When it was confirmed that Christie Clark was planning to run for the leadership of the BC Liberal party I thought it a positive for the party and the province. Not because I thought Christie Clark would make a good leader (I lacked enough information on her and her policy positions to make an informed judgment on that) but because she was not ‘one of the gang’ and offered the possibility of a candidate that was not more of the same old thing. There was also the possibility that Clark’s entering the leadership race would encourage one or several others who were not part of Gordon Campbell’s inner circle to enter the leadership race.

Hearing, as part of her announcement of her decision to pursue the leadership, Clark announce that if chosen as leader she would hold an open and free vote on the HST caused me to doubt Clark has what it takes to be leader in what will be a time of difficult, and on occasion unpopular, decisions to be made in order to provide the leadership and governance BC will need in the coming years.

In considering what comments I wanted to make about Clark’s announcement I found myself leaning towards opening with a comment that Clark was in a leadership race to lead the BC Liberals, not a popularity contest to be a talk show host.

Then common sense asserted itself and I acknowledged the reality that the leadership of a political party, and elections themselves, are about popularity – not about ideas or ability. A Reality that does much to explain the sad state politics, government and society are in today (but that is a whole other discussion).

In choosing the easy way out on the matter of the HST Clark promised to bow to the minority of BC citizens (22%) who signed the anti-HST petition; deprive the majority of BC citizens (78%) of an opportunity be heard and to express their thoughts on the HST; opened the door to fiscal, healthcare and education crises for BC; shown herself to be unsuited to be premier of BC.

[A referendum that is not so much about yes/no on the HST but whether the remaining 78% of British Columbians are willing to ‘cut off their noses to spite their faces’ by repealing the HST and damn the damaging costs.]

What ever else one may choose to say or think of Gordon Campbell he stood firm and took the shots on the HST in a manner that both held his MLAs together on the HST and provided them cover (at least to some extent).

Campbell refused to take the easy way out by giving in to the threats and blackmail of Vander Zalm and the anti-HST forces and hold a free vote in the legislature which would have denied the majority of BC citizens the right to be heard and triggering the serious negative consequences for the province that a repeal of the HST will bring about.

Let us assume that Clark were to win the leadership of the Liberals and holds her free and open vote on the HST, what will the outcome(s) be?

The NDP have campaigned and called for a free vote to end the HST. Even if some members of the NDP have the fiscal acumen (admittedly an assumption as no member of the NDP caucus has evidenced any effective understanding of the financial reality in BC) to recognize the fiscal consequences, political advantage has been demonstrated to be more important to the NDP than the consequences of repealing the HST.

With Christie Clark taking the easy way, the politically popular way out on the HST, why would Liberal MLAs take flack and possible career ending damage by voting no? In fact it would be smart for Liberal MLAs to have a ‘crisis’ that required them to be elsewhere on the day of the vote, thus avoiding the need to vote No and permitting them to claim they did not vote to repeal the HST and bear no responsibility for the consequences of repealing the HST.

What are the consequences I refer to?

The first is that the final $475 million payment due July 1, 2011 from Ottawa for implementing the HST will not be paid. Meaning that in 2011 the government either cuts $475 million out of healthcare and education or it raises taxes to raise the additional $475 million needed to offset the forgone payment..

In addition the BC government has already been paid $1.1 Billion by Ottawa to implement the HST. No HST and Ottawa will want, will be entitled to have the money paid to the BC government to implement the HST refunded/returned.

Despite the bafflegab spouted by the anti-HST forces about negotiating on the matter of repayment, Ottawa has no need to do any negotiating.

Do you know what the amount of money transferred from Ottawa to BC will be in 2011? For the major transfers alone, items such as healthcare and education, it will be approximately $ 5 billion.

Ottawa has no need to negotiate repayment of the money BC will owe to Ottawa if BC repeals the HST, it can simply deduct the $1.1 billion from the $5 billion. Ottawa is not going to set a precedent by not getting repayment for a province accepting payment then not carrying through with the actions agreed upon.

