Bill C-21 (Historical)

Political Loans Accountability Act

An Act to amend the Canada Elections Act (accountability with respect to political 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.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, this afternoon we will continue the debate on today’s opposition motion from the NDP. Pursuant to the rules of the House, time is allocated and there will be a vote after the two-day debate.

Tomorrow we will resume the third reading debate on Bill S-9, the Nuclear Terrorism Act. As I mentioned on Monday, I am optimistic that we will pass that important bill this week.

Should we have extra time on Friday, we will take up Bill C-48, the Technical Tax Amendments Act, 2012, at report stage and third reading.

When we come back from constituency week, I am keen to see the House make a number of accomplishments for Canadians. Allow me to make it clear to the House what the government's priorities are.

Our government will continue to focus on jobs, growth and long-term prosperity. In doing that, we will be working on reforming the temporary foreign worker program to put the interests of Canadians first; implementing tax credits for Canadians who donate to charity and parents who adopt; extending tax credits for Canadians who take care of loved ones in their homes; supporting veterans and their families by improving the balance for determining veterans' benefits; moving closer to equality for Canadians living on reserves through better standards for drinking water, which my friend apparently objects to; giving women on reserves the rights and protections that other Canadian women have had for decades, something to which he also objects; and keeping our streets and communities safer by making real improvements to the witness protection program. We will of course do more.

Before we rise for the summer, we will tackle the bills currently listed on the order paper, as well as any new bills which might get introduced. After Victoria Day, we will give priority consideration to bills which have already been considered by House committees.

For instance, we will look at Bill C-48, which I just mentioned, Bill C-51, the Safer Witnesses Act, Bill C-52, the Fair Rail Freight Service Act, and Bill S-2, the Family Homes on Reserves and Matrimonial Interests or Rights Act, which I understand could be reported back soon.

I look forward also to getting back from committee and passing Bill C-60, , the economic action plan 2013 act, no. 1; Bill S-8, the safe drinking water for first nations act; and Bill C-21, the political loans accountability act.

We have, of course, recently passed Bill C-15, the strengthening military justice in the defence of Canada act and Bill S-7, the combating terrorism act. Hopefully, tomorrow we will pass Bill S-9, the nuclear terrorism act.

Finally, we will also work toward second reading of several bills including: Bill C-12, the safeguarding Canadians' personal information act; Bill C-49, the Canadian museum of history act; Bill C-54, the not criminally responsible reform act; Bill C-56, the combating counterfeit products act; Bill C-57, the safeguarding Canada's seas and skies act; Bill C-61, the offshore health and safety act; Bill S-6, the first nations elections act; Bill S-10, the prohibiting cluster munitions act; Bill S-12, the incorporation by reference in regulations act; Bill S-13, the port state measures agreement implementation act; Bill S-14, the fighting foreign corruption act; Bill S-15, the expansion and conservation of Canada’s national parks act, which establishes Sable Island National Park; and Bill S-17, the tax conventions implementation act, 2013.

I believe and I think most Canadians who send us here expect us to do work and they want to see us vote on these things and get things done. These are constructive measures to help all Canadians and they certainly expect us to do our job and actually get to votes on these matters.

I hope we will be able to make up enough time to take up all of these important bills when we come back, so Canadians can benefit from many parliamentary accomplishments by the members of Parliament they have sent here this spring.

Before taking my seat, let me formally designate, pursuant to Standing Order 81(4)(a), Tuesday, May 21, as the day appointed for the consideration in a committee of the whole of all votes under Natural Resources in the main estimates for the final year ending March 31, 2014. This would be the second of two such evenings following on tonight's proceedings.

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

Be careful what you joke about, Mr. Kingsley. That might appear as an endorsement in literature down the road.

I have one last question, again dragging you back to Bill C-21, which at the moment we're sort of working within. We're open to opening it up, I suppose.

You said something very interesting about how you had to make judgments about making extensions, often on a no-information basis, and using a presumption of good faith on the part of the person asking for the extension. Mr. Mayrand also spoke about the problems in the current bill. Section 405.6 deals with the circumstances under which an unpaid amount doesn't become a deemed contribution—that's another area of confusion—at the end of three years if one of four things has occurred.

One is the loan is subject to a binding agreement that effectively means you have almost a new loan, and another one is that it's been written off by the lender as an uncollectable debt.

Basically I think he was saying that if he was going to have those functions, he was going to need access to more information than he currently had.

I assume you would agree with that and that we should be considering writing in informational requirements.

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

Mr. Mayrand also spoke to us, Mr. Kingsley, on two points. He suggested that we need to have a provision to make sure that no indirect loans could take place. I know that your system might make that less of an issue. I'm assuming that if we kept the system and tinkered with whatever in Bill C-21, you would say as well that we should add a prohibition on that.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Thank you.

