approvalof the actualrate forthe yearbecause of the process that they engage in.

They approve an interim rate, and then it’s eitherconfirmed or changed following the end of the hearing. So ’17-18 was an unusualyear in thatthe fiscalcrisis at ICBC led ourgovernmentto pursue som e very significant policy reform s. The firstis in relation to minorinjuriesand the treatm ent of what are called non-pecuniary dam ages orpain and suffering awards — essentially, an award from the court for the fact that you were injured to recognize your injury. The second was areform around minorinjuries.So where those disputes overinsurancebenefits— definition of minor injury, and so on — wouldtake place.

Getting them outof 5104 British Columbia Debates Tuesday, May 29, 2018

the B.C. Supreme Court process, which is quite a lengthy process and afarmore costly process, into alower-overhead tribunal process still independent of ICBC and still inde- pendent of government — the civil resolution tribunal. These two pieces — major impacts on ICBC’s costs. [2:55 p.m.] In addition, when we inherited government, we found a very differentfiscalreality on the ground than hadbeen pro- jected in the previous government’s budgetdocuments,not the least of which was that ICBC was supposed to be rev- enue positive this year. It’s still astounding to me.

A num- berof complicated calculations to arrive atthese remarkable budgetprojections. In any event,ittook us some significant time to really getto where we had a firm understanding of where ICBC’s true finances were at. As a resultof allthose moving parts,forthe 2017-18 rate hearing, we did a directed rate, which was not a full rate hearing. We wentto the BCUC and said:“Look….” We didn’t say this, butessentially, the governmentsaid, “This thing is a huge mess. We’re doing these huge policy reforms.

If we just go with an undirected rate hearing and present all of this, the rate increase for an average British Columbian is going to be somewhere in the neighbourhood of $400, and British Columbians can’tafford that.We’re going to dothese reforms. We’re going to geta handleon where ICBC’s fin- ancesare at.For 2018-19, we’llgo to a fullrate hearing, the eightto nine months. Everyone come and kick the tires on ICBC’s projections, on theirfinances,where they’re at.Ask your questions, interveners,” and so on. The m emberasks about2017-18. It’s an unusualyear.

It’s nota good yearto take an understanding of how long this process takes. Far betterto look atprevious fullrate hear- ings involving the B.C. Utilities Commi ssion, which are typically around eight to nine m onths and which will be taking placefor the 2018-19 fiscalyear, an eight-to nine- m onth hearing process. M.

Lee: I understand that the special direction IC2 that the Attorney General signed by Order-in-Council 602, ’17 stated, in connection with the 6.4 percentrate increase, that the panelmake no determination whetherornotthe change in basicinsurancerevenueneeded to pay forexpected future costs of KY2017 is 20 percentage points, as stated by ICBC.

The panel, in connection with itshearing, stated that,as a resultof this order-in council, itdoes notallow the commi s- sion adequate time to fully explore allthe componentsthat contribute to the rate change to fully covercosts,including ICBC’s actuarialrate levelindication analysis and including operating expenses and allocation information and invest- ment matters. As the Attorney General has just summ arized, the over- sightfrom the regulatorforICBC, itsmanagementteam and the organization itself, was truncated in this year.

I’d like to ask, in connection with that,the Attorney: whatobligation does ICBC have to report to the BCUC any changes to its financialposition thatmightcome to itsattention duringthe rate review process? Hon. D. Eby: ICBC advises me thatthey do quarterly fil- ings with the B.C. Utilities Commi ssion. [3:00 p.m.] To the member’s earlierintroductory bitof his question, though, aboutthe fullhearingthatthe UtilitiesCommi ssion, in the member’s opinion, didnotgetto engage in, and mine too, itwas adirected rate hearing. The rate thatwas directed was at the high end.

Well, it was the maximum underthe previous government’s rate-smoothingframework. Evenhad the thinggone to afullhearing, itwas the maximum amount that the Utilities Commi ssion, under the existing law of B.C. at the time, could have increased rates. I agree with the memberthatthere is greatbenefitto the publicto know thatICBC has hadintervenors come and that there have been peoplelooking at the books and all these kinds of things. Butthe ultimate pointof the rate hearing is to setthe rate, and governmentdirected arate atthe maxim- um rate that ICBC could set for that process.

One of the challenges — and the memberwillsurely see this — is thatforthe regulatorto need eightto nine months to go through this whole process and get a sense of the books and where ICBC is atand allthose kinds of things…. The challenge, obviously, for ourgovernmenton coming in was acting quickly, recognizing the financialcrisis atICBC withouthaving afullknowledge of whatthe financeswere at ICBC, whatthe truestate of affairs was atICBC and whatwe needed to do. That’s why we did the directed rate hearing. I agree with the memberthatitwasn’tideal.

