Procedure and House Affairs Committee on Oct. 23rd, 2012

[A voice]

Mr. Cullen.

[The Chair, Conservative, Joe Preston]

I'm sorry, Mr. Cullen. There are three minutes left.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Very quickly, is there a consideration in your recommendations for retroactive application of this to the previous general elections? Is there some concern about or knowledge of retroactively applying any changes to financing and loans to previous elections? Is this a contemplation that your office has had?

[Marc Mayrand]

First of all, it is actually the government's responsibility to state that approach in its bills.

My understanding of this bill is that there will be no retroactivity. That means that loans made before it comes into effect remain subject to the former rules. But the other provisions in the bill will apply when it comes into effect, including the change allowing contributions for leadership races. Any contribution made after the act comes into effect could be made annually for leadership races.

[The Chair, Conservative, Joe Preston]

Mr. Scott, you have two minutes left.

[Craig Scott, NDP, Toronto—Danforth, ON]

Mr. Mayrand, if I may follow up on that, we had some discussion with the minister on one particular component. His advice to the committee was that there is a degree of retrospection, in the sense that, at least for leadership candidates, the fact of a person still being a contestant by virtue of not yet having paid off their loans means that past contestants—for example, in the Liberal leadership race, or another one that we've had—can still benefit from the provision that allows for annual contributions as opposed to per event contributions.

On that particular semi-retroactive point, I want to clarify whether you are in agreement or not, because there is nothing in the bill that makes that clear. It simply has a very generic transition provision that would suggest that nothing is retroactive.

[Marc Mayrand]

That's my understanding—I think it's clause 34 in the bill. There is no retroactive impact; therefore, legislation will apply as of its coming into force. The contribution regime will change for a leadership contestant; therefore—

[Craig Scott, NDP, Toronto—Danforth, ON]

For future campaigns.

[Marc Mayrand]

No, for any campaign that is open. The act doesn't make the difference here.

[Craig Scott, NDP, Toronto—Danforth, ON]

It's still open. Okay.

[Marc Mayrand]

So any contribution made after the coming into force could be made to any leadership contest that is still open.

[Craig Scott, NDP, Toronto—Danforth, ON]

As long as it's still open. That's an important clarification.

Thank you.

[Marc Mayrand]

Yes.

[The Chair, Conservative, Joe Preston]

Thank you.

There are about eight seconds left, so I'll go to Monsieur Garneau. You'll get an extra eight seconds today.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you for your presentation, Mr. Mayrand.

You have pointed out a number of shortcomings in this bill. You mentioned that it is too complex, that it has loopholes, and that the process lacks closure. That concerns me greatly, of course. I have some questions for you about that lack of closure in the bill.

Your suggested model is that political parties should be responsible for outstanding debts when the process is all over. You said, in fact, that parties should be responsible for the unpaid debts of all its affiliated entities, except perhaps for leadership candidates. Do you have a proposed model for leadership candidates?

[Marc Mayrand]

I have to admit that I have not yet found the perfect solution, without interfering in a party's internal affairs.

My difficulty in making parties responsible for candidates' debts is that there is a danger of making them indebted in a different way, of putting the party in a position of appearing to give one candidate an advantage over another, if it were responsible for higher debts.

One of the solutions to the problem is the Quebec one, as I understand the current system. In a leadership race, if candidates have not paid by a certain time, they become responsible for the debt personally. Perhaps that is something that could be looked into. So, in Quebec, it is also my understanding that the party is not responsible for the debts of leadership candidates.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Merci.

My second question has to do with the perceived democracy of the process that's being advocated here in Bill C-21.

We're talking about loans coming from banks or financial institutions. Do you think the process is inherently fair? For example, because banks are concerned about somebody's credit rating and credit history before they make a loan to them, do you think there is going to be a perceived disadvantage to somebody who wants to run in some way but does not have a well-established credit rating—for example, in some cases, women who have not built up a credit rating during the course of their lives, or perhaps very young candidates who might want to run. Are they at a disadvantage in this process because of those factors?

[Marc Mayrand]

I cannot speak for the financial institutions and how they will look at these matters, but my understanding of the legislation is that the personal credit rating of a candidate will not be a matter of relevance. The reason for that is that the only source of funds that can reimburse the bank are funds that flow through the political entities in the form of contributions, in the form of transfers from the party, and from various legal sources of funds.

Whether you're wealthy or not, the bank should be looking—and I'm sure you will be asking them a similar question—at what your capacity is to raise contributions, whether you are affiliated with an EDA and what the financial situation of the EDA is, what the financial position of the party you are affiliated with is, and whether you can expect to have transfers of funds from your EDA or from your party. Of course, I'm sure the other thing that will be considered is the likelihood of you receiving a rebate for your expenditures, meaning the likelihood of achieving 10% of the vote.

I think those are basically the only factors a financial institution should be considering, because if there's a failure to repay, the bank cannot turn to your assets to secure repayment. That would be illegal under these provisions.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

The reasons are what the banks should be looking at, as you've just described it there—for example, the health of your association and those kinds of things. Do you think that places certain people at a disadvantage with respect to others? Do you think that, in itself, is undemocratic, or is it simply a reality that everybody has to accept?

[Marc Mayrand]

I think the minute we rely on private institutions to fund loans, they will take a business approach to this. They're not in the business of subsidizing campaigns. The more we rely on private funding for political activities, and limiting access in terms of recovery, we can expect that it may impact different players differently.

It comes to my mind that the situation of independent candidates in this context may be even more difficult than it is now, and I think that would militate for at least allowing them to get a seed loan from a financial institution, because the bank, looking at a candidate, cannot rely on any financial position of the association or the party.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

You are saying that we should perhaps not allow individual loans up to $1,200 per individual and that the other model would be the one you have just described. Saying that it is an option is very tactful of you.

Would you prefer individual loans to be prohibited and, instead, the option would be a system whereby the candidate gets a loan in order to launch a campaign?

A seed loan.

[Marc Mayrand]

As I just mentioned, my concern would be accessibility, especially for independent candidates who really do not have the means as long as they remain unconfirmed as candidates. It would put them at a clear disadvantage. I would rather tend to propose a separate limit on loans made so that candidates are able to get their campaigns underway.

[The Chair, Conservative, Joe Preston]

Thank you, Mr. Garneau.

For five minutes, Mr. Reid.

[Scott Reid, Conservative, Lanark—Frontenac—Lennox and Addington, ON]

Thank you, Mr. Chair.

Thank you for being here, Mr. Mayrand.

I have a few questions, one of which stems from your presentation. I'm looking at page 7 of the English edition of your presentation. The first sentence on that page reads:

I also note that, unlike current provisions dealing with contributions, nothing in the bill specifically prevents loans from being funnelled through other individuals.

I marked at the end of that a question mark and the word “how”. Could you explain what you mean by that? What does the word “funnelled” mean?

[Marc Mayrand]

I think there's been a fair bit of media coverage in other jurisdictions about a system of prête-noms—sorry, I'm not sure how you translate that—where an individual wishing to support a candidate or a party could split the amount and fund individuals to extend the loans to the candidate or the entity.