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Posts Tagged ‘Election Expenses’

FINAL UPDATE: Amended Glover return shows cabinet hopeful overspent in 2011

June 21st, 2013 | 27 Comments

Shelly Glover's amended financial return from the 2011 general election has now been posted on the Elections Canada website, and it reports over spending of 2.76% of the expense ceiling for her Saint Boniface, MB riding in that campaign.

[Click on image to open a full-sized version]

Saint Boniface, MB Conservative M.P. Shelly Glover's revised Election Campaign return (Part 3a)

UPDATE: Actually Glen McGregor & Stephen Maher of the Ottawa Citizen and Postmedia first reported the Glover-Bezan disputes, while Laura Payton of CBC first reported the Watson case. My apologies to the storied, award-winning journos.

FURTHER UPDATE: And they update the story themselves now here.

After the CBC's Laura Payton it was first reported that Glover, along with Conservative MPs James Bezan (Selkirk-Interlake, MB) and later Jeff Watson (Essex, ON) were involved in a dispute with Elections Canada finance officials over their costing of used signs on their campaign returns, and that Chief Electoral Officer Marc Mayrand had taken the unprecedented step of writing to the Commons Speaker about Glover and Bezan's unwillingness to file amended returns, pressure had been building in the Commons for the Speaker to table this CEO's letters, and decide what action to take in response.

When Speaker Andrew Scheer finally ruled on the Liberals' point of privilege Tuesday before the Commons rose, he also revealed that Glover had filed the amended return as requested, and had withdrawn her court proceedings against Elections Canada, slated for a court date yesterday.

However, Glover's amended return did not appear on the Elections Canada website for several days. It's there now, though.

At issue between Elections Canada and the MPs was their campaigns' decision to account for used signs at a discounted cost, rather than at their replacement cost. The latter is being insisted on by Elections Canada, because the purpose of an expense ceiling is to level the playing field between candidates by costing goods and services at the market value – i.e., the same price anyone else would pay for an equivalent value to the campaign.

The definition of an "Election Expense" is contained in s.407 of the Elections Act:

s.407 – (1) An election expense includes any cost incurred, or non-monetary contribution received, by a registered party or a candidate, to the extent that the property or service for which the cost was incurred, or the non-monetary contribution received, is used to directly promote or oppose a registered party, its leader or a candidate during an election period.

Exclusions – certain fund-raising and nominations

(2) Expenses for a fund-raising activity and expenses to directly promote the nomination of a person as a candidate or as leader of a registered party, other than expenses referred to in paragraph (3)(a) that are related to such fund-raising and promotional activities, are not election expenses under subsection (1).

Inclusions

(3) An election expense referred to in subsection (1) includes a cost incurred for, or a non-monetary contribution in relation to,

  • (a) the production of advertising or promotional material and its distribution, broadcast or publication in any media or by any other means;
     
  • (b) the payment of remuneration and expenses to or on behalf of a person for their services as an official agent, registered agent or in any other capacity;
     
  • (c) securing a meeting space or the supply of light refreshments at meetings;
     
  • (d) any product or service provided by a government, a Crown corporation or any other public agency; and
     
  • (e) the conduct of election surveys or other surveys or research during an election period.
     

Definition of "cost incurred"

(4) In subsection (1), "cost incurred" means an expense that is incurred by a registered party or a candidate, whether it is paid or unpaid.

Here's how the Political Financing Handbook for Candidates and Official Agents describes the procedure for recording election expenses:

Expenses include:

  • amounts paid
  • liabilities incurred
  • the commercial value of donated property and services (other than volunteer labour)
  • the difference between an amount paid or liability incurred and the commercial value of the property or services (when they are provided at less than their commercial value)

The official agent has to report the amount charged to the campaign for an electoral campaign expense. Generally this amount is the commercial value of the property or service received.

Commercial value is the lowest amount charged at the time that it was provided for the same kind and quantity of property or service or for the same use of property or money by:

  • the person who provided it (if the person who made the contribution is in that business)
  • another person who provides that property or service on a commercial basis in the area (if the person who made the contribution is not in that business)

Commercial value is generally the amount charged in a store for an item or a service.

If the campaign purchases a property or service from an individual for less than the commercial value, the official agent has to report the difference as a non-monetary contribution from the individual.

A closer look at the declaration of Election Expenses on Part 3a of Glover's amended financial return shows that, indeed, two discounts (see red boxes in the graphic above) for the value of "Other Advertising" have now been recorded:

  1. one in the amount of $2,195.53 from the riding association (all good), and
  2. a second in the amount of $1,049.04 from Glover personally, which could have created a whole new problem for her, if that contribution put her over her own contribution ceiling to ridings and candidates for the year.

But candidates are allowed to contribution an additional $1,000 + inflation factor ($1,200 now) to their own campaign over and on top of that ceiling, and since Glover did not, she's in the clear on that one at least.

With the total discounts of $3,243.57 added to the previously reported spending of $81,426.71, that brings her return up to $84,670.28  – $315.68 in declared election campaign expenses that were found NOT to be under the ceiling (see blue boxes in graphic above), for a revised total of $84,354.60 in election expenses covered by the ceiling — and exceeding that $82,086.99 ceiling by $2,267.61 or 2.76%.

So, what happens now? That's up to the Commissioner of Elections and if he so decides to refer the case, the Director of Public Prosecutions. Exceeding the campaign expense ceiling can be (for either the candidate or the official agent):

  • a simple matter of a compliance agreement or exchange of correspondence, if done unwittingly and in good faith,
  • a strict liability offence under s.497(1) of the Elections Act subject to a summary conviction and a fine of up to $1,000 or up to three months in jail or both,
  • an offence requiring intent under s.497(3) subject to a summary conviction and a fine of up to $2,000 or up to one year in jail or both, or
  • an offence requiring intent under s.497(3), but subject to an indictment, and therefore a fine of up to $5,000 or up to five years in jail or both

The issue for Bezan and Watson now is that, with Glover's campaign having accepted the ruling from the Chief Electoral Officer, it may be harder for them to make their own cases in court in July and September respectively. Time will tell.

Meanwhile, as former Mulroney-era PMO chief of staff David McLaughlin noted on Twitter, Glover was probably in some hurry to clean up the outstanding issue, in order to qualify for consideration in the upcoming cabinet shuffle. A pretty good incentive, one might say, so long as it was clear which of the above four options the Commissioner of Elections intended to pursue.

Understanding Peter Penashue’s revised election campaign return

March 22nd, 2013 | 45 Comments

[Welcome, National Newswatch readers!]

There has been some fantastic reporting on the case of the financing and election expenses of the Peter Penashue Conservative campaign in Labrador, but an awful lot of misinformation elsewhere in the media as well about the details of the case.

So here's a briefing note, Pundits' Guide-style, on the law, on how to read his financial returns, and a little on what may come next.

I would say that the popular (mis-) understanding of the story at this point is that "Peter Penashue overspent on his campaign by accepting $40,000 in illegal donations, and had to pay it back, and we're just waiting for some kind of Elections Canada report to come down, to know what happens next".

There are a lot of factual errors in that statement. For one thing, illegal donations on the one hand, and election overspending on the other, are two different issues. If Candidate X incurs tens of thousands of dollars flying around the riding, so long as its cost was under the campaign ceiling or was for his or her own travel as a candidate, no problem – as long as it was accounted for at commercial value.

Whether the money to pay for it came from eligible contributions to his candidate campaign, from funds transferred in to the candidate's campaign from the local party riding association, or funds transferred in from party headquarters, it doesn't matter. If they couldn't raise the money locally to cover the cost, they could always just ask party headquarters to transfer in some funds. This happens a lot with those big northern remote ridings, which are expensive to travel across, and usually have a low average income so are hard to raise money in.

Ineligible Contributions

Here's what the Elections Act says on contributions:

Ineligible contributors

404. (1) No person or entity other than an individual who is a citizen or permanent resident as defined in subsection 2(1) of the Immigration and Refugee Protection Act shall make a contribution to a registered party, a registered association, a candidate, a leadership contestant or a nomination contestant. [emphasis mine]

Return of contributions

(2) If a registered party, a registered association, a candidate, a leadership contestant or a nomination contestant receives a contribution from an ineligible contributor, the chief agent of the registered party, the financial agent of the registered association, the official agent of the candidate or the financial agent of the leadership contestant or nomination contestant, as the case may be, shall, within 30 days after becoming aware of the ineligibility, return the contribution unused to the contributor or, if that is not possible, pay the amount of it or, in the case of a non-monetary contribution, an amount of money equal to its commercial value, to the Chief Electoral Officer who shall forward that amount to the Receiver General. [again, emphasis mine]

Contributions by corporations – or by what in this case seem to have been some individuals signing corporate cheques to make their contributions and other cases of a single corporate cheque purporting to cover several individual contributions – are "ineligible" under the Act.

(As are union contributions – though we note with a sigh that some Conservatives in the House of Commons are referring to these corporate donations sweetly as "ineligible contributions", but the sponsorships at the NDP convention which were afterwards deemed to be union donations less sweetly as "illegal contributions"; sauce for the goose is sauce for the gander and all that).

Now if someone has received an "ineligible contribution" as an official agent for a candidate, or chief agent for a party, they have to pay it back within 30 days of becoming aware of its ineligibility. And they can choose to (or in some cases have to) pay the money to the Receiver General of Canada instead – including the commercial value of any non-monetary contribution.