Thatis why, though, we are going to a full hearing for 2018-19 on this. It’s so that the publiccan getthe transparency, so they can see the projec- tions, so thatprojections can be tested around the legislative reforms thatwe putin placearound minor injuries, around the benefit increases and transitioning to a care-based sys- tem for those minor injury files,so peoplecan getthe sup- port that they need. It’s been a challenging transition, butI can see…. I’m not sure I wantto putthaton the record. I feellike we’re headed in the right direction is what I’m going to say.

I’m looking forward to ICBC having the opportunity to show up in front of the BCUC and be tested on all of these things — rigor- ously, internally. Certainly, I am challenging them, the gov- ernmentis challenging them, and they are providing us with a huge amount of information so that we can ensure that we’re allon the same page. I’ve been very gratefulfor their supportand cooperation in that.There’s been a lotof work over a very short period of time. The memberis rightto identify, yes, ’17-18. Wouldithave been niceto have a full hearing? Yes.

It takes a lot of staff resourcesto dothat,as well, and the staff were working hard on major, major reforms, the biggest reforms to insurance law and policy in British Columbia in a long, long time. We’re slowly getting there. Tuesday, May 29, 2018 British Columbia Debates 5105

M. Lee: Priorto comingto this House, I was alawyerwith a law firm in Vancouverthatrepresented otherCrown cor- porations, like B.C. Hydro, in frontof the BCUC. I didn’tdo thatwork directly, butI doappreciate the levelof complexity and rigour that the Attorney is speaking to in this House. Of course, thatlengthof process, the eightto nine months, with the intervenors, the various submissions and the fore- castassessments,is an importantrolethatthatcommi ssion plays. With thatoversight,itgives British Columbians some confidence in what a Crown corporation is reporting and what and how the rates are being set.

With thatin mind, again I’d like to ask…. Specifically in the context of this period from September 15 to January 12, 2018, there was a mention thatthere was or there have been quarterly reportsfiled by ICBC with BCUC. Specific- ally, which reports were filed, and when? [3:05 p.m.] Hon. D. Eby: On the directed rate hearing, which was 2017-18 — which is, as I say, when we were in, and still are, this very challenging transitional period — there was a quarterly report.Now, the rate hearing was Septemberto November. There was a quarterly reportjustbefore, in July. There was one just after.

So it started in September. There was one in October. Then there was anotherone justafter, in January. They happen quarterly. So the memberhas an idea now — July, October, January, April every year. Those quarterly reports,as they were filed with the Utilit- ies Commi ssion, were getting progressively worse, in terms of ICBC’s projections aboutwhere the financeswere going, and it reflected some of the challenge that we facewith a Crown corporation. Now, just for the member’s information, the way the B.C. Utilities Commi ssion setsrates is thatthey’re setfor a point in time.

So they’re setfor the application, which was done for September. As things getprogressively worse…. If things getmuch better or if they getmuch worse over the year, you’re stuck with the same rate forthe year. They’re set forapointin time. You don’tgetto cherry-pick apointthat’s worse or a pointthat’s betterin the year and go from there. The start of the hearing is the start of the hearing. Whilethe Utilities Commi ssion is keptup to date about where thingsare going, they’re setting the rate based on that point-in-time information. Of course, in this circumstance, they weren’tsetting the rate.

The rate was directed in ’17-18 so thatwe couldfree up staff to do the importantwork on the reforms that we were rolling out. The full hearing for ’18-19, which will be the eight-to- nine-month process, willhave those quarterly reportshap- pening. Butit’llstillhave thatsame issueof the rate being set for the pointin time, as opposed to oversome otherpoint during the year or some average or something like that. M. Lee: Thank you to the Attorney forwalkingus through that.I think it’s fairto say thatjudging from when the Janu- ary quarterly report was provided….

Perhaps I could just confirm whetherthatquarterly reportwas provided before the January 12 decision. Hon. D. Eby: It would have been after the decision. M. Lee: As the Attorney Generalhas indicated, itwas cer- tainly less than idealthatthere wasn’tafullrevenue require- ments application process. Without that fullness, there wasn’tthe kind of oversightthatwouldtypically be the case over ICBC. [3:10 p.m.] CouldI justask one otherquestion in respectto BCUC?

In the submission — and there may be some otherpointswe come to later on in this questioning — what was the pur- pose of ICBC proposing to discontinue certain performance measures, like the average costof bodily injury claims, litig- ation costs,BI claims, paid loss amountsand the costsof lit- igation in future applications? TheChair: Hon. Members, the member for Courtenay- Comox seeks leave to make an introduction. Leave granted. Introductions by Members R. Leonard: I’m afraid I won’t be able to stay in the House long enough for three of the classes from Mark R.

