Challenges That Face Political Party Financing Politics Essay

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

In this essay it will examine how Canadas political parties finance their activities and outline the party and campaign finance regulations that govern how parties spend their money (Fogden, 2005). In 1970, majority of the federal electoral legislation enacted was in power at the end of the last century and within the 30 years following, the Canada Elections Act was followed by updates and changes of amendments, revisions and clarifications, which made the act all that much more to read. Parties need money for three main purposes: to support research and advisory services for the leader and the elected MPs; to maintain a small permanent staff between elections; and most importantly to fund election campaigns. In order for parties to get funds they look to the public, corporations, associations and unions to raise money (Jackson, 2010).

It is increasingly expensive to finance political parties and electoral campaigns. However political parties' financial status plays an important and often an ignored role in the Canadian political system (Biezen, 2003). Canada's party system is dominated by a select group of well-known parties that capture a majority of the political donations made by donors The Elections Expense Act was created in 1974 and has had an insightful influence on the fundraising pattern of political parties. Political parties and candidates were each given a limit on how much they could spend during election campaigns. The new fundraising rules laid out within the act have made the process more open and parties were able to get donations from both corporate and individual donations (Jackson, 2010). Those changes created also included spending limits on national and local election expenses, generous tax credits for political contributions, stronger disclosure provisions, and reimbursement for a portion of election spending by parties and candidates who met certain qualifications (Political Science, 2010). For the first time, Canadian political parties became largely supported by taxpayer funds, both directly and indirectly (Beange, 2009).

By instituting donation limits, Parliament hopes to constrain the negative consequences typically associated with party fundraising. Political fundraising can create problems of corruption and influence peddling whereby donors 'buy' influence and access to policymakers and government contractors. The new campaign finance laws embrace the principle of equal opportunity for all Canadians who wish to participate in public life (Fogden, 2005).

In 2003, with hardly any public discussion or input from opposition parties, the Liberal government Introduced by Jean Chr'tien, and Parliament approved Bill C-24 which was an act to amend the Canada Elections Act and the Income Tax Act, which deals with political financing. The new law completely changed where the sources of income for political parties in Canada would come from by banning corporate and union contributions to national political parties. They put limitations on the donations to candidates and local party associations to $1,000 a year. They required limits on individual contributions, such as $5,000 year that's adjusted for inflation. There was a schedule made for tax credits that was a generous offer in order to encouraging individuals giving more and by increasing campaign rebates from 22.5% to 50% of national campaign expenditures which was then raised to 60% in 2004.

One of the most significant things about the new law that was introduced was a generous system of publicly funded quarterly allowances to help replace the revenue lost from eliminating corporate, union, and high-end individual contributions. Those that are registered political parties will receive an annual allowance of $1.75 for each vote they won in the most recent general election. In order to qualify as a registered party, the party must win 2 percent of the popular vote. If the party does not receive 2 percent of the popular vote but received 5 percent of the vote in ridings where they ran candidates, they also qualify (Jackson, 2010).

Only after two years of Bill C-24 in 2005 changes took effect, the newly elected minority Conservative government made more changes by introducing the Accountability Act that banned corporate and union donations to all party entities and candidates and lowered the individual contribution limit to $1,000. This allowed it to still maintain its quarterly allowance, although even the Conservatives had opposed the allowance system when it was first established (Beange, 2009).

Between 2000 and 2003, for the total donations to the major federal political parties the Liberal Party was definitely the most successful at raising money from corporations, trade unions, and associations, receiving a total of $36, 580, 853, therefore was also the most likely to feel the disadvantages of the effects of Bill C-24, even though the Liberal government is the ones who introduced the bill. . The Canadian Alliance Party came in second with $11, 211,868. The New Democratic Party received $11, 167, 805, the Progressive Conservative Party received 6, 567, 701. The Bloc Qu'b'cois with $859, 349 and the Green Party with only $65,975.