If you want to follow along on Mr. Penashue's return at the Elections Canada website for the next bit, it's about a 20-step process to get to the table of contents of the various parts of his return (or you could just click here), but once you get there, make sure you (a) already selected by candidate's details, (b) select 'Data as reviewed by Elections Canada …' if not selected already, and then (c) pick the relevent section.

[Click on image to open a full-sized version]

In the Penashue case, we can look at Part 2a of his revised financial return ("as reviewed by Elections Canada"), and see that the official agent declared a total of $28,360.14 in eligible contributions from 42 eligible donors. [You can find that yourself - I'm not showing the names of citizens who contributed to our democracy in good faith and whose donations have been deemed eligible.]

But in Part 2c of that return, we find the list of 28 ineligible contributions (both monetary and non-monetary) totalling $46,560.54, and note that the first 27 monetary contributions worth $27,850 were paid back to the Receiver-General through the CEO on November 28, 2011, while the non-monetary contribution of $18,710.54 from Provincial Airlines Limited/Innu Mikun Ltd., on line 28, was paid out on March 4, 2013.

[Click on image to open a full-sized version]

So, ineligible contributions were accepted during the campaign, and were later repaid via the Chief Electoral Officer to the Receiver-General for Canada, per s.404(2) of the Act. Not great, but so far so good.

The legal questions on the contributions side, though, are whether the official agent "knowingly" accepted ineligible contributions, whether he colluded to hide the true source of any of those donations, etc., etc. These are evidentiary questions for the Commissioner of Elections, who is still investigating, and once concluded will forward a recommendation to the Director of Public Prosecutions (DPP) for a decision on whether charges should be laid, and against whom.

Also, anyone making a contribution on behalf of someone else would have committed an offence, or anyone who colluded to hide the source of a donation. Again, an evidentiary issue about which we could speculate endlessly, but is up to the Commissioner of Elections to investigate properly and thoroughly, collect up all the evidence, and then perhaps recommend to the DPP that charges be laid.

Exceeding the Expense Limit

Moving to the other side of the ledger, here's what the Act says about candidate expenses and a candidate's expense ceiling:

Candidate's expenses for electoral campaign

406. An electoral campaign expense of a candidate is an expense reasonably incurred as an incidence of the election, including

  • (a) an election expense;
  • (b) a personal expense; and
  • (c) any fees of the candidate's auditor, and any costs incurred for a recount of votes cast in the candidate's electoral district, that have not been reimbursed by the Receiver General.

Election expenses

407. (1) An election expense includes any cost incurred, or non-monetary contribution received, by a registered party or a candidate, to the extent that the property or service for which the cost was incurred, or the non-monetary contribution received, is used to directly promote or oppose a registered party, its leader or a candidate during an election period.

….

Definition of "cost incurred"

(4) In subsection (1), "cost incurred" means an expense that is incurred by a registered party or a candidate, whether it is paid or unpaid. [emphasis mine]

S.C. 2003, c. 19, s. 26.

….

Personal expenses of a candidate

409. (1) Personal expenses of a candidate are his or her electoral campaign expenses, other than election expenses, that are reasonably incurred in relation to his or her campaign and include

  • (a) travel and living expenses; [emphasis mine]
  • (b) childcare expenses;
  • (c) expenses relating to the provision of care for a person with a physical or mental incapacity for whom the candidate normally provides such care; and
  • (d) in the case of a candidate who has a disability, additional personal expenses that are related to the disability.

….

Prohibition – expenses more than maximum

443. (1) No candidate, official agent of a candidate or person authorized under paragraph 446(c) to enter into contracts shall incur election expenses in an amount that is more than the election expenses limit calculated under section 440.

Prohibition – collusion

(2) No candidate, official agent of the candidate, person authorized under paragraph 446(c) to enter into contracts or third party, within the meaning given that expression by section 349, shall collude with each other for the purpose of circumventing the election expenses limit calculated under section 440.

As you can see, expenses can be paid or unpaid. Candidate expenses can be either election expenses or personal expenses, but only the former are subject to the expense ceiling. Candidate travel is a personal expense that doesn't fall under the ceiling, but non-candidate travel is an election expense.

Note that the expenses in question in Mr. Penashue's case have to do with candidate versus non-candidate travel. We can look at Part 3a, which is the expense portion of his amended return, and see the problematic expense on line 83.

[Click on image to open a full-sized version]

$19,869.56 in Candidate's personal expenses (which includes candidate travel) + $5,840.98 in Miscellaneous expenses (including non-candidate travel) = $25,710.54 in travel services that were purchased from Provincial Airlines/Innu Mikun, for which $6,000 + $1,000 was the agreed final price, including a $18,710.54 discount from their commercial value. As of when the return was filed, $1,000 of the $7,000 was still owing to the airline as an Unpaid Claim from the campaign.

Now, note further that the airfare discount of $18,710.54 on line 83 of Part 3a is also recorded as an ineligible contribution on Part 2c, and shows there as having been paid back to the Chief Electoral Officer for the Receiver-General on March 4 of this year. All good, so far as it goes.

But also note that the amount of the non-candidate travel – the $5,840.98 with the red circle around it on line 83 of Part 3a – when added to Penashue's other election expenses, puts his total Election Expenses subject to the Limit up to $89,997.85.

Looking at Part 4 of his return (the Campaign Financial Summary) we see from line 3 that, for candidates in Labrador riding in the 2011 election, the Permitted limit of election expenses (aka the "ceiling" or the "expense limit") was $84,468.09.

So Penashue is now $89,997.85 – $84,468.09 = $5,529.76 over the limit. Or, another way of saying the same thing is that his election expenses now represent 106.55% of the limit, in order words 6.55% over the limit, and thereby violating s.443 of the Act.

Role and Responsibility of the Official Agent vs the Candidate

A Candidate isn't the one who accepts donations. The candidate's Official Agent is. And in one of those typical anomalies in the Elections Act, which the Chief Electoral Officer has recommended that Parliament amend, if the official agent screws up on filing the candidate's return – then he or she is the one to go to jail, not the candidate.

Here's what the Act says about official agents:

Duty of official agent

436. The official agent of a candidate is responsible for administering the candidate's financial transactions for his or her electoral campaign and for reporting on those transactions in accordance with the provisions of this Act.

[Also, no person (or entity) other than an official agent shall: s.438(2) accept contributions to the candidate's campaign, (3) issue tax receipts to contributors to that campaign, or (4) pay expenses, except for petty cash and candidate's personal expenses.]

[And only an official agent or the candidate shall: s.438(5) incur campaign expenses, or (6) pay the candidate's personal expenses [which includes candidate travel, but not family or staff travel, a point we'll return to in a second].

Offences

Here is a list of some of the technical offences you can commit under the s.497(1) of the Act as an Official Agent, on what's called a "strict liability" basis (i.e., if you did it, you did it, whether you meant to or not) which can result in a "summary conviction" instead of an indictment:

[Note: there are a lot of them, so you can just skip over them to read about the punishments, if you like.]

  • 497 (1) (r) being an official agent, contravenes section 437 (failure to satisfy bank account requirements);
  • (s) being an official agent, a candidate or a person authorized under paragraph 446(c), contravenes subsection 439(2) (incurring more than maximum allowed for notice of nomination meetings) or subsection 443(1) (exceeding election expenses limit) or, being an official agent, candidate, person authorized under paragraph 446(c) or a third party, contravenes subsection 443(2) (colluding to circumvent election expense limit);
  • (t) being an official agent, contravenes subsection 445(1) (failure to pay recoverable claim in timely manner);
  • (u) being an official agent, contravenes subsection 451(1), (2), (3) or (4) (failure to provide electoral campaign return or related documents);
  • (u.1) being an official agent, fails to comply with a requirement of the Chief Electoral Officer under subsection 451(2.2);
  • (v) being a candidate, contravenes subsection 451(5) (failure to send declaration re electoral campaign return to agent);
  • (w) being an official agent, contravenes section 452 (failure to pay value of contribution that cannot be returned);
  • (x) being an official agent, contravenes section 455 (failure to provide updated electoral campaign return or related documents);
  • (y) being an official agent, contravenes paragraph 463(1)(b) (providing incomplete electoral campaign return);
  • (z) being an official agent, contravenes subsection 472(2) or section 473 (failure to dispose of surplus electoral funds);
  • (z.1) being a registered agent or financial agent, contravenes section 476 (improper or unauthorized transfer of funds);
  • (z.2) being an official agent, contravenes subsection 478(2) (failure to return unused income tax receipts);
  • (i.3) being a person who is authorized to accept contributions on behalf of a registered party, a registered association, a candidate, a leadership contestant or a nomination contestant, contravenes section 404.4 (failure to issue receipt);

There are other "strict liability" offences that apply to everyone in Canada, not just official agents.

  • 497 (1) (i) being a person or entity, contravenes subsection 404(1) (making contribution while ineligible);
  • (i.4) being a person or entity, contravenes subsection 405.2(1) (circumventing contribution limit);
  • (i.5) being a person or entity, contravenes subsection 405.2(2) (concealing source of contribution);
  • (i.6) being an individual, contravenes section 405.3 (making indirect contributions);
  • (i.7) being a person authorized under this Act to accept contributions, contravenes section 405.4 (failure to return or pay amount of contribution);

But there's also another class of offences, which "require intent", and could be either summary convictions or indictable offences (note the use of the words "wilfully" or "knowingly").

