Party Finance in the Wake of the 2011 General Election
May 26th, 2011
[Welcome, National Newswatch readers!]
With the last of the four recounts out of the way, the exit polls and academic post-mortems wrapped up for now, and various other items of post-election business analysis taken care of, we turn our attention back to …
… the money.
Of course, it's going to take some time to sort out how fundraising and spending shaped the parties successes and challenges in last month's election, but here are some of the milestones we'll be watching for:
- Next Tuesday May 31, the parties' riding associations (aka "registered associations" aka "electoral district associations" or EDAs) must file their annual returns for 2010 with Elections Canada. As they get entered into the Elections Canada database and published to the website, we'll start to develop a picture of who had done a good job on pre-election fundraising. It's probably also an indicator of organizational depth and strength how quickly those get filed, and the fact that the Liberals were much slower than the other parties in filing a complete set of riding returns for 2009 should already have been an indicator that their grassroots had been left untended. (This is also a good reminder to me that it's high time I went back and completed my dataset of 2009 EDA returns, as well).
- A month after that, the registered parties themselves have to file their own annual financial statements and fundraising reports for 2010 on June 30.
- By the end of July, we'll also have the parties' second quarter 2011 fundraising reports to examine, which will show the rest of how they fared on the fundraising front during the recent election campaign.
- Candidates have until four months from Election Day to file their financial returns, so we'll start to see those by early September.
- The registered parties have until six months from Election Day to file their 2011 election returns, so we'll start to see those posted in November.
- Meanwhile, the last quarterly allowance (aka "party political subsidy") payment based on the 2008 election will go out at the end of June. It will be increased based on the "inflation adjustment factor" of 1.165 announced last March in the Canada Gazette, and will therefore represent one-quarter of approximately $2.04/vote obtained in the 2008 election ($2.03875/vote, to be exact).
- The first quarterly allowance payment based on the 2011 election would normally be paid at the end of October, and be based on one-quarter of $2.04/vote obtained in the 2011 election.
Some of you may have seen a certain someone's appearance with Don Martin on CTV Power Play yesterday to discuss the impact of the election on the per-vote democratic subsidy, and how Minister Flaherty's three-year phase-out proposal would affect each of the parties. Since part of that analysis got quoted on CTV.ca, and you may be interested in the calculations, I've reproduced them here, along with a long-needed update to the table of subsidy payments to the parties.
The bars with the black borders show the impact of the election on the annual subsidy payments, but under the current regime. The next three bars for each party show the impact of the declining payments expected to be proposed in the June 6 federal budget.
[Click on image to open full-sized version.]
A reminder that the subsidy payments are calculated based on $2.00 or so until the end of March, 2011, and $2.04 thereafter, taking the announced inflation adjustment factor into account, and including the discounts apparently being proposed in the upcoming budget.
|Subsidy – Before||$7,279,994||$5,040,008||$1,878,742||$2,765,157||$10,437,672|
|Subsidy – After||$5,674,200||$9,199,837||$1,166,385||$1,817,393||$11,897,026|
I'm not clear whether the government's proposal for phasing out the subsidies will start this year (i.e., that the 75% would start in 2011-2012) or next, although I suspect the former. But if that is the case, then the bar with the black border for each party is the *hypothetical* amount they would have been entitled to receive after the 2011 election based on the number of votes they obtained and the current formula, including the already-announced inflation adjustment factor.
As you can see, in Year 1 of the government's plan only the NDP comes out ahead, then they break even more or less in Year 2, and lose actual dollars in Year 3. In a different take, blogger Greg Fingas (whom we've known up to now only as the mysterious "Jurist" behind the NDP blog "Accidental Deliberations, but who now has a weekly column with the Regina Leader-Post as well; congrats Greg) points out that the total per-vote funding over the three years of the Flaherty proposal pretty much amounts to the expected amount of each party's election spending less their expected rebates – meaning that party fundraising from this point forward can concentrate on supporting current operating expenses and setting aside funds for the next campaign.
