In the Chamber -- Grant Mitchell's Blog

Democracy and political party contributions

Posted 8/11/2011 by Grant Mitchell


Much has been made recently of publicly subsidized donations to political parties. I think this debate matters deeply to the health and vibrancy of our democracy.  I believe that the Government traded on public cynicism with political parties when it decided to phase the per vote subsidy out over next four years. While this will hurt the other parties considerably more than it will affect the Conservatives, none of the other parties, sensing public sentiment, has really resisted this initiative this time.

At the same time, the financing of political parties does have implications for a properly functioning democracy and there is a broader public interest in ensuring that opposition parties have the wherewithal to provide choice and debate. Given that the party in power will almost always have an easier time of raising money than opposition parties, the complete absence of public support for parties can truly skew the political process unreasonably in the favour of the governing party, making the kind of change critical to a fair and responsive democracy increasingly difficult.

Currently, there are several forms of public subsidy:

1. Donors are given a tax credit on annual contributions to national parties, and constituency organizations up to the prescribed limit of contribution ($1,100) in each of these categories. No donations are permitted from businesses or unions.
2. Donors are given a tax credit on contributions to leadership candidates of up to $1,100, one-time per leadership race. This amount does not renew annually. No donations are permitted from businesses or unions.
3. A percentage of national party and constituency organizations election expenses are reimbursed by the government directly after each election provided the given candidates receive a minimum level of votes.
4. The government pays parties a certain amount annually per vote received in the preceding election. This is to be discontinued over the next four years.

The latter two direct public subsidies were implemented to compensate parties for the loss of corporate and union donations, which were discontinued because they were seen to be particularly fraught with undue “special-interest” influence. Cancelling the per vote subsidy has been done without the Government acknowledging that there was this reason for the subsidy in the first place.

Right now, you simply cannot give more than the limits even though you would receive no extra tax credit from the public purse for doing so. The thinking is that $1,100 is low enough that politicians will not be unduly beholden their donors.

The cancellation of the per vote subsidy will represent a significant reduction in revenue to each party and , in particular, to the Conservatives , who received the most votes. While they seem to have great ease in raising money, even the Conservatives  are thinking about how to compensate for this reduction.
Here are some ideas on how we might increase the amount that donors can give in order to sustain the wherewithal of parties to contribute to real choice and debate in the political and electoral processes while not costing the tax payer anything more and while not enhancing the spectre of undue political influence:

1. The obvious way to offset the per vote subsidy cancellation is to increase the $1,100 maximum contribution limits in the various contribution categories. Probably, all the parties would agree with that, particularly if limit increases did not increase the tax credit. In that way, parties could raise more money from each individual up to some limit, let’s say $5,500, but there would be no additional cost to the taxpayer.  So, the tax credit would continue to apply to the $1,100 but not to the additional $4,400.

The question remains as to what is the threshold of contribution in total under which we need not fear undue gratitude by politicians to “big” donors. Pick a number. It seems to me even $5,500 is not unreasonable.

2. Allow the cost of conventions, say one annual national and one annual provincial, to be in addition to the other contributions. Right now, if an annual convention costs $1,100 (and by the time people fly there, etc,) there is nothing left over to give the party for its operations. Again, there does not need to be a tax credit on this amount, so there need be no cost to the taxpayer.

3. Create a new category of donation for the development and support of women candidates. While I would argue that this amount should be eligible for the tax credit given the importance to equality in our democracy of this issue. If public cost trumps this, then at least allow a special annual contribution, unsubsidized, from donors.

4. Renew the now one-time leadership contribution limit annually for leadership candidates who still have debt after the campaign and who have generally tapped out all the supporters who have maxed their one time contribution and would be happy to give more in a subsequent year, but simply cannot.

It is necessary, to be sure, to find a balance between the legitimate democratic imperative of some public financing of political parties and the need to ensure that politicians cannot be “bought”. But, it is by no means particularly difficult to do so. We can increase limits and add some categories without requiring public finance and up to limits that do not threaten undue political influence. In fact, a strong democracy really demands that we do.

I am in the process of developing a piece of legislation for presentation in this Chamber to amend the Elections Act to allow for these changes.

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