With the individual donations being limited to $5,000 between the years or 2000 and 2003 the Liberal Party would have lost more than $647,619, or 3% of its income from individual donors, while the Progressive Conservative Party would have lost about $490,818, or 4.2% of its revenue from individual donations (Political Science, 2010). The Canadian Alliance Party would have lost about $ 622, 471, which raised much of their money from individual donations than did other parties or 2.1%, income from individual donors. The New Democratic Party would have lost about $292,832 or 1.4%. The Bloc Qu'b'cois would have lost about $481 or 0.02% and the Green Party would have lost about $17,987 or 3.6%. Overall, these amounts are very small compared with what the parties lost through being deprived of donations from corporations, unions, and other organizations (Political Science, 2010).

To add up all the amounts of the total contributions to the major federal political parties from corporations, associations and trade unions and the revenue losses of major federal political parties with $5,000 limit on individual contributions between 2000 and 2003 the total comes to more than $68 million, almost half of which, ironically, would have been lost by the Liberals, the authors of Bill C-24 (Political Science, 2010). To compare the amounts the parties could have lost over the last four years because of the old system with the amount they received in quarterly allowances in the following four years, it would be plain to see that some the parties incomes were negatively affected, while some were much better off. 'Between 2004 and 2007, Canada's five main parties received more than $105 million in allowances' (Political Science, 2010). To put it more plainly the parties, 'quarterly allowances alone represented an increase of almost $37 million, or 54%, in revenue for the parties compared with what the parties had raised from corporations, unions, and individual contributions over $5,000 in the preceding four years' (Political Science, 2010). According to Prime Minister Chr'tien's policy adviser, Eddie Goldenberg, Bill C-24 was supposed to be more or less revenue neutral, leaving parties about as well off afterward as they had been before the new law was passed (Senate of Canada, 2006). As we can see, this clearly is not how it has worked out.

'The relative impact of the quarterly allowances on each party has been different, but no party is worse off in absolute terms as a result of the new legislation' (Political Science, 2010). Between 2004 and 2007, the Liberal Party received $36, 560, 180 which is almost the exact same amount they has raised from corporations, unions, and individual contributions of $5,000 or more in the previous four years. Therefore the Liberal party has profited very little from the legislative changes. The Conservative party received $35, 946,872. The New Democratic Party received $16, 779,951. The Bloc Qu'b'cois received $12, 098, 796 and the Green Party received $4, 047,527. If you look at the Block Qu'b'cois they have increased a great amount from financing changes. 'Over the four years from 2000 through 2003, the BQ raised less than $1 million from corporations or unions, but received more than $12 million in the following four years' (Political Science, 2010).

In 2004 the reimbursement rate was increased from 22.5 percent of a partied paid election expense to 60 percent. During the first election after Bill-C24 came into effect in 2003, reimbursements dropped back to 50 percent for the next following general elections. The final important element of the 1974 improvements introduced the registered political party to claim generous credit on their income taxes.

In the taxpayer check-off systems both the Canadian Alliance and the Progressive Conservative party opposed the Liberal government's Bill C-24 in Parliament in 2003. 'The Canadian Alliance objected to the coercive nature of the allowances, in that money collected from all taxpayers would be given to political parties even though some taxpayers might not wish their money to go to particular parties' (Political Science, 2010). The Canadian Alliance's argued that the fundraising done by parties should be based on personal not the decisions given by the government as well that the allowance system would be difficult for new parties because the financial support would only be offered to parties that had competed in the previous election. The Progressive Conservatives on the other hand did not offer any ideas that were based on the bill, but suggested that the bill should be out on hold for two years so that in the meantime a new election could be held and would give them a more up-to-date idea for the financial support of the parties. In the 2004 general election, the Conservative Party of Canada, and the Alliance and Progressive Conservatives had combined, and promised to replace the party allowances with a taxpayer check-off system (Political Science, 2010): 'We will eliminate the current per voter annual subsidy for federal political parties. Instead, we will include a check-off box on taxpayers' T1 forms that will allow Canadians to direct a nominal amount towards the registered political party of their choice. This choice will not affect taxpayers' refunds or amounts owing' (Democracy, 2010). The Conservatives lost the 2004 election, and their 2005 and 2008 platforms were silent on the question of replacing party allowances (Political Science, 2010).

