Worst fear for B.C. business: a minority government

Future of some major resource and infrastructure projects would be in doubt under a government dependent on co-operation of opposition parties

Uncertainty over which party will lead the legislature following the May 9 election is raising business anxiety in B.C. | Josef Hanus/Shutterstock

The George Massey bridge could be shelved, liquefied natural gas projects delayed, thermal coal exports taxed out of existence, and B.C. could again become a climate action leader with North America’s highest, fastest-rising carbon taxes.

These are just some of the possible outcomes of a minority BC Liberal government compelled to make concessions to a BC Green Party with a sudden outsized influence in the B.C. legislature. The political landscape could also change if the BC NDP and Greens can successfully press for electoral reforms.

Or, it could be business as usual, if a final vote count next week hands the Liberals one more seat.

Following last week’s election results, some business leaders are now hoping a final vote tally May 22-24 will give either the Liberals or NDP a majority, because the last thing they want is a minority government.

“I think what’s very important is that we don’t overreact as a business community,” said Iain Black, CEO of the Greater Vancouver Board of Trade and former Liberal MLA. “Our role right now is to stay calm.”

But should a final vote fail to give the Liberals a minority, it could make for a bad investment climate.

“The business community does not like uncertainty,” Black said. “When you’ve got a minority government, you deal with a government that has to do two things to stay in power: they must compromise, and, No. 2, they must spend money.

“To stay in power, you need to appease the interests of those who are supporting you and that almost always boils down to money.

“Those two phenomena, by and large, the business community doesn’t like too much because we like governments that live within their means.”

An initial vote count in the May 9 provincial election gave the BC Liberals 43 seats in the legislature – one short of a majority – 41 to the NDP and three to the Green party.

But one riding, Courtney--Comox, which the NDP won by just nine votes, was so close that a recount is likely, and there are still more than 170,000 mail-in ballots, district office votes and other special ballots to be counted. That’s about 9% of the total vote. Those final votes will be tallied between May 22 and May 24.

In the meantime, Christy Clark will continue to be B.C.’s premier. Once the final vote is tallied, there are at least three possible outcomes:

•the Liberals could pick up at least one more seat, to give them a majority;

•the NDP could pick up three additional seats, to give them a majority; or

•there could be a minority NDP or Liberal government, in which case they would need to either form a coalition with the Green party or govern as a minority, dependent on the co-operation of the Greens.

Typically, minority governments in Canada don’t last a full term before the other parties trigger a confidence vote to try to force another election.

The Green party picked up two additional seats May 9, giving them a total of three on Vancouver Island. But should B.C. end up with a minority government, the Greens could wield a disproportionate influence.

Clark said she can work with BC Green Party Leader Andrew Weaver.

Weaver said he could work with a minority government.

But his starting position is that there must be electoral reform to enshrine proportional representation, and campaign financing reform to eliminate or cap large corporate and union donations. That alone could change B.C.’s political landscape in the Greens’ favour.

“A shift to proportional representation is necessary, not only to get what they [the Greens] consider their fair due, but also for their potential for future growth,” said Norman Ruff, political science professor emeritus at the University of Victoria.

But there may be some non-starters for Green-Liberal co-operation, and one of them is the Liberals’ key job creation plank, which is the development of a liquefied natural gas (LNG) industry.

“LNG’s not happening,” Weaver said, when asked May 9 if he could co-operate with the Liberals on that file. “So let’s move on to the new economy.”

That’s not the kind of signal that companies like Petronas – which is contemplating a $36 billion final investment decision – are looking for, said Ken Green, senior director of the Centre for Natural Resource Studies at the Fraser Institute.

“We’ve had a long process at this, and we just added a big dose of uncertainty, so I would say this is a big setback for getting investor certainty. I would guess foreign firms, particularly, are going to look askance at the election results and say, ‘We don’t see a concrete path forward on these projects.’”

While NDP Leader John Horgan has expressed some support for an LNG industry, he has vowed to try to prevent the Trans Mountain pipeline expansion. Weaver also opposes the project.

“The pipeline in particular – that puts that whole project in a precarious position,” Black said. “Not that the province has any powers to actually stop it, let’s remember. This is a federal project. But nonetheless, signals of uncertainty and unpredictability scare away investors.”

Greg D’Avignon, president and CEO of the Business Council of British Columbia, doesn’t think a minority government would necessarily stop major energy projects like the Trans Mountain expansion or the $36 billion Pacific NorthWest LNG project.

“Will it take a little longer to get some things done?” D’Avignon asked. “Yes. But those projects have already been approved; they’ve already gone through court cases. The decision to go ahead has already been made.”

But he agreed with Black that minority governments are bad for business and investor confidence.

“There’s going to be uncertainty for the next few weeks, but there’s going to be uncertainty past that,” D’Avignon said. “We’ll get decisions, but they will take longer. They will often be more complicated because there will be layered issues in those compromises.”

A key priority for business in the election campaign was transportation. While all three parties committed to matching federal funding for public transit and transportation, only the Liberals want to replace the George Massey Tunnel with a $3.5 billion bridge – something the B.C. business community strongly supports.

But it’s unlikely a Liberal minority government would get support from either the Greens or NDP on that project.

Environmentalists are cheering last week’s election results, saying both the NDP and Greens committed to enacting the recommendations of the Liberal government’s Climate Leadership Team, which includes raising carbon taxes annually by $10 per tonne, starting in 2018.

The Liberals plan to freeze the carbon tax until 2021, while the NDP wants to increase it to $50 per tonne by 2020 and the Greens want it to rise to $70 per tonne by 2021. Weaver might now have the leverage to get his way on carbon taxes. A key question is whether the carbon tax would remain revenue neutral, which would mean tax decreases elsewhere.

It was a Liberal government that introduced the carbon tax, and Josha MacNab, B.C. director at the Pembina Institute, now hopes the province can regain its position as a climate change leader.

“Due to Liberal government inaction in recent years, B.C. is guaranteed to miss its legislated 2020 target for reducing carbon pollution, and is far off track to meeting its 2050 target,” she said.

“So it’s positive that both the NDP and the Greens have committed to adopting the Climate Leadership Team’s recommended 2030 target. The election results represent a must-seize opportunity to get back on track.”