Isfeldhigh school, who are arriving and are in the pre- cinct this day. They’re grade 10, 11 and 12 students. I asked them particularly what they would like m e to say about them, and they m entioned that their girls rugby team cam e third in the province. That was som ething they’re pretty proud of this week. I also wouldlike to acknowledge thatone of the students, a grade10 student, Jaylene Kwo, is a volunteerin my con- stituency office, where she’s contributing to democracy. She’s very much appreciated by my staff and by the publicthat comes in.

I wouldask the House to welcome them as they come in, all three of them, over the next couple of hours. Debate Continued Hon. D. Eby: There are a number of explanations for various measures. The information itself, with these various measures, may still be present in the filings to the Utilities Commi ssion. The request is that the Utilities Commi ssion no longerrequire itto be bundled up into a separate report to them, which takes staff time to do. It’s stillin the report. Orforsome of the measures,there mightbe abettermeasure or, in ICBC’s opinion, a better measure of the same thing.

And there are othermeasurementsthere thatICBC doesn’t use, produced solely for the Utilities Commi ssion and have no bearing on how ICBC setsrates or addresses the subject matter in front of the commi ssion. 5106 British Columbia Debates Tuesday, May 29, 2018

What it’s an attempt to do is to improve efficiencies at ICBC. What it is, in actuality, is a request to the Utilities Commi ssion to considerthese things.If they stillwantthem, they’llstillgetthem. Butif they don’tneed them and if ICBC can convincethem thatthere are betterways orthe informa- tion is availableelsewhere, these can be some more efficien- cies for ICBC, which the member will know is something we’re driving towards. Now, the membershares my regretaboutthe lack of afull rate hearingin ’17-18. I’m goingto have to say thatthe mem- berwas done a favour, frankly, by nothaving the fullhear- ing.

It was not intentional. I didn’t setout to do the previ- ous governmentafavourby nothavingthe oversightof afull Utilities Commi ssion hearing abouthow ICBC ended up in the state thatitdid, how itcouldpossibly be thatICBC was projected to make money this year and how it couldpos- sibly be thatthe projected loss was so small. I have some idea abouthow thattook place. None of itis particularly inspir- ingin terms of confidencearound the previous government’s decisions. So the member shouldbe careful what he wished for in terms of ’17-18 oversight by the commi ssion.

The reason why we directed that was to free up as much staff time as possible to haul on the wheel of the ship to get it turned around, because the situation is quite dire. It was not for a lack of wishing thata third party couldcome in a very pub- licway and expose some of the decisions of the previous administration and the state of ICBC’s revenues. [3:15 p.m.] TheChair: Hon. Members, the member for Abbotsford West seeks leave to make an introduction. Leave granted.

Introductions by Members M. de Jong: We’re joined in the gallery by, I think, about 25 studentsfrom one of the greatschools in the Abbotsford schooldistrict,BradnerElementary. They are here with their teacherRavinderSandhu and some parentsthatare accom- panying them. They are also the hosts of one of the great May Day celebrations, which is atime-honoured tradition in Abbotsford. I hope thatthe House willmake these students, grades4 and 5 studentsfrom BradnerElementary, very wel- come here. Debate Continued M. Lee: Well, I justhadto comm enton the lastcomm ent madeby the Attorney there.

Obviously, it’s notacase of what I wish for. British Columbians need to have that oversight through the BCUC. Itis this abbreviated form, the decision madeby this government,thatabbreviated the review by the BCUC. That’s the reason why we justwentthrough thatdis- cussion. I think that’s a concern. I wantto move forward now into governanceof ICBC. I’d be asking the Attorney Generalto comm enton a quote that the current chair of ICBC stated at the end of January, on January 29.

She stated, in respectof a media interview, that ICBC is the insurance company that carries out the policy directions or decisions of the government of B.C. ICBC is the vehiclethatdelivers governmentpolicy so thatitwould be governmentthatwouldmake the changes,and thenICBC would implement them. I would ask the Attorney if the Attorney agrees with that statement. Hon. D. Eby: I would definitely need more context for that statement, and I would encourage the member to address the chairof ICBC for clarification of the contextof those remarks and whatever she was saying. M.

Lee: Letme ask the question differently, then.Doesthe Attorney believe thatICBC shouldbe politically directed or that it is an instrument of government policy? Hon. D. Eby: I know that one of the concerns over the years in relation to ICBC has been “political interference” with the operations of the insurer. So when we look atthings like rate design….

