The Hon. Kevin Falcon, B.C.'s Minister of Finance, gestures during a press conference where reporters asked for his reaction to the federal budget.Diana Nethercott/The Globe and Mail
The president of ICBC, the Crown corporation that provides universal auto insurance in B.C.. has announced his resignation after a scathing government audit raised concerns about excessive compensation for managers.
Jon Schubert told staff he was leaving while a news conference at which ICBC accepted the recommendations of the audit and announced a series of austerity measures. They include: cutting up to 195 positions, most of them management; imposing a hiring freeze; freezing compensation for all executives; and holding back 20 per cent of executive salaries unless they meet specific targets.
In all, ICBC plans to reduce its operating budget by $50-million by the end of next year.
B.C. Finance Minister Kevin Falcon called the situation at ICBC "unacceptable" in light of the fact that economies at home and abroad are struggling.
The audit revealed a 32-per-cent increase in management positions over five years and a 50-per-cent increase in compensation costs for management and what were described as confidential employees.
Mr. Falcon said the B.C. Liberal government accepts responsibility for the hikes occurring on its watch, and was trying to be forthright with British Columbians even if the candour caused political pain ahead of the provincial election next May.
"Does it help politically? I rather doubt it," he said.
However, he noted the public should know it had a government "that is constantly going to be turning over rocks," to look for options for managing costs where possible.
"If you take that approach as a government, you have to deal with the good and the bad."
In a note to staff released Thursday as the audit was released, Mr. Schubert said his departure was a "mutual decision" with ICBC's board – a line repeated several times during the news conference by ICBC chair Paul Taylor, who refused to provide additional details.
The audit makes 24 recommendations, all accepted by ICBC, but the issue of executive management dominated the response of the organization as well as the B.C. Liberal government, which has been preaching austerity in eliminating the deficit and capping increases in public-sector wages.
Just hours after the news conference, the B.C. Utilities Commission approved an 11-per-cent increase in ICBC premiums for basic vehicle coverage. The increase has been in effect since February, but the commission has just now approved it.
Mr. Schubert, who took on the executive job in 2008, will leave his office on Nov. 15, but continue as an adviser of dealing with the recommendations through to next June 30, remaining on payroll until then.
"He's committed to the program," Mr. Taylor said.
MLA Mable Elmore, the NDP critic for ICBC, said the problem has long been clear to her party so she could not understand why it was news to the Liberal government.
"The situation at ICBC is not isolated, but part of a pattern across various Crowns," she said, referring to BC Hydro, and BC Ferries. "It points to a pattern of Liberal mismanagement and incompetence."
Mr. Taylor said he preferred to look forward the austerity measures the organization is now committed to.
"Our focus is saying, `OK. We've got a problem here. How do we fix it?' There's a clear path to that. We've laid that out."
Ian Bailey