The best BC can hope for on the ‘negotiating’ front is that Ottawa is willing to be merciful and spread the $1.1 repayment over 2 or three years, or deduct the $1.1 billion in 2012 rather than reducing BC’s revenue flow in 2011 by $1.6 billion ($1.1 billion repayment due for repealing the HST and $475 million July 2011 payment forgone by repealing the HST).

If the federal government is feeling punitive they could well charge BC $40 – $100 – $200 million for costs associated with the on then off HST agreement

However the repayment timing is resolved, by repealing the HST the province of BC will be reducing its revenue by the $1.6 billion it was to (or did) receive from the federal government to implement the HST.

BC will either have to make massive cuts to healthcare and education to cut $1.6 billion out of its budget or increase taxes, fees etc by $1.6 billion to avoid deep cuts to healthcare and education.

Proponents of repealing the HST may advocate borrowing funds to cover the $1.6 billion to cover the costs of repealing the HST, but borrowing funds will have costs – if the funds can be borrowed.

The province had an agreement with the federal government, accepted funds to implement the HST and now those leading the anti-HST campaign are talking about negotiating how much, if any, of the money paid the province by the federal government for the HST they will repay.

Would you want to lend money to a government that makes an agreement, accepts payment then backs out of the agreement? Would you want to do business with a province that does not keep its agreements? Would you want to lend money to a government that takes funds, doesn’t do what it committed to doing, then wants to negotiates how much it will repay?

The repeal of the HST would be as a result of a taxpayer revolt. How do provinces raise the funds to repay borrowing? That is right – through taxes. Are you going to want to lend money to a province that needs the money to fund a taxpayer’s revolt? What interest premium will be necessary to offset the perceived extra risk to lenders to get them to lend?

Then there is the reality that BC came close to having its bond rating lowered under its proposed borrowing/budgeting plans. What effect will having to borrow another $1.6 billion, because BC did not keep its word, going to have on the province’s credit rating?

Should the province succeed in funding the $1.6 billion it will be at a substantial interest cost – a cost that will eventually spread to all of BC’s debt.

One must also add to the cost of repealing the HST the extra $200 – $300 million dollars a year the HST would have added to the provinces revenue. That $200 -$300 million will either have to be replaced by increased taxes or program cuts – every year.

There is no ‘good’ outcome if the HST is repealed. There are simply differing degrees of costs and damage. Cost that could take the form of massive cuts to healthcare, education and other budget items; of large increases in taxes and fees; of large increases in debt and debt servicing costs; in damage to BC’s reputation for reliability and trustworthiness; the cost to the majority of BC businesses in 1) not having the benefits the HST confers on businesses and 2) having to switch back to GST and PST.

Costs that will, in keeping with demonstrated political (Liberal or NDP) behaviour, undoubtedly fall on those least able to bear them – the group that is also the least connected, least able to be heard and the least politically powerful.

Christie Clark’s declaration of candidacy for the leadership of the BC Liberal Party is the first time I have ever thought “this is a positive for the party and xxxxx (BC in this case)” at the start of an announcement speech and by the end of the announcement, based on what the candidate had to say, ended up thinking “this would be a disaster for xxxxx (BC in this case)”.

Interesting that in disqualifying herself for the Liberal leadership, as being capable of being the Premier of BC, Christie Clark has set out what is a (if not THE) defining issue for those seeking the leadership of the BC Liberals.

How Ironic that the issue that has plagued the BC Liberals for months, that ended Gordon Campbell’s ‘Teflon’ ability, that brought about Gordon Campbell’s resignation, not only remains a political hot potato (hence Christie Clark’s attempt to ‘duck’ the issue) but how they handle the critical HST issue is perhaps THE defining issue for those seeking the leadership of the BC Liberals – or the BC NDP.