Here’s something that is done in every other jurisdiction in Canada in a very different way than it’s done in British Columbia, which is how do you address this big-picture problemof incentinggood drivers to contin- ue theirbehaviourand incenting peoplewho are higher-risk drivers to stop engaging in theirrisky behaviour, causing at- fault accidents, multiple serious infractions, and so on. The way it’s done in other jurisdictions is very different than here, in thatgood drivers subsidizebaddrivers farless than they doin B.C. Why is itthatthat’s the case?

The reason forthatis thatthe governmentsof the day decided thatitwas too politically challenging, too risky, to address this issue in the way that it needed to be addressed. Now, I understand that policy decision. But that is an example of why people say there has been political inter- ference in the operation of the Crown insurance company. There are many examplesthat I couldgive about this. But there is anotherlayer, which is: does ICBC serve the public interestin British Columbia?

I getletters from peoplewho say: “Well, if ICBC is losing a lot of money, why don’t you justsell?Why don’tyou privatize it?Thatwoulddo us a lot more favours here in British Columbia.” When peoplesay thatto me, I say, well, the issuesthatwe facein B.C. are definitely managementfailures — and, spe- cifically, in my opinion, governmentfailures in the previous administration. I’m happy to go into detail if the member wishes about why I believe that. When I look atOntario, which has afully privatized mod- elof delivery of insurance….

Here’s aprovincethatgetsnone of the benefitsthatwe getfrom the publicinsurerin terms of administration of drivers’ licencesand aclose tie between insurance and drivers’ licences to minimize the number of uninsured drivers. Tuesday, May 29, 2018 British Columbia Debates 5107

[3:20 p.m.] They don’thave a tie between insurance and government to be ableto do things— like realizeforthe insurancecom- paniesto fund roadsafety improvementsthatreduceinsur- ancecostsand increase roadsafety, thatprovideanetwin for everyone in British Columbia. And they have higherinsur- ance rates than we do in British Columbia. Now, there are peoplefrom Ontario who say: “Holdon a second. I moved to B.C., and now I’m paying way more in insurancethan I didin Ontario.

That’s nottrue; Ontario has cheaperinsurance.” They do for good drivers, because they have this system thatrecognizes peoplewho are lower-risk drivers and incentthem with betterrates thatwe don’thave in the same way here in B.C. Butoverall, Ontario has high- erinsurance rates than we do. They don’thave those public benefits, and they have a fully privatized system.

When I look atSaskatchewan, Manitoba, publicinsurers deliverhuge benefitsto theircomm unities— significantrev- enuesand greatsuccess in the work thatthey doin ensuring that peoplereceive good benefitsif they’re in a crash, that they’re looked after, that they have adequate benefits. Not only that,butthey deliverrevenueto the treasury and deliver affordable car insurance. Now, I acknowledge the difference between the Prairies and British Columbia in terms of driving environments.

There are a lot more challenges here than they facein the Prairies.Butthe ideathataprivate insureris abettervehicle forproviding savingsornetbenefitto British Columbians is not borne out by the examples in Canada that we look at. I wentdown thatrabbithole, and I have completely lost whatever the member’s original question was. So if that didn’t address the question, I’d ask the member to ask me again, because I’m quite…. Interjection. Hon. D. Eby: Oh, the political interference, right. There are two levels. The political interference question about ICBC not taking necessary steps….

The member asked me about auto glass: why are we paying to replace mouldingsthataren’tactually replaced? It’s because it’s polit- ically difficult to have a small family auto glass business come to yourofficeand say: “Why did you stop paying for this?” That’s politically difficult. “Why did you not rein in minor injuries like every other province in Canada?” It’s because it’s politically difficultto have the triallawyers saying that you’re taking rightsaway from peopleand organizing againstgovernment.So there has been politicalinterference in ICBC.

Also, ICBC delivers publicbenefitsthatdo require polit- icaldecisions around allocating ICBC’s scarceresourcesand how and when and why ICBC shouldbe involved in public interestmatters like roadsafety, driver’s licence administra- tion, collection of fees or fines for peoplewho aren’tpaying theirchildsupportoraren’tpaying theirticketsorwhatever. Those are politicaldecisions, so there’s politicalinvolvement. I wouldn’t call that interference. If there’s political inter- ference, then it interferes with the good operation of the insurer, and notalways in a positive way.

