Monday, August 16, 2010

Debate on political financing methods spreading

It was good last week to see more debate in broader circles around the ways we should be funding the political system in Canada, and possible reforms. Things got kicked-off by a column in the Globe and Mail from Jeffrey Simpson, where he largely echoed an argument I made earlier in favour of ending the per-vote subsidy but raising individual contribution limits:

If we want parties to be healthy, they need money to do their work. And if we don’t want public dollars to help them, then individuals should be encouraged to give what they can to fill in the public subsidy – which will mean raising the individual limit above $1,000.

That’s the fair tradeoff: End the public subsidy, all right, but raise the individual contribution limit.
Alice Funke of The Pundit's Guide also weighed-in with her usual detailed statistical analysis, examining the dependency of each party on the subsidy and noting that rumours of the BQ's likely death without the subsidy are largely exaggerated:
The Bloc raises enough at the riding and candidate level each year alone to run fully funded campaigns after the candidate rebates, and yet it is able to win fully two-thirds of the province’s seats spending on average less than two-thirds of the limit in each constituency. Combining the riding-level surplus with its central fundraising would still allow that party to adequately finance its central campaign, after the central rebate is taken into account. We also know it costs significantly less to run a campaign across a single province in a single language than it does to run a national and bilingual one.
It's good to see more detailed, substantive debate happening on an issue that, in the past, has largely been confined to the Conservatives threatening to pull the subsidy and then everyone speculating if the opposition will risk an election over it or not, instead of an examination of the merits of different funding regimes.

You can read my original post on the topic here, but in a nutshell my argument is quite similar to Simpson's: end the per vote subsidy but raise the individual donation limits while keeping the union and corporate bans in place. Dan Arnold has also weighed-in on the topic.

I should clarify my original argument a little, as it was seen by some as a partisan argument for a system designed to best advantage my party and disadvantage it's opponents. Obviously that's true in a sense; I'm a partisan, guilty as charged. But that wasn't the main point of my argument; it was more about strategy.

I was trying to say that if the Conservatives keep trying to push ending the subsidy as a wedge-issue we should outflank them by counter-proposing ending the subsidy but only with raising individual limits. To those who say we shouldn't be funding political parties with tax dollars, this is a perfectly reasonable counter-proposal that can't be dismissed out of hand.

The Conservatives would either a) back away because such a scheme would likely see the Liberals recover their fundraising levels (which they don't want), ending the move to kill the subsidy and maintaining the status quo b) accept the proposal, increasing the fundraising capacity for all parties (but strongly benefiting the Liberals, who have relied on larger donations), or c) reject the counter-proposal and carry on trying to end the subsidy with no other changes to increase capacity, which would expose their strategy as having nothing to do with principle and everything to do with partisanship, which won't play well with John Q Public.

That's what I was trying to argue with my initial post: a political strategy the Liberals could employ to neuter one of the big wedge issues the Conservatives have continually been threatening to employ, and indeed have in the past (see the fiscal update/prorogation drama.) It's also one that would resonate with the libertarians amongst the CPC.

Putting aside the politics, I have nothing against the per vote subsidy and would be fine seeing it continue. However, if it is ended I believe it is only fair to increase the fundraising capacity of all parties by raising the individual donor limit. And even if the per vote system remains, I do not believe their is a reasonable argument to be made for capping individual donation limits at $1100. I think they should be closer to the older $5000 level.

I accept the argument for banning union and corporate donations. But I say if a private individual has more than $1100 and wants to use it to support a political party or parties, they should be free to do so and you need a pretty strong argument to restrict them.

I don't accept the argument that someone donating between $1101 and $5000 would be gaining undue and improper influence with a government or politician. Frankly, if someone can be bought for so little, we have much bigger problems to deal with. And with all donation information being posted online, and with other tools such as the lobbyist registry, there is plenty of transparency to see who is donating what and if it is leading to anything improper. I'd rather have strict controls to identify and punish abusers than punitively restrict everyone. And $5000 should be a low-enough limit to keep such fears at bay.

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Greg said...

I accept the argument for banning union and corporate donations. But I say if a private individual has more than $1100 and wants to use it to support a political party or parties, they should be free to do so and you need a pretty strong argument to restrict them.

How about, rich individuals already have enough access to power without giving the ability to buy more?

Jeff said...

How about $5000 can't possibly buy the kind of influence that anyone would have to be worried about, and there are plenty of checks and balances in place to see if anyone is abusing the system, so get off by back, big brother?

