The B.C. government is holding a public inquiry into money laundering in the province, which has been blamed for driving up housing prices and worsening the deadly overdose crisis.

Premier John Horgan said the findings of three independent reviews into dirty money and the impacts it's had on different parts of the B.C. economy have made it clear a public inquiry is needed.

"It became abundantly clear to us that the depth and magnitude of money laundering in British Columbia was far worse than we imagined when we were first sworn in, and that's why we established the inquiry today," Horgan told reporters Wednesday.

The inquiry has been asked to deliver an interim report within 18 months, and a final report by May 2021.

The government appointed B.C. Supreme Court Justice Austin F. Cullen to head the inquiry. According to the terms of reference, Cullen is tasked with finding out how money laundering thrived in the following sectors: gaming and horse racing, real estate, financial institutions including those that are currently unregulated, corporate entities like shell companies and trusts, luxury goods, as well as professional services like legal and accounting.

A report from an expert panel that looked into money laundering in real estate this month estimated $7 billion was laundered through B.C. last year, with $5 billion of that in real estate. The experts said that is a conservative number, and the actual amount could be much higher. The impact on B.C. house prices has been estimated at an average increase of 5 per cent.

"We know in markets like Metro Vancouver with much more money laundering activity that number could be much higher, as high as 20 per cent," added Finance Minister Carole James.

Attorney General David Eby said Cullen has been given the power to compel testimony from those who refused to take part voluntarily in the independent reviews.

"We are done with asking nicely. Today our government has given Justice Cullen the authority to do more than ask for voluntary participation," Eby said.

Opposition parties welcome inquiry

The Opposition BC Liberals said they will co-operate with the inquiry. The NDP government has repeatedly pointed fingers at the Liberals for allowing the money laundering problem to flourish under their watch. Former cabinet minister Rich Coleman said he welcomes the opportunity to clear himself and his colleagues of any wrongdoing.

"Yeah, I think there's been a lot of speculation. I don't have a problem with it whatsoever," said Coleman. He added he thinks he and his colleagues did everything they could to address the problem.

The Greens have called for an inquiry and leader Andrew Weaver said he supports the shortened timeline, given the "alarming issues" raised by previous reports.

The premier couldn’t provide a number when asked for a pricetag for the inquiry. He said the decision was made to give the commissioner a wide scope.

Eby noted there was a mechanism for an extension if need be, meaning the final report may not actually be complete by May 2021.

Gaming in the province also brings in significant revenues. Addressing that, the premier said the negative effects of money laundering far outweigh any consideration of revenue.