Democracy Watch: How to democratize political finance systems across Canada

Some politicians and commentators have recently made proposals that won’t stop big money from corrupting Canadian politics.

The most questionable claim is that the federal law is the best model. While the federal government banned corporate and union donations in 2007, its $3,050 annual donation limit for individuals ($1,525 to a party and the same amount to its riding associations) is much more than an average Canadian can afford.

As a result, wealthy people can still use money as an unethical way to influence federal politics, especially since they can give the $3,050 amount to more than one party. That high donation limit also facilitates businesses, unions and other organizations funneling donations through their executives.

Some have proposed that requiring donors to identify their employer would stop this funneling. However, donors would just claim they were not forced to donate, and no one would be able to prove otherwise.

Quebec learned this the hard way, as few have been charged in its corruption scandal even though an Elections Quebec audit found $12.5 million in likely funneled donations from 2006-2011. To stop the corruption, in 2013 Quebec lowered its individual donation limit to $100 annually, and required donations to be verified by Elections Quebec before being transferred to parties and candidates.

Some claim political parties wouldn’t have the money they need to operate under the Quebec limit. They conveniently fail to mention other elements of Quebec’s world-leading system, and also that email and social media make reaching voters less expensive than ever.

Quebec also has per-vote annual funding for political parties (as do four other provinces -- the Harper Conservatives eliminated it at the federal level), and public funding that matches the first $200,000 raised by a political party, and $20,000 raised by an election candidate. These amounts close the gap left by ending undemocratic large donations from wealthy interests.

Some argue against the per-vote subsidy – even though it upholds the key democratic principle of one-person, one-vote – by claiming it forces voters to give money to parties they don’t support. Actually, the $1-2 amount comes from taxes everyone pays and goes only to the party they support (and only if they vote).

Matching funds raised is also more democratic than other options as a party or candidate needs broad support to access significant funds, and the matching helps equalize the funding available to all.

True, the per-vote subsidy should not be too high – it shouldn’t provide more than half the annual funding for any party – to ensure parties can’t unjustifiably prosper by baiting voters with false promises to boost the votes (and money) they receive.

Many commentators also ignore the fact that the current voting system and other subsidies shift a lot of taxpayer money in undemocratic directions. For example, in the 2011 federal election the Conservatives received 24 MPs more than they deserved (they received 39.6 percent of the vote, but 54 percent of the MPs). Each of those MPs received about $440,000 annually in salary and for their offices, so the Conservatives received an undemocratic subsidy of $10.5 million every year until the 2015 election. Now the Liberals are receiving roughly the same amount as an unfair subsidy.

As well, the average individual donation to each federal party is only $100-250 yet people who donate up to $400 receive a 75% tax deduction. Even worse, wealthy people who can afford to donate the maximum $3,050 receive the huge subsidy of half that total as a tax deduction. These taxpayer-funded subsidies add up to more than $20 million annually.

Quebec’s system is much more democratic because its donation limit, and subsidies, require parties to maintain broad voter support in order to prosper financially.

Other key changes needed to stop big money include limiting loans as strictly as donations. Currently, financial institutions (and, in some jurisdictions, businesses, unions and individuals) can loan unlimited amounts to parties and candidates.

Campaign spending by parties, and nomination race, election and party leadership candidates, must be limited to no more than a dollar per voter.

Spending on advertising by third party interest groups must also be limited during campaigns – only the federal government and five provinces have such limits – and each third party should have to prove its supporters (or, in the case of a business, shareholders) approved the spending.

Election and ethics watchdogs must be required to do regular audits, including of politicians’ bank accounts, to ensure everyone follows all the rules.

Finally, to ensure fair issue debates in between elections, individuals and interest group should be required to disclose how much they spend on each issue campaign, and their funding sources. If that reveals a huge disparity in funding, and funding sources, then donations to issue campaigns, or at least paid campaign ads, should be limited.

These changes won’t stop bribery but they will discourage it by making it more clearly illegal, and by increasing the chances of getting caught. Until all Canadian jurisdictions (federal, provincial, territorial and municipal) make these changes, big money will continue to dominate, and corrupt, our politics.

Duff Conacher is the Co-founder of Democracy Watch and a Visiting Professor at the University of Ottawa