Ted Betts said...

What are your thoughts on ending the tax deduction subsidy? i.e. John donates $100 to the CPC, gets $75 back and so the rest of us are subsidizing the CPC to the tune of $75.

Seems to me this is far more undemocratic and far costlier than the per vote subsidy.

I think your and Simpson's ideas are winners. I think we knock it out of the park if we suggest a reduction in the donation deduction from 75% to 50% so that politicians are not taking money away from charitable donations.

As far as strategy is concerned,
(1) I think it would sell well with the public, especially those who work for charitable organizations and I'd love to see what argument the CPC could come up with that politicians deserve the money more than charities (especially when much of their base of social conservatives are strong advocates of charitable giving)

(2) if we made all donations 50% (right now, there is actually a range of 75% for lower amounts and down to 33% for donations above $500 (or around there), coupled with your proposal of increasing the max, we would have a donation system that could better reflect Canadian support and benefit those parties that convince supporters to donate to the maximum. said...

I personally think raising individual limits while taking away the voter subsidy has an elitist appeal to it. What your suggestion comes down to is parties can focus more on the rich and less on the individual average voter.

Not to be contrary but a political donation of $5,000 does have great sway and politicians have abused their office for far less.

The idea of reducing the tax refund also has troubling implications as we want people to contribute, increasing public discourse is a good thing, it is a public good. I don't care if I'm funding 75% of Conservative contributions because I'd also be funding 75% of the Liberals, and all the while Canada only becomes the better for increased debate and political opposition.

Jeff said...

Scott, I find it hard to see how $1100 is (whatever the opposite of elitist is) but $5000 is somehow elitist. To carry your thinking through, shouldn't we ban donations entirely? Some people can't afford, say, $20, so that's elitist. My point is, at what point do you draw the line, and what is your rationale for drawing it where you do?

And as I mentioned, it is very easy to track who donates what, and if that leads to nefarious doings, which then can and should be punished. But why should I be prohibited from making a legitimate donation because someone else could do something wrong? That's like saying I can't use a fork to eat with because someone else could stab someone with a fork, so let's ban forks.

Ted, I think I could support a reform to make the tax treatment for political donations the same as the tax treatment for charitable donations.

And, frankly, I'd also consider making the charitable donation regime as generous as the one for political donations.

CanadianSense said...

The Liberals would benefit the most with large donations from the Bay Street donors.

Sorry the cap of $ 1k forces every political party to reach out and actually have a large number of donors making it more representative of a larger group.

The CPC would lose ten million per year if we eliminate the political party subsidy.

Add up the yearly figures and over a decade over $ 300 million have gone in party welfare.

I would like the closing of loopholes for loans for leadership by politicians.

Kim said...

I couldn't afford to donate to political parties and I know alot of people who don't have any spare cash. The left of centre parties would not be able to compete, because they appeal to the poorer segment of society.

I also think that political parties are getting in the way of democracy, with MP's having to vote with the party line, as opposed to their constituents wishes.

Jeff said...

CS, and the CPC would also be free to raise in larger amounts. You want to restrict the system to the fundraising methods that best favour the CPC and exclude those that best favour the LPC. My proposal would allow each party to raise in the ways they do best.

On another note, how about Ted's proposal of lowering the tax subsidy for political donations? If this is really about tax dollars and subsidies, that would have a far bigger impact.

Jeff said...

Kim, if there's research to the contrary I'd be interested in seeing it but I don't think it can be argued there's any correlation between income and the left/ring spectrum. I know lots of wealthy lefties and lost of righties of lesser means.

Ted Betts said...

Don't let CS mislead you either, Jeff. The CPC would in fact benefit the most from raising the limits. They have far far more donors who max out their donations. When Harper reduced the limit from $5400 to $1000 he did so not because he couldn't get the max but to kneecap the Liberals because he knew they had too heavy a reliance on big donors.

Raising the limits creates a fairer, more just campaign limit while being realistic about the money necessary to fund a modern campaign, which only helps democracy by giving Canadians real options. said...

There is such a thing as relativity. Allowing wealthier people to donate more and have more influence is more elitist than a limit of $1100.

These limits are not to make contributions affordable, but to reduce the influence of the rich. So if people cannot afford $20 fine, but those who can won't have hardly any more influence because the vast amount of contributors now necessary acts as a safe guard against that from happening.

