HST Lesson
Did Finance Minister Kevin Falcon or any of the Liberals learn anything from the HST referendum? Premier Christy Clark promised that the referendum would take place just like a normal election, but she then allowed third-party advertisements without disclosure. We'll never know how many millions were spent on trying to convince people to vote for the HST, but we know the government spent $7 million. It wasn't just the advertising campaign that failed any reasonable test of transparency; information provided by the government and its "independent panel" couldn't be verified. One of the lessons the Liberals should learn from their HST failure is that transparency is essential in order to earn public trust.The 2012-2013 budget is expected to be tabled in the legislature on February 21, 2012. In addition to budget estimates for the next fiscal year, the document must contain forecasts for fiscal years 2013-2014 and 2014-2015, the PST transition year and the first two full years of a restored PST. It will not be good enough to plug in phony numbers, calling them “placeholders”, as was done with this year’s budget when the government was preoccupied with leadership issues.
Falcon said:
“The return to the PST creates significant pressure on
the government budget. In May I outlined the approximately
$3 billion-hole created in the fiscal plan over the coming
years if we return to the PST.”
“The lower revenues and higher cost of administering the tax
in the context of increasing global economic uncertainty are
an added challenge for us to manage.”
When Clark attempted to sell the HST by lowering it to 10% in 2013, she said the reduction would be financed by restoring corporate tax rates to the 2008 level. That means increasing the corporate tax rate from 10% to 12% and postponing the planned elimination in 2012 of the small business tax of 2.5%. Those changes are estimated to bring in $650 million in revenue. If those changes are implemented as part of returning to the PST, the revenue shortfall issue disappears, leaving only the issue of repayment to Ottawa which is a matter of honestly stating the province’s debt.
While some Liberals claim that business cannot take the double hit of restoring the PST and increasing corporate taxes, all that is involved is returning to the corporate tax levels that prevailed after seven years of Liberal rule. Any revenue problem is not a result of restoring the PST; it is a result of tax cuts that went beyond what is necessary to keep BC competitive with neighbouring jurisdictions. Many small businesses will see the restoration of the PST as a benefit, particularly service oriented businesses, and keeping the 2.5% small business tax is not an increase since it has not yet been eliminated.
Ten years in power does something to government’s, making "it's time for a change" one of the most popular political slogans. After more than a decade of rule, the Liberals seem to have lost the ability to be clear and transparent with the public. They might not have what it takes to tell their financial backers that it is necessary to return to 2008 corporate tax rates, but the alternative of cutting services or increasing taxes and fees for families will not fly in the aftermath of the HST fiasco.
August 20, 2011
Penner’s Omission
Cynics are tempted to say “yah sure” when politicians say they are stepping aside to spend more time with their family, but I believe Barry Penner when he said that. His decision doesn't take anything away from politicians like Kevin Falcon or Jenny Kwan who decided to continue to serve despite the age of their families. Unlike them, Penner is a cancer survivor which may have contributed to his reassessment of priorities. At age 45 he has served 15 years in the legislature, 10 of them as a cabinet minister. Hopefully he will have a long second career.Despite the credibility behind Penner's statement, there are some undercurrents that cannot be an accident for an experienced politician. When he announced his decision on August 18th, he issued his own news release rather than using government or caucus communications. Some in the media contacted the Liberal caucus to verify that the release wasn't a hoax, only to learn that it was valid and that they were caught by surprise. That suggests Penner was not entirely pleased with all his colleagues. His statement emphasized the role the Liberal party played in his decision when it required the names of key volunteers for his campaign team in the upcoming election. In other words, Penner may have remained as Attorney General for another year if Christy Clark wasn't playing games with the date of the next election. Her hastily called media availability to react to the resignation did nothing to disguise her surprise at the announcement. Her tone said far more than her words.
The morning after Penner's surprise announcement he appeared at 8:50 AM as a guest on CKNW with Michael Smyth. During the course of that interview he didn't mention Christy Clark; the omission was striking. Smyth directly asked him if uncertainty created by Clark's election timing forced him out. Known for his communication skills, Penner could have used the opportunity to express confidence in Clark and the agenda she may eventually reveal; he didn't.
Penner's website features a statement on his resignation; the only reference to Clark is: “I want to thank both former Premier Gordon Campbell and Premier Christy Clark for being willing to lead the BC Liberal Party and our province, and for giving me an opportunity to serve as a Member of Cabinet - for five years as Minister of Environment, then as Minister of Aboriginal Relations and Reconciliation and most recently as Attorney General.” That's not close to an expression of confidence in Clark. Of course, Penner will remain as MLA until the next election so perhaps he will correct these oversights, if indeed they were unintended.
