Bill C-29 (Historical)

An Act to amend the Canada Elections Act (accountability with respect to loans)

This enactment amends the Canada Elections Act to enact rules concerning loans, guarantees and suretyships with respect to registered parties, registered associations, candidates, leadership contestants and nomination contestants.

Canada Elections Act

[The Acting Speaker, Royal Galipeau]

It being 1:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

When we return to the study of Bill C-29, there will be four minutes left for questions and comments for the hon. member for Ottawa South.

The House resumed from June 13 consideration of the motion that Bill C-29, An Act to amend the Canada Elections Act (accountability with respect to loans), be read the third time and passed.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, I rise to speak to the bill, as opposed to some other times when I rise in the House and really wish I did not have to speak. The bill is definitely a step forward in the reform of our democracy overall, specifically the reform we are pursuing in political financing of election campaigns, both general campaigns and leadership campaigns as well as nomination meetings.

In that regard, this type of reform has been needed for quite some period of time. Prior attempts to reform the system have been made. We saw the Federal Accountability Act passed in this current Parliament. We saw significant reforms, which I think we all applaud, in the prior parliaments of 2000 to 2004 in particular.

However, this was an area where there was a glaring loophole left. We saw that, particularly in the last leadership race by the federal Liberals. A large number of candidates took out very substantial loans to finance their campaigns, in some cases approaching as much as a million dollars, loans that were left owing when the campaign was finished. Although there are mandates to repay those loans, there is no provision of any serious consequence where the lender on the loan had opted to forgive the loan.

We can see where the huge potential for abuse can lead. In most cases, we have very clear guidelines on how much can be spent in campaigns, including leadership campaigns. This is one of the areas where we need further reform, so there is a clearer accountability of where the funds have come from and how they are spent. In fact, we need more detail in those accounting reporting functions.

However, what this left opened was people could come forward as candidates for leadership or running for the nomination in a riding association and could borrow extensive amounts of money to fund those campaigns from family or close associates, business associates perhaps. Then when the campaign was all over, the limits that we had imposed on donations, the cap we had put on donations, could be easily exceeded by the people who had advanced the loans, saying, “I understand you're in dire financial straits, I'm not going to ask you to repay the loan”.

We saw that repeatedly happen. I often wondered, even prior to some of the reporting we now have in place, how often it happened of which we were not aware.

Therefore, we are taking a significant step forward under Bill C-29. We are placing very clear guidelines on from whom funds can be borrowed, and that is primarily the lending institutions of our country, not private individuals. There are limits on how much can be borrowed as well. It is a major step forward. I do not think it is the end of the day.

I remember sitting in committee one time and listening to two delegations, one from the province of Manitoba and one from the province of Quebec. They had started the program of financial reform in political financing and political donations in particular, much ahead of where we did at the federal level. It was interesting to listen to them. In both cases they said that what we had to do was continue to monitor, at least after every election and leadership campaign, to see if some creative person had come forward with an idea, a way to get around the restrictions and legislation, which thought we had put in place and which we thought were solid and absolute,

We are seeing that to some extent in the scandal of the Conservative Party's in and out scheme, which Elections Canada clearly found improper and contrary to the legislation. That was the Conservatives' creative attempt to get around the financing laws during a federal campaign. Hopefully at the end of the day they will have their wrists severely slapped, they will be penalized, et cetera, and we will put an end to that one.

In this case, what happened with the accountability act and some of the reforms we saw under the Liberal administration was that the issue around the loans was not dealt with. We are now dealing with it in Bill C-29. I think we have covered all the bases on it, but it will require ongoing monitoring. If we do not have that, we can be almost certain that someone will figure out a way around it and we will then have to move back in as a legislature to close whatever loopholes are found.

In addition to this legislation, we have additional democratic reforms. The current Prime Minister was very strong in opposition and in both federal campaigns in arguing for all sorts of democratic reforms.

We know we need reforms within this House to deal with the decorum problem we have in this House and to deal with the problem of actually democratizing the institution. In particular, right now we can see the need to deal with democratizing our committees. We need to deal with making them stronger and more independent of the party in power in particular, but also of the leadership of the parties, so that we as members of Parliament can act more independently and also more representatively of our constituents. Those reforms are needed.

We expect that we are going to need additional reforms once we see how the Federal Accountability Act works in the next federal general election. I expect additional reforms will be called for.