Some apply to official agents, while others apply to anybody:

  • 497 (3) (f.12) being a person who is authorized to accept contributions on behalf of a registered party, a registered association, a candidate, a leadership contestant or a nomination contestant, wilfully contravenes section 404.4 (failure to issue receipt);
  • (f.13) being an individual, wilfully contravenes subsection 405(1) (exceeding contribution limit);
  • (f.14) being a person or entity, knowingly contravenes subsection 405.2(1) (circumventing contribution limit);
  • (f.15) being a person or entity, knowingly contravenes subsection 405.2(2) (concealing source of contribution);
  • (f.16) being a person entitled to accept contributions under this Act, contravenes subsection 405.2(3) (knowingly accepting excessive contribution);
  • (f.161) being a person or entity, knowingly contravenes subsection 405.2(4) (entering prohibited agreement);
  • (f.162) being a person or entity, contravenes subsection 405.21(1) (soliciting or accepting contribution);
  • (f.163) being a person or entity, contravenes subsection 405.21(2) (collusion);
  • (f.17) being an individual, wilfully contravenes section 405.3 (making indirect contributions);
  • (f.18) being an individual, wilfully contravenes section 405.31 (exceeding cash contribution limit);
  • (f.19) being a person authorized under this Act to accept contributions, wilfully contravenes section 405.4 (failure to return or pay amount of contribution);
  • (p) being an official agent, a candidate or a person authorized under paragraph 446(c), wilfully contravenes subsection 443(1) (exceeding election expenses limit);
  • (q) being an official agent, a candidate, a person authorized under paragraph 446(c) or a third party, contravenes subsection 443(2) (colluding to circumvent election expenses limit);
  • (r) being an official agent, wilfully contravenes subsection 451(1), (2), (3) or (4) (failure to provide electoral campaign return or related documents);
  • (r.1) being an official agent, wilfully fails to comply with a requirement of the Chief Electoral Officer under subsection 451(2.2);
  • (s) being a candidate, wilfully contravenes subsection 451(5) (failure to send electoral campaign return declaration);
  • (t) being an official agent, wilfully contravenes section 452 (failure to pay value of excess contribution);
  • (u) being an official agent, wilfully contravenes section 455 (failure to provide updated electoral campaign return or related documents);
  • (v) being an official agent, contravenes paragraph 463(1)(a) or knowingly contravenes paragraph 463(1)(b) (providing electoral campaign return containing false or misleading statement or one that is incomplete);

Punishments

According to s.500(1), conviction of a "stricty liability" offence like those in s.497(1) would result in a summary conviction having a punishment of up to three months in jail or a fine of up to $1,000, or both.

But under s.500(5), conviction of an offence "requiring intent" with a dual procedure like those in s.497(3) could result in either: (a) a summary conviction with a punishment of up to a year in jail or a fine of up to $2,000, or both, or (b) an indictment with a punishment of up to five years in jail or a fine of up to $5,000 or both.

And if the offence is a serious one, then under s.501(1), the court is empowered to make any other orders to bring them in compliance with the Act, or make compensation, perform community service, and so forth.

Finally, under s.502(1)(c), if a candidate or official agent "wilfully contravenes section 443 (exceeding election expenses limit)", then that's called an "Illegal practice" and under s.502(3) the person is prevented from being elected to or sitting in the House of Commons for five years, in addition to any other punishment.

To Recap

Exceeding the spending limit is the charge that finally stuck to the Conservative Party in the so-called in-and-out advertising case. They faced charges on the more serious offences, and while charges were dropped against the individuals, the party paid the maximum fine.

In this case, we do not know what evidence there is of "wilfully" or "knowingly" accepting ineligible donations, or incurring election expenses over the limit. But the Commissioner of Elections is investigating, and the former official agent insists he accepted them 'unintentionally". Given the facts now reported on Peter Penashue's election campaign return, one or more strict liability offences appear to have taken place by exceeding the ceiling, but whether they are something more we don't know yet.

Now many people make the point that these extra expenses are what allowed Penashue to fly around the riding and win by 79 votes. Newsflash: Penashue's own flights were not included under the ceiling. And I highly doubt a well-funded party headquarters wouldn't have chipped in with funds to cover a star candidate's travel expenses, when he was only nominated at the last minute (April 4, according to my notes from the time). And it's very hard to out-organize incumbent MPs in far-flung remote ridings like that.

The incumbent MP he beat would have been flying around the riding for nearly 6 years on House of Commons travel points, except during writ periods. Todd Russell spent considering less than the expense limit in the 2011 campaign, perhaps because looking at his previous vote-share, he might not have believed he needed to raise so much money this time to win this campaign.

Other folks wonder if all this detail makes a difference, or if one charge is worse than the other? Well, exceeding the limit is an offence for a candidate, and has some pretty strict punishments if done deliberately. That's the offence that in the worst case could strip Penashue of his seat in the House of Commons, and keep him from running for another five years.

Others scoff at whether the official agent was an "inexperienced volunteer", when he'd worked as an official agent before. I don't know if that was in a remote riding though, which as you can see sometimes has very different requirements from an urban or suburban one. In how many other ridings in Canada would the cost of a staffer hopping the cab to travel with the candidate, risk putting that candidate over the limit. This might have been the inexperience part – not saying no to the family and staff travelling with Penashue, I don't know.

Anyways, I hope this illustrated explanation has helped explain the factual details of the financial return, while we await word of the investigation and disposition.

Liberals Matched Conservatives Dollar for Dollar in May Election

November 10th, 2011 | 35 Comments

[Welcome, National Newswatch readers!]

The Liberal Party matched Conservative Party spending in last May's election nearly dollar-for-dollar, both coming in at 93% of their respective spending limits.

The Liberals spent $19,507,745.82 nationally, just $12,249.05 less than the $19,519,994.87 spent by the Conservative Party on its national campaign.

The figures are contained in the parties' campaign financial returns for the recent federal general election, now posted on the Elections Canada website.

The New Democratic Party, meanwhile, came closer to reaching the expenditure ceiling of $21,025,793.18, spending $20,372,231.49 or 97%, while the Bloc Québécois came closest to their cap, spending 99% of the $5.3M or so that they were able to spend centrally. For both parties that represented the highest percent of the limit either had ever spent in a general election.

The Liberals also outspent the Conservatives in advertising, $11.9M to $10.6M, when considering both broadcast (TV + radio) and "other" (likely print and/or online). However, the Conservatives concentrated their ad spending on the broadcast side where they outspent the Liberals $10.4M to $8.3M.

The NDP's spending on advertising fell somewhere in between, coming in at $9.5M for broadcast ads and $10.9M overall.

One journalist likely having some good sources, but evidently strong feelings on the matter as well, has written that the Liberal national campaign had promised to spend close to the limit, but then cut their losses in the final week, turning down a proposal for a $2.9M ad buy; noting in his story that 44 seats were lost by the Liberal in that election.

It's a curious argument, because there is no straight line between spending and election outcomes in all cases. If the assertion is that not spending $2.9M on advertising in the final week was responsible for the loss, how to explain the Conservative majority victory for virtually the same spending as the Liberals, or the massive Bloc Québécois rout for 99% of their ceiling. Clearly a further $2.9M spent on advertising would have put the Liberal Party $1.4M *over* the cap, given that their final campaign spending came in $1.5M under.

The Green Party, for their part, fell back off their 2008 high of 14% of the limit, spending 9% of the limit on their central campaign – roughly $1.9M.

You can see the parties' spending and percent spent on the Parties page for the last election here at Pundits' Guide, and compare with earlier elections one party at a time.

Candidate returns are also being slowly filed and reviewed by Elections Canada officials (though I haven't entered them into this database just yet). Of the 1,587 nominated candidates, by my last count (earlier this week), 1,268 returns were posted on the Elections Canada website. Rather than posting how many have been filed, here's a table showing how many are missing by party and province/territory.

2011 GE Candidate Financial Returns not yet Filed or Posted on Elections Canada website (as of November 6)

Prty YT NT NU BC AB SK MB ON QC NB NS PE NL All
Lib 1   1 19 8 5 10 38 15 3 3   1 104
NDP       4 8 5 2 21 66 3   1 1 111
Grn       3 2     5 6 1       17
BQ                 9         9
Cons   1   6 8 1   6 6 1 2   3 34
Ind       2 2   1 4 2 1     1 13
1stP               1           1
CAP           1   1 1         3
CHP       1 5     1           7
Comm       3 1     5 4         13
PC         1     1           2
Pir         1                 1
Rhino                 2         2
Unity               2           2
All 1 1 1 38 36 12 13 85 111 9 5 1 6 319

Pundits' Guide is on a bit of a blogging hiatus at the moment, due to some other pressing commitments. To get your daily (hourly, minutely) political fix, however, don't forget to regularly check into the NDP Leadership Race Pundits' Guide portal. It's a one-stop shop of the rules, calendar, and a news aggregator and social media aggregator besides.

Federal Budget Advertising vs Campaign Advertising Budgets

March 11th, 2011 | 64 Comments

[Welcome, National Newswatch readers!]

The $4 million reportedly set aside for an intense 10-day ad blitz to promote the March 22 federal budget represents about two to three weeks worth of election campaign advertising for the three main parties, according to their 2008 election campaign returns.

The Conservative Party reported just over $10 million in radio and television advertising during the last election campaign, which lasted some five weeks, while the Liberals reported just under $6 million, and the NDP a record $7 million for them.

The governing party thus spent $2 million a week on TV and radio advertising during the last election campaign, which is significantly less than is likely being spent on all the government and party pre-election advertising now.

Put another way, $4 million is how much the Bloc Québécois and Green Party spent on TV and radio ads during the entire 2008 general election. Combined.

