Elections Ontario should conduct audit — would likely find high donation limit has led to funneling of donations by businesses (as happened in Quebec and at the federal level)

50-group coalition, and more than 10,000 Ontario voters, call for annual donation and loan limit for individuals (including candidates) of $100 (as in Quebec), stronger enforcement and penalties for violations, and review of annual per-vote and donation-matching public funding to prove it’s actually needed

Same changes should be made to municipal political finance system across Ontario

FOR IMMEDIATE RELEASE:
Wednesday, December 13, 2017

OTTAWA – Today, just as it predicted last year, Democracy Watch revealed that Ontario’s provincial political finance system is still undemocratic as donations under the new system from January 1, 2017 to September 30, 2017 show the Liberals and PCs receiving a large share of their donations from a very small group of people who contributed $1,000 or more, as follows:

Ontario Liberal Party:
– Total Donated (Jan. 1-Sept. 30, 2017) – $420,133.30
– Total Number of Donors – 1,501
– Total Donated in amounts of $1,000 or more – $120,795.60 (28.75%)
– Total Number of Donors donating $1,000 or more – 103 (6.8%)

PC Party of Ontario:
– Total Donated (Jan. 1-Sept. 30, 2017) – $1,391,651
– Total Number of Donors – 4,151
– Total Donated in amounts of $1,000 or more – $454.920 (32.69%)
– Total Number of Donors donating $1,000 or more – 391 (9.4%)

The Green Party had a similar pattern (2.4% of total donors (22 people) donated 13.7% ($27,087) of total donations in amounts of $1,000 or more).  Only the NDP diverted from the pattern, as only 0.5% of total donors donated $1,000, and in total only donated 3.85% ($24,965.16) of the total amount the party raised ($647,763.20).

Based on these results, Democracy Watch and the Money in Politics Coalition (made up of 50 groups with a total of more than 3 million members), joined by almost 10,000 Ontario voters who have signed a petition on Change.org, called on Ontario’s political parties to make the following changes before the legislature breaks for the upcoming provincial election:

1. set an individual donation limit of $100 per year (as in Quebec);
2. set a limit of what candidates can give to their own campaign of $100 per year;
3. prohibit loans to parties except from a public fund;
4. review the per-vote annual public funding and, if the parties can actually prove they need it, set it at at most $1 per vote, and use annual donation-matching public funding if parties prove it is needed, and;
5. strengthen enforcement and penalties for violations.

Democracy Watch also called on Elections Ontario to conduct an audit to ensure that businesses were not funneling donations through their executives and family members (as happened in Quebec and at the federal level.

“As Democracy Watch predicted last year, Ontario’s new donation limit is much higher than the average voter can afford, and allows wealthy donors to continue to use money as an unethical way to influence politicians and parties,” said Duff Conacher, Co-founder of Democracy Watch and Chairperson of the Money in Politics Coalition.  “Ontario’s too-high donation limit is likely encouraging funneling of donations from businesses through their executives and employees and their families, as has happened in Quebec and at the federal level, and Elections Ontario must conduct an audit to ensure this isn’t happening.”

Years of experience and scandals in Quebec before 2013, at the federal level since 2007, and in Toronto since 2009, show clearly that setting a donation limit that allows individuals to donate more than $1,000 each year will allow the unethical influence of big money donations, and cash-for-access fundraising schemes, to continue in B.C.

“As Quebec, federal and Alberta donation scandals show clearly, the only way to stop the unethical, undemocratic influence of money in B.C. politics is to stop big money donations by allowing only individuals to donate only $100 a year,” said Conacher.

The many donation scandals across the country show that low donation limits are the only way to stop the influence of big money.  Few have been charged in Quebec’s corruption scandal even though an Elections Quebec audit found  $12.8 million in likely illegally funneled donations from 2006-2011. To stop the corruption, in 2013 Quebec lowered its individual donation limit to $100 annually to each party, with an additional $100 allowed to be donated to an independent candidate), and required donations to be verified by Elections Quebec before being transferred to parties and candidates.  B.C. should make the same democratic changes.

At the federal level, SNC-Lavalin illegally funneled almost $118,000 to the Liberal and Conservative parties, riding associations and candidates through its executives and employees from 2004 to 2011.  And former-Conservative MP Dean Del Mastro’s cousin was charged in 2014 with illegally funneling donations through his business’ employees.  There are likely many more examples of illegally funneling of donations at the federal level, as it seems Elections Canada has not yet done the full audit it promised to do in 2013.

As in Quebec, when Elections Alberta did an audit in 2012 it found dozens of illegal donations.  As well, in a 2013 scandal in Alberta, a coalition of construction companies made it clear that their big money donations were conditional on the Alberta government changing the labour law.

As well, the federal Liberals were caught last fall in a cash-for-access scandal as Prime Minister Trudeau and several Cabinet ministers have attended about 90 high-priced, exclusive events since January 1, 2016.  And, as the Globe and Mail reported last October 25^th, one of the events was a fundraising event to be attended by Finance Minister Morneau that a drug company executive helped organize while his company lobbied Finance Canada.

