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January 30, 2012

Clark Can't Punt (Again)

Some politicians are great campaigners, but not so good when it comes to governing. Often there is little correlation between the skills required to win a nomination, to win an election and to do the job.

During the Liberal leadership race, George Abbott said it would take the remainder of the term to try to restore trust in the Liberals. Subsequent polls support the argument that the "liberal" brand name is hopelessly tarnished, a reason John Cummin's BC Conservatives are nearly tied with Clark's Liberals.

Having gotten this far, Premier Clark can't just tread water and do photo-ops for 15 months until Election Day, May 14, 2013. Like it or not, some hard decisions have to be made. While she toyed with breaking the set election date, she punted some decisions forward. Opinion polls showing the Liberals behind closed the early election option and events now require decisions on controversial issues before voting day.

Of course the 600 pound gorilla is the HST. Having risked her early political capital on defending the unpopular tax, Clark is now held accountable for why transition rules can't be produced, six months after the tax was rejected. Some pundits say government's delay is consistent with its expert panel, but they don't say whether that panel took its advice on how long it would take to restore the PST from the Ministry of Finance. Many issues split along party lines, but the HST turned some Liberal supporters against their former party. Delaying implementation of the referendum result benefits corporations (Liberal donors) to the tune of $2 billion per year and aids government with $600 million per year in excess revenue beyond its original claims. With details like that on who wins and who pays, it is no wonder that the Liberals have a trust issue.

Shortly after taking over Gordon Campbell's remaining term, Clark punted the BC Hydro rate increase controversy to a review lead by Rich Coleman. That review criticized the definition of self-sufficiency in the so-called Clean Energy Act and said:

"Changing the definition of self-sufficiency to use average water without additional surplus energy would substantially reduce the need for new clean energy supply and BC Hydro would not need to begin sourcing of additional clean energy until 2016 or beyond depending on increased demand. If the definition of self-sufficiency is not changed, BC Hydro will need to begin sourcing new clean energy as early as January 2012."

Premier Clark's government has yet to act on that key observation in the review she commissioned.

Facing the possibility of more hikes in BC Ferry fares beyond cost-of-living increases, Bill 14 (2011) was passed to authorize the review of BC Ferries that was released January 24th. The Liberals, and million dollar CEO David Hahn, like to characterize BC Ferries as being in chaos in 2000, but the report of Ferry Commissioner Gord Macatee said (p. 76): "The financial sustainability of BC Ferries is at considerable risk." Not to understate the point, he provided a table showing the need for $2.5 billion in capital improvements over 12 years plus $58 million per year in operating deficits beginning in fiscal year 2013-14. To made matters worse for Premier Clark, he noted the legislation that authorized his report in lieu of the required four year price cap "imposed a price cap of 4.15% on all routes for the first year of PT3 (April 1, 2012 March 31, 2016) and deferred a final price cap decision for the remaining three years of PT3 to September 30, 2012 pending the outcome of the review " In other words, all the issues raised in the report, punted from 2011, come home for a decision before September 2012. Clark will have to cut services, increase subsidies or increase fares beyond sustainable cost-of-living increases. She can't postpone her decision until after the 2013 election.

Some of the 2012 decisions Clark must make are determined by events rather than legislation. The June 2011 Stanley Cup riot saw Clark in photo-ops demanding immediate justice and public embarrassment for rioters, complete with televised trials. With 18 vacancies in provincial courts and a backlog of cases that threatens to see hardened criminals released due to delays, Clark is hard pressed to explain why she is further delaying the courts with her demand for TV coverage, and why she can't fill the judicial vacancies. She's gone from a cheap photo-op sweeping up broken glass and expressing anger at rioters to being the one responsible for delaying justice by posing unrealistic demands and inadequately funding the courts.

You might think Clark would try to take political advantage of the broken negotiating framework with the BC Teachers Federation (BCTF). To her disadvantage Clark has a history as former Minister of Education when she frequently went out of her way to poke a finger in the eye of the BCTF, and oversaw legislation that was overturned by the Supreme Court years later when, ironically enough, she had returned as Premier. Most commentators agree that the impasse with the BCTF will lead to legislatively imposed working conditions in lieu of a contract, but the government's previous contract breaking episodes haunt it. The Hospital Employees' Union won a victory in the Supreme Court of Canada that can be interpreted as imposing an obligation on government to engage in good faith bargaining before resorting to legislation. It is likely that any legislation to deal with the BCTF will wind its way to the Supreme Court where the government will have to prove that it fulfilled its obligations. That blunts the ability of the Clark government to take political advantage of the situation.

Clark cannot escape the requirement to produce two budgets before the next election. On February 21st a budget for the fiscal year starting April 1, 2012 (provincial budgets always start on April Fools' Day) must be tabled, and another budget must be tabled on February 19, 2013. Each of those budgets must project for two years beyond; so expectations for 2013-2015 must be disclosed on February 21, 2012, and expectations for 2014-2016 must be revealed on February 19, 2013. The federal cuts to health care will have to be revealed in each of those budgets; the shift to equal per capita funding effective April 1 2014 will cost BC $250 million, offsetting the two year 6% annual increase to 2016 promised by Flaherty. Contrary to optimistic forecasts in the May 2011 budget, the next two will also have to realistically project natural gas prices and investment income, a revenue reduction in excess of $300 million. That hit to the bottom line is before the government shows the effect of not taking in $600 in excess HST revenues. Voters may recall Premier Campbell's claims before the 2009 election that the deficit would not exceed $495 million, only to learn it was six times that months after the vote when he announced the HST. This review of government revenue expectations suggests a deficit for 2013-14, the fiscal year that overlaps the next election, yet Finance Minister Falcon and Premier Clark insist on the same sham the Liberals put forth before the 2009 vote. That nonsense will further challenge their credibility.

Campaign slogans, like Clark's job plan promises for 2015 after the next election, are easy to make. It is much more challenging to meet measurable targets that can be considered before the election. Clark can't punt all of the difficult issues beyond May 2013; she is required to make some decisions that will have consequences before the vote.