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Political parties dependent on public handouts: study

Kevin Libin,  National Post

January 23, 2010 Chris Wattie/Reuters

Calgary — The tax handouts for political parties created by former prime minister Jean Chrétien have relieved taxpayers of tens of millions of dollars, relieved the Bloc Québécois of having to fundraise, and cursed Canadians to a life of never-ending election campaigns — but getting rid of them, as the Conservatives want to do, is likely unrealistic, says a new study co-authored by a former Tory campaign manager.

The report by Tom Flanagan and David Coletto, to be released today by the University of Calgary’s School of Public Policy, concludes that while the Conservatives continue to promise to eliminate the $1.95-per-vote allowance Elections Canada doles out to federal parties every quarter, any attempt to end the program is bound to leave party organizations financially “crippled,” without the ability to make up the lost funds through fundraising.

“Given all the difficulties, this may not be the time to try and replace the system,” says Mr. Flanagan, a political science professor who formerly served as Stephen Harper’s chief-of-staff and national campaign manager for the Conservatives. (Mr. Coletto is his PhD student.)

Although the Conservatives would suffer least were the subsidy cancelled (they earn the largest portion of their revenue from small, individual donations) – suggesting that their motive could have been partly animated by a beggar-thy-neighbour instinct – history shows Conservative fundraising support won’t always be so strong, Mr. Flanagan warns.

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“Things change. You shouldn’t really design systems around temporary conditions,” he says.

One of Mr. Chrétien’s final policy flourishes in 2003 was to drain corporate and union donations from party politics, as well as tightly cap individual donations, replacing the money with public funds tied to each party’s vote-count in the previous election. “More public contribution to meet the requirements of every party is a very small price to pay in order to have a very substantial reform of political financing,” Mr. Chrétien said, arguing that his reforms – pushed through amid opposition from within his own caucus and little consultation with other parties – would “make all the political parties less dependent on contributions from the industrial sector” and avoid American-scale election spending.

Mr. Harper, once elected, added yet more donation restrictions under 2006’s Accountability Act. But the Tories remain opposed to the public allowance.

“We believe that political parties should support themselves with people who voluntarily donate to whichever party they wish to support,” Steven Fletcher, Minister of State for Democratic Reform, said in August. A Conservative proposal to cut the funding in November 2008 galvanized opposition leaders into a coalition aimed at unseating the minority government.

While Mr. Chrétien’s policy advisor, Eddie Goldenberg, had promised that public subsidies under Bill C-24 would be revenue neutral when held up against the donations that parties would be forfeiting, in reality, all parties are collecting far more today from their Elections Canada cheques, even after inflation adjustments, than they ever did before.

Parties now collect, on average, roughly 50% more from public funds than they gave up under the new limits on corporate, union and large personal donations, the study calculates: The Bloc Québécois raised less than $1-million in corporate donations in the four years prior to C-24, but collected more than $12-million in public funds in the four years after.

“The Bloc has all this dough; they never have to fundraise again,” says Stephen LeDrew, a Toronto radio host who, as president of the Liberal Party of Canada in 2003, publicly battled Mr. Chrétien over the reforms he called as “dumb as a bag of hammers.”

Though the study examined potential alternatives to the quarterly allowance – a return to capped corporate and union donations, more generous tax write-offs for individual donations, and an American-style “check-off” system, allowing tax filers to indicate on their return whether they want to direct some public money to their favourite party – they all would fall considerably short of replacing the subsidies upon which political organizations now rely, the authors calculated.

It’s little wonder parties have become hooked on the subsidies to the point where removing them now could be devastating, Mr. LeDrew says. “Money is the mother’s milk of politics. Taxpayers’ money is the mother’s milk with a drop of scotch in it.”

As it happens, one unforeseen result of party organizations enjoying such a steady, lucrative cash flow, Mr. Flanagan says, is the emergence of a “permanent campaign” model, with party organizations now keeping their war-rooms open, keeping up voter identification campaigns, and increasingly running ads targeting opponents between election periods: a “campaign virtually all the time.”

Still, Duff Conacher, co-ordinator of the Ottawa-based advocacy group Democracy Watch, says that, compared to all other models, the taxpayer allowance is the best system for keeping moneyed influence out of politics. “There isn’t a more democratic way to do it,” he says.

And with no ready alternative, the Tories might be better to stick merely with adjusting levers in the existing system, Mr. Flanagan suggests: they could look at reducing the $1.95 per vote allowance, allowing small businesses to contribute, or readjusting tax credits for individual donations. “Changing it now is going to be harder than passing it.” But he’s firm that whatever alterations they have in mind should not be undertaken without a consensus among the major federal parties. “I think it’s bad policy to do any of these changes unilaterally. This is where the Liberals got us on the wrong track; the Liberals pushed through their changes.” The Conservatives have only followed suit. And while gaming the election system in their own favour may be any party’s natural instinct, Mr. Flanagan says, it’s no way to run a democracy.

National Post