Democracy Watch filed a complaint about the event with the federal Lobbying Commissioner who is investigating, and also a complaint about another event the same drug company executive organized for Justin Trudeau in August 2015, and a complaint about another event top Liberal donors were invited to in September 2016, as well as a complaint about the Trudeau Cabinet selecting their own ethics and lobbying watchdogs.  In March, Democracy Watch filed a complaint about a big money fundraising event held by a corporate board member for the Liberals in August 2014.  The Lobbying Commissioner has failed to rule on any of the complaints.

The results of Democracy Watch’s research also show that top federal Liberal Party donors (to the Party only, not its riding associations) who gave $1,100 or more in 2015 were only 4.37% of total donors (4,084 donors out of 93,426 donors total) but they gave the Party 22.87% of total donations raised ($4,866,373.76 out of the $21,276,897.57 total raised).

In addition, the federal Liberals hold special events for donors who donate $1,500 or more annually (they become members of the exclusive Laurier Club).  As the Globe and Mail reported recently, based on Elections Canada figures only 790 people (0.85% of all donors to the Liberals) donated $1,500 or more in 2015, and in 2014 only 522 people (0.68% out of 77,064 total donors) donated $1,200 or more (the amount needed then to attend a Laurier Club event).

Toronto’s experience is another example of how high donation limits allow donors to get around bans of corporate and union donations.  Such donations were banned in Toronto elections in 2009, and individual donations limited to $750 annually, but a 2016 analysis by the Toronto Star found that big business and other special interest group executives and their families continue to give large amounts to city councillors.

Loans from financial institutions must also be limited to ensure financial institutions, businesses and unions can’t use loans as a means of unethical influence.  Loans should only come from a public fund and be limited to the average total amount donated during the previous two years.

If the parties can prove that they need public funding, annual per-vote funding should be no more than $1 per vote, and the parties should implement a similar annual public funding matching system as Quebec ($2.50 for the first $20,000 raised annually by each party, and $1 for the first $200,000 raised annually).  Elections Quebec has analyzed the results of Quebec’s changes and found that the parties are still adequately funded.

“To match Quebec’s world-leading democratic system, Ontario must limit individual donations to about $100 annually and, if the parties can prove they need it, use per-vote and donation-matching public funding to give parties and candidates funding based on their actual level of voter support,” said Conacher.  “Similar changes should be made to Ontario’s municipal law, taking into account that there are no parties in most municipalities, to ensure every city and town across the province has the same democratic rules.”

The key changes that must be made in Ontario to democratize its political finance system are as follows (and similar changes should be made province-wide to the municipal political finance system, taking into account that many municipalities do not have political parties):

1. limit annual combined total donations of money, property and services by individuals to $100-200 to each party (Quebec’s limit is $100), and establish the same limit on candidates donating to their own campaign, with donations routed through the election watchdog agency (as in Quebec);
2. prohibit loans to political parties, riding associations and candidates, except from a public fund (with loans limited to the average annual amount of donations received during the previous two years);
3. limit spending leading up to, and during election campaigns by parties, nomination race and election candidates, third party interest groups, and also candidates in party leadership races;
4. require disclosure of all donations and gifts of money, property, services and volunteer labour given to any party, riding association, politician, nomination race, election or party leadership candidate, including the identity of the donor’s employer, and board and executive affiliations (and the identity of anyone who assists with any fundraising);
5. review the annual per-vote funding for political parties and riding associations, and if the parties can prove they actually need it, give annual public funding for parties based on each vote received during the last election (no more than $1 per vote, with a portion required to be shared with riding associations);
6. if the review shows that parties and riding associations actually need it, give annual public funding for parties matching up to the first $500,000 raised (as in Quebec where the first $200,000 raised is matched);
7. give public funding matching up to $25,000 that each nomination race and election candidate (including an independent candidate) raises (similar to Quebec’s matching funding system), and public funding matching up to $100,000 that each party leadership campaign candidate raises, and;
8. require election, donation and ethics watchdogs to conduct annual random audits to ensure all the rules are being followed by everyone;
9. Elections Ontario, or the Auditor General, must be empowered to review all government advertising and to stop or change any ad that is partisan or misleading;
10. all penalties for violating donation and spending rules must be increased to minimum $100,000 fine and a multi-year jail term, and loss of any severance payment, and a partial clawback of any pension payments, and;
11. Elections Ontario must be required to disclose the rulings they make on all complaints they receive as soon as they make the ruling, and to disclose the rulings they make on all investigations they initiate themselves.

– 30 –FOR MORE INFORMATION, CONTACT:
Duff Conacher, Co-founder of Democracy Watch and Chairperson of the Money in Politics Coalition
Tel: (613) 241-5179    Cell: 416-546-3443
[email protected]Democracy Watch’s Money in Politics Campaign