It’s a complicated answerbecause it’s a complicated subject for a Crown cor- poration like ICBC and its history. M. Lee: Well, I mentioned earlierthatI hadpracticed law with a law firm in Vancouver. There was a time where I was the actingcorporate secretary forB.C. Hydro and very much understanding the nature of governance between a Crown corporation, a deputy minister, a ministerand the executive team and the board, of course. With thatin mind, I take it from the Attorney’s answerthathe is mindfuland sensitive to political interference and political direction.

Can I ask the Attorney Generalif he coulddescribe forus the reporting structure on financesbetween the ICBC exec- utive team, the board and the minister? Hon. D. Eby: On a monthly basis, actual claims results and forecastson any new emerging risks or developments are reviewed by the ICBC executive. [3:25 p.m.] On a quarterly basis, claims forecastsare updated based on experience and reviewed by the ICBC executive and ICBC’s independentactuary, Ecklerand associates.

Also on a quarterly basis, actual results for the quarter, as well as updated claims forecastsand the outlook forotherexpenses, are reflected in ICBC’s quarterly resultsand outlook for the currentand future years and are presented to the ICBC exec- utive and government, in accordance with Crown agencies and board resourcing office guidelines. They are reviewed and approved by ICBC’s auditcommi ttee of the board and board of directors. Also on a quarterly basis, an actuals and outlook reportforthe basicline of business is filed with the B.C. Utilities Commi ssion.

On an annualbasis, ICBC’s annualaudited consolidated financial statements…. With respect to those, ICBC’s external actuary, Eckler, provides an opinion on the fair- ness of the policy liabilities and/orunpaid claims reserves. In addition, ICBC’s external auditor’s actuaries — that’s PwC — review the policy liabilities, unpaid claims reserves, as partof the annualauditbefore signing off on ICBC’s financial statements. Finally, also on an annual basis, there’s an annual basic revenue requirement application with the B.C. Utilities Commi ssion.

As partof the filing, ICBC’s externalappointed actuary, Eckler, reviews and signs off on ICBC’s actuarial assumptions and claims forecasts,supporting the requested basic rate increase. The B.C. Utilities Commi ssion engages an independent actuary, Oliver Wyman, to review ICBC’s actuarial assumptions and claims forecasts supporting the requested basic rate increase. Because 2017-18 was such a mess following the previous administration, we took additionalsteps. Given the signific- antloss forecasted in quarter3, the following reviews were undertaken.

Government retained PwC to review ICBC’s 5108 British Columbia Debates Tuesday, May 29, 2018

assumptions and methodology. The review found that ICBC’s assumptions and methodology were reasonableand with some conservativism, which is reasonable, given the risk to government’s fiscal plan. Government is also engaging a peer review of PwC’s review — so this is areview of the review, because PwC is the auditorof ICBC — to ensure an independentreview of that actuarial forecast. As aresultof areportfrom the TrialLawyers Association, ICBC also requested thatICBC’s externalactuary review two of the Trial Lawyers Association claims, which were con- cerns raised by thatorganization butultimately found notto be….

Well, frankly, they were dismissed. I’m trying to find a niceway to say that,because I doappreciate the TLABC rais- ing concerns aboutthat— aboutanything where they find a concern around the financial numbers. Forthe member’s information, I was provided thatinfor- mation by ICBC as their understanding of their financial information accountabilities and reporting processes. For my purposes here today, I adopt them as my own. M. Lee: Well, thank you for thatsumm ary. Itsounds, in ordinary course, like regular monthly, quarterly and annual reviews.

During this period of time between July and Janu- ary 2018, were there any additional points in time where thattypicalreview and reporting structure was notfollowed, meaning there was some specialreporting madeavailableto the Attorney Generalin his capacity as ministerresponsible for ICBC? Hon. D. Eby: Nothing beyond what I described to the member, in terms of the exceptionalreview by PwC, thenthe review of the review by an externalauditorand thenareview of the TLA’s concerns by an independent actuary, as well. M.

Lee: In the course of this period of time in question, when there was something that came to the attention of the executive and the board — meaning a reclassification of types of claims and losses — was that not reported to the Attorney General? [3:30 p.m.] Hon. D. Eby: In terms of ICBC’s work to understand the impact of the large losses and the change in the Q2 to Q3 revision, thatwas reported as according to the quarterly reports that I laid out for the member. In addition, I was briefed in detailaboutthatin January. Obviously, nothappy news, but I was briefed about that by ICBC. M.

Lee: There is a progression, which my colleague the member for Richmond-Steveston will be getting to in a moment,of changes in the financialposition for ICBC over this period of time, statements made in July, September, November, January. Atthese particular junctures, when the Attorney Generalreceived this reporting, whatprocess did the Attorney Generalfollow, in terms of whetherit’s review ordealing with this loss discovery as ithas been portrayed?