Thank you, again, Mr. Kingsley, for being here.

I want to go back to Bill C-21 and get your observations on some of its elements.

One of the ongoing problems we have is that we've seen, for example, from the 2006 Liberal leadership campaign, that there are still outstanding loans from some of their leadership contestants. I think they total over $400,000. I think elements of Bill C-21 would go a long way toward preventing that type of situation from happening again, specifically since, as you've mentioned, loans could only be granted through financial institutions.

The problem we see now with the unpaid loans is that they will probably end up being deemed contributions, since it's been six years in the case of some of those contestants. If a party were to backstop a financial institution's loan through a legal contract between the two, it would be difficult for a party or an EDA to renege on repayment because there would be consequences, but in the existing regime, since Bill C-21 hasn't been passed into law yet, there's still that loophole.

Do you see in Bill C-21 enough preventative measures to stop the type of situation we saw in 2006? You're going further. You're making the suggestion that the party be the guarantor, in effect, and that's not contained in Bill C-21. In your read of Bill C-21, does it have enough provisions in it to prevent the type of situation we saw in 2006 from occurring again?

[Jean-Pierre Kingsley, Former Chief Electoral Officer, As an Individual]

Thank you very much, Mr. Chairman.

Mr. Chair, members of the committee, appearing before this committee is always a great pleasure for me. I see there is continuity, both in the chair and among certain members.

I have had the opportunity to examine Bill C-21, mainly its objectives, and the testimony of the Chief Electoral Officer and representatives of the Canadian Bankers Association. My opening remarks will only take about eight or nine minutes. I would like to recall that the Canadian system, the Quebec system for controlling funds, has made Canada, Quebec, a world leader in the control of money.

Canada understood a long ago that if the system did not control the money, the money could easily control the system. It is important to bear in mind that you are examining what I would call the most refined points in the control of money. We are not dealing with absolutely atrocious scandals, but it is very important to solve the problems that may arise as a result of the present definitions.

I really liked the analogy that one of the committee members made, that money is like water, in that it can seep into all the cracks. It seeks equilibrium, but moves downward. I have previously said that the smallest crack could eventually allow a Garda or Brink's truck to drive through it. So it is very important to make sure there are no cracks.

I share the concerns expressed by the Chief Electoral Officer regarding the complex nature of the proposed system and those concerning certain aspects on which you might focus your attention. I agree that there is a need for complete transparency and periodic reports that would be made public. I also agree that only financial institutions should be allowed to make loans. That moreover is the recommendation I made before I left my position in 2007.

Two options are possible here.

If the loan is unpaid by the agent at the end of the three years, the EDA would pay. If the EDA cannot pay, then the party would pay. This would obviously mean that the party may wish to get involved, but that is something for internal workings of parties. It would certainly start getting people to be more responsible about the loans that are taken out.

The second thrust would be to allow loans to leadership contestants, again from financial institutions only, up to an amount approved by the party for the leadership for three years, keeping in mind that parties don't have ceilings. There's no ceiling in the law. Parties are free to set the ceilings on expenditures. They may well be entitled to set ceilings for their candidates. Obviously the logic is if it's unpaid at the end of three years, then the party pays. Again, this would instill a sense of reasonableness in the process.

I also note that in their testimony, the banking association representatives stated that grounds for loans would be economic. They would make money available based on the ability of the person to repay and their ability to make money in the process. I took a lot of comfort from that, realizing that no political grounds would be invoked for turning down a loan. That came back to Mr. Reid's concern about independent candidates and candidates from smaller or marginal parties with ideas that are not yet mainstream.

The result would be that the debt would be finalized. It would be off the books. One would have achieved separation of the member of Parliament from the debt. There would be no more undue influence, no potential for it, no perception of it in the minds of the public. The CEO—the Chief Electoral Officer—and the courts would no longer be involved in extending this very complex system. It would be simple to administer, and parties and EDAs would effectively have control over the system to instill responsibility.

In a nutshell, that is the suggestion, sir—not the recommendation, not the proposal, but the suggestion I would like to make to the committee for further discussion.

The objective of Bill C-21, in my view, is it seems to remove the reality, the perception, or the potential of undue influence on a member of Parliament or on a party leader through loans.

The capacity to exceed the contribution limit by the back door is essentially what you're trying to shut down. I thought I would make a suggestion to you for a very simple system, based on the view that the more complex the system, the more tangled the web that is woven, to quote somebody who is well known to most of us.

As I mentioned earlier, in my view—and this I think is the purport of the bill—only financial institutions should provide financing to parties, to candidates, or to any emanation in the political sphere. The terms and the conditions should be made public, and as soon as possible. I struck out “immediately” in my notes, realizing that “as soon as possible” may be better.