There are certainly reforms that need to be made to the electoral process. As members know, the NDP has been a strong proponent for a long period of time of a form of proportional representation so that everybody's vote counts the same. This is another reform that needs to be undertaken.

The point I am trying to make here is that although this is a relatively small act, it is another step along the route we have to take, that we as members of Parliament have a responsibility to take, to see to it that as much as possible we make our country, our electoral process and our democratic institutions as absolutely democratic as possible.

Attached to this is something that one would almost say is just so obvious that we should not have to say it. There has to be accountability in the process and there has to be transparency. The average citizen has to understand how the process works, both in terms of election financing and in terms of the process here in the House and during the elections.

The point I want to make as well with regard to Bill C-29 is what we hear more about from the Liberal side of the House, which is that we really do not need this kind of restriction. We hear that we simply could put in place a regime that would set out how much money a candidate has spent, with no cap on it, and how much a candidate still owes, with all of it just being an accounting process. The accountants in the country would love that, I am sure.

All we have to do is to look to other jurisdictions to see where they have followed that type of regime. I am going to point to the United States in particular, where there are no caps on what a candidate can spend, from whom a candidate borrows, and whether a candidate pays it back. There are very few restrictions.

What we see there is that if someone wants to be a senator, for instance, he or she starts from the fact he or she is going to have to raise millions and millions of dollars to get elected. Quite literally, and I know the Americans hate it when we say this, a person can buy an election at the senate and congressional levels in the United States, because effectively there are no limits on how much one can spend.

On paper it looks like there are some limits, which goes back to the accountability. The reality is that there are none because of the political action committee fundraising methodology they employ there.

We see this even in small states. Members may remember the incident in New Jersey involving an individual who was a multi-millionaire, almost a billionaire, and who spent something like $60 million in trying to buy his senate seat. And he did win it.

He swamped the opposition with advertising, with people working door to door, and with all kinds of promotional material. He was able to use all the things that we could use if we were allowed to spend that amount of money. However, anybody who does not have access to those sources of funds, either personally or through contacts, is in a totally impossible position in regard to making the democratic process function.

It really is important that we pass Bill C-29. I believe from the comments we have heard that it obviously is going to go through.

I want to finish with the caution I heard in that committee from both the province of Quebec and the province of Manitoba. We have to be eternally vigilant.

After the next election, we will have to look at this piece of legislation. We will have to look at the Federal Accountability Act, other political financing acts and other electoral processes to see if somebody has figured out a way to get around the rules. If so, then we will have to move again to close any loopholes that have developed.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, the Bloc Quebecois is in favour of the bill. We believe that it will indeed plug some holes that needed plugging.

There is however one element that we put forward and that was rejected by the government with the support of the NDP. It had to do with the fact that a political party will now be liable for debts incurred by its candidates even though the party was not involved in the agreement between the candidate and his or her bank.

I find this somewhat absurd, and it is not a partisan issue. It is simply a question of financial logic. Let us take for example a candidate from any party, in any riding, who suddenly decides to spend $40,000 or signs a $40,000 loan agreement with his or her bank without informing the party. The way the bill is written, the political party will be liable for that debt. Is that not irresponsible?

Could that not be very dangerous for a party, like the NDP for instance, where out of 75 candidates in Quebec, perhaps 50 or so are basically in the running just to fill a spot and are often chosen at the last minute? Could we not see a situation where five, six or ten candidates will spend money without being liable for their debts since, under this legislation, that liability will now fall on the party?

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, I thank my hon. colleague from Montmagny—L'Islet—Kamouraska—Rivière-du-Loup for his question. Our federal NDP staff have looked at this and they have come to two conclusions.

First, we have responsible candidates. They will not take out loans that could pose a problem to the federal party.

Second, and this is a really pragmatic answer, if a candidate's chances of winning are slim so will his chances of securing a loan from a bank or financial institution.

For these two reasons, we are satisfied and prepared, as a party, to accept our responsibility should it become necessary for the party to assume liability for loans taken out by individual candidates.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

To expand on the same question, Mr. Speaker, we have seen that electoral practices have been significantly cleaned up in Quebec and Canada over the past decade. That has to be recognized.

It remains possible, however, for a party to decide all of the sudden to help another party out by finding three, four or five individuals who will agree to become registered candidates for that other party, engage expenses and, ultimately, let the party assume liability and pay for those expenses. Does that not open the door to a rather dubious election strategy which will nonetheless be legal under the existing legislation?