Clark was sworn in as Premier on March 14th. In her over six months as premier she has yet to demonstrate that she is governing rather than running from photo-op to photo-op and picking the low-hanging-fruit by way of announcements in preparation for a possible early election. Returning from her August vacation she was interviewed at 12:35 PM on August 17 in her old time slot by CKNW's Sean Leslie. She said she spent a lot of time thinking about what her government could do in the fall to defend jobs but she wasn't able to provide any specifics other than a trip to Asia. Leslie pressed her for more details but all she could say was they needed to examine what government does to get in the way of job creation. Perhaps her cabinet, most of who served for the last ten years, could confess what they did to kill jobs and how they'll perform better now that she has rejoined them. Clark should learn that governing is different than hosting a talk show. She needs to think before she speaks; perhaps she could get advice from Kevin Falcon and George Abbott, both of whom warned during the Liberal leadership race that Clark is not a deep thinker.
August 16, 2011
Election Speculation
Most pundits have discounted the likelihood of a fall provincial election this year, but Christy Clark has not repudiated her statement that she will violate the set election date specified in Section 23 of BC’s Constitution Act. Clark would likely be supported if she amended the Act to change the next election to the fall of 2012, with subsequent elections every four years thereafter. I believe she will call it when the polls show she can win, unless of course she runs out of time and hits the May 14, 2013 required election date.Public opinion polls provide what we call the horserace numbers (party preferences) sometimes broken down by region, gender and age. The last Mustel Group provincial voting intention poll in May put the Liberals at 38% and the NDP at 35%. The last Angus Reid poll in March put the Liberals at 43% and the NDP at 38%. A new Angus Reid poll is expected in September once the result on the HST referendum is known.
Political operatives are as interested in the horserace numbers as they are in the kind of detailed argument testing that drives advertising campaigns. That kind of polling, and associated focus groups, seeks to determine what arguments, and what precise wording, changes voting intention. The premier could call an election even though behind in the horserace numbers if she were confident that she could move the numbers by election day; she would be foolish to call an election, even if ahead in the polls, if she knew the opposition had arguments that would put them ahead by the time of the vote.
Whenever the election is called, particular attention will be paid to the constituencies which were won by narrow margins in 2009. The Liberals and NDP, possibly joined by the Greens and Conservatives, will run candidate in all 85 constituencies but it is unlikely that a Liberal would lose in West Vancouver – Capilano where Ralph Sultan had a winning margin of 53% (calculated as the excess of his vote over the NDP divided by the total of all valid votes cast). Likewise, the NDP appears to have a solid grasp on Surrey – Green Timbers where Sue Hammell had a winning margin of 49%. NDP leader Adrian Dix and Conservative leader John Cummins both talk about appealing to people who didn’t vote last time, but parties know it is easier to win swing voters who regularly vote than it is to get non-voters to get out to the polls.
In 2009 there were 13 constituencies where the Liberal candidate and 8 constituencies where the NDP candidate won by less than 10%. That includes Cariboo North where Bob Simpson, whose winning margin was only 4%, now sits as an independent.
The 13 weak Liberal constituencies with winning margins shown in parenthesis are: Surrey-Tynehead (9%), Vernon-Monashee (5%), Vancouver-Fairview (5%), Comox Valley (5%), Boundary-Similkameen (5%), Vancouver-Fraserview (4%), Burnaby-Lougheed (4%), Burnaby North (3%), Kamloops-North Thompson (3%), Oak Bay-Gordon Head (2%), Saanich North and the Island (1%), Cariboo-Chilcotin (1%) and Maple Ridge-Mission (0.4%). Some incumbent MLAs, like Kash Heed, Harry Bloy and Margaret MacDiarmid, are household names because of their records. It will be interesting to see if Terry Lake and Ida Chong, members of the weak group, were helped or hurt by failed recall campaigns. I expect the campaigns strengthened their organizations and put them in a stronger position for the next election.
The 7 weak NDP constituencies represented by an NDP MLA are: Delta North (9%), Fraser-Nicola (6%), Stikine (5%), Coquitlam-Maillardville (3%), Burnaby-Deer Lake (3%), Saanich South (2%), and Maple Ridge-Pitt Meadows (1%). Harry Lali has won four elections; I expect he’ll win again in Fraser-Nicola. Kathy Corrigan has created a high profile; I expect she’ll increase her winning margin. The other seats are not safe bets and the candidates need to spend every possible minute door knocking. Mainstreeting, waving from buses or using phone banks are poor substitutes for the hard work of going door-to-door to meet voters face-to-face. There isn’t enough time in a 28 day election campaign for one person to canvass a significant portion of any constituency; the door-to-door work needs to begin now for any candidate who is serious about winning.
The magic number for forming government is 43 MLAs, although a workable majority requires a few more seats than that. The Liberals currently hold 49 seats, the NDP 34, and there are two independents, one elected as such. To form government the NDP must defeat at least 8 Liberal incumbents as well as hanging on to all of the current NDP seats or defeating an additional Liberal incumbent for each NDP incumbent that is defeated. That is not an insurmountable task for Adrian Dix and the NDP. Christy Clark and her advisers know that, which is why she may hesitate before rushing into an early election.