party finance

Towards a citizen-based system of party finance?

Harold Jansen — Thu, 27 Nov 2008 14:02:58 -0700

I always enjoy reading or listening to Andrew Coyne, even when I think he's wrong. Today's blog post praising the proposed elimination of the per vote subsidy is an interesting defence of the Conservatives' announcement. In the post, he argues that this moves towards a citizen-based finance system for political parties, arguing that party support should be a private matter between citizens and parties. If that's what we want, the problem is that the per vote subsidy isn't the biggest culprit in this respect. Remember that there are three sources of public money to parties:

the generous tax credits for individual political contributions
the $1.75 per vote per year subsidy (now $1.95 because of inflation)
the reimbursements of election spending for parties and local candidates

The first two of these sources of public money are at least tied to individual public support. You don't get #1 unless you attracted donations and you don't get #2 unless you earned people's votes. But #3 is entirely dependent on how much you spend, which is almost completely unconnected to popular support (provided you meet the minimum vote thresholds of 2% for a party and 10% for a candidate). That move would be far more consistent with the logic Coyne provides than what the government is doing.

The end of $1.75 per year per vote?

Harold Jansen — Wed, 26 Nov 2008 19:33:28 -0700

According to the Ottawa Citizen, the Conservatives are going to propose the end of the $1.75 per vote per year subsidy that came in 2004 as part of the reforms to party finance. The Conservatives are justifying this by saying that the country can't afford this in times of economic downturn. That explanation doesn't really make a lot of sense, considering that the $28 million that this cost taxpayers in 2007 is a tiny part of the multi-billion dollar federal budget. What seems more likely is that the Conservatives have wanted to do this since they can easily live without the subsidy. Only about a third of Conservative revenue comes from the state subsidy. Compare that to around 60% for the BQ, two-thirds for the Liberals, and half for the NDP and Greens. The economic crisis provides a nice pretext for cutting the subsidy.

It's hard to see how this is going to pass in Parliament since this would severely hurt all three opposition parties, who together have a majority of the votes in the House. How hard will the Conservatives push on this one?

How do you pay off a $200,000 leadership debt? $1,100 at a time

Harold Jansen — Tue, 21 Oct 2008 20:15:41 -0600

So, Stephane Dion has announced he's quitting ... eventually. There's lots of speculation as to why he's staying, but one popular theory is that he's sticking around until the party crowns a new leader in order to pay off his lingering leadership campaign debt, estimated to be over $200,000. I thought it might be useful to quickly review the law over leadership finance to understand how daunting Dion's task is. When the Liberals changed the party finance laws in 2004, they put in a $5,000 cap for a number of kinds of donations, including to leadership contests. When they brought in the Accountability Act, the Conservatives then lowered that to $1,000, which when adjusted to inflation is now $1,100. That means that a person can donate a total of $1,100 to all of the contestants in a particular leadership contest. Unlike the other donations caps, this is not a limit per year, but a limit per leadership contest. So, to retire this leadership debt, Dion has to find at least 200 or so new people who did not donate the maximum amount to his or to any other of the other contestants in the 2006 contest and convince them to give up to $1,100. And remember that this is not getting people fired up with your vision of where you intend to take the party in the future. Instead, it's to get people to fund your campaign retroactively for where you took the party, which is, as we know, to defeat on October 14. And, to make matters worse, Dion will largely be fishing from the same pool of potential donors as the current crop of leadership contestant. The word "daunting" barely captures how difficult the task is.

I'm not sure the full ramifications of the the 2004 changes to party finance have been fully worked out, but I'm starting to conclude that the leadership donation rules are overly restrictive, especially post-Accountability Act. I'm sure the Conservatives (and the NDP and Bloc who supported the legislation) had a bit of a snicker over how difficult the Accountability Act has made life for the Liberals. But here's the thing. At some point, Stephen Harper, Jack Layton and Gilles Duceppe will all quit and their parties will have to hold their leadership contests under these rules. And they may find that their candidates also struggle under the restrictive limits.

Money makes the campaign go round

Harold Jansen — Wed, 24 Sep 2008 08:36:13 -0600

I had to take a little hiatus from blogging about the election to finish up a paper for a conference this coming weekend. In this paper, my co-author, Lisa Young of the University of Calgary, and I look at patterns of fundraising and spending since the adoption of the changes to Canada's electoral laws in 2004. You may remember that the government banned corporations and trade unions from donating to political parties, enriched the election expenses reimbursement given to qualifying parties (those who get at least 2% of the vote nationally or 5% of the vote in the districts in which they run candidates), made individual donations to poltiical parties more advantageous by strengthening the individual political contributions tax credit, and gave every qualifying party (2%/5%) $1.75 per vote per year. As the media have reported, the Conservatives have been raking in money like crazy.

(Aside: I have a mental picture of Stephen Harper and Doug Finley in a big room with money and then Harper calls out "money fight!" and they fling bundles of money at each other. You know, like Smithers and Burns did in The Simpsons. But I digress....)

What we look at, though, is the fundraising costs associated with raising that kind of money. Once you factor that in, things get a bit more interesting. The Conservatives are spending 4-5 million a year more on fundraising than the Liberals, which indicates that the lead isn't as big as you might expect if you looked at the raw numbers. Still, in 2007, the Conservatives took in about $8 million more than the Liberals, even after you account for fundraising. With a national spending limit of around $20 million, you can see what an advantage it is. In fact, the major constraint on the Conservatives is the election expenses limit.

But the Conservatives are in excellent shape to weather its third national campaign in the last four and a half years. But this is taking a financial toll on the Liberals, another reason why Harper was interested in ignoring his own fixed election date law. As Tom Flanagan famously argued in a Globe and Mail column, these elections are the Punic Wars, designed to grind down the Liberals and use up their resources.

We also find evidence that all parties have been able to spend more in election campaigns since the new rules came in. There has been a sharp increase in BQ and NDP spending suring elections as well. And the Greens? They used to spend about $16,000 on their entire national campaign. In the last two elections, they spent close to a million. Arguably, the new laws have contributed to making Canadian politics and elections more competitive than they have been in some time.

Mason has a point (or at least the start of one)

Harold Jansen — Tue, 12 Feb 2008 13:24:42 -0700

NDP leader Brian Mason is proposing an end to corporate and union donations to political parties in Alberta. Mason is pitching this as something that would eliminate (or at least reduce) corruption in Alberta. I'm not entirely convinced that this will make much of a difference on that front, but Mason is correct in pointing to the deficiencies in Alberta's party finance laws. Compared to other provinces in Canada (and to the federal government), Alberta has very little in either regulation of spending or in public reimbursements that would help to make political parties more competitive and able to communicate with the public. A ban on corporate and union donations might be part of the solution, but it needs to be part of a more comprehensive review of how we regulate party and election finance in this province.

Incidentally, this also points to the relative lack of discussion about the democratic deficit in Alberta so far in the election. Alberta's democractic institutions are in sorry shape, but Mason's foray into this field has been the only discussion of this thus far. I'm thinking this doesn't resonate particularly well with voters, who seem more preoccupied with what government does, not how it does it or why how government does things affects what it does (if you follow me).