We are talking about officially nominated candidates spending a lot of money. This could happen in three, four or five different ridings, with five candidates each spending $30,000, which would mean a $150,000 liability for the party that accepted to nominate those candidates because candidates were needed in ridings where they are hard to come by. Do we not run the risk of some scandal or another being uncovered in a couple of years from now because of the door left open in the legislation?

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, once again, I thank my colleague for his question.

Encouraging a candidate to stand for election when it is not certain that they will actually be elected is not only scandalous but also unlawful.

I will put it another way. In the case of our candidate in Outremont, who won that riding in the September byelection, he spent a lot of money because he was allowed to borrow money. In fact, the banks were willing to lend him money.

However, in other situations, some Bloc, Liberal or Conservative candidates do not stand a very good chance of winning and therefore cannot borrow money from the banks. They cannot do it.

That is the simple answer.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

Mr. Speaker, I want to ask my colleague from Windsor a question around the whole issue of loans. We saw huge loans being given to Liberal leadership candidates by friends and businesses. Businesses that were not allowed to donate to those leadership campaigns were able to give huge loans.

My understanding at this point is that many of those loans have not yet been paid back. Some are wondering whether in fact they ever will be paid back. Could the member from Windsor tell us how this bill can correct this glaring problem in the democratic system that allows people to go beyond bank loans for their campaigns and get money from friends or businesses?

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, I will say for my colleague from New Westminster—Coquitlam that there are some major protections in the bill. Again, as I said in my speech, I am not sure that it covers all the bases, but the major protections are there to avoid what we saw in the Liberal leadership campaign.

I think we would have seen it if we had ever received any adequate and accountable reporting from the current Prime Minister in regard to his leadership run. We will be doing away with the ability of individual candidates to borrow from individuals. Basically we are focusing in on only financial institutions being able to lend money to candidates.

Why this is important is that, again, it takes away the ability of the wealthy private sector to come in and buy a leadership or a nomination. We have a cap on what candidates can spend. Then we make sure that they do not get around the cap by taking out loans they never repay.

One of the inadequacies of the current law on the books now is that Elections Canada in effect can extend the time to repay the loans. The loans are supposed to be repaid 18 months after the fact. Elections Canada can extend that time.

Quite frankly, I am concerned that the criteria for Elections Canada to make decisions on whether it is going to allow the loans to be extended for repayment purposes are not as clear or perhaps as tight as they should be. It is one of the areas where at some point we may need to have some additional reform.

[The Acting Speaker, Royal Galipeau]

The hon. member for Scarborough—Guildwood for a short question.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I generally enjoy my hon. colleague's speeches, but I would ask him to reflect on a wider issue, which is that this House, by a series of actions, has put itself in such a jam on political financing that it seems we have to keep on doing fixes.

First of all, the House passed Bill C-24, which many people lauded and thought was a wonderful thing, the effect of which is that fundraising on a larger basis is pretty well cut off. That has driven leadership candidates and others into raising funds on a micro basis and a whole new dynamic of political fundraising has been created. That dynamic has its difficulties as well.

In our particular case, the difficulties are in the Liberal Party but are about to happen to the Conservative Party, the NDP or the Bloc. They are also going to run into the same difficulties that the Liberal Party had, which is that there is only a limited pool of money. Therefore, candidates effectively are driven to getting loans, either from backers, or if they are no longer backers--

[The Acting Speaker, Royal Galipeau]

I am sorry to interrupt the hon. member. I had asked for a short question. He has now lasted more than a minute and there is not even equal time for the hon. member for Windsor--Tecumseh to respond.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, I can do this really quickly. It is a simple answer.

It is not a problem for the other three parties. It is a problem for the Liberal Party. We do not have problems finding enough money to run our leadership campaigns. The Conservatives do not and the Bloc does not either. We can get it from individuals. We do not have to go to the big corporate world as the Liberals always have.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, Bill C-29, which seeks to close loopholes in campaign financing, is a good bill in and of itself, with the exception of the matter that was rejected by the government at report stage, with the support of the NDP, allowing a candidate to incur expenses without necessarily obtaining the party's authorization. The party would then be responsible for those expenses. That seems to be an aberration. However, we still believe that there are enough positive changes in the bill as a whole to support it.

We believe that the legislation should cover loans in order to close loopholes pertaining to financing limits. We would like to remind members that these limits were established as a result of a fight led by the Bloc Québécois in the past requiring that corporate contributions be prohibited and that individual contributions be limited, as has been the case in Quebec for 30 years.

