Canadians Come Clean
by Aaron Freeman
Multinational Monitor magazine,
The Canadian government has introduced
sweeping legislation aimed at reducing the influence of money
The bill, introduced by the governing
Liberal party in the federal House of Commons in February, would
radically transform how elections are run. The rules would ban
donations to parties from corporations, unions and other organizations,
and cap donations from these sources at $1,000 (US$650) for individual
candidates. Donations from individuals would be limited to $10,000
Prime Minister Jean Chretien himself introduced
the legislation in the House of Commons on February 11, announcing
it was "a bill that will change the way politics is done
in this country, a bill that will address the perception that
money talks, that big companies and big unions have too much influence
on politics, a bill that will reduce cynicism about politics and
politicians, a bill that is tough but fair."
To make up for the shortfall in party
revenues, there are new public financing provisions, the most
significant of which would provide parties with an annual subsidy
of $1.50 per vote received in the previous election. Current measures,
such as a partial reimbursement of election expenses for parties
and a tax credit for donors, would also be increased. The cost
to taxpayers of the new public financing measures is estimated
at approximately US$25 million per year.
New disclosure requirements would close
many of the loopholes in Canada's 29-year-old system for reporting
donations. Donations that are currently outside the disclosure
system-such as those to party leadership races (similar to the
U.S. primary system), and local candidate nomination races - would
be brought under the law.
Canada already has election spending limits
for both candidates and parties, which will be maintained, although
buried in the law is a provision increasing the party expense
limit by 13 percent.
While the new law would help limit the
influence of money in Canadian politics, key loopholes remain.
Donors would still be allowed to funnel money to trust funds,
a ubiquitous term covering accounts controlled by a candidate
or a party. While the limits and disclosure obligations would
apply to money that is moved from these funds to campaign coffers,
the funds could continue to receive secret money that can be used
for a candidate's personal benefit, such as for his or her retirement.
In addition, disclosure of political donations
in Canada occurs just once a year, six months after the end of
the year. As a result, it is usually impossible to know until
long after a piece of legislation has passed whether donations
were made by those with an interest in the legislation while it
was being deliberated on by government officials.
The $10,000 individual donation limit
is also seen by many as too high. Two Canadian provinces, Quebec
and Manitoba, have complete bans on corporate and union donations,
and a limit of $3,000 on all individual donations.
While the Ottawa-based citizens group
Democracy Watch and other organizations have been pushing for
the reforms contained in the law for many years, the prime minister's
motives for introducing the bill this year is the subject of much
speculation in Ottawa. Recent scandals involving Liberal Party
donors receiving plum contracts have also led many to speculate
that the prime minister does not want to leave a legacy tainted
by these events. There are several police investigations underway,
and if they reveal that misconduct has taken place in the awarding
of these contracts, some say the prime minister will want to point
to changes he has initiated to ensure a cleaner process.
"Contracts have been awarded in an
irregular fashion to companies that give handsome sums to the
Liberal Party," says Andrew McIntosh, an investigative journalist
with the National Post who has broken several political corruption
stories. "This bill is intended to make it look like Chretien
is responding to the problem of the influence of corporate money
The bill comes as Chretien is in his last
year of power, forced to step down after 10 years as prime minister
by his party's own caucus, which by and large supports leadership
contender and former finance minister Paul Martin. In the leadership
race that is underway, Martin has been criticized for refusing
to disclose many of his donors. Many view the legislative initiative
as a way for the prime minister to focus attention on this aspect
of his long-time rival's campaign.
"The appearance of this legislation
at this time is too driven by internal Liberal politics and needs:
the need of the Prime Minister to whitewash various scandals from
his record before he retires; the need to deal with his leadership
rival within the Liberal Party; and ... the need to deal with
the bank debts of the Liberal Party itself," says Stephen
Harper, leader of the opposition Canadian Alliance Party.
While the three other opposition parties
agree with the principles of the proposed law, and plan to support
it, Harper argues that taxpayers should not be forced to further
subsidize political parties. "When the Liberal public relations
rhetoric is set aside, the true nature of the bill is simply the
replacement by the government of its addiction to large business
and union donations with an addiction to taxpayer funding."
The prime minister will also have to contend
with opposition within his own party. Liberal Party President
Stephen LeDrew refers to the idea of banning corporate donors
as "dumb as a bag of hammers," and some Liberal members
of Parliament agree with this sentiment. But polls show strong
public support for the corporate and union donation ban, and Chretien
has announced that the vote on the bill will be a confidence vote,
meaning that if it fails to pass, the government may fall. As
a result, most Liberals are expected to vote in favor of it.
In the United States, the McCain-Feingold
Bipartisan Campaign Reform Act, passed last year, bans all "soft
money"-unregulated donations that provide a loophole similar
to those that the Canadian reforms would address. However, some
are challenging the bill in court, arguing it violates the U.S.
Constitution's freedom-of-speech provisions. In Canada, however,
constitutional protections are balanced differently by the courts,
and freedom of speech is weighed against democratic rights such
as electoral fairness. As a result, a legal challenge to the Canadian
law would be very unlikely to succeed.
One of the biggest differences between
the Canadian proposed law and existing U.S. Iegislation is in
the public financing provisions, causing some U.S. reform advocates
to take an interest in the Canadian initiative.
"This bill recognizes that running
a democracy can't happen on the cheap, and that parties need money
in order to educate voters and mount effective campaigns,"
says Susan Anderson, a senior program adviser with the Washington,
D.C.-based Public Campaign. "By providing public funds while
also limiting a political party's access to private funds, the
parties may begin to listen again to their citizen constituents,
not just their cash constituents."
The bill has been referred to a parliamentary
committee, which will review and propose amendments before returning
it to Parliament for final passage, expected in June.
Aaron Freeman is a founding director of
Democracy Watch and a columnist with the Hill Times, Canada's
Reforming the Electoral Process