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Trudeau Liberals’ political finance bill a charade that doesn’t stop cash-for-access – too-high federal donation limit of $3,100 a year means wealthy still have unethical influence, funneling of donations continues

Sports referees can’t take gifts from players – why should payoffs be allowed to politicians?

50-group coalition, and more than 11,000 voters, call for annual donation and loan limit for individuals (including candidates) of $100 (as in Quebec), stronger enforcement and penalties for violations, and annual per-vote and donation-matching public funding only if parties can prove it’s needed

High donation limit allows for ongoing funneling of donations by businesses and unions – as happened in Quebec until it was stopped – and ongoing unethical influence by wealthy donors (in 2015, federal Liberals received almost 23% of their donations from just over 4% of wealthy donors who gave $1,100 or more)

Lobbying Commissioner taking too long to investigate Liberal fundraising events, and is biased because Trudeau Cabinet gave her six-month renewable term contract in July

Thursday, October 5, 2017

OTTAWA – Today, testifying before the House of Commons Committee reviewing the Trudeau Liberals’ political finance Bill C-50, Democracy Watch and the Money in Politics Coalition (made up of 50 groups with a total of more than 3 million members), joined by more than 11,000 voters who have signed a petition on, called on the Committee to make the following changes before sending the bill back to the House:

  1. set an individual donation limit of $100 per year (as in Quebec) and require all donations of money, property and services to be disclosed (including volunteer services);
  2. set a limit of what candidates can give to their own campaign of $100 per year;
  3. prohibit loans to parties and candidates except from a public fund (to stop allowing federally regulated banks to buy influence with their loans);
  4. only re-establish per-vote annual public funding to of at most $1 per vote, and annual donation-matching public funding, if the parties can prove they need it, and;
  5. strengthen enforcement and penalties for violations.

“The Trudeau Liberals’ proposed bill is a charade that doesn’t stop cash-for-access to Cabinet ministers, MPs or their staff or the unethical influence of big money in federal politics, and the only way to stop it is to lower the federal donation limit to $100 as in Quebec,” said Duff Conacher, Co-founder of Democracy Watch and Chairperson of the Money in Politics Coalition. “The too-high federal donation limit of $3,100 not only continues to allow wealthy people to use money as an unethical way to influence politicians and parties, it also encourages funneling of donations from businesses and unions through their executives and employees and their families, as has happened in Quebec, at the federal level, and in Toronto.”

“Politicians are supposed to be the referees who decide what is in the public interest – so why do federal political party leaders continue to allow wealthy people to buy them off with huge donations, including secret donations? In hockey, baseball, soccer, basketball and other sports, referees are not allowed to accept even small gifts from players,” said Conacher.

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

“As Quebec, federal and Alberta donation scandals show clearly, the only way to stop the unethical, undemocratic influence of money in federal 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.

Enforcement also needs to be strengthened, as there are likely many more examples of illegally funneling of donations at the federal level than just the case where 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. Former-Conservative MP Dean Del Mastro’s cousin was charged in 2014 with illegally funneling donations through his business’ employees.

It seems Elections Canada has not yet done the full audit it promised to do in 2013 – it must be required to do such donation audits every year.

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.

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 on October 25, 2016, one of the events was a fundraising event to be attended by the Finance Minister that a drug company executive helped organize while his company lobbied Finance Canada.

Democracy Watch filed a complaint about the event with federal Lobbying Commissioner Karen Shepherd who is investigating, and also a complaint last November about another event the same drug company executive organized for Justin Trudeau in August 2015 (which is also being investigated), and also a complaint last March about a big money fundraising event held by a corporate board member for the Liberals in August 2014 (which Commissioner Shepherd is also investigating). Commissioner Shepherd’s office is taking much too long investigating the complaints (possibly because she is essentially serving at the pleasure of the Trudeau Cabinet in her current six-month renewable term as commissioner).

In addition, Democracy Watch filed with the federal Ethics Commissioner Mary Dawson a complaint another event top Liberal donors were invited to in September 2016as well as a complaint about the Trudeau Cabinet selecting their own ethics and lobbying watchdogs. Commissioner Dawson has failed to investigate both 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, 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, the federal Liberals 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.

The key changes that must be made to democratize the federal political finance system are as follows:

  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 all 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 or fundraising event);
  5. 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. give annual public funding matching up to $1 million that each political party raises (Quebec matches up to $200,000);
  7. give public funding matching up to $25,000 that each nomination race and election candidate (including independent candidate) raises (similar to Quebec’s matching funding system), and public funding matching up to $200,000 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 Canada, 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;
  11. Elections Canada and the Commissioner of Canada Elections 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.

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Duff Conacher, Co-founder of Democracy Watch
Tel: (613) 241-5179
Cell: 416-546-3443
[email protected]

Democracy Watch’s Money in Politics Campaign