Selling the HST: Kissing a toad that was a prince, or putting lipstick on a pig?
A five year, interest free repayment plan on the $1.6 billion owed to Ottawa is a good first step to the unraveling of BC’s Harmonized Sales Tax. As Finance Minister Kevin Falcon and the newly minted tax panel mull how to improve the 63 year-old PST, B.C.-watchers from around the world must be shaking their heads in disbelief.
Why turf a tax that makes Canada the “best country for business”? That headline from Forbes Magazine largely credited the HST with earning Canada top spot in the 2011 global business ranking.
“What didn’t happen?” might be the better question.
Enough has been said about how the tax was rolled out. What lessons can be learned from trying to sell the HST? And how are those lessons transferrable to other brands and corporate communications strategies?
You’d be hard pressed to find a product today as unpopular as the HST at its birth. Many analysts saw it as damaged beyond hope with public opposition cresting at 82% in April 2010.
Riding the wave of public dissent, FightHST put their stamp on the tax early, calling it a “transfer from big business to consumers” and “an erosion of democracy.” Some reporters labelled it the “hated” HST.
Lesson learned is to get out early and define your issue first. If you’re trying to turn back the clock, make sure you have enough time and horsepower to move the dial of public opinion.
Another takeaway is to make sure you’re talking to all audience groups. Every vote counts. That means non-English-speaking communities need to be a large part of any fact-based communications campaign. When the ballots were counted, Chinese Canadian voters widely rejected the HST in several Lower Mainland ridings, including those where the vote traditionally supports the B.C. Liberals.
The gradual shift, however, in public support for the HST showed how to organize effective two-way symmetrical communications (PR shop talk for mutually beneficial communications that listen and lead) and come close to snatching victory from the jaws of electoral defeat.
After the rocky rollout of the HST, voters wanted to send a message to government. They expected consultation. They wanted facts. They wanted a break from the rising cost of living.
The B.C. government delivered by negotiating change with the public for mutual benefit. They started by altering the circumstances around the tax, and then changing the tax itself.
Step one: Premier Gordon Campbell resigned in November 2010. Around the same time, the HST Information Office and the Independent Panel were formed with a mandate to educate British Columbians on the choice between the two tax systems. Shortly after, pollsters showed a sudden surge of support for the HST.
But a sales job on the business-boosting merits of the 12% HST wouldn’t measure up with voters. The harmonized tax needed to be more than the old PST/GST. In fact, it needed to be less. Like a slightly damaged toaster, the HST had to be marked down. If not, it was in real danger of popping up as proverbial toast.
In response, newly selected Premier Christy Clark organized a public engagement process as part of an HST policy review. The upshot of that was an announcement from Finance Minister Kevin Falcon to legislate a future rate cut to 10% from 12%.
But a policy change in Victoria commands about the same public attention as a Canadian feature film premiere. Selling the value of the New HST from a deficit position was the assignment taken up by the B.C. business community through the Smart Tax Alliance. The challenge was to reach and connect the benefits of the 10% HST to the everyday lives of British Columbians.
A well-integrated earned media, digital media and ad campaign profiled small-business employers talking about the HST and how it was already creating new jobs. The message resonated with British Columbians feeling the pinch of financial insecurity. The next round of polls showed supporters of the HST had outnumbered those favouring the PST/GST.
FightHST was on the ropes. Fearing a pro-HST vote, the B.C. NDP and some large public-sector unions came out swinging shortly after with their own media campaigns to hold their supporters' feet to the fire.
By the time the ballots were cast, FightHST, the NDP and Big Labour had surrendered their 82% advantage but still came out ahead with a 55% referendum win.
Lessons learned?
- Define your issue first
- Negotiate and create a win for soft opponents and undecideds by changing the circumstance and/or changing the product for mutual benefit
- Listen to audience groups with research and two-way communication channels
- Power your communications with more than enough time and resources
- Build on research-tested messages, messengers and strategies that connect with people and their lives, and
- Leave no stone unturned when reaching out to identified audience groups, including ethnic communities that have their own media markets
The provincial government’s negotiated solution with voters, amplified by the Smart Tax Alliance’s persuasion campaign, turned the HST toad into a prince for 45% of the voting electorate. Over 430,000 HST opponents from April 2010 converted to HST supporters a little more than one year later.
More voters, however, still saw lipstick on a pig, suggesting there are limits – assailable perhaps under the right circumstances, but limits nonetheless to what the market will bear for damaged goods.
Victor Vrsnikis the principal of SPIRE Public Relations and former communications director of the Smart Tax Alliance.
Comments
HST
Thanks for the analysis on the HST Victor. I recently used the HST debate in BC with a university class at RRU, putting it up against Peter Barthe's Congruency Test to determine where the gaps were on this issue. For those not familiar with the Congruency Test, it's a communication theory that says that depending on where the gaps exist (between expected vs. actual vs. perceived performance) helps to determine the remedy for an issue ie. if there's a gap between expected and actual performance, it's a strategic issue and the org needs to change what it's doing; if the gap is between actual and perceived performance it's a tactical issue and the org needs to change how it's doing something; and if the gap is between expected and perceived performance it's a communication issue and the org needs to communicate what it's doing.
Interestingly, most of the gaps identified on the HST issue came up as strategic and tactical. Generally, people felt that there was a lot of communication done on both the pros and cons of the HST. The strategic issues identified were that it wasn't delivering what it was promised to do: new jobs, good for business, revenue neutral. When in reality, BC lost 10,000 jobs the year after the HST was introduced, the HST was good for big business and not so for many small businesses, and it generated significant new tax revenue.
The tactical issue of course was the way the HST was introduced.
The learning from this discussion was that communication in and of itself can not always build public support. Sometimes organizations need to change what they're doing or how they're doing it to garner public acceptance -- the focus of your second lesson learned.
Thanks for weighing in
Thanks for weighing in Sharlene. Your final point is the one I most struggled with. What are the limits the communication?
The needle of public opinion moved dramatically from April 2010 (82% HST opposition - Angus Reid) to referendum day (55% HST opposition), a date, incidentally, that the BC Government deliberately moved up. In hindsight, would more time and resources have tipped the scales? Hard to say. Opinion may very well have plateaued with entrenched positions resistant to change.
Another question I have is how to isolate the variable that voters defeated the HST to punish the government. As is the case in most controversies, the denial of fault becomes the story and overshadows the fault itself. Without restoring sufficient credibility and trust with voters , it could be argued that it mattered little how the HST was changed to curry favour.
I like your congruency model for finding the gaps. It's true at the outset voters believed the HST was bad for some small business and collected more revenues. I'm not sure that voters held the perception that jobs were lost and hence it was not living up to expectations.
There appears to have been an actual net gain of 7,800 jobs from July 2010 (HST implementation) to July 2011 (Stats Can Labour Force Survey: http://www.statcan.gc.ca/daily-quotidien/110805/t110805a4-eng.htm.) Media regularly reported on monthly job numbers.
Voters came around to see that the HST was in fact good for business and the economy. An August 29 Ipsos poll found that most respondents believed the outcome of the final HST vote had a positive impact on their families but a negative impact on the overall BC economy.
Voters objected to HST impacts on their personal finances (haircuts and dining out, etc). HST benefits to the economy and jobs would not trump the immediate self-interest argument.
Hence,the HST was doing what it was promised to do. But that promise was not sufficiently convincing, even with the scheduled rate cut to 10% from 12.
To your point, the organization had to change what it was doing but the change was not enough. Perhaps an immediate rate cut would have made a difference.