As to the question of where I draw the line, the answer comes from the argument of reducing the influence on politics of a few.

If the limit is $5,000 a federal party that spends 20 million in an election can just focus on 4,000 supporters, that's just 400 a province. If the limit is $1,100 that same party must now focus on 18,200 supporters or 1,820 supporters a province.

In addition it can easily be understood that there is a relationship between donations and influence. Someone would be more willing to donate if their contribution bought them sway of some kind. With smaller limits there will be less of a probability that the larger pool of supporters the party must focus on will donate the maximum.

To state more clearly, with only focusing on 4,000 supporters to fund a party (which is more doable for a political organization), each contributor is more likely to donate the maximum $5,000 as they will see a greater return of influence. If the party must focus on 18,000 supporters, any influence offered in return for the maximum donation of $1,100 is likely to be much more insignificant and thus those supporters have less of an incentive to donate the maximum.

CanadianSense said...

I am not a donor to any political party or collect any payment from a political party.(Anyone else?)

The first part is voluntary and each party must solicit the funds.

If a party can't convince you to open your wallet it will die a natural death. Miss the Rhino party yet?

Engagement through Corn Roasts, dinners should be used to generate donations.

Donating over 6% of your average income after taxes to a political party does seem a tad elitist.

Don't you think other charities are more pressing?

If you are making in excess of 300k a 5k donation to the Liberals may appear reasonable.

When Chretien used his majority to reshape political financing he may have not anticipated the LPOC would be unable to attract a large number of small donors to match the upstart Reform party.


He may have wanted to protect his legacy and cripple the LPOC for years to come.

Ted Betts said...


I'm with Jeff and Simpson and Jean Chretien on the amount of the limit. I really don't think anyone person donating $5000 is going to have much influence. I really don't think that a party is going to be beholden to anyone or be so desperate that it needs that single donation of $5000 that there is really any practical influence to be won. Campaigns costs tens of millions of dollars and one $5000 donation is going to get you nothing.

Especially when you paint the numbers as you did: one donor out of 4,000 who have maxed out? You'll get a rotodialler thank you from the leader and maybe a photo with him for your desk (if you go to Ottawa to get it). said...

Ted I know you were quite active in the Liberal Party so I'm not quite sure how to understand your position. I haven't done much within the party but I have spoken with executive members and have been at events where special treatment was given by executive members and prominent Liberals to members who donated 1,100. I can only imagine what would occur if they had contributed $5,000.

I don't think anyone can deny that a federal party can reciprocate far more to 4,000 supporters, as that's only 400 a province, than 18,000 supporters, at 1,800 a province.

I think political parties when given the opportunity are not just vulnerable to influence peddling but prone to it. I think the Liberal Party if anything should be sensitive to this.

CanadianSense said...

Sorry Ted you are proving my point.

When Harper reduced the limit from $5400 to $1000 he did so not because he couldn't get the max but to kneecap the Liberals because he knew they had too heavy a reliance on big donors.

The PM has led a minority since 2006 with the support of at least one political party to pass their agenda. The coalition can introduce non-confidence and ask the voters if this issue or ANY issue is important.

The elitist tag sticks for those who are 'connected' or have the financial resources.

Why should a small number of Big Fish have undue control-influence the Liberal Party?

I am in agreement with Scott V.I.P.'s don't need to have more influence/control of the political parties.

The Laurier Club Liberals as well as max donors in other parties probably don't stand in the same line as the small donor.

Campaigns cost $ 20 million every three or four years. The majority is television. Less involuntary tax funding means less television ads, we all win.

Koby said...

As usual, I disagree with you. One, allowing individuals to give $5000 is letting corporations in through the back door. Two, such a move is anti democratic. It limits choice. Without the voter subsidy there is no Green party. Without the voter subsidy, the NDP is not able to compete with the Liberals and Conservatives. Without the voter subsidy it is Liberal Tory same old story.

CanadianSense said...


the removal of the subsidy does not eliminate the NDP or Greens.

It will hurt every party and reduce the ability to go to the polls before a full mandate and fund a $ 20 million dollar campaign that advertising television predominately eats up.

So the two front runners will NOT be able to afford large media buys and the smaller parties with their grassroots will be on a fairer footing.

You ignore the two front runners are able to staff, advertise with bloated war rooms with the $ 10 million CPC and 7 million LIB per annum.

The Rat said...

