January 24, 2009. To me, this was the day that set in motion a series of events that, 10 months later, would see former premier Gordon Campbell needing to step down and make way for a new leader of the BC Liberal Party.
The premier was in Courtney, B.C. that afternoon, marking the death of his former cabinet minister, Stan Hagen. After the funeral, the former premier gathered with his then finance minister Colin Hansen, his chief of staff Martyn Brown and two senior officials from the ministry of finance.
For three hours they talked about what had, until then, been the unthinkable for the BC Liberal government; they talked about how the province needed to run a deficit.
At the time this was taking place, I was the Vancouver Sun’s legislative bureau chief, watching the events through the lens of what they would mean for a provincial budget that was due that February, and for the election date set for that May. For a political correspondent, this entire period was fascinating to observe.
But since I joined H+K, I’ve begun seeing these events through much different eyes. Now, advising clients, I think back to what can be learned from B.C’s experience with the Harmonized Sales Tax.
Those who follow B.C. politics will know how reluctant the former premier would have been to entertain the notion of dragging B.C. into the red. He saw deficits as a weakness, likening them to an unforgivable theft from future generations. But his government’s fiscal prudence had run aground on the unavoidable facts of a global meltdown. And so, for three hours that night in Courtney, the conversation was not about if B.C. needed to run a deficit, but rather how big a hit it needed to declare.
In the days that followed, I would stand in front of the premier as he made the election promise: “The deficit for 2009-2010 will be $495 million maximum.”
I watched as his newly re-elected government arrived back in office to discover an unexpected loss of about $1 billion in projected government revenue.
And I watched as government sought to solve the revenue shortfall through the hurried introduction of a Harmonized Sales Tax, which brought with it a $1.6 billion transition payment from Ottawa. The public backlash that ensued was fierce, and eventually forced the government to backtrack and cancel the HST, and for the premier to resign.
At the time, these were great stories. Now, they are great lessons.
The government has said it failed in communicating the HST. Now that I’ve moved from journalism to communications, I have a much greater appreciation of what that means, and how one of the most compelling stories in the province’s political landscape can apply to the decisions that organizations make every day.
The following are a few of those observations:
1. Know your audience; understand what they want: When the government arrived at the deficit number for the 2009 pre-election budget, it did so believing people in the province loathed the idea of deficits. So it sought to find a number that was as small as possible, thinking people of the province would appreciate the prudence of arriving at $495 million instead of something larger. In truth, I believe people would not have cared if the deficit had been triple the amount, so long as they believed it was manageable, and they understood there was a realistic plan to return the province to balance. What’s more, I believe the government, and the premier, had a strong enough record to turn the negative financial situation into a positive, especially given most other provinces were already in worse shape. In other words, the case for a more realistic fiscal cushion could have fit hand-in-glove during the 2009 election with the argument to keep a capable and steady hand at the helm of the province. The clear lesson I now take from this is that every organization needs to truly understand its audience, because sometimes making people happy is easier than you think.
2. Don’t underestimate your opposition: The first time I saw former premier Bill Vander Zalm talking on the HST, he was addressing a conference of funeral directors in Victoria. I and most others there at the time, rated his chances for success to be about as dead as the clients who would eventually slip into the luxury coffin on display near the stage. It was a mistake many made, but most significantly by the government, which saw Vander Zalm as so insignificant it did not even register with Elections B.C. to officially oppose him during the eventual referendum. Obviously, organizations should not overestimate the capacity of every possible opponent. But the government experience here clearly demonstrates that a good strategy should never underestimate an obvious foe, and should always leave open the possibility of mounting a strong defense.
3. This time is not like the last time: Though two similar issues may look the same, they can often be very different. For example, in 2008/09, premier Campbell brought his government through a difficult fight on the Carbon Tax. He faced criticism from outside, and from within, but he persevered and the tax remained. And his government won an election based on the stand he took. But as he would eventually find out, the HST was not the Carbon Tax. Despite some initial similarities, the HST was not a battle his government could win. For me now, it’s a good reminder that organizations need to constantly asses the landscape, and to always determine what factors will be essential to gain needed support and/or social license.
4. The importance of a united front: Throughout the fight on the HST, the voices in favour of the tax were not always as strong as they could have been. And in some cases, some of the likely supporters – including some government MLAs – began raising concerns. While it is impossible to predict how an issue will unfold, any organization needs to spend significant attention to its own people, making sure they are supportive at each stage of the process. Any internal dissent only serves to fuel criticism, and as with the HST, can take a challenging idea and make it toxic.
I’m sure there are more lessons I’ll take from this, and other of the stories I covered during my journalism career. It is fascinating to now revisit these all through a very different set of eyes.