The expected buy comes in the wake of a very heavy government ad buy to promote Canada's "Economic Action Plan" and a number of other government initiatives in child health, product safety, and immigration; along with a series of pre-election ad volleys by all four english-language political parties in recent weeks and days.

At this rate, Canadians will be wanting an election just to see the volume of advertising reduced!

Let's look at the actual dollars spent by each party on TV and radio advertising over the past five elections. Note that under an earlier version of the Elections Act in place for the 1997 and 2000 general elections, "Broadcast Advertising" and "Television Advertising" had to be reported separately, while today there is a single line item for TV/Radio Advertising. Thus I've summed up the two earlier categories in order to be comparable with the three later elections. The Reform Party and Canadian Alliance are shown in aqua for the two earliest elections.

[Click on graph to open larger-version in a new window.]

National Election Campaign Spending on Radio & TV Advertising by Party, 1997 - 2008 General Elections

As you can see, the Conservatives have increased their campaign advertising spending by $2 million in each of the last three elections, increasing from $6 million in 2004 to $8 million in 2006 to $10 million in the last election. And that only includes the ad buys reported by the party as national advertising, i.e., it does not include the disputed advertising costs reported by the affected candidates in 2004 and 2006.

The Liberals spent $4 million in advertising for each of Prime Minister Chrétien's last two elections (1997 and 2000), but doubled that spending to $8 million under Prime Minister Martin in the 2004 and 2006 elections, before falling back to $6 million in the most recent campaign.

Meanwhile, the NDP's ad budget has risen substantially over the years, doubling from $2 million or so in 1997 and 2000 under leader Alexa McDonough, to $4 million in 2004 and 2006 under Jack Layton, and nearly doubling again to surpass the Liberals, with $7 million spent on TV and radio ads during the last election.

Lest anyone speculate otherwise, part of the changes to party and campaign finance rules in 2004 was an increase in the rebate of their paid election expenses the parties could earn from the public purse, from 22.5% until 2000, to 50% in 2004 and thereafter. The increased rebates appears to have provided part of the incentive for greater ad spending during election campaigns (though I'm sure we could brainstorm a pretty long list of other possible explanations as well).

Of course, different parties spent different amounts in total during the last election, so let's look at their ad buys as a percentage of what they spent.

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National Radio & TV Advertising by Party as a Percentage of Central Campaign Spending, 1997 - 2008 General Elections

Here we see that the three traditional parties have usually spent between 35-45% of their budget on TV and Radio advertising until recently, when they were joined by both the Bloc and the Greens up in the 40-55% range. The smaller parties spent a higher proportion of their budget on advertising in the earlier years, but of course they were spending less overall.

To standardize that data even further, we can look at the parties' ad buys as a percentage of what the overall party election expense ceiling was. Now of course a party doesn't get to spend the full ceiling unless it runs candidates in every single riding, but on the other hand the major parties all had nearly-full slates of candidates this time, so there wouldn't be very much difference. For sanity's sake, we're showing the Bloc spending as a percent of the ceiling for parties only running candidates in Québec.

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National Radio & TV Advertising by Party as a Percentage of the Spending Ceiling, 1997 - 2008 General Elections

Now we realize that the Greens are outgunned no matter what percentage of their own budget is devoted to advertising, while the Bloc moved up its ad spending significantly from earlier elections, presumably to meet the perceived threat of Conservative Party growth in the province last time around. And while the Liberals and NDP might have spent between 40-55% of their campaign budgets on ads, of course they also spent less overall during the last elections, putting their ad spending in the range of 30% of the ceiling.

I point this data out to help you compare what might be being spent on advertising now, with what can be spent during the writ period. The parties will likely have a national spending ceiling of just over $20 million this time. You can either democratically elect a Parliament with that, or promote five budgets.

Federal Court of Appeal Confirms Chief Electoral Officer’s Authority

March 2nd, 2011 | 62 Comments

Some pressing obligations are keeping me from writing at greater length on the Federal Court of Appeal ruling that was handed down Tuesday on the Conservative Party's civil case against Elections Canada (Kady O'Malley has posted the english version of the ruling at the CBC website, though it will be available soon enough through the FCOA's website in both official languages).

Some quick comments are in order, however. While the Appeals Court reviewed some of the details of the advertising campaign arrangements known as the so-called "in-and-out advertising case", its main purpose was to ascertain whether the Chief Electoral Officer could only do a "document review and nothing else" before certifying the advertising costs as having been incurred by the candidates (the Conservative Party's position), or had the authority to ascertain IF there was sufficient documentary evidence that they had been incurred before certifying the payment of the candidate rebate (Elections Canada's argument).

But settling the issue on the Chief Electoral Officer's legislative authority, as a question of administrative law, won't change very much when it comes to the charges under the Elections Act that will be coming before a criminal court on March 18, so far as I read things.

The Commissioner of Elections and Public Prosecutor will have to prove there that the advertising was a national expense, and if so that the individuals and the party "intended" to exceed the national spending ceiling, and that they "intended" to file a campaign financial return that was false or misleading, or that they ought to have known was false or misleading. That's a high bar, which may very well explain the time it took the Director of Public Prosecutions to arrive at the decision to recommend the Commissioner of Elections lay charges and those ones in particular.

The Federal Court of Appeal ruling did examine some of the issues surrounding the accounting of expenses for the regional media buy (RMB), but by way of determining whether the Chief Electoral Officer of Canada (CEOC in the Court's acronym) had a reasonable basis for asking for further documentation of the claimed candidate election expenses, before certifying that they had been incurred for rebate purposes.

The Court of Appeal considered two questions that formed the basis of Elections Canada's appeal:

  • Does the CEOC have the power to verify election expenses claimed by candidates? Answer: yes
  • Was there sufficient material before the CEOC on which he could reasonably decline to state that he was satisfied that the Respondents had incurred a portion of the cost of the RMB advertisements which they claimed as election expenses? Again, the answer is yes

The Appeals Court was also asked to consider on cross-appeal the question about how — if advertising expenses were to be allocated between candidate campaigns on the basis of market value, as Judge Martineau ruled in the lower court decision — those additional non-monetary election expenses could have been deemed to have been incurred by campaigns when official agents had not authorized them. The court found that its answers to the first two questions made this issue beside the point, but also noted that judges are not to impose decisions on officers legislatively authorized by statute to actually do the deciding.

With this appeal court ruling out of the way, the Commissioner and Chief Electoral Officer are 2 for 2 on appeal so far in the related cases winding their way through the various courts. The Conservative Party's talking points stress that they will appeal the ruling, but we should rephrase that to make clear that they will be "seeking leave to appeal" it, since the Supreme Court of Canada decides which appeals it will hear.

Irregular readers of this blog may not have noticed the very interesting legal discussion that unfolded in the comments section of my last blogpost on this topic, but some discussants there are suggesting the outlines of what could be the basis for a compromise settlement of the case at hand.

As usual, the best coverage of this issue has come from the Canadian Press Parliament Hill bureau's reporters, both for the depth of their understanding of the details of the case (which is based in large part on having taken the time to read and understand the original documents), but also the length they're granted in which to cover it. It's frustrating indeed to see the typical "no-one cares about this issue" emerge before a single news cycle is even concluded.

I think we can give people a day at least to read the documents for themselves and decide for themselves, and perhaps some of the "no-one cares" crew would care to do the same thing first as well.

The Conservative Party argued some interesting issues in the civil case, and created some jurisprudence for future reference. Their communications plan, however, perhaps relied overly on the existence of the civil case, and unnecessarily expanded the scope of what it was ultimately going to decide, which has left them in the glue a bit on losing the appeal. Now that they have lost it on appeal, I suspect the plan for communicating the details of the Elections Act charges will undergo another change in response.

RE-UPDATED: A Look Behind the In-and-Out Charges Laid This Week

February 25th, 2011 | 72 Comments

[Welcome, National Newswatch readers!]

In what could significantly change the political capital of the various parties bargaining over the federal budget and a possible confidence vote stemming from it, four senior officials of the Conservative Party are now apparently facing charges under the Elections Act.

UPDATE: The suppositions in this post were based on working backwards from the penalties reported in last night's first news blitz. The actual charges have been posted now, and they are of a somewhat more serious nature. Stay tuned for a further update of this post.

FURTHER UPDATE: I should have rewritten the third Q. and A. below when the exact charges were published. I've done so now. Apologies for confusing people.

In an obviously orchestrated release of information to numerous media outlets, embargoed until 10 PM, spokesperson Fred DeLorey of the Conservative Party got out in front of story with a series of talking points designed to steer the initial coverage. It's a time-honoured media strategy (and one I hope they include me in on next time, hint, hint).

By way of background, here's a handy reference to writing I've done on the related issues here at Pundits' Guide, in chronological order:

  • Nov 26, 2009: The Federal Court hearings on the initial In-and-Out case brought by the Conservatives. Links to Glen McGregor's then-innovative "live-tweeting" of the hearings, and my earlier posts detailing the list of candidates affected, and the evidence raised by the Conservative Party in the affadavits of their Organization Director Geoff Donald.
  • Jan 19, 2010: The Federal Court ruling comes down, followed by a Superior Court of Ontario ruling on the GST case that's tangentially related.
  • May 23, 2010: Some details emerge about the Conservative Party's appeal of the Federal Court ruling.
  • Jun 10, 2010: An advancer on the Federal Court appeal hearings.
  • Dec 12, 2010: The tangentially related Regional Offices issue emerges. (Back story here)
  • Dec 22, 2010: Elections Canada wins the GST case at the Ontario Court of Appeal

Here's a wonderful graphic prepared for the Ottawa Citizen that explains how the In-and-Out arrangement worked.