There are essentially two broad strokes to what I'm going to suggest to you, allowing for the fact that they may well be shot down and hoping that people will keep in mind that I've been absent from this particular statute for five years now.

I would suggest that loans to nomination contestants and candidates—from financial institutions only—would be only up to an amount approved by the electoral district association, and only for the maximum of three years that we're talking about. The maximum amount could be up to some percentage of the ceiling that may be spent on the campaign, and it could be based on what the EDA itself wishes to establish, so that the EDA would have something there.

[The Chair, Conservative, Joe Preston]

Folks, I will get us to start back in, please.

It's always good when my own colleagues don't even recognize when I gavel.

Thank you very much. We have a full second hour today, and I'd like to get started.

It's a great pleasure to have Mr. Kingsley back before committee. It's probably five times now that I've been at committee when you have been here. It has always been a great day when it happens.

You know that we've been studying Bill C-21. As you shared with me, you watched some of it and you have some suggestions for us, perhaps, or at least some points of view on it.

I'll leave you to open with comments, and then we'll go to questions.

[Alexandrine Latendresse, NDP, Louis-Saint-Laurent, QC]

Thank you very much, we appreciate that.

Thank you for having come here to testify.

You explained earlier that loans always involve risk management. Consequently, you are aware of the risk that a candidate may not be able to reimburse a bank loan after a campaign. In the context of Bill C-21, however, that becomes a presumed contribution to the campaign.

What consequences could this have? As we know, banks cannot fund either candidates or campaigns.

[Anthony Polci]

A more general statement in response—I would say banks take their responsibilities quite seriously. How banks conduct themselves in political financing, whether it's under the regime proposed in Bill C-21 or in provincial financing regimes, is ultimately a bank decision, an individual institution decision. We have a competitive marketplace. They are competitors with one another. They will take a number of factors into consideration in their approach.

In terms of the public duty aspect—if that's the question—the political process can be widely defined in terms of the participants. You use an example of a couple of parties. There's a good, proper understanding of the main parties that are involved in the political process and their viability and their staying power, if you will. If there's a suggestion perhaps that banks should be providing loans under any circumstances to any political party, there ultimately becomes a conflict with the prudential regulation because banks do lend to get the money back. We are regulated by the Office of the Superintendent of Financial Institutions. The lending that is undertaken by banks is lending that Mr. Wrobel has referred to. It is undertaken consistently to assess and manage risk, and to ensure repayment. That ultimately has to be the final decision.

That's probably the perspective that banks come at this from. For that public duty aspect, you have to look at how broad this can become in terms of an equation.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Thank you both for being here.

I'm going to divert a little bit from the actual elements of Bill C-21. I don't know how germane my questions will be to the examination of Bill C-21, but I am going to ask the questions anyway.

I would like to hear from you, as an industry, as to what you feel your obligations may be to assist and participate in the democratic process. I want to give you a specific example. Back in the late nineties, there was a political party—I'm not talking about candidates now, but a political party—in Saskatchewan. It was called the Saskatchewan Party. I was very involved with it at the time. Now, of course, it's the current government of Saskatchewan. At the time, it was fledgling. It had just started. About a year and a half after the party was formed, there was a general provincial election. I was one of those who was tasked with negotiating with financial institutions to try to secure a bank loan. Of course, there are slightly different determinants in provincial elections as opposed to federal elections in terms of rebates. You need 15% of the popular vote, both as a candidate and as a party, to get any kind of a rebate. Nonetheless, we didn't really have much of a political history to assure the banks that we would in fact be able to get over and above 15% of the popular vote and then trigger a rebate.

We were able to secure a loan. One of the determinants was that the banker in question said that he believed, and his bank believed—I won't give you the name of the bank—there was an obligation on their behalf to participate in the democratic process. It really was part of their decision-making process to assist in the political process. Having said that, I don't think they would consider it if there was a million dollar loan request from the Rhinoceros Party of Saskatchewan. But given the fact that this was a fairly legitimate political entity, that factored in to their determination of whether or not the loan should be granted.

Is that common in the industry, both at the candidate level and at the political party level, or does it have any bearing whatsoever?

[Anthony Polci]

At the end of the day, the bank is not lending to the individual, so the personal credit history is not the relevant feature; it's their ability to have a campaign that is, as I said, a viable campaign. You're not collecting from the individual; you're collecting from the campaign in terms of repayment of the loan. It is that entity that matters. You have to assess, can they fundraise? Is the rebate part of the equation?

So the personal credit history, the way Bill C-21 is structured, is not a part of that assessment.

[Anthony Polci]

The industry doesn't have a position on the bill for or against it. We haven't come at it from that angle, and banks operate within the laws of Canada. As Mr. Wrobel noted, banks are federally regulated, so we're used to that sort of oversight.

