September 3, 2009

HST - Plausible Deniability

In question period today John Horgan, NDP MLA for Juan de Fuca, asked Finance Minister Colin Hansen if the reason he wasn't concerned about falling government revenues during the election period because he knew that he had a $1.6 billion commitment from the federal government for implementing the HST. Hansen ignored the question and attacked the NDP's record, but on previous occasions he denied considering the HST until after the election.

Hansen's denial was called into question by NDP finance critic Bruce Ralston based on a March 30, 2009 Canwest News Service story with byline by David Akin who attributed a statement to federal Finance Minister Jim Flaherty as saying "other provinces" (note plural form - two or more provinces) have approached the federal government to talk about ways to harmonize the federal goods and services tax with provincial sales tax. That was after Ontario announced in its March 26 budget that it was implementing the HST. Akin's story noted that a spokesperson for Manitoba's Finance Minister, Greg Selinge, said Manitoba has no interest in copying Ontario and has not approached the federal government to talk about harmonization. The story said: "Saskatchewan Premier Brad Wall campaigned last year on a platform that included no harmonization but recently has hinted that he was open to more discussions on the issue." Harmonization is irrelevant in Alberta which has no sales tax. Akin wrote that "P.E.I. Treasurer Wesley Sheridan could not be reached"; but HST observers know that Prince Edward Island passed when the three other Atlantic provinces harmonized in 1996.

That leaves B.C. as one of the most likely provinces referred to by Flaherty, six weeks after B.C.'s budget was tabled and six weeks before British Columbians went to the polls.

In contrast to saying that the PEI treasurer could not be reached, Akin's article said: "B.C. Finance Minister Colin Hansen declined to comment on the issue …" A debate arose in the legislature today over whether that meant Hansen had no comment or whether he was simply unavailable to comment. Akin's notebook and his willingness to talk on what is now a five month old story may prove to be important evidence in the ongoing saga of the credibility of Hansen and Campbell.

If nothing further can be added to clarify Akin's March 30th story, there is the much stronger evidence that Jim Flaherty and his officials could provide on whether Hansen or his officials were in conversation with the federal finance department as early as March 2009. Freedom of Information requests would be useless as both governments would consider intergovernmental communications exempted. There is the possibility of a federal election in the next few months and, as Vancouver Sun columnist Barbara Yafee wrote today, BC's impending implementation of the HST could become an issue in a federal election. The line from the Conservatives has been that implementation of the HST is done by provincial initiative, as they try to wash their hands of the controversy.

Hansen says that he did not personally speak to Flaherty about the HST, but that does not mean that someone in the Ministry of Finance did not begin serious discussions regarding its implementation prior to the election. This is where the concept of plausible deniability comes in.

The problem the Campbell government faces with the state of the province's finances, and likely the HST, is that the public doesn't accept its denials as plausible; an Ipsos-Reid survey released by Global BC reported: "Seven-in-ten (72%) residents say they believe that the Campbell Liberals intentionally misled voters about the province's worsening financial situation during the spring 2009 election campaign” .

Questions need to focus on whether anyone who could credibly represent the province had discussions with the federal government before the election on the implementation of the HST after the election. If so, was Hansen protected so he could maintain plausible deniability? Somewhere in the bowels of Victoria and Ottawa a small handful of people know the truth - a truth the public deserves to know.