[Click on image to open full-sized version]

Explanation of the so-called 'In-and-Out' accounting for advertising case

And here's a graphic I prepared that shows the impact of the three cases, individually and together, on the Conservative Party's national spending and expense ceiling in the 2006 general election.

The Impact of 3 Court Cases on the Conservative Party's 2006 Election Expenses

So, with the benefit of the initial reporting, and the background material posted above, let's take a look at some of the issues and questions now raised, before turning to the implications for the political landscape.

Q. The Conservative Party is saying that the charges are "administrative" rather than "criminal". Isn't that just so much spin / dancing on the head of a pin?

A. No, it's not actually. To understand this, you need to be familiar with the provisions of the Elections Act regarding the financial administration of registered parties (Part 18 Division 3). The relevant sections are as follows:

UPDATE: adding s.422 and s.423:

  • s.422 – sets out the method for calculation the national election expense limit
  • s.423 – prohibits the incurring of election expenses beyond the limit (subsection (1)), and collusion with a third party for the purpose of circumventing the limits (subsection(2))
  • s.429 – requirement to file an election campaign return, what its contents must be, and the six month deadline for filing it
  • s.430 – requirement to have the return audited, and authority for auditor to gain access for that purpose
  • s.431 – prohibitions against filing a return that is not complete, or that is known to be or ought to be known to be inaccurate or misleading. I believe this is the section the officials were probably charged under.
  • s.432 – allows the Chief Electoral Officer to make a minor correction to the return, and/or to direct the registered party to make a correction to their return
  • s.433 – allows the Chief Electoral Officer to authorize extensions and corrections of a registered party's return on request, so long as the CEO believes the corrections to have arisen through inadvertance or honest mistake, or due to the absence or death or mixup of an earlier chief agent
  • s.434 – allows the chief agent of a registered party to obtain a court order relieving them of the obligation to file, or for an extension of the deadline
  • s.435 – Provisions like those in this section were actually the crux of the Conservative Party's case before the Federal Court. It says that once the Chief Electoral Officer has received the election campaign return, he is to provide the Receiver General of Canada with a certificate setting out what 50% of the reported election expenses amounted to, in order that the election expense rebate could be paid to the registered party. The section says the CEO "shall" provide the certification, "if satisfied" that the registered party has complied with ss.429-434, and the auditor has not made any findings of incompleteness or unfair presentation of the facts. The reason for my emphasis on those two phrases will become clear below.
  • s.497 – lays out the Offences under Part 18 of the Act, including those summary convictions that are "strict liability offences" (s.497(1)), those summary convictions that "require intent" (s.497(2)), and those "dual procedure" convictions that "require intent" (s.497(3)).

As you may be gathering by now, it matters under the Act whether there was "intent". Some offences are "strict liability offences", which are charged whether intent was found or not. Some other offences are only defined to have occurred when there was "intent", but are still charged as summary convictions (the less serious kind), while still others are "dual procedure" convictions that can be charged as either summary convictions or as convictions on indictment (the more serious kind). Here are the penalties for each, as laid out in s.500:

  • strict liability offence – summary conviction (under s.497(1)): up to $1,000 or up to three months in jail, or both
  • offence requiring intent – summary conviction (under s.497(2)): up to $2,000 fine or up to six months in jail, or both
  • offence requiring intent (under s.497(3)): if by summary conviction, then up to $2,000 or up to a year in jail, or both
  • offence requiring intent (under s.497(3)): else if by conviction on indictment, then up to $5,000 or up to a five years in jail, or both

Because the news stories were careful to point out that the fine could be up to $1,000 along with possibly a jail term of up to 3 months, we know that intent is not being alleged, but that the officials are being charged based solely on whether the sections of the Act have been breached. Undoubtedly, this is what the Conservative Party means when it says the charges were "administrative only" in nature, and it seems to me a perfectly reasonable characterization in that case.

To find the exact charges, then, we know we are looking under s.497(1) for offences relating to ss.429-435, which leaves the following possibilities:

  • (q) being a chief agent, contravenes section 429 (failure to provide election expenses return or related documents);
  • (q.01) being a chief agent, contravenes paragraph 431(b) (providing incomplete election expenses return);
  • (q.011) being the chief executive officer of a provincial division, contravenes subsection 435.02(5) (failure to report provincial division changes);

of which I suggest to you the second is the most likely.

So, here are the actual charges, then:

  • The Conservative Fund and four individuals were charged under s.423(1) – incurring election expenses over the national ceiling, which is an offence under s.497(3)(g), punishable by summary conviction under s.500(5)(a), which carries a penalty of a maximum fine of $2,000 or a jail-term of up to a year, or both
  • The Conservative Party was also charged under s.423(1), an offence under s.497(3)(g), but is punishable for the party itself by summary conviction under s.507, which carries a maximum fine of $25,000.
  • The Conservative Fund and Senator Irv Gerstein as chief agent for the registered party are being charged under s.431(a) – filing a return that was known, or ought to have been known, to contain materially false or misleading statements, which is an offence under s.497(3)(m)(ii), also punishable by summary conviction under s.500(5)(a), which carries a penalty of a maximum fine of $2,000 or a jail-term of up to a year, or both
  • The Conservative Party was also charged under s.431(a) - filing a return that was known, or ought to have been known, to contain materially false or misleading statements, which is an offence under s.497(3)(m)(ii), but is punishable for the party itself by summary conviction under s.507, which carries a maximum fine of $25,000.

Note that none of the provisions under s.497 is listed as an "Illegal Practice" or "Corrupt Practice" under s.502.

UPDATE: Nor are any of the provisions under ss.422-423, or ss. 429-425.

However, under s.507, a registered party whose chief agent is convicted of any offence under s.497(1), such as (q) or (q.01) [UPDATE: or any offence under s.497(3), such as (3)(g) or (3)(m)]  is also itself guilty of an offence under summary conviction, and liable for a fine of up to $25,000, meaning that the Conservative Party itself could be in for some charges if those individuals are convicted. Bet they didn't mention that in their talking points.

UPDATE: Indeed the Conservative Party was charged, alongside the four individuals and the Conservative Fund, which is the chief agent for the Conservative Party, as headed up by Senator Gerstein.

It seems, then, that the Conservative Party's contention that the charges were "administrative" and not "criminal" is based on their being laid under s.500(5)(a) – the summary conviction section, rather than s.500(5)(b) – the conviction on indictment. They might also be referring to the fact that the charges relate to offences under the Elections Act, rather than the Criminal Code.

Q. Why would Elections Canada not wait until the case was through the courts? Didn't the Conservative Party already win at trial?

A. The short answer is that the case before the Federal Court had to do with the candidates rather than the registered party; and with the candidate equivalent of s.434 (s.456) rather than the proper allocation of those advertising expenses to the national or candidate campaigns.

Now of course it will take me several paragraphs to explain why, and how the case over s.456 could run parallel to an investigation by the Commissioner of Elections and referral to the Director of Public Prosecutions on the alleged violation of s.431(b), but that's exactly what's being counted on. Your eyes will glaze over, and it will all become a big blur about in-and-out and a fight between Elections Canada and the Conservative Party, and that's just an easier story to tell/sell.

But I will try and do my best to lay the issues out fairly (and as concisely as humanly possible) now. Judge Martineau's ruling from the Federal Court can be found here. Here's how he summarizes the case:

[3]        The applicants act as official agents of two Conservative candidates, and were among the recipients of these refusal letters. As such, they challenge the legality of the CEO's decision to refuse to certify certain advertising expenses claimed by their particular campaigns (the impugned decisions). They request that the Court set aside these two decisions and force the respondent to deliver new certificates to the Receiver General of Canada (Receiver General) which include the claimed advertising expenses.

[4]        While the Court does not endorse all of the arguments made by the applicants, the impugned decisions should be set aside and the matter referred back to the respondent with appropriate directions.

[61]      The question that is now before this Court is whether the respondent can legally refuse to certify for the purposes of reimbursement under section 465 of the Act, the claimed advertising expenses on the ground that he is not satisfied that these expenses have actually been incurred by the applicants or the candidates for whom they act as official agents.

[62]      The applicants are requesting from the Court, a writ of mandamus to force the respondent to deliver new certificates to the Receiver General, which include the claimed advertising expenses, and/or a writ of certiorari to set aside the impugned decisions either with or without directions for the respondent.

[102]   In the Court’s opinion, the powers and duties of the CEO under sections 435 and 465 of the Act are presently limited to the power to audit and verify the accuracy or reasonableness (in light of the legislative reference to “commercial value”) of expenses reported by candidates and registered parties for the purpose of reimbursement by the Receiver General. Thus, the fact that the RMB program put in place by the Party in December 2005 is unprecedented in scale (67 campaigns) and financing (approximately 1.2 million dollars), does not by itself give the CEO licence to refuse to certify advertising expenses duly incurred by the participating campaigns.

[103]   The Court accepts that a clear distinction must be made between an audit, which is for the purpose of reimbursement under the Act, and an investigation, which is for the purpose of bringing a criminal charge under the Act. In the case of a criminal prosecution, the prosecuting party must prove the requisite elements of the offence beyond a reasonable doubt, which may require the proof of intent, before a person can be found guilty by a court. On the other hand, the purpose of the audit is simply to ensure that the candidate and/or registered party are entitled to have their claimed election and/or personal expenses reimbursed.

