If you voted for the NDP in the last election because you
wanted to stop the Site C project or halt the Kinder Morgan pipeline expansion,
then you must be very disappointed. But if you did so because of the cesspools
of patronage and mismanagement at ICBC
and BC Hydro, and the strong smell of dirty money in gambling and real estate suspiciously
coupled with the BC Liberals’ avowed determination to hang on to outdated campaign finance laws,
then your choice has been powerfully vindicated. It was definitely time to have
a change of government.
In 2001, the newly elected Liberal government vowed to take
politics out of the management of BC Hydro and ICBC, as part of Gordon
Campbell’s extensive “New Era” basket of promises. Accordingly, the BC Utilities Commission had
its authority to set BC Hydro’s rates restored, along with the authority to set
the rates for ICBC’s compulsory Basic insurance. Following the 2009-10
recession, however, the Liberal government decided to get more involved in the financial affairs
of both major public corporations. Their profits gave the government some
badly-needed revenues, and their cash transfers reduced the government’s direct
borrowing requirements. The fiscal shell game had begun. Starting in 2010, the government began to
appropriate ICBC’s Optional insurance surplus capital. In 2011, the Liberals exempted BC Hydro from rate-regulated accounting rules; then,
the following year, the government took direct control of BC Hydro’s annual
rate setting authority.
Richard
McCandless is a retired public
servant whose analysis of the 40-year financial history of ICBC was
published in the academic journal BC
Studies in 2013. His paper exposing the
BC government’s manipulation of the finances of BC Hydro from 2008 to 2014 was
published in that same journal in
November 2016. As he described it, “[t]he government’s politicization of the
finances of BC Hydro and ICBC has come at the expense of future customers in a
classic ‘pretend and extend’ gambit.”
McCandless shows how in 2013, cabinet imposed limits on the annual
change in basic insurance rates, and suppressed BC Hydro’s rate increases and enhanced its apparent profits through deferring cost
overruns and revenue shortfalls. Cabinet
orders in March 2014 required the Utilities Commission to approve a highly
dubious “rate smoothing” deferral account
for BC Hydro, allowing it to count future unbilled revenue. According to McCandless, “[this device allowed
the government to continue to suppress electricity rates while reporting higher
yearly profits as government revenue (and to extract dividends which added to
BC Hydro’s debt).”
As a result of these Liberal manoeuvres, BC Hydro customers
now face a much higher debt liability, which, when coupled with recent massive capital expenditures such as
the Site C project, threaten to cause the province’s credit rating to be
downgraded. Meanwhile, over at ICBC, the
failure to curb the growth in Basic claims costs, and the government’s
suppression of the growth in Basic rates, has reduced the corporation’s once
healthy capital reserves, making a future car insurance rate hike likely unavoidable. As McCandless wrote on the eve of the election
in May 2017, “The [Liberal] government’s manipulation of the finances of the two public
corporations has been incremental, and therefore has generally occurred out of
the glare of the media spotlight.” Now,
the Liberals are no doubt hoping that it is the NDP who will be blamed for any
rate hikes, tax increases or credit
rating downgrades necessitated by their own poor governance.
You are probably thinking that it is only a matter of time
before the NDP starts playing the same sort of games, or the Liberals get back
in and start doing the same things all over again. But maybe this cycle of
corruption can be broken by having a more democratic electoral system. If
governments are composed of broad coalitions representing a true majority of
voters, then we can hope that the parties who are coalition partners (i.e. friendly competitors
for each other’s share of the votes) can keep each other honest, making the kind
of financial legerdemain that we have
seen from the BC Liberals more difficult to get away with in the future.
Mark
Crawford is a professor of Political
Science at Athabasca University.
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