Canadian Commentary

Making Political Financing Truly Democratic

May 2002

A version of this article originally appeared in Pundit Magazine in April 2002.

Campaign finance reform is in the air.

In Manitoba, the NDP government has banned contributions from corporations and unions, and has limited those from individuals to $3000. In Ontario, the opposition Liberals, leading in the polls, have made the issue one of the key planks of their platform. And even in the United States, long the bastion of shady campaign financing, both houses recently passed a serious campaign finance reform bill.

In each case, the reforms are intended to limit the undue influence of wealthy donors upon democratic political life. But in spite of progress having been made, in many regards they haven't gone far enough.

That's because, although the measures do reduce the most egregious opportunities for society's richest to influence the outcome of elections and the behaviour of governments, they do not fundamentally alter the way in which our democracy is financed.

After all, it's highly unlikely that more than perhaps one percent of Canadians can afford to dish out $3,000 to a political party. Granted, political contributors receive generous tax credits - but again, only well-off Canadians can afford to take full advantage of such an incentive.

In fact, most Canadians are fortunate if they can afford to donate $100 to their political party of choice. That means that even in Quebec, where the $1000 maximum contribution is the most stringent in North America, the wealthy can still contribute ten times as much to a political party as can the average citizen.

That discrepancy has a bearing on political participation levels. In Toronto, for example, Mayor Mel Lastman managed to raise all of the money that he could possibly have needed for his 2000 re-election campaign in a single $1,000-a-plate dinner attended by the city's wealthiest and best-connected citizens. Although other circumstances were also at play, Lastman's tremendous fundraising advantage helped ensure that no other serious candidates entered the race. Perhaps more importantly, the lack of participation by ordinary citizens in helping to fund his campaign has arguably resulted in their voices being largely ignored under his subsequent leadership.

The fact is that, even if Canada were to impose Manitoba-style restrictions on federal campaign financing, our democratic process would still financed by the affluent, and as such that particular segment of the population would maintain a disproportionate influence upon government policies.

None of this is to suggest that affluent voters have monolithic political interests; after all, the average income of New Democrat voters is higher than that of any other party's supporters. But the range of perspectives remains limited, restricted mostly to those of well-established, middle-aged voters in business or professional careers who can afford to give money to causes that they believe in.

So what's the answer? Should political donations be limited to a sum - $200, perhaps - that's closer to the range within which most Canadians can afford to donate?

On the plus side, that would force political parties to make a genuine effort to reach out to a broader base of voters. But the drawback is that the amount that political parties are able to raise would be significantly reduced. That, realistically, would be a serious problem, because ample funding is necessary for all political parties in order for them to get their point of view out to voters in the era of mass media.

If anything, our parties would benefit from more funding. For instance, the political process would be enriched if parties could present their viewpoints on active issues directly to voters through advertising in the periods between elections, rather than just once every four years.

The danger of under-funding political parties is an important issue that's usually neglected in discussions of campaign finance reform. And it's not a coincidence that parties of the left, which are more likely to be under-funded because they lack the backing from corporations that supports their business-friendly counterparts, are often the ones that get caught up in illegal funding scandals (the British Columbia NDP's troubles in the 1990s come to mind).

An obvious answer is public financing of election campaigns, which already plays a significant role in Canadian elections. But the biggest problem with that solution is deciding how to allocate the funds.

As it currently stands, public funds are allocated based on the performance of the parties in the previous election. The result is that the system clearly benefits the party in power, creating a roadblock to the creation of new parties and effectively perpetuating the status quo.

That inherent unfairness leads many to reject an increase in public funding to compensate for a reduction in private funding, and has left us at an impasse when it comes to serious campaign finance reform.

There is, however, a way around that roadblock. Why not let the voters themselves decide, on a yearly basis, how much money each of the parties should receive from public funds?

Here's how it could work: Each year, a public fund would be set aside equal to ten dollars per voter. Voters would receive a form on which they could select one political party to receive their allocated ten dollars, and they would then return the form in a double-envelope system designed to ensure anonymity but prevent fraud. For every voter who chose them, the designated party would receive ten dollars from the fund, to be divided between the local riding association and the national party.

That amount might not seem like much, but given the number of eligible voters, it would amount to more than two hundred million dollars - a far greater sum than political parties currently receive each year. With that level of public funding, in fact, private financing of political parties could be abolished completely, rendering our system truly democratic.

Such a system would also help to engage voters in the political process. With the funding allocation form could come a booklet in which each of the registered political parties - including those that aren't currently represented in parliament - would have a page to make their case for support. Voters would be able to consider and take action on their political preferences on an annual basis, rather than just once every four years.

For those who did not wish to support a particular party, but still wanted to participate in the process, there could also be a "none of the above" option. Voters who made that choice would see their money go towards a political education fund, dedicated to encouraging participation in the political process.

To give voters an incentive to make their choice, funds available for forms that weren't returned could be divided according to the preferences of voters who did respond. In other words, those who chose not to respond would have someone else decide where their money went.

The result would be a truly democratic political funding system, and one that would force parties to consider their popularity all of the time, rather than just in the run-up to elections. In other words, voters would finally have some pull between votes, when relevant policy decisions were actually being made.

As for the financing of actual election campaigns, the parties would receive enough money each year to build up more-than-adequate war chests for upcoming races.

To prevent a massive annual feeding frenzy, with parties distorting their messages to appeal to voters over a limited funding period, distribution of the forms could even be staggered throughout the year. An added bonus of that approach would be that the aggregate results of voter funding selection could be made public, resulting in an on-going poll of public opinion on the parties' respective performances.

A final benefit, of course, would be that the system would in all likelihood provide increased funds for smaller parties, allowing them to make their voices heard and resulting in a true test of their viability and appeal.

One objection to this kind of system is that activists - people who believe strongly in a particular party - would be denied the ability to show that support. However, everyone in Canada would still be able to devote their time to their political party of choice - and time is a resource that is much more evently distributed across the population. In fact, the system could result in greater political activism in the population, as people who once supported their party passively by giving money instead took on an active role.

The biggest difficulty in this sort of system could be the financing of independent candidates. But presumably, some sort of mechanism could be developed to provide funding from the unallocated portion of the public fund to independent candidates who could demonstrate a minimal level of support, perhaps though local signature campaigns.

The other major drawback, of course, would be the high financial cost of running such a system, both in terms of administrative and mailing expenses and because of the actual fund itself. Meanwhile, it would be necessary to constantly update the national registry of voters, since a truly up-to-date list would be required for the process to function effectively.

But while the total cost could reach as high as $400 million dollars per year, it is difficult to imagine a better investment. For the first time in history, a nation would have a truly equal, democratic method of funding its political process; at the same time, increased voter participation and greater communication and research resources on the part of the parties would rejuvenate a political process currently overcome by apathy.

For Canadian democracy to be revitalized, such a system might not only be desirable - it might, in fact, prove to be necessary.

May 2002

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