How to fix the elections finances bill

Whose hands are still in the cookie jar?
Presentation to Standing Committee on General Government
On BIll 201: An Act to amend the Election Finances Act and the Taxation Act, 2007
Mike Schreiner, GPO leader

June 7, 2016

Please check against delivery.

Introduction    

What the GPO likes about Bill 201, with some minor revisions

Significant revisions the GPO would like to see in Bill 201 Lower contribution limits and eliminate loopholes    

Conclusion

How can you help?
Send a message to Premier Wynne

 

Introduction

Chairman Crack and members of the committee I appreciate the opportunity to present the Green Party of Ontario’s views on Bill 201, An Act to amend the Election Finances Act and Taxation Act, 2007. 

It’s time to get big money out of Ontario politics. 

Cash for access private dinners, fundraising quotas for Ministers and a pay-to-play public funding model that benefits the wealthy and those who seek their money have no place in our democracy. Even the appearance of buying access to power undermines trust in government policy making and in our democratic institutions.

In my meetings with the Premier and the opposition leaders, I think it is clear to all parties that the status quo is unacceptable. 

Whether you are new to the fundraising reform bandwagon or, like us, have been on it for some time, by working together we now have a historic opportunity to make our elections more democratic and fair. 

Comprehensive fundraising reform is essential to renewing our democracy and to restoring trust in the integrity of government decision making.

Bill 201 takes a major step in that direction, but it does not go far enough. If the government is serious about getting big money out of politics, then Bill 201 must lower donation limits and loopholes, reduce party spending limits, and tighten disclosure and oversight rules.

Before I go into specific ways in which I think Bill 201 can be improved, I want to reinforce my support for some of the positive changes in the bill. Although I have not always been supportive of the government’s process in drafting legislation--and in this regard I want to acknowledge the NDP’s efforts to establish a more democratic and inclusive process--I am pleased that the government listened to many of the ideas that I shared with the Premier when we met on April 12. 

I also want to acknowledge the government House Leader for including the GPO in consultations on drafting Bill 201. We will need a legislative historian to verify this, but it might be the first time that a party without an elected MPP was asked to provide substantive input into the drafting of legislation. So, although the government did not support a non-partisan committee process, I do appreciate the effort to consult across party lines on an issue that is so central to the fairness and legitimacy our democratic elections. 

And I want to acknowledge that I took it upon myself to seek input from the leaders of all registered political parties in Ontario. Their feedback informs some of my presentation. 

Only by working together can we transform political fundraising rules in a way that is fair, transparent and democratic.

What the GPO likes about Bill 201, with some minor revisions

It eliminates corporate and union donations

The GPO strongly supports the elimination of corporate and union donations to political parties. People vote, not corporations or unions. As such, people should fund political parties, not corporations and unions. 

However, I think the legislation should be explicitly clear that the donation of paid “volunteers” from a corporation or union are not allowed. The use of paid “volunteers” could be an obvious way for a corporation or union to get around the ban on corporate and union donations. I believe the public will find this potential loophole to be unacceptable. 

This rule should be written in a way that does not deny people from volunteering for a campaign or party. Nor should it preclude organizations from encouraging people to volunteer. But the use of paid “volunteers” should be strictly prohibited. 

The GPO also supports the elimination of corporate or union loan guarantees.

A more democratic way to fund political parties: per-vote funding 

The GPO strongly supports the introduction of per funding for political parties. Even though we believe this should be a permanent change, we can live with a review after 5 years. 

If we want government decisions to be made in the public interest, then the public should fund political parties. 

Per-vote funding of political parties is more democratic than our existing public financing system. It is also essential to getting the corrosive influence of big money out of politics.

Currently, the public financing of political parties is a pay-to-play model that undemocratically benefits big donors through generous tax credits and the parties that seek their money. For example, a $2,500 donor will receive a refundable tax credit of approximately $1,150. Tax dollars cover the cost of almost half of the donation.

By contrast, a per-vote allowance is a vote-to-play system. It upholds the simple democratic principle of one-person, one-vote. It doesn't exclude citizens who don't have deep pockets. It empowers every citizen with an opportunity to financially support the party of their choice with their vote.

The current system is also more expensive. The pay-to-play system currently provides around $13.4 million of public funding to political parties through generous tax credits for their donors. The estimated cost of the per-vote allowance is $10.9 million of taxpayer money.

I want to be clear that I’m not suggesting an elimination of contribution tax credits. I believe we want to encourage people to make political donations. But I would prioritize the per-vote allowance over contribution tax credits because it is more democratic. And I support a dramatic decrease in donation limits, which will presumably reduce the cost of the contribution tax credits. 

Finally, in keeping with the one-person, one-vote, one-donation principle, the GPO does not support the party eligibility threshold of two percent province wide, or five percent of the vote in the ridings where a party ran candidates. Citizens should have the ability to direct their donation to any legally registered political party that is in good standing with Elections Ontario. 

I know some will argue that public money should not go to small, so-called “fringe,” parties. But I think it is more democratic to empower citizens, not politicians, to make that determination. I want to be clear that I say this not in self-interest--the GPO would qualify for public funding with the current proposed threshold--rather I say it in support of the democratic principle of one-person, one-vote, one-donation. The cost to the public treasury would be small, but the message to the public would be big: the per-vote allowance is based on democratic principles, not established party self-interest. 

It restricts third-party advertising during writ and pre-writ periods

The GPO supports restrictions on third-party advertising, including spending limits, reporting requirements and anti-collusion provisions. 

Partisan third-party ads can be used as a way for corporations, unions and other organizations to get around party spending limits and the ban on corporate and union donations. 

Some have raised questions about whether this places a restriction on free speech. The Supreme Court in Harper vs Canada the Supreme Court upheld the constitutionality of third party advertising limits.