[104]   Thus, the Court reiterates that the CEO has no power under the Act to conduct a general investigation into the manner that a registered party spends its funds or helps finance its candidates’ campaigns during an election. Indeed, in cases where the CEO suspects that a person is not complying with the Act, his duty is to refer the matter for investigation by the Commissioner [ed., i.e., the Commissioner of Elections]. That being said, the Court cannot endorse the overly restrictive view of the powers under sections 435 and 465 put forward by the applicants.

And here's how I am reading it:

  • The official agents for the Conservative candidates were asking that the court direct the Chief Electoral Officer to issue certificates for those advertising expenses by the candidate campaigns, under s.456, saying that the provisions of the section amounted to a "document review and nothing more", and he had to certify them.
  • If the CEO was forced to issue the certificates, it would then be used as proof by the party that the expenses were local and not national in scope.
  • The court spent numerous paragraphs ([80]-[115]) mulling over the administrative law jurisprudence about the meaning of "shall" and "if" in terms of the CEO's duties under that section, and came to the conclusion that under the Elections Act, as drafted, the CEO had to issue the certificates *even* if he had also already referred the issue for investigation to the Commissioner of Elections.
  • But it also found that the candidates had "incurred" the expenses, and that administratively, the CEO could not introduce new reasons for questioning the expenses after he had already certified them in some cases. The issue seems to be timing, in that the CEO had certified the expenses pro forma in the case of some candidates, until new evidence surfaced from other candidates about the nature of the Regional Media Buy (RMB) that caused him to want to go back and reexamine some of the earlier returns.
  • The court also ruled, however, that there had to be a fair market value basis for allocating the costs to the campaigns, not simply how much room there was under the candidate's own spending ceiling.
  • The Conservative Party took this victory and called it an absolute victory. Meanwhile, the Commissioner of Elections continued his investigation, and both the Conservative Party and Chief Electoral Officer took the decision to the Court of Appeal.

After the impact of the initial ruling was fully appreciated, a new issue emerged (and one that proves to me that Elections Canada was in fact being even-handed in its treatment of the issue):

  • It turned out that the "fair market value" basis for allocating the advertising costs between the candidates, once applied to all 65 of the affected Conservative candidates, would have put 10 of them (including 4 MPs, 3 of whom were sitting in cabinet) over the spending limit.
  • Elections Canada therefore asked for a stay of the application of this part of the ruling so as not to put the Conservative MPs in jeopardy of losing their seats or right to vote in the Commons, and meanwhile the Conservative Party appealed a different implication of that aspect of the ruling, namely questioning whether a court-imposed formula could see a candidate's campaign "incur" expenses not already authorized by the official agent.
  • I'm told by people who struggled through the appeal court hearings that they were impossibly complicated to follow, and therefore no news stories, save a very quick hit from Brian Lilley of Sun Media, emerged from those at all. We still haven't had the ruling.

But the case was never about whether a party could organize Regional Media Buys (of course it can), or transfer funds back and forth between the central party and the candidate campaigns (of course they can). It was about whether a party could transfer national election expenses to candidates who were expecting to spend well under their own ceiling, in order to avoid breaching the national ceiling, and whether these expenditures constituted national or candidate advertising expenses. I've argued elsewhere that the issue of what constitutes a national vs candidate expense is a point well worth litigating, and the lines being drawn by neither party to this point are very satisfactory (one is too permissive, and the other too restrictive, in my view), so I'm hoping the courts can help out with a better litmus test.

But meanwhile, an initial loss by Elections Canada at the Ontario Superior Court on the GST case (ruling found here) turned into a win at the Ontario Court of Appeal (ruling found here).

Q. So what does it all mean?

A. It means that the Director of Public Prosecutions has decided that while those advertising expenses ought to have been reported as national expenses in his opinion, those making the spending and reporting decisions for the registered party (i.e., the officials at party headquarters of the Conservative Party itself, and not the candidates or their agents) did not violate the Act with "intent" (or at least he can't prove that they did, or at least he wanted to lay the charges before the Court of Appeal ruled).

He and the Commissioner of Elections have evidently decided that it is in the public interest to pursue the charges, but only as summary convictions on a "strict liability offence".

A. It means that the Director of Public Prosecutions has recommended a charge that requires they be able to prove "intent" on the part of the individuals and registered party charged, but that they decided to pursue the lesser, summary conviction offence rather than proceed by indictment.

Q. Does this mean we're more likely to have an election?

A. The reaction to these charges, and perhaps the Federal Court of Appeal ruling on the certifying candidate expenses side of the so-called "In-and-Out" case if it arrives soon, could certainly change the balance of political capital and thus of power, in the run-up to the budget vote.

But parties would have to come up with a much better way to explain "at the doorstep" what the issues are, than what I've been able to manage here tonight, in order to make it a vote-determining issue in any election campaign. No doubt they have been sharpening their lines overnight, and we should get the first taste of that on Friday.

Elections Canada Wins Appeal of GST Rebate Case

December 22nd, 2010 | 29 Comments

An Ontario Court of Appeal ruling has sided with Chief Electoral Officer Marc Mayrand in the second of three court cases related to the Conservative Party of Canada's accounting for its election expenses in the 2004 and 2006 general election.

In a unanimous ruling, the panel of three judges found that "for the purposes of general election expenses returns, expenses do not have to be reported net of GST rebates", meaning that the Chief Electoral Officer does not have to allow the Conservative Party to restate its 2004 and 2006 national election financial returns.

The Conservative Party had wanted to correct its 2004 and 2006 election returns to retroactively deduct the value of GST rebates, to which it later became eligible as "qualifying non-profit organizations" by virtue of receiving 40% or more of their income from government subsidies. Many observers have also noted that making this "correction" would give the party extra room under the ceiling in case it loses the first of the three cases – the so-called "in-and-out advertising expenses" case – which could then see $1.3 million added to the party's election expenses for 2006, thereby putting them over their national spending limit.

The court said that its "interpretation maintains the equality of spending limits – the primary instrument used by Parliament to protect the level political playing field", and argued that "it is in keeping with the egalitarian model of elections adopted by Parliament as an essential component of our democratic society".

Hearings in the appeal were heard last June.

The three cases pitting Elections Canada and the Conservative Party against each other over the allocation of election expenses to national parties versus local candidates, and related issues, are:

  • The "in-and-out" accounting for advertising case (aka L.G. (Gerry) Callaghan et al. v. the Chief Electoral Officer). Hearings were held last month in the appeal and cross-appeal of the Federal Court's January 2010 ruling in favour of the Conservative Party about the statuatory power of the Chief Electoral Officer to refuse to certify certain advertising expenses claimed by Conservative candidates in the 2006 general election. Those advertising expenses, and the way that ad buy was organized and accounted for between the party's election return and the candidates' returns, are part of a related criminal investigation by Commissioner of Elections William Corbett, which he has referred to the director of public prosecutions to decide whether any charges should be laid. At issue is $1.3 million in possibly unreported national election expenses.
  • The "GST rebate" case (aka Conservative Fund Canada v. Canada (Elections), 2010 ONCA 882), which was the subject of Tuesday's appeal court ruling. It would reduce the amount of election expenses by some $600K.
  • The "regional campaign offices" case, which was uncovered by PunditsGuide.ca and has been further reported on by the Canadian Press in a series of stories. In this case, the Chief Electoral Officer has ruled that the costs of running the Conservative Party's regional campaign offices in Montréal and Québec City during the 2006 election campaign properly belonged on the party's election return, and were improperly attributed to some but not all of the party's candidates in those urban centres. At stake is $107K in possibly unreported national election expenses, but also perhaps evidence of a pattern of transferring election expenses from the party to certain candidates not expected to spend their own expense ceiling.

The issue for both parties to the dispute, according to many observers, is exactly how much the Conservative Party incurred in election expenses for its national campaigns in each of the two general elections. The question is particularly pressing in the case of the 2006 election, in which the Conservatives came very close to spending the legal limit.

I whipped up a chart using the Google Chart Wizard to try and demonstrate the individual and combined impact of the various court cases on the final accounting of the Conservative Party's legal election expenses for the 2006 General Election.

Impact of 3 Court Cases on 2006 GE Cons Election Expenses

As you can see, the Regional Campaign Offices case alone would not put the party over the limit (although it would come very close). Also, winning the GST Rebate case would still not completely make up for losing the In-and-Out case, as the party would still be over the limit, but not by as much.

  • The party originally reported spending $18,019,179 of an expense limit of $18,278,279 in the 2006 election (98.58% of the limit, or $259,100 under the spending limit aka "ceiling").
  • Adding the $107,401 cost of running the two regional campaign headquarters in Montréal and Québec City would put election expenses at $18,126,580, 99.17% of the limit, in other words $151,699 under the ceiling.
  • Adding just the $1.3 million said to be involved in the in-and-out advertising case would put the party at an estimated $19,319,179 in election expenses, 105.69% of the limit, in other words $1,040,900 over the ceiling.
  • Adding both the in-and-out plus the regional campaign headquarters amounts would put the party at an estimated $19.426.590 in national election expenses, or some 106.28% of the limit, which means $1,192,599 over the ceiling.
  • Being able to deduct the $590K in GST rebates from that amount, had the lower court ruling stood, or should the Conservative Party be successful on appeal to the Supreme Court of Canada, would still nevertheless leave the Conservatives around $600K over the spending limit, if it ultimately loses the In-and-Out case.

In other words, winning on the GST rebate issue alone would not have been sufficient to eliminate the potential of having spent over the ceiling, whatever other merits the case might have.  However, it would have cut down the overspending by about half, if the party eventually loses when the In-and-Out case in decided.