Currently, Canadian citizens and permanent resident's individual contributions are allowed to contribute a maximum of $1,100, but have been adjusted to $1,000 for inflation since 2000, to be able to give to a single political party. Before the political financing amendments in 2006, limit was $5,400 but has been adjusted to $5,000 for inflation. Since Elections Canada's record of donations does not combine the total donations by individuals in a single year, it combines the donators list by donators name and the party they donated to in order to produce a useful list of donators to suggest the result of higher donation limits on party income. In order to make sure that the new rules were being followed candidates and parties have to disclose donation information within a set period of time after an election, and leadership contestants should do so during and after a leadership contest. Bill C-24 also introduced annual allowances, recognizing that parties should be compensated for the loss of their normal funding stream from large corporate and union donations (Charter Era, 2010). Bill C-24 also brought constituency associations of registered parties under legislative control for the first time. The main reasoning behind Bill C-24 was that financial controls and full disclosure 'will increase public confidence in the system, and that financially healthy political parties will contribute to the vitality of the electoral process' (Robertson, 2003). Bill C-24 was followed in 2006 by Bill C-2, known as the Federal Accountability Act. This legislation further restricted political donations and made other changes to the Canada Elections Act that intended to increase the transparency of the electoral process and better control the influence of money on elections.

When it comes to corporate, association and union contribution, some argue that the system allows special interest groups to buy influence and access to power by supporting certain parties, thereby undermining the democratic process. Big business, labour unions, and lobby groups have typically been significant contributors to political parties (Fodgen, 2005).Before 2004 Canada's political parties were allowed to accept any amount of money from individuals and led to the idea that they were having a huge influence on the political system and that lead to the creation of Bill C-24. 'He who pays the piper calls the tune' (Mike Garratty- Former Political Reporter for the Barrie Examiner). We recognize the political sensitivity of unlimited contributions from these bodies, but capping such contributions at the same level as those of individuals might not create the same perception of influence peddling as an unlimited amount. Corporate, association, and union donations were always lower in non-election years than in election years, so donations from these sources could be largely higher over a period of time that included one or more election years (Robertson, 2003). A limit on annual contributions however would limit such differences in total funds raised: the likely result of returning such donations such with a donation limit would be for these sources to increase their annual donations, and in doing so they would get closer to the quarterly allowance provided with the consistent flow of donations.

When it came down to regulating political parties, candidates and their campaign finance citizens are required to have full disclosure of electoral spending. By today's standards it is a required recent improvement. Citizens have the right to be able to choose between the competing parties and their candidates and to be able to support their decisions by having access to information about that parties activities and their opponents. Concerns about the fairness of political competition and worries about donors exercising unfair influence over politicians are hardly new themes in Canadian politics (Vote in Canada, 2007). By forcing parties and candidates to report the source and amount of their donations, the financing laws are designed to make Canada's democratic system more transparent. Today, voters can see for themselves where a given candidate's financial support comes from (Fodgen, 2005).

In order for parties to receive public donations, political parties and candidates are required to disclose the amount and the source of all donations over $100. Parties as well have to present detailed financial reports, including statements on revenue and trust funds. They are also required to file detailed returns after each election. If the third party spends $500 or more on election advertising, it must immediately register with Elections Canada. If the third party is a trade union, corporation, or another body with a governing body, it must include a copy of the resolution passed by its governing body authorizing it to spend money on election advertising (Fodgen, 2005).

The Commissioner of Canada Elections was created in the 1974 Election Expenses Act and established the position of Commissioner of Election Expenses who is responsible for the Accountability Act and for the Conflict of Interest Code for Members of the House of Commons. The Commissioner has the power to initiate formal investigations, hold politicians responsible for their actions and fine violators (Jackson, 2010).

Due to the 2000 Canada Elections Act it has been recognized and made clear for those to understand and apply. Election law regarding third party advertising has been extended to include requirements for registration, disclosure and spending limits and adjust spending limits annually for inflation. Disclosure of financial information by registered parties is subject to more precise reporting requirements. The Commissioner of Canada Elections is authorized to initiate formal investigations, hold politicians responsible for their actions and fine violators. The act provides for other administrative changes to improve the accessibility of Canada's electoral process. Key Provisions of Bill C-24 were made in 2004 that included how much an individual and corporations, associations or unions could contribute to a party as well as annual allowances that registered political parties would receive and how to qualify as well as reimbursement for election expenses. In the end the political parties will always need governing and it will continue to be a struggle with amendments to all the regulations concerning political spending and financing.