What actions did the Attorney General take in terms of ensuring thatthose losses wouldnotfurtherprogress from the period in time where itwas being comm ented on in July, again, to September, to November and then January? [R. Chouhan in the chair.] Hon. D. Eby: I laid outthe quarterly reporting

schedule and the factthatthe Q2 to Q3 change…. I received abriefing in January, and itwas reported Q3, according to the outline that I laid out for the member. I don’t think the member has a full appreciation of the scenario of whathappened when we took overgovernment. We were dealingwith projections thatwere based on, among otherthings, a fire saleof ICBC’s assets,both realproperty and things as bizarre as selling ICBC.com and booked sav- ingsfora reportthatgovernmenthadnoteven received yet. The government had commi ssioned it but not received it.

They booked the savingsforthat,noteven knowing the con- tentof the report.It’s justexamplesof the challenge of trying to get to what ICBC’s actual financial state was. I do appreciate the member holding me to account for governmentprovidingthe public,the B.C. UtilitiesCommi s- sion and others, in terms of my responsibility for ICBC…. I do appreciate that,because I really recognize that,boy, we shouldhave been looking really carefully atthose numbers when government presented them. I don’t say this to chal- lenge the memberdoing his job, because he shouldbe doing these things.

But I do point out that for the opposition now to say, “Why this suddenescalation, and why the losses? You pres- ented the lossesin this way,” and so on, when, on the way out the door, they had presented numbers that were based on, let’s say, optimism….

That the report wouldbe something thatthey couldimplement,thatthere wouldbe savings that would result in a certain amount and that they’d be able to sell these assets— ICBC’s domain name, and so on — and geta certain amountof money for these various things was based on, atbest,a hearty optimism aboutwhatwould happen going forward, including theirability to implement these things on the

schedule that they projected. Ittook some time to figure outthe true financialstate of where ICBC was and a painstaking review by ICBC of the filesto give us a bottom-line numberof where they’re at— in terms of many olderfilesatICBC, large loss claim files— to provide the public with that accurate report. [3:35 p.m.] Understandably, the opposition, me, the Trial Lawyers, peopleoutsideof ICBC, were looking atthe escalating loss and saying, “How coulditbe thatthis is growing so quickly? How coulditbe so differentfrom the previous government’s projections?” Absolutely importantquestions.

Thatis why I didn’t just take ICBC at its word. I engaged PwC to do a review of the actuarialprojections to assure me thatI could have confidencein them. Butalthough it’s a differentarm of Tuesday, May 29, 2018 British Columbia Debates 5109

PwC, because PwC’s otherarm does ICBC’s audits,it’s not enough thatPwC does this review. I wantsomebody else to come in and review PwC’s work so I can have absolute cer- tainty in these numbers. Certainly, the charge has been m ade by som e personal injury lawyers thatthe numbers have been inflated to cre- ate an artificial crisis to force the minor injury changes. I’ve seen absolutely no evidencethatthatis the case.

What I’ve seen evidence of is that there was a systematic effort before the election to optimistically — it’s the best faceI can put on it — project ICBC som ehow m aking m oney this year, which is astounding to m e, facing a $1.3 billion deficit. But here we are. M. Lee: I willturn this overto my colleague, the member for Richmond-Steveston, in a moment.Butjustto respond to this. Obviously, I am a new member of this House, as the Attorney knows.

Butwhen you look atthis and you rely on whatthe governmenthas been saying, the focus thatthe Attorney General put in his release on January 28, 2018, focused on the mounting losses. The Attorney is referring to otherthings here. I appreciate whatI’m hearing, butthe focus was on the loss. We know that,of course, ICBC, as a Crown corporation, has the oversightof a board, has a managementteam that’s been in place, looking at and monitoring — with audit reviews by PwC — the regulatory oversightby BCUC. So the questions thatwe are asking here today….

It’s to really geta betterunderstanding as to how these suddenchanges could occur from July to September to November to January. With that, I’ll just ask and invite the member for Rich- mond-Steveston to continue. Hon. D. Eby: Maybe I’lljustanswerthe member’s ques- tion. How couldthis happen? Letme give the member an example of how this could happen. If you retain an independent,third-party business firm to provide you with an opinion — where are things going at ICBC?

Whatshouldgovernmentbe concerned about?What shouldwe be thinking about?— and they provide you with thatreport,with recomm endations, and then you take pages outof thatreportbefore giving itto ICBC and releasing itto the public,thatis how oversightfails. The memberwonders: how does oversightfail?Thatis how oversightfails. Thatis nothow oversightfails. Thatis how oversightactually failed at ICBC under the previous administration. J. Yap: Can the minister tell us what changes have been madeto the executive team sincehe took over?Has the team largely remained on board? [3:40 p.m.] Hon. D.

