A reply to John Richards
by Doug McArthur
John Richards argues (“Tax policy by referendum,” Inroads, Winter/Spring 2013) that referendums are a bad way to make policy. He favours parliamentary democracy and electoral accountability. So far so good. But on the basis of my defence of the HST referendum in British Columbia, he then associates me with a somewhat ill-defined school (read American) that apparently supports policymaking through direct democracy as opposed to parliamentary democracy. That comes as a surprise to me.
I do argue in favour of the legislation in B.C. that permits voters under quite exceptional circumstances to require the legislature to review and revote a matter that has been previously decided. I do not consider that to be an affront to parliamentary democracy. Indeed I am a self-confessed champion of parliamentary democracy and deliberative politics. But I am open to ways of improving it.
Perhaps more egregiously to Richards, I also argue that the referendum in B.C. that rejected the HST was neither proof of irrationality on the part of voters nor an affront to democracy. I am quite convinced of the rationality of voters. However, governments and special interest groups try to game the system, and voters thus need all the help they can get.
First let me address the alleged challenge to parliamentary democracy in the B.C. system. It is true that aroused voters may, if they sign up in very difficult to obtain numbers across all constituencies over a short and defined period of time, require a review of a policy. The government must then decide either to vote on the issue in the legislature or to put it to a referendum. If it chooses a referendum the result is only advisory. It is up to the government to decide what it will do. The system is thus in effect a fairly nonthreatening “check and balance” on a government that overreaches itself in defying popular opinion. Rather than constraining the legislature, the B.C. system simply requires that any matter approved by a referendum go the legislature. The legislature is completely unfettered in how it treats the matter. Unlike the California system, which Richards seems to assume is the same, the B.C. system provides in fact only for a form of political protest.
Let me now turn to the oft-alleged irrationality of voters. Richards, like many defenders of the B.C. government, claims that tax credits for low-income voters addressed any legitimate objections to the distributive affects of the tax. However, something that the government and its supporters seemingly missed in the whole debate was the salience of the issue among middle-class voters.
In its opening explanation and defence of the HST, the government itself carefully noted that there would be a large transfer of the tax burden from business to middle-class consumers. This, it said, would be good for business and the economy. Later it enlisted supporters who drew on parallel claims made for a shift from a manufactured goods tax to a value-added sales tax, thus exaggerating the economic gains. Large parts of the middle class did not buy the arguments and they were not convinced by the belated argument that the benefits would eventually trickle down to them. To make matters worse, many didn’t think the government was convinced either; otherwise why would it have in effect lied by omission by not revealing that the tax was coming during the just concluded election? It didn’t pass the smell test.
It was among these middle-class voters that the anti-HST campaign was in effect battled out. These voters may or may not have been wrong, but they were not irrational. Many formed a rationally held belief that the trickle down and other gains would not be getting to them.
The lapse in rationality was to be found almost entirely in government circles, where the blind belief prevailed that voters would not lash out through the use of legislation that gives them a tool to engage in organized protest. Oddly enough, it was an apparent belief by the government and its supporters that voters are irrational that was at the root of the badly conceived and executed enterprise.
A small amount of political intelligence applied at various times might have led to a different conclusion. Had the government not in effect deceived voters in the election, it would then have engaged them in deliberations. These deliberations would have contained the voter revolt that eventually found expression in the referendum. Indeed the referendum might not have been forced on the government at all. And even if it had been, there might have been no political necessity to commit to a complete reversal of the HST policy. The legislation certainly does not require it. The simple fact is that by the time the referendum was held, the government was discredited and in massive disarray. In the end it was the government that voters voted against. And it was the government that had to give. The HST was the collateral damage.
None of this resulted from a breach in parliamentary democracy. Along with most, I agree that parliamentary democracy is about as good as it gets. That doesn’t mean that it must be frozen in form and time. If governments insist on taking voters for granted, it is a good thing to provide voters with tools that they draw on to check arrogance and deceit in the system. Parliamentary democracy requires information and transparency, respect for voters and honest deliberation. Even if a good tax policy measure should flounder in the face of government deceit and arrogance because of it, that is not a good argument to oppose a more vibrant set of checks and balances. The deterrent effect alone is well worth it.
Unlike Richards, I embrace the B.C. system – and thus the HST result. If nothing else, it serves as a reminder to future governments that voters can be militantly rational. And almost certainly, a government that is ignorant of history and intent on short-circuiting democracy will at some time again face such voters. Hopefully, reminding such a government of the HST will be enough to deter it.
Doug McArthur is a professor in the School of Public Policy at Simon Fraser University in Vancouver.