Establishes donation limits for nomination contestants and leadership races

We support donation limits for nomination contestants and leadership races, which closes a major loophole that has enabled wealthy donors to exceed donation limits by contributing big money--in one previous case $100,000--to candidates, who in the case of leadership contestants might serve as Premier. 

The GPO also supports spending limits for nomination contestants and leadership races. 

Eliminates general and by-election contribution periods to a party 

The GPO strongly supports closing the loopholes that enable wealthy donors to exceed contribution limits by making additional party donations during election and by-election writ periods.

Although Bill 201 will not be in place before the next by-election, I challenge all parties to adhere to the spirit of this bill by voluntarily not accepting party donations that enable donors to exceed annual limits during the upcoming by-election in Scarborough Rouge River. 

Significant revisions the GPO would like to see in Bill 201

Lower contribution limits and eliminate loopholes

Bill 201 does not get big money out of politics. Under the proposed new rules, rich donors can still contribute up to $7,750 to a political party, through donations to its central party, local associations and candidates. 

I don’t think this is the real reform people expect. How many Ontarians have $7,750 to donate to a political party? 

High limits mean high-end donors can still buy access. Parties can use these loopholes to host cash-for-access events that give wealthy donor privileged access to power. Even if no influence is peddled, the perception of it erodes the public’s trust in the integrity of government. 

Bill 201 should close all contribution loopholes, not just those for by-elections, leadership and nomination contests. 

At a minimum, the annual contribution limit should be capped at $1,500 total to a party, including its associations and candidates. 

I would like to challenge the committee to be even more bold by lowering the total annual contribution limit to under $1,000. Quebec has an annual donation limit of $100. 

A number of people have told me that such a low limit is unrealistic. That might be the case. So, let’s use the committee hearings and public consultation to determine what the appropriate contribution limit should be. 

What I do know is that we need lower contribution limits to prevent anyone from having the ability to buy access or to even have the perception of buying access. Lower limits have the additional benefit of forcing parties to earn broad support in order to succeed in their fundraising efforts.  

I can’t emphasize enough how important it is for Bill 201 to be amended in a way that lowers contribution limits and closes loopholes. 

Lower spending limits for political parties

Bill 201 does not change Ontario's political party spending limits, currently $0.80 per elector. 
This means a party's total campaign spending limit is around $7.4 million, based on the 2014 voters list of 9,248,764 electors.

Quebec's limit is $0.68 per elector. If we had that limit in Ontario, parties would have a campaign spending limit of around $6.3 million. Taking over a million dollars out of a party's potential maximum budget would reduce the pressure to raise big bucks. 

An added benefit, from the perspective of many voters, is that lower spending limits might result in fewer negative attack ads which seem more frequent in today’s free spending political world. 

The GPO supports the addition in Bill 201 of pre-writ spending limits on advertising during the six-months prior to an election. We believe the committee should develop a similar formula for campaign advertising during the entire period between elections. 

And while it may be outside the scope of Bill 201, the GPO believes that changes to the rules for government advertising made last year must be reversed. It is wrong for the government to use public dollars for partisan advertising and to possibly get around pre-writ spending limits outlined in Bill 201.

Eliminate the partial reimbursement of campaign expenses

Candidates who receive over 15% of the vote in their riding get 20 percent of their campaign expenses reimbursed by taxpayers. This public subsidy costs the treasury  around $1.9 million each election cycle. 

In addition, parties receive $.05 per elector in ridings where a candidate receives over 15% of the vote. This public subsidy costs the treasury around $1.2 million each election cycle, for total cost of around $3 million. 

The reimbursement of campaign expenses is clearly unfair to small parties, new candidates and the citizens who voted for them - perversely, it funds the campaigns of established parties with the tax dollars of people who voted against them. It also encourages candidates to spend more in order to maximize their reimbursement. 

The GPO supports the complete elimination of the reimbursement of campaign expenses, not the reduction of the threshold from 15% to 10% proposed in Bill 201. 

Improve disclosure and oversight rules

Stronger disclosure and oversight rules are needed to ensure that corporations and unions do not funnel donations to political parties through individuals.

According to campaign finance expert Professor Robert MacDermid, some jurisdictions in the US require individuals to list their employer and occupation when making a donation in an effort to avoid corporations from funneling donations through individuals. 

Quebec requires donations to be verified by Elections Quebec before being transferred to parties and candidates.

Bill 201 should adopt similar requirements to ensure that everyone is playing by the rules and that the fundraising system is open and transparent. 

Conclusion

In conclusion, I want you to imagine this: 

A political world in Ontario where politicians are concentrating on what’s best for Ontario, not on raising money to fund their campaigns.

 A world where parties engage a broad cross section of people in their fundraising efforts, instead of focusing on cash-for-access events where politicians have to shake down wealthy donors for big bucks. 

Where the focus of political spending is to talk to people where they are on the issues, not to go after other parties through high priced attack ads.

A politics funded, not by those with deep pockets, but by you, me, our friends and neighbours--By voters across Ontario.

Now picture this.

Low donation limits so MPPs can focus on creating good public policy. Per-vote funding that underlines how important each vote is, because that’s how parties would be elected and funded.

Lower spending limits to take away the pressure that we see right now to go after big money - and to make promises in return for exclusive access to MPPs, Ministers and even the Premier.

This picture looks a lot like a healthy, vibrant democracy.

We can do this in Ontario. Bill 201 starts us down the road toward a better democracy. 

As GPO leader, I’ve had the privilege of getting to know many of you, MPPs from all parties, and I truly believe that this is the road you want to choose. I encourage to take it. 

Be bold. Be transformative. 

Make the changes to Bill 201 that take us all the way down that democratic road. Let’s make the focus of politics about people, not about the incessant need to raise big money.