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Canada’s campaign finance law still has a huge loophole

Set out below is a letter-to-the-editor by Democracy Watch Board Member Duff Conacher which was published in the Hill Times on September 24, 2012

Re: “Money talks … about Grit leadership race,” (The Hill Times, Sept. 17, p. 10, by Gerry Nicholls). As he has in the past, Gerry Nicholls claims that, “The real problem is Canada’s overly-restrictive campaign finance laws which make it nearly impossible to raise the resources needed to run for high political office.”

Of course, he doesn’t cite any evidence to back this claim, because there is no evidence.

Canada’s campaign finance law only makes it nearly impossible for people who are not supported by many people to raise the resources needed to run for office.

Which is exactly how it should be in any country that calls itself a democracy.

I say nearly impossible because Canada’s campaign finance law still has a huge loophole in it that federal politicians have continued to fail to close for the past three years—a loophole that allows for unlimited loans to candidates and allows candidates to have the resources to run a successful leadership campaign with the support of only a couple of people.

No one knows for sure how much funding is needed to have a chance of success running for the leadership of a national party, especially today with the internet as a very, very low-cost way of reaching many people (and robocalls as another very low cost way). But let’s assume $1-million is needed (which I think is a reasonable estimate).

Only donations from individuals are allowed, and the federal donation limit is $1,200 to all the candidates in any federal party’s leadership race. Some people may choose to donate to two candidates, so they would only be allowed to donate $600 to each candidate (or some other combination of donations that adds up to $1,200). It is key to remember that donors get about 50 per cent of their donation back as a tax credit.

Assuming $1-million is needed for a campaign that has a chance of success, a candidate who hopes to be successful has to convince only 833 people out of the 26.4 million Canadians who are older than 19 (i.e. 0.0032 per cent of all those people) to give the maximum $1,200 to him/her, or 1,666 people (0.0064 per cent) to give $600 each (or 3,312 people (0.013 per cent) to give $300 each etc.).

So here’s a simple question for anyone thinking of running for leadership of the Liberals or any other national party to ask themselves. Do I have the strong support of at least 0.0032 per cent to 0.013 per cent of adult Canadians, strong enough for them to donate to me?

If not, better think hard about whether you should run (because you likely won’t, and should not, win), and if you do run better severely restrict your spending so you don’t end up in with a debt you can’t pay off.

Several candidates from the 2006 Liberal leadership race have such debts because they simply failed to ask themselves this question.

While the donation limit was decreased during that race, they still should have known that they were spending way more than they would ever be able to raise. And, as a result, Elections Canada should, and hopefully will, soon prosecute them for failing to pay off their debts in the past six years.

And also hopefully the federal political finance system will be made even more democratic very soon by prohibiting loans to candidates from anyone but individuals, limiting loans to the same level of donations, and closing the loopholes that currently allow for secret, unlimited donations to nomination race and party leadership candidates who are not MPs.

For more details, go to Democracy Watch’s Money in Politics Campaign