Moreover, if the Conservatives had won, or are successful on appeal, it would set a precedent that could then obligate the Liberal Party to return an estimated $600K in election rebate money to Elections Canada as well, funds they can spare less readily than their better-funded opponents in the Conservative Party.

The Back Story on the Big Story

December 12th, 2010 | 1 Comment

[Welcome, National Newswatch readers!]

Regular readers might be interested in how I came to work with The Canadian Press on today’s story, and how I came across the correspondence between Elections Canada and the Conservative Party.

It started two Fridays ago, when I read Ian Bussières’ story in Le Soleil about how Elections Canada had directed four Québec City area Conservative candidates – including 2 MPs – to correct their election returns, and how they had filed a motion to contest that ruling.

Mr. Bussières appears to be a generalist, and so when he wrote that:

“Le DGEC prétend toutefois que les dépenses engagées auraient dû être déclarées comme dépenses par le Parti conservateur et non par les candidats parce que c'est le parti qui a payé la note au départ.” [emphasis mine]

… it raised my suspicions, knowing that this was the opposite of what Elections Canada has argued in other legal proceedings about what makes an election expense a national one, versus one that should be declared by a local candidate.

So, I dropped a note to the media relations department at Elections Canada, asking if this was indeed what they’d argued, and were there any original documents they could send to me. They replied that there were some documents I could see, but if so, it would take an appointment to come in and view them.

I nearly didn’t, but thought the exercise in democracy alone might be interesting, and so an appointment was made to visit their office on Monday morning.

By the time I’d read through the correspondence, it was clear to me that my website alone could not do a responsible job with the story, which appeared to require an organization that could work in both languages, have access to court documents in two cities, and be able to obtain reaction from all the parties to the story. And as a story about a court case, I believed it was also better handled by an organization well-versed in writing responsibly about such matters.

By coincidence a journalist from The Canadian Press had written to me that morning looking for help on another story about the difference between charitable donations and political contributions, and I realized that CP would be a good partner for the story.

So, after broaching the topic generally, I went away and wrote my interpretation of the correspondence, met with their bureau the next day and decided how to proceed. If there are follow-ups now, it’s up to CP (and their competitors), although of course I’ll be reading along with interest, and perhaps covering their coverage with some perspective of my own.

As this website has always been considered one that’s written by practitioners for practitioners, it is part journalism, part analysis, partly a personal quest to satisfy my own curiosity, and partly written to cover events from the perspective of a politically interested and active person, albeit one who respects the participation of folks from all parts of the spectrum. Don’t get me wrong; I like to break a story every once in a while just to prove that I can. But I don’t like to take anything on if I can’t do it properly.  So I’m grateful that a news organization like the Canadian Press was willing to work with PunditsGuide.ca in order to cover a story of this significance the right way.

Conservatives Face New Set of Legal Hurdles in Dispute with Elections Canada

December 12th, 2010 | 8 Comments

[Welcome, National Newswatch readers!]

In what may be the second shoe to drop in the so-called “in-and-out” election expense investigation, the Conservative Party of Canada last week filed an amended 2006 campaign financial return “under protest”, at the direction of Chief Electoral Officer Marc Mayrand, but is reserving all its legal rights to undo the requested corrections, PunditsGuide.ca has learned.

The issue being contested is whether the cost of running the party’s regional campaign offices in Montréal and Québec City should be counted as an election expense of the national party, or be shared between 15 of its candidates in the province’s two major cities. This is the same question currently under litigation in relation to the so-called “in-and-out” advertising expenses also incurred during the 2004 and 2006 elections.

The new case is expected to up the ante for both sides in the earlier dispute, as it suggests there was a pattern of transferring other election expenses besides advertising from the Conservative Party’s national campaign to certain of its riding campaigns, that were expected to have spending room under the ceiling, and who would be eligible to receive a rebate of those expenses with a vote share of 10% or more.

Earlier this fall on September 8, Chief Electoral Officer Marc Mayrand wrote to Senator Irving Gerstein as Chair of the Conservative Fund of Canada directing him to add election expenses of $107,401.11 to the Conservative Party’s campaign return for 2006, relating to salary, lease and office costs for the operations of the party’s Montréal and Québec City regional campaign offices; and to file a corrected 2006 campaign return, along with revised party annual returns for 2005 and 2006, before midnight of November 30, 2010. The Prime Minister subsequently called three by-elections for Monday, November 29, several weeks earlier than some observers had expected, thereby leaving one vacant Québec seat in Haute Gaspésie-La Mitis-Matane-Matapedia out of the call.

According to public documents obtained by PunditsGuide.ca, Party National Director Dan Hilton complied with Mayrand’s request on November 30, although he added the lesser amount of $106,283.61 instead, after deducting GST rebates the party obtained from the Canada Revenue Agency as a non-profit organization, further to a case it won at the Ontario Superior Court) last December. That case is currently under appeal, as is the so-called “in-and-out” case which came before the Federal Court of Appeal for several days of hearings two weeks ago.

On their own, the $107,000 in regional office expenses would have very nearly put the Conservative Party over its spending limit for 2006. But as Hilton reminded Mayrand in his November 30 reply, the party had already restated its 2004, 2006, and 2008 election returns to exclude GST rebates the party argues it won the right to deduct following the decision of the Ontario Superior Court in Conservative Fund Canada v. Canada (Chief Electoral Officer), [2009] O.J. 5574. The latest “under protest” version of the 2006 Conservative campaign return reports total registered party election expenses of $17,569,357.23, or 96.1% of the party’s $18,278,278.64 national expense ceiling for the 2006 election.

The Conservative Party needs every bit of room it can find under that expense ceiling in case it loses the bigger “in-and-out” case on appeal, which could place over $1 million in advertising on its books for the 2006 campaign, rather than the candidates’ expense returns, thereby pushing the party over its national spending limit for the 2006 campaign, in violation of the Elections Act.

The Chief Electoral Officer’s letter to Gerstein explains that evidence turned up during the course of an investigation by Commissioner of Elections William Corbett into the regional office expenses — possibly including documents seized during the raid on Conservative Party headquarters in April of 2008 — shows the 11 regional office staff had been paid by party headquarters, had titles and job descriptions consistent with work normally done in a party regional headquarters, made some 2,000 long distance telephone calls and sent courier packages to other cities besides the 15 Montréal and Québec City ridings who were billed for its full costs – including some outside the province itself – and showed that the costs for running the regional offices had been included in several earlier drafts of the party’s central campaign budget for the 2006 campaign.

Draft campaign budgets are never filed as part of registered party or candidate financial returns, and so would either have been obtained by the Commissioner as part of his investigation, or else may have been discovered amongst documents obtained during the April 15, 2008 raid on Conservative Party headquarters in downtown Ottawa.

Furthermore, candidates and official agents from the 15 ridings who were interviewed by the Commissioner had little detailed knowledge of what the regional offices were doing “for their benefit”, or to directly promote their own candidacy, and had never used the offices themselves, Mayrand noted. Nearly half of them declared separate expenses for their own local campaign offices as well.

In his letter Mayrand told Gerstein that he had requested additional information from the 10 candidates and official agents in the Montréal ridings who had declared a portion of those expenses, none of whom could provide supporting documentation of either the lease or the purposes for which the regional office was used to promote their candidates. Party Chief Financial Officer Ann O’Grady however provided supporting documentation for the lease and office expenses, and other supporting documentation said to reflect “details of the costs that were charged out to, and paid for by, the 10 ridings that benefited”.

Mayrand also wrote that he contacted a further 5 candidates and official agents from the Québec City ridings, and obtained some documents from the candidate and official agent in Portneuf—Jacques Cartier, including an invoice from the Conservative Party for their “share” of the total expense for the office. It was then that he questioned whether the expenses of the two regional offices might have been a transferred election expense from the party to the ridings, and referred the matter for investigation by the Commissioner of Elections.

“I trust the above will give you a sufficient understanding of the facts which have led me to conclude that the expenses under discussion are those of the Conservative Party of Canada and not of the local campaigns that reported them in their returns. Accordingly, these expenses should have been reported by the Party,” he wrote in the September 8, 2010 letter to Gerstein.

The 15 candidates and their official agents also received letters dated October 4, 2010 asking them to restate their 2006 campaign returns by November 12, and to refund any rebate they had received from Elections Canada for those expenses. To date, the party’s candidate in Portneuf—Jacques Cartier, Québec City lawyer Howard M. Bruce, has complied with the request, but last week the remaining 4 Québec City candidates, including MPs Daniel Petit and Sylvie Boucher, former MP Luc Harvey and former candidate Frédérik Boisvert filed a motion before the Québec Superior Court asking to have the finding overturned, according to a story in Friday’s edition of Le Soleil.

The 4 candidates are represented by the lawfirm Stikeman Elliott which told the court that Elections Canada’s claims were based on an incorrect assessment of the facts, according to Le Soleil’s story, and that the regional office in fact had been organized for the benefit of those candidates, many of whom had not originally been expected to win, had no local organizations, and were helped by party organizers to regroup and share a common office space.

Meanwhile Mr. Petit also filed a revised return “under protest” and pending legal remedies, after seeking through his attorney at Stikeman Elliott an extension of the November 12 deadline until December 15, which was refused by Elections Canada. Petit’s original campaign return reported both his $1,750 share of the Québec City regional office as “other office expenses”, along with $1,000 for office rent, heat and light. Two of the three other Québec candidates also originally declared separate office expenses, over and above their share of the regional office expenses.