Funding for the Bloc Québécois – often a sticking point for some Canadians – seems high until you realize that they still won 23% of the vote in Québec, obtaining the votes of some 890,000 Canadian citizens living there, even if that only earned the party 4 Commons seats this time around.
In fact the Bloc's situation exemplifies more generally the way the per-vote financing introduced a bit of proportionality into Canada's electoral system, as a counterbalance to the first-past-the-post (FPTP) method of electing representatives. In 2008, the Bloc obtained 1.3 million votes, representing 38% of the vote, which earned it 49 seats representing 65% of the ridings in Quebec. In 2011, the party lost 488,000 or so votes, yielding only 4 seats representing a mere 5% of the province's delegation to the House, in contrast to its 23% vote-share. Yet, the Bloc's public funding under the current system – as with that of any party – reflects the votes it obtained rather than the seats its candidates were able to win.
This shows the stickiness of the approach for parties perhaps on the way out, the reverse side of the higher barriers to entry for new parties trying to get off the ground. On the one hand, even some proponents of public funding might balk at extending $1.8 million dollars to a separatist party that had just been handed a massive defeat at the polls, at least in FPTP terms.
On the other hand, when talking about political parties in general, it meant that one bad election would not necessarily mean an execution for that party, but that valid political choices might be retained for possible future resurrection in at least one later election, however temporarily out of favour with the electorate.
Political parties do perform important roles in our electoral system, which are worth remembering:
- They recruit and cultivate our country's political leaders and representatives, and as we've recently seen, that can be difficult to do well on a shoestring budget or with a regionally concentrated support base, something the Liberal Party may be learning the hard way the next time around.
- They develop policy, and
- They bridge gaps between different parts of the country, between different language and cultural communities, and between different interest groups.
These functions are an important part of our system of governance and must be performed well for the overall system to function at its best. Political parties are not simply social clubs, in other words, and we must consider how the various options for financing them will help or hurt those goals.
Some may worry that the proposed new financing regime will have the effect of turning them into pyramid sales organizations, and/or create too high a bar to entry for new choices, thereby entrenching the two largest current entities.
Others will worry that this move is only the first step to reintroducing big money into Canadian politics, whose voice would then drown out those of others who can't afford to participate on the same scale.
One thing is clear: the current and proposed set of democratic subsidies represent a modest expenditure in the federal budget, and provide a very cost-effective party system with plenty of political choice, as compared with the system used by our neighbours to the south. Here is the estimated total annual cost of the four kinds of democratic subsidies, in election versus non-election years:
|Non-Elxn Year||Elxn Year|
|* Department of Finance, 2010 Evaluation of Tax Expenditures. Perhaps 250,000 Canadians contribute to a political party, riding association or candidate each year, and would benefit from the tax credit – IF they had a taxable income.
** Based on 2008 GE
*** Based on 2006 GE; latest figures available due to litigation re 2008 GE
NOTE: Party and Candidate rebate amounts are both included in the $300 million estimated cost of holding a general election.
|Contribution Tax Credit*||$21,000,000||$32,000,000|
|Party Elxn Rebates**||–||$29,212,158|
|Candidate Elxn Rebates***||–||$24,595,606|
For comparison purposes, the cost of running the Senate of Canada, including over $800K for a Senate Ethics Officer, is $95M annually, while the cost of running the House of Commons, including the Library of Parliament and the Conflict of Interest Commissioner, is around $500M per year. The annual cost of running a small government department like the Department of Veterans Affairs, including Grants and Contributions, is $3.5 billion.
In my view, the government will need to justify how its current proposal will create a better democracy, because with the greater power they've acquired to impose their point of view on others, comes a greater responsibility to consider the Platonic goal of creating a more just republic, and not merely the Machiavellian objective of being more feared than loved. On the other hand, we cannot say they did not obtain a mandate for this policy, as the proposal was clearly outlined in their election platform.