I have been a member of this House for 15 years and I remember an epic debate that took place under the former Liberal government. As Mr. Chrétien's term of office was winding down, the situation was significantly improved by allowing only individuals to make contributions. With this bill, we have gone even further, and that is a very positive aspect of democracy.

Often, when people in other countries have governance difficulties, one of the sources of their problems is actually linked to electoral practices that do not measure up to the requirements of democracy. They deserve better support. So the actions taken today are part of a development we are familiar with, which deserves to be supported.

The Bloc Québécois and Quebec as a whole have really made an interesting contribution in this regard. In Quebec, the Election Act, which was amended during the time of René Lévesque in the 1970s, now serves somewhat as a rule at the federal level, and that is good. It makes for a healthier democracy. It also requires us to seek money from a multitude of people, and thus reduces the excessive impact some contributors have on political parties. In this regard, we are headed in the right direction.

This bill corrects another problem in the Federal Tort Claims Act. During consideration of Bill C-2, the Conservative government was more interested in getting its bill passed in a hurry than in dealing with problems of ethics. In the present context, we realized that some things needed to be added. At that time, the opposition parties, the media and Democracy Watch had raised the problem, and the government refused to act. In the current context, we are correcting some of these situations.

For example, the bill corrects the problem of loans that made it possible to get around the limits on political contributions. In this connection, there are some important points concerning the poor protection of whistleblowers and the lack of reform of the Access to Information Act. However, as far as the problem of loans is concerned, we realized in the past that these loans served as crutches to compensate for the fact that a candidate or a party had not raised enough money. This situation was particularly prevalent in leadership races. We realized that something the new Canada Elections Act did not permit was happening through the back door, that is, raising very large amounts of money from one or two individuals who were providing loans. The aim is to correct this situation.

When this bill was introduced, it was pointed out that during the last leadership race several Liberal candidates took out large loans in order to get around the financing limits in the way I have just described. While it is true that quite a few have acted in this way, it should not be forgotten that the Prime Minister himself did not reveal all his contributions during the leadership race in 2002. So the Conservative Party was not really in a position to lecture anyone. We have also seen it in the past seven years, given the scandals we now know about.

It is necessary to prevent the law from being circumvented by introducing new limits for political contributions. For example, an individual can contribute $1,100 annually to a registered party or to a candidate. The amount a union can contribute annually to a registered party has been reduced to $0. That shows a significant shift in terms of the respect owed to the people who give us our mandates—the voters. It is still possible to circumvent the limits by using personal loans. That will no longer be the case. The example was given of the candidates for the Liberal leadership.

We have corrected many other issues in Bill C-2 that were not adequately addressed in the Federal Accountability Act.

Other ethical problems persist. Even though Bill C-29 corrects the problem of loans that allow candidates to circumvent political contribution limits, there are still many ethical problems that were not fixed by Bill C-2.

For example, many Conservative campaign promises in terms of whistleblower protection did not make it into the Federal Accountability Act. Notably, the Conservatives said that they wanted to “ensure that whistleblowers have access to...legal counsel”. Yet the Conservative bill allows for only $1,500 in legal fees. They also wanted to “give the Public Service Integrity Commissioner the power to enforce compliance with the [whistleblower act]”. Finally, the Conservatives promised to “ensure that all Canadians who report government wrongdoing are protected, not just public servants”.

We understand that Bill C-29, as a whole, will improve the situation. We would have liked it to clarify the situation of candidates who incur expenses for their party, unbeknownst to the party, which would then be liable for them. However, because of the overall improvements it proposes, the Bloc Québécois believes that this bill should be supported.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, Bill C-29 has some good points to it. There is one however, and I want to ask the member's view on it. It has to do with unpaid loans by a candidate which, if the bill passes, would become the responsibility of the riding association. That may put some riding associations in an awkward situation. I can say that from experience, because the same practice applies provincially where any debts of a candidate become the responsibility of the riding association. In one particular case, in fact in Mississauga South provincially, a candidate who was appointed by the party, not selected by the riding association, had a very substantial and irresponsible level of spending and ran up a $26,000 debt which had to be assumed by those who had absolutely no control over how that spending was done.

In cases such as that, it would seem to me that riding associations would not have very much recourse and may find themselves with a substantial debt of which they had absolutely no control over the spending, nor the resources to repay. I am not sure whether that really hits the target squarely with regard to that provision whereby unpaid loans would automatically be the responsibility of a riding association. I wonder if the member has some comments on that.