It’s not known whether the Montréal areas candidates or the Conservative Party itself have also filed separate motions to challenge the Elections Canada demand for corrections in their returns, but they have until December 14 to do so, under s.434(2)(a) of the Elections Act.

UPDATED: Proposed Election Act Amendments from the CEO

June 11th, 2010 | 0 Comments

The Chief Electoral Officer’s comprehensive post-2008 general election report was tabled in parliament Wednesday, and CEO Marc Mayrand met with members of the media Thursday morning to discuss his recommendations for overhauling the Elections Act in more detail.  Glen McGregor’s story for the Ottawa Citizen is here.

While I’ve filed a general story for Monday’s Hill Times, I thought readers might be interested in the full list of recommendations governing Political Financing.

  • Supporting documents requestable from registered parties The CEO says he needs the same authority to request supporting documents from registered parties to confirm their rebatable election expenses as he now has for candidates, and as all his provincial counterparts have under their respective statutes.  This is his number one ask, and tops Glen’s story as well.  You can examine the parties’ campaign returns at the Elections Canada website here.
  • Consequences for overspending candidates The law as currently written permits either a “slap on the wrist” (a warning letter or a compliance agreement) or a full-blown prosecution for cases of overspending, with not only nothing in between, but no actual financial consequences.  Weirdly, the way the law is written, expenses incurred over the limit are still rebatable: something I certainly never knew, nor could have imagined. [UPDATE: Well, I'm really glad to find out I'm wrong on that one.  What they were trying to say in that section of the report was that if a candidate *under-reported* expenses, and was fined for doing so, s/he would still be eligible for a rebate of the additional expenses, possibly amounting to more than the fine.  However, no rebate is given for expenses exceeding the limit, and thank goodness for that!]  Mayrand is proposing that some administrative penalties be added to the Act, such that candidates or political parties found to have overspent their limits would be dinged dollar-for-dollar out of their rebates.  In addition, if they were found to have done so deliberately, they could still be prosecuted.  This is currently the law in Ontario and Manitoba.
  • No re-registration of delinquent riding associations The CEO believes there should be a four-year ban on registering a new riding association for a party in a riding where its last riding association had outstanding financial returns, and/or deregistered itself and hasn’t filed its final return.  The ban would be reversable once the missing returns were filed.
  • Candidates should not be allowed to keep property acquired during the campaign At present, candidates can transfer the property of their campaigns (e.g., an inventory of signs, or a piece of office equipment) to either their local riding association, and/or the party that endorsed them, but they don’t have to.  The CEO argues that candidates should not be allowed to profit financially from their candidacy, and thus should be required to dispose of that property at fair market value, include that value in the calculation of campaign revenue and campaign account surplus, which then triggers other sections of the Act to govern its disposal.
  • Candidates should also bear responsibility for filing a false or misleading campaign return Currently only the financial agents are legally responsible for these offences, but the CEO believes the Act should be amended to share that responsibility with candidates and nomination contestants.
  • Clarify the Act’s treatment of advertising expenses incurred prior to the campaign period for transmission during the campaign period, by both third parties and riding associations.  Currently the Act only regulates expenses incurred during the campaign for these two groups.  In light of the fixed date amendments to the act, this oversight could have growing consequences for perceptions of fairness in the electoral system.
  • Clarify the Act’s treatment of candidate debates as non-monetary election expenses The definition of a candidate’s election expenses in s.407 probably includes the costs of organizing candidate debates, since they promote a candidate or might disadvantage a candidate who doesn’t participate.  So, for example, say the local community association organizes a debate for 4 candidates, one quarter of its costs in organizing the debate could arguably be considered a non-monetary contribution to the participating candidates.  But wait, since another set of amendments were passed banning contributions by anyone other than individuals, now the community association would be in violation of the Act, since it may not make even a non-monetary contribution to those candidates.  You and I might look at things and say that reasonable people could easily figure out this is not what Parliament intended, but public servants are governed by the law the way it’s written.  What’s worse is that (and let’s be honest with ourselves here), some all-candidates meetings are organized by groups who clearly intend to help one candidate and/or hurt another, and even in other occasions where that organization might be trying to be fair, their obvious point of view might leave certain other candidates feeling the deck is stacked against them regardless.  Arguably in the former case, that group’s expenses should be treated as a non-monetary contribution to the candidate being promoted, but for the problem that only an individual could then hold such a meeting, not an organization.  A further problem would plague the case of meetings in ridings with large numbers of candidates (usually the core urban riding in each city): would the association trying to organize a neutral meeting still have to invite every single candidate to it?  The CEO is asking Parliament to clarify its intent in these situations, and outlines the guidelines he has employed to handle them, asking for some legislative backup of those practices.
  • The treatment of unpaid election expenses by candidates, nomination contestants, and leadership candidates needs to be streamlined, and made more effective.  Explaining this recommendation could take an entire blogpost all on its own.  The law as currently written did not anticipate many of the consequences of its application, and means amongst other things that a candidate has to apply to the CEO or a judge in order to pay off their debts any later than 4 months after the campaign has ended (18 months for leadership candidates), or it becomes a “deemed contribution” by the vendor or lender.  This creates a host of problems, because given that candidates usually haven’t paid those bills because they don’t have the cash and need to raise it, now they can no longer legitimately spend any money in order to raise it (since the Act says that any invoice must be submitted within 3 months), nor to request the extension from the Chief Electoral Officer or a judge.  Simply going ahead and paying the bill after 4 months without authorization (which many people do inadvertantly, not realizing the requirement), not only puts them in violation of the Act, but is now no longer transparent, since unauthorized payment of an outstanding debt does not trigger the requirement for an updated campaign return which is invoked with an authorized payment of an outstanding debt.  So we’ll never know who they raised money from to pay those debts, or whether they were paid and paid in full … unless the CEO decides to impose that requirement when they ask for authorization to pay the claim after the deadline.  Worse still is that any updated campaign return has to have an updated audit, thus incurring another expense that the candidate would have to raise more money to pay, without spending any money to raise it, and so on and so on and so on.  It’s a mess.  Trash the whole system and rebuild it from scratch I say.  The CEO’s suggestions in that regard seem reasonable to me, but then I’ve never run a leadership campaign, nor been an official agent for a candidate.
  • Judges shouldn’t need to approve every single filing extension, just the grossly negligent ones Political entities like candidates or political parties can ask for extensions on their filing deadlines up to two weeks after the due date, but after that it’s no-person’s land.  Although there’s no provision for it in the act, in practice the parties have retained lawyers on behalf of their candidates to request extensions from a judge.  Also, there are only very narrow grounds for granting any extension, and no extension means no return of their nomination deposit, no rebate payment, possible deregistration, and no sitting as an MP in Parliament.  Oh and prosecution.  So, there may be situations in which the CEO might feel that an extension is warranted, but has no authority under the act to grant the extension; following which no financial return will be published, an unfortunate result that works against transparency.  The proportion of candidates not filing in time has risen from 20.3% in 2004 to 29.4% in 2008, according to the report, so this situation has become more pressing over time.  To ensure transparency in the absence of some legislative changes, the agency has had to reluctantly sacrifice its goal of ensuring timeliness.  It would like to redefine the acceptable reasons for granting an extension, not bring the courts into the process so early, and introduce an administrative penalty such that late candidate returns forfeit a portion of their nomination deposit.  Also, updated returns should not have to have a completely updated audit, as it serves little practical use.
  • The ‘per contest’ cap on leadership contest fundraising should be replaced with an annual cap, as is the case for contribution limits to every other political entity regulated under the Act (such as candidates or parties).  It’s also recommended to repeal the presumption that any contribution made within 18 months of the conclusion of a leadership campaign was made for that race, and not for any subsequent one that may since have started.  Finally, not every report currently mandated to be filed by leadership contestants serves a purpose, and two of the six required reports could be dropped in the CEO’s view.
  • Candidates shouldn’t need bank accounts if they don’t spend anything This change alone would save on a lot of pointless administrivia.  In a related recommendation, the CEO suggests that candidates who are not rebate-eligible and don’t raise money or incur expenses above $5K or $10K really shouldn’t need to produce an auditor’s report when they file their returns.
  • Parties and riding associations should be able to transfer funds and goods and services to a candidate’s campaign at any time Currently this can’t be done until the candidate is confirmed by the returning officer, however this can impede their campaign start-up significantly.
  • The rules around by-elections superceded by general elections need to be completely revisted.  All kinds of unintended consequences result from this situation, the craziest of which is that a by-election candidate is not allowed to transfer the assets of their by-election campaign to their general election campaign, even though this violates any standard of common sense.  Candidates endorsed by a political party could transfer the assets to the riding or party and then ask for them to be transfered back to the new candidate campaign.  But Independent candidates in that situation are completely out of luck.
  • The limit on fees allowed to be paid to campaign auditors should be allowed to be adjusted for inflation.

I think fair-minded people and those who care about sensible public administration will agree with the issues raised by the Chief Electoral Officer here, even if they don’t agree with every detail of the proposed solutions.  For others, the above blogpost has probably unfortunately served as a guide on some of the ways they could game the system.

However, the CEO’s general point in making these recommendations to Parliament is that the political financing provisions of the Elections Act are a patchwork of a succession of legislative changes, which don’t work well together, aren’t consistent across all the political entities he has to regulate, and leave some large gaps in some areas of transparency and compliance, while imposing unneeded and burdensome administrative requirements in others.  For anyone who’s worked with the Elections Act at all, they can