Ideally I believe the political parties should all try to agree on the rules of engagement they will follow, and I can always hope this will be their modus operandi. But, for what it's worth, above are some of the considerations I think Canadians may want to mull over during the upcoming debate in the House of Commons on the government's proposal.
Below, you'll find an updated table of subsidy payments by quarter.
Annual Allowances to Registered Parties, by Payment Date, and projected forwarded according to current provisions of the Elections Act
|2011 – Q3*||$1,418,550||$2,299,959||$291,596||$454,348||$2,974,256||01-Oct-11|
|2011 – Q2||$1,851,789||$1,282,011||$477,890||$703,364||$2,654,997||02-Jul-11|
|2011 – Q1||$1,819,999||$1,260,002||$469,686||$691,289||$2,609,418||01-Apr-11|
|2010 – Q4||$1,819,999||$1,260,002||$469,686||$691,289||$2,609,418||04-Jan-11|
|2010 – Q3||$1,819,999||$1,260,002||$469,686||$691,289||$2,609,418||01-Oct-10|
|2010 – Q2||$1,819,999||$1,260,002||$469,686||$691,289||$2,609,418||02-Jul-10|
|2010 – Q1||$1,815,230||$1,256,701||$468,455||$689,478||$2,602,581||01-Apr-10|
|2009 – Q4||$1,815,230||$1,256,701||$468,455||$689,478||$2,602,581||04-Jan-10|
|2009 – Q3||$1,815,230||$1,256,701||$468,455||$689,478||$2,602,581||01-Oct-09|
|2009 – Q2||$1,815,230||$1,256,701||$468,455||$689,478||$2,602,581||02-Jul-09|
|2009 – Q1||$1,773,903||$1,228,089||$457,790||$673,781||$2,543,328||01-Apr-09|
|2008 – Q4||$2,187,074||$1,264,370||$324,231||$758,350||$2,623,890||05-Jan-09|
|2008 – Q3||$2,187,074||$1,264,370||$324,231||$758,350||$2,623,890||02-Oct-08|
|2008 – Q2||$2,187,074||$1,264,370||$324,231||$758,350||$2,623,890||03-Jul-08|
|2008 – Q1||$2,140,040||$1,237,179||$317,258||$742,041||$2,567,462||07-Apr-08|
|2007 – Q4||$2,140,040||$1,237,179||$317,258||$742,041||$2,567,462||03-Jan-08|
|2007 – Q3||$2,140,040||$1,237,179||$317,258||$742,041||$2,567,462||02-Oct-07|
|2007 – Q2||$2,140,040||$1,237,179||$317,258||$742,041||$2,567,462||05-Jul-07|
|2007 – Q1||$2,096,926||$1,212,255||$310,867||$727,092||$2,515,737||04-Apr-07|
|2006 – Q4||$2,096,926||$1,212,255||$310,867||$727,092||$2,515,737||05-Jan-07|
|2006 – Q3||$2,096,926||$1,212,255||$310,867||$727,092||$2,515,737||04-Oct-06|
|2006 – Q2||$2,096,926||$1,212,255||$310,867||$727,092||$2,515,737||07-Jul-06|
|2006 – Q1||$2,282,186||$974,374||$266,686||$769,708||$1,841,145||06-Apr-06|
|2005 – Q4||$2,282,186||$974,374||$266,686||$769,708||$1,841,145||01-Jan-06|
|2005 – Q3||$2,282,186||$974,374||$266,686||$769,708||$1,841,145||01-Oct-05|
|2005 – Q2||$2,282,186||$974,374||$266,686||$769,708||$1,841,145||01-Jul-05|
|2005 – Q1||$2,240,772||$956,692||$261,847||$755,740||$1,807,734||01-Apr-05|
|2004 – Q4||$0||$956,692||$261,847||$322,846||$0.00||07-Jan-05|
|2004 – Q3||($49,646)||$12,958||$261,847||$0||($563,630)||07-Oct-04|
|2004 – All||$9,191,054||$1,914,269||$2,411,022||$8,476,872||01-Jan-04|