Eby: There have been some changes in the exec- utive team. I dowantto pointoutthatitis my personalopin- ion thatthe losses and the failings of managementatICBC liesquarely withthe previous administration, butI willpoint out that there have been changes in the executive team. The CEO, Mark Blucher, is no longerin thatposition. Nic- olas Jimenez is in that position as acting CEO. The VP of human resources,BarbaraMeens Thistle, is no longerin that position, and now LeslieMitton is in thatposition.

The VP of corporate and stakeholdergovernance, Steve Crombie, is no longerin thatposition, and the currentperson in thatposi- tion is Lindsay Matthews, who I introduced to you earlier, as the interim. J. Yap: Can the ministerconfirm forus the following?Nic- olas Jimenez, the interim CEO, was previously VP of insur- anceand joined ICBC in 2003. BillCarpenterhas served as chief actuary since February 2015 and has added the title CFO in June 2016. Hon. D. Eby: The member is correct with those bios. J. Yap: Can the ministerconfirm forus thatthe executive team has largely stayed the same? Hon. D.

Eby: That’s a very subjective judgment.I’ve out- lined for the member the changes that have been made. J. Yap: On January 30, in an interview with Mike Smyth on CKNW, when asked if he had faith in the former CEO and the othermembers of the executive team atICBC, this was the minister’s answer: “In short, no. I was completely blown away by the fact that things got so much worse so quickly. I want somebody to explain to me how that happened.” Is the ministerwilling to tellus whatactions he took with the executive team with regards to accountability, turnover or anything if he did not have faith in them? Hon. D.

Eby: Absolutely. I took anumberof steps. I asked the corporation to retain an independent third-party busi- ness firm to doan operationalreview of the organization and make recomm endations forme. Itwas PwC. I also asked for an independentactuarialreview of ICBC’s work. Then, giv- en the factthatwe were forced, because of various conflicts of interest,to retain ICBC’s auditing firm to do that,I asked for another actuary to review that work as well. I have to say that that quote absolutely reflectswhere I was at, at the time.

I have to say, as well, how astounded I have been as I peeled back the layers to discover how the financialprojections forICBC thatwere in the govern- m ent’s books were arrived at,how itwas thata third-party business report that was released to the publicwas not complete in thatthe complete reportwasn’teven released to ICBC itself, how it was that key policy changes — like shouldwe pay for a m oulding that’s notreplaced? — went unaddressed for two years.

I have come to the inescapableconclusion that the pre- vious government’s work resulted in the crisis thatwe face, and itwas work to doit,to preventthe publicfrom knowing 5110 British Columbia Debates Tuesday, May 29, 2018

where things were going. I find itdisturbing, and I’m obvi- ously not happy about that. But, you know, onward and upward. [3:45 p.m.] We are m aking changes that shouldhave been m ade a long time ago. We’re going to get ICBC back on track. Obviously, there’s a m ajor hit to government’s fiscal plan. Obviously, itis alotharderto do this in aconstrained time period than over the years that the previous government had available to m ake these changes. But we will m ake those changes, and we’ll get ICBC back on track.

We’ll deliver affordableinsurance to British Columbians, and I have absolute confidencein the m anagementteam that’s in placeand the board thatis in placeto, firstof all, provide m e with candid and appropriate inform ation. I hope that British Columbians have confidencein this governmentto act on those recomm endations where legislative or regu- latory reform i s needed. J. Yap: Does the ministerhave any faith in the board, as well, given thatthey signed off on numbers thatsimply did not hold weight at the end of the day? Hon. D. Eby: I can advise the member….

I’ve already explained where I personally assign responsibility for this, butin any event,the board is completely changed exceptfor one member. J. Yap: On July 24, 2017, the minister stated: “ICBC, as described to m e by senior bureaucrats, is on the path to insolvency.” What indicated to him this was the case? Whatdid he do to correctthis? And why did he only pro- jecta $225 million loss in September, which was a m arked improvement over March 2017 and would suggest a reverse trend? Hon. D.

Eby: The member is going to have to provide me with the sourcefor the numbers thathe provided there, because they don’t jive with the numbers that have been reported. I’m just curious. Maybe I misheard him. The member asks: “You’ve got this big problem. What changes have you made? Enough with the media. Enough with the dumpsterfire.” I getit.Thatdoesn’thelp drive down insuranceratesforBritish Columbians. Itdoesn’taddress the fiscal problems at ICBC. I madethe comm entthatICBC was on the roadto insolv- ency. Thathas a legaldefinition.

