Public Funding of Federal Political Parties in Canada

Last Updated on Thursday, 09 June 2011 22:20 Thursday, 09 June 2011 22:17

Written by Gin Mang

On June 6, 2011, Finance Minister Jim Flaherty announced Canada’s fiscal budget at the 44^th Parliament of Canada. One significant component of this year budget is that the government will gradually eliminate the two dollar per vote subsidy program – a program where every political party receives two dollars for every vote they get during the General Election. According to the new budget, this per vote system will be reduced fifty one cents every year and will be eventually eliminated in the year 2015 (Corbella, 2011). Finally, Canadians will see the end of a nearly decade old tax-payer funded subsidy system for political parties.

For those who observer current political trends, this is not something new.  Prime Minister Stephen Harper and his conservative party had made public their policy on the issue since 2008.  They made it clear again in their 2011 election campaign platform that the per vote subsidy system will be scraped if they were elected (Fitzpatrick, 2011). Since the conservatives won the majority mandate on May 2, 2011 election, the Harper led conservative government is taking action to amend the flawed system as they promised. This motion, how good it may be appealing to the tax payers, already faces tough adversaries from the opposition parties as well as some political pundits who decry it as “an end to democracy” (Snobelen, 2011). Whatever political opinion people may have, it is natural to see people freely express their opinions in a democratic society.

In their attempt to gain public mandate, politicians will always try to make us believe that they are promoting public interest first unlike their political opponents. However, it is wise to be mindful what politicians are saying and what kind of interest they are trying to promote often at the expense of public resource. In contrast to what the opposition parties claim, eliminating public subsidy for political parties is neither detrimental to the function of democracy nor does it limits citizens’ participation in the political process.

Federal elections and national referenda in Canada are governed and administered by the Election Canada, a non-partisan, impartial agency, which directly reports to the parliament of Canada. The Canadian parliament passed different pieces of legislations, most notably, the Election Canada Act 1974.  The 1974 amendments to the Election Canada Act outlined the rules and guidelines for political parties financing (Flanagan & Coletto, 2011). Since then, there are further amendments to Election Canada Acts passed by both the conservative and liberal governments, most often to the advantages of their political parties. The per vote subsidy system was introduced by Jean Chretien’s liberal government in 2004.

As of January 2011, federal political parties roughly received $2 for every vote they got in the last election under the current system (Election Canada, 2011). On top of that, this per-vote subsidy rates are adjusted with the rate of annual inflation. Canadian tax-payers’ money is given to political parties in the amount of 29.2 million as of September 2010(Corbella, 2011).  The question is who benefit from this subsidy programme? All federal political parties that secured 2 % of the vote in the federal elections are entitled to this subsidy programme. Based on record from 2008 General Election (Coyne, 2008), the amount and percentage of resources federal political parties relies on per vote subsidy is summarised in the following table.

Amount of Political Parties’ funding from the subsidy programme.

Ironically, the Bloc Quebecois, which doesn’t have interest outsides of Quebec province, depends 86 % of it party finance on this subsidy programme. Of course, other political parties also get their shares from this per vote subsidy system but in a smaller percentage (Coyne, 2008). The following table highlights the latest amount of public resources quarterly allocated to political parties.

Quarterly Allowances to the Registered Political Parties (2011)

Pursuant to section 435.01 of the Canada Elections Act, the first quarterly allowance for the 2011 fiscal year is the product of $0.4375 multiplied by the number of valid votes cast in the 40th general election. The sum obtained is adjusted by using the inflation adjustment factor in effect on April 1, 2010, of 1.145 (Election Canada, 2011).

Election Canada provides sufficient channel of funnelling public resources for political parties to ensure that the function of democracy isn’t deterred by lack of funding with or without the per-vote subsidy system. This includes individual contribution to federal political parties up to the amount of $ 1,100 annually. In addition to this contribution, Canadian voters can also donate $ 175 per year to electoral district (constituent) where they reside (Flanagan & Coletto, 2011). This system of political contribution allows political parties to build their support base to represent them in Ottawa.

One may argue that a political party with support from people with higher income has advantage from individual contribution.  On a closer look, this argument doesn’t have valid reasons because political contributions are tax deductible and individual can 75 % of their contribution on their annual tax return.  Moreover, 50 % of political campaign expenses when properly documented are refunded by Canada Revenue Agency (Flanagan & Coletto, 2011). Clearly, these rebates eliminate any disadvantages any political party may have due to financial constraints. Therefore, the efficiency and functioning of political parties lie within the number of voter supports they garnered.

Participation of citizens in political process is essential in democracy. Without citizens’ participation and political parties, there will be no democracy but dictatorship. In contrast to what the Liberal Leader Bob Rae, Green Party Leader Elizabeth May and NDP Leader Jack Layton’s interpretation as “the end of democracy” (Snobelen, 2011), cutting per-vote subsidy, in reality, will encourage political parties to have a closer relationship and connection with the voter. Since political parties need financial support from their constituents, their   leaders will reach out to their supporters and give them more opportunities to be involved in their party’s political functions (Corbella, 2011). With the end of per vote subsidy, party leaders can no longer depend on automatic funding from Ottawa, but they will have to earn it from their supporters to raise party’s finance.

Political parties will equally be independent without being heavily funded by public resources. This is the essence of democracy. Political funding must first and foremost come from the grass root supporters and not from the government. Political parties must be able to compete independently based on their political platforms to raise party finance, rather than waiting for cash being handed to them from Ottawa for party activities. It’s logical for Canadians not to trust a political party heavily depends on public resources rather than raising its own finance from its supporters. Since there will no longer be per vote subsidy in four years from today, political parties must learn how to raise fund from their supporters if they want to balance their party’s budget. In brief, political parties in Canada receive remuneration from the public system in terms of tax rebate from their expenditures and tax deductible system for individual contributions. This rebate and tax systems ensures the smooth function of democracy and the citizens’ participation in the political process. The end of per vote subsidy is not only beneficial for Canadian voters, but also for political parties that depend only on voluntary contributions not on the government subsidy.

References

Flanagan, T. , & Coletto, D. (2011). Replacing allowance for Canada’s national political parties. SPP Briefing Papers, 3(1). The School of Public Policy, University of Calgary.

Coyne, A. (2008, November 27).  Getting politics off the dole. Macleans. Retrieved from http://www2.macleans.ca/2008/11/27/getting-politics-off-the-dole/

Campion-Smith, B. (2011, April 1). Harper says he’s willing to talk about his push to eliminate political subsidies. The Star. Retrieved from http://www.thestar.com/news/canada/politics/article/967482--harper-says-he-s-willing-to-talk-about-his-push-to-eliminate-political-subsidies

Fiztpatrick, M. (2011, May 25). June 6 budget will phase out per-vote subsidy. CBC News. Retrieved from http://www.cbc.ca/news/politics/story/2011/05/25/pol-flaherty-budget.html

Snobelen, J. (2011, May 30). It’s time for Stephen Harper to go big. Toronto Sun. Retrieved from http://www.torontosun.com/2011/05/28/its-time-for-stephen-harper-to-go-big

Corbella, L. (2011, June 7). How scrapping the per-vote subsidy will end up saving the Liberals. Calgary Herald.  Retrieved from http://www.calgaryherald.com/health/Corbella+scrapping+vote+subsidy+will+saving+Liberals/4902564/story.html

Election Canada. (2011). Retrieved June 7, 2011, from http://www.elections.ca/content.aspx?section=pol&document=qua2011&dir=pol/qua&lang=e