$5000 isn't much to some, I guess, but I'd struggle to donate $1100 were I desirous of doing so. I'm not, thankfully.

Still, has anyone ever heard of a guy named Joe Volpe? Seems this guy had every member of a family donate the maximum to his campaign. Some cynical people felt it was absurd that a child of 12 would donate that kind of money to Joe but at least we know that the child wasn't able to buy influence with Joe for a mere 5 grand.

While I am for removing the taxpayer subsidy I am a conservative-ish type so maybe my thoughts are self serving. I haven't heard an argument that says $5000 is any more reasonable than $1100. I have heard that Liberals somehow attract money from bigger spenders than the Conservatives and I have heard the Conservatives are better at getting small donations from many people. It seems to me that a party that is more indebted to wealthier donors might be more attuned to those persons' needs, just as a party indebted to little donors might be more influenced by that donor type. I kinda feel more small donations from many voters is more democratic than fewer bigger donor/voters, but then I also feel that we should only be accepting donations from actual voters, of voting age and of the correct citizenship. I bet that would also hurt the Liberals and someone here would probably call me a racist.

ricky said...

Given that the bulk of our election system has been written by Liberal Governments I find it odd you would suggest such a change as raising the personal contribution limit in exchange for eliminating the goverment subsidy per vote to political parties.

The one thing Liberals use to have on their side was a degree of fairness. Liberals brought in with the encouragement of David Lewis, spending limits which made elections more about the issues than who had the most money.

The subsidy also adds a degree of fairness to the system, allowing for basic operations.

The Tax subsidy for individuals also assists more people to play in the political game, albeit most are in the middle class.

I suspect the Liberals have generally had fewer donors of small amounts and generally more donors of big money than the other parties. That maybe what you are thinking of as an advantage, or at least an opportunity to close the gap on the Tories.

It won't work. It will be seen as a political play, and an elitist one at that.

The Pundits' Guide said...

Had my head down working on something else, and missed this post until now.

I do see your strategic point a bit better now, Jeff, although the assumption behind your option (c) could be debated based on recent history.

In your proposal there would be a natural incentive to seek out larger donations, and it's the behaviour this induces in the political party itself -- separate and apart from whether any individual donor would have been seen to influence policy -- that the critics are more concerned about.

Also, I think we would not have to look very far to find evidence that the NDP finds more of its supporters amongst people of more modest means, on average, than Liberals do. The Conservatives are also finding much of their contemporary support amongst folks with lower education levels, as the crosstabs in any public domain polls these days will confirm.

I was just arguing that, in the ideal situation, the parties would agree on a set of rules ... and I wish it could be done on a principled basis, with the principle hopefully being "how best to maximize access to the political system for as many citizens as possible". Taking the high road with such a principled approach might be the most bullet-proof strategy of all.

Ted Betts said...


Actually I've never been involved with the Liberal Party, internal politics, etc., only one leader's leadership campaign.

I'm not trying to say $5,000 is not a lot of money. It is for most.$1,200 is a lot of money for some too.

What I am trying to say is that no one is going to give anyone a contract, waive licensing conditions, fast track an approval, draft a policy, change a policy etc. because an individual has donated $5,000 instead of $1,200. A party is just not dependent enough on that $3,800 for it to matter that much that the party is going to feel the need to do anyone's bidding.

Give face time? Have staffers return calls faster? Give them a heads up when you come to town? Maybe. But I know lots of people who have donated almost nothing and have far greater access and people who have donated the max for years and can't get anyone's attention. So it's not the money.

In my very limited experience, boots on the ground and organizatinal usefulness are valued far more than individual donations when it comes to influence. And that is my experienced based on working with Liberals provincially and federally and Progressive Conservatives provincially.

Gayle said...

"Sorry the cap of $ 1k forces every political party to reach out and actually have a large number of donors making it more representative of a larger group."

I disagree with this statement, made not only by CS but by others here.

A political party has to be representative of a "larger" group if it wants to win an election. I cannot see how it benefits any party to cater to its rich donors at the expense of the needs and wishes of its smaller donors. A party that designs its platform on the needs of the few is probably not going to get a lot of votes.

I agree that any move by the liberals to raise donation limits is going to be seen as self-serving, but what is wrong with that? People are going to be surprised that a political party wants to increase its donations? If the CPC are going to argue that is self serving, they are also going to have to accept their push to maintain the lower cap is self serving.