Basically, whatI was saying was thatICBC’s expenses were vastly in the billions of dol- lars, exceeding theirrevenue intake. Thatis notasustainable position forthe Crown corporation to be in. Ithas reserves. Ithas assets.You can selloff the assets.You can liquidate the reserves over time. But clearly, ICBC was in dire financial circumstances, and I have a critical roleto play to comm unicate that to British Columbians so they understood why we were tak- ing these very dram atic policy reform s that will impact individuals and businesses in the province.

Law firm s in British Columbia that do personal injury work, families thatare dependenton the revenues from those law firm s, will be impacted by the changes we’ve m ade. Autobody repair firm s, glass repair firm s — we’ve already heard a m ember talk about it — will be impacted by the changes that we’re making. Peopleneed to understand why we’re doing this. We’re notexcited aboutdoing it. This is essentialand necessary for us to do. The m ember heard m e go through, in som e detail, a very minorpiece— the glass repairchanges.

The big piece is certainly the treatm ent of minor injuries, the limit on these non-pecuniary dam ages, the pain and suffering awards — getting them outof B.C. Supreme Court,getting them into this tribunal process, the civil resolution tribunal. It’s independent of government, independent of ICBC, to resolve any disputes, proportionate to the injur- ies. Major, m ajor reform s. And that’s not all. The PwC operational review of ICBC madea numberof recomm endations around potentialsav- ings within the corporation that they advise could result in savings of up to $57 million a year.

We’re implementing those recomm endations. [3:50 p.m.] We have additional work to do on the material damage side. These are the autobody repair expenses and policies thatICBC…. ICBC is engaging rightnow with the New Car Dealers, with the ARA, and insuring thatthe reform of the tiering, as bestas possible, has as minimalimpactas possible on theirbusinesses but also delivers necessary savings that we believe are there. Finally, we need to have a serious conversation aboutthe factthatthere are an increasing numberof accidentsin our province.

The member has heard the very significant changes thatwe putin placearound distracted driving pen- alties,treating itakin to driving whileunderthe influenceof drugs or alcohol, in terms of the penalties for yoursecond time distracted driving. I’m working with the Ministerof Transportation and with the Solicitor Generalon a numberof initiatives — with the SolicitorGeneral, in terms of these red-lightcameras, which have the ability to measure speed as you’re goingthrough the intersection as well. We’ve gotgreatbig signs. We’re turning the things on 24 hours a day.

Greatbig signs: “If you speed through this intersection or if you run a red light, you’re going to get a ticket.” Ateach of these intersections…. There are 140 of them. If I’m way off, I’llletthe m emberknow, butthere are about 80 accidentsayearateach of these intersections. That’s the numberI remember. If we can reducethe numberof acci- dents by putting up a sign saying, “Don’t speed through the red lights,don’t speed to m ake it through a red light, and don’t go through a red light,” then we can improve road safety.

The Minister of Transportation is identifying dangerous Tuesday, May 29, 2018 British Columbia Debates 5111

roads and intersections underthe controlof the provincial government and trying to find ways to address road safety through engineering and otherinitiatives. In addition, we’re working with ourpartners in municipalities. We talk about the revenue from infractions related to people driving through these red-light cameras, speeding through these red-light intersections, and the increased revenue. Could municipalities, potentially, dedicate that to safety improve- ments on their roads in their comm unities to reduce the number of accidents?

Everything from roadsafety to cracking down on distrac- ted driving to cleaning up operational efficienciesat ICBC to addressing escalating autobody repaircoststo addressing escalating legalcosts— this has been a very ambitious and aggressive reform agenda the governmenthas been on. Itis absolutely necessary, given the losses ICBC is posting. We willnotbe turning to British Columbians for the $400-per- driverincrease thatwouldbe necessary if we justleftthings the way they were. M. Lee: I just wanted to clarify with my colleague from Richmond-Steveston.

The figure thatthe memberfor Rich- mond-Steveston was referring to, of course, is from the ser- viceplan filed by ICBC in September2017. On page 15, it’s justthe summ ary financialoutlook, which wouldshow, for the 2017-18 budget,anetloss of $225 million. Thatis the fig- ure that the member for Richmond-Steveston just cited. In the contextof statementsthat….Atthe end of July, the Attorney Generalwas indicating thatICBC was on the path to insolvency. Well, in the contextof that, looking at wha

Document details

Collection	British Columbia — Debates (Hansard)
Citation	20180529pm-Hansard-n145
Type	hansard
Volume / chapter	20180529pm Hansard n145
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	e1597357ad50b4209cdb17fd6dec690c16dbc0fa

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