I think, though, the one concern I would state is that we watched very carefully the discussion around this legislation in the House of Commons and at committee, and the allegations or the charge that perhaps banks would be controlling access to the political process concerns us. The banks will make decisions based on lending decisions. They will look at the financial viability of a campaign, as I've said, and their ability to repay. It's not a question of anything other than that. This is what banks do.

So the idea that banks could be accused of favouring one candidate over another or one party over another is a cause for concern for the industry, but if Parliament sees fit to have political financing conducted in the way that it's proposed in Bill C-21, the banks would absolutely comply with the law.

[Marion Wrobel, Vice-President, Policy and Operations, Canadian Bankers Association]

Thank you, Mr. Chairman. My name is Marion Wrobel and I'm the vice-president of policy and operations at the Canadian Bankers Association. I'm joined by my colleague, Anthony Polci, the CBA's vice-president of government relations.

We're pleased to be here today at the committee's invitation, as part of your review of Bill C-21, Political Loans Accountability Act, to provide the committee with the banking industry's perspective and to answer members' questions.

The CBA works on behalf of 54 domestic banks, foreign bank subsidiaries, and foreign bank branches operating in Canada, and their 274,000 employees. The CBA advocates for effective public policies that contribute to a sound, successful banking system that benefits Canadians and Canada's economy. The association also promotes financial literacy to help Canadians make informed financial decisions, and works with banks and law enforcement to help protect customers against financial crime and to promote fraud awareness.

Canada's banking industry supports objectives to strengthen accountability and enhance confidence in the integrity of political institutions, and we recognize that the proposals contained in Bill C-21 are aimed at achieving higher standards of transparency and accountability in political financing. Canada's banks have a long history of supporting the political process by providing financing to political parties and candidates, assessing individual loan applications on their own merit. Banks will continue to assess applications for political loans in the same way as any other loans. Decisions on whether to lend funds and the appropriate terms and conditions will be based on prudent risk management considerations, including repaymentability of the potential borrower.

As you know, Canadian banks are well-managed, well-capitalized institutions operating in a competitive market and within effective and efficient federal-provincial prudential and consumer regulatory oversight. That was the case prior to the global financial crisis and it is the case today. A strong and healthy banking system is a cornerstone in helping Canadians buy homes and save for retirement, helping small businesses grow and thrive, and promoting Canada's brand internationally. Canada's banks have always employed a prudent approach when it comes to lending. This is one of the key reasons why our banks have largely avoided the problems that have plagued banks elsewhere. Such a prudent approach is vital because a healthy financial sector is important for a well-functioning economy, and Canada's banking system is widely recognized as being one of the soundest and strongest in the world.

While we cannot be certain about the practical aspects of this bill's impact in the absence of actual loan applications, under this new proposed regime, banks will continue to operate within the framework of sound prudentially focused management and a robust regulatory regime. It's within this context that we are pleased to offer the industry's perspective based on our understanding of the legislation. I should note that banks are not the only financial institutions that would be authorized under this bill to make political loans. Other financial institutions such as credit unions and caisses populaires would also be authorized to make such loans available. While the CBA can only offer the perspective of our member banks, the committee may also be interested in hearing from representatives of these financial institutions.

We would be pleased to answer questions from members of the committee. Thank you very much.

[The Chair, Conservative, Joe Preston]

Good morning, all. Thank you for attending committee this morning. It's great to have you here.

We're still in our study of Bill C-21, An Act to amend the Canada Elections Act (accountability with respect to political loans), and at the request of the committee, we've asked the Canadian Bankers Association to come here today and talk to us.

Mr. Wrobel is going to start today. Please, go ahead with your opening statement and then the members will have time for questions.

Mr. Wrobel.

[Marc Mayrand]

Currently, there's no restriction, so we have to look at it in the context of Bill C-21. Again, my suggestion is based on the fact that....

You're absolutely correct: the candidates get most of their funding through contributions and another big part from transfers from their EDAs or the party. But when we look at the system globally, they are looking for 7% of their funding—it's not a large amount—that comes from loans other than those from the parties or EDAs. What Bill C-21 is taking away is that 5% to 7%.

What I'm suggesting is that consideration be given to either eliminate those loans entirely, because of the complexity in the bill, or allow a separate, one-time, one-campaign loan, with a strict limit, to allow candidates to get seed money to start their campaigns. That's all I'm suggesting.

[Marc Mayrand]

It varies by political entities. Of the two entities we have spoken most about today, for candidates in an election, 50% of the loans are from the candidates themselves, and another 30% are from other individuals. In leadership contests, which have been an issue of much discussion, leadership contestants are again depending on individual or other entity loans to the tune.... Again it varies very much, because there are far fewer contests, but it's somewhere around one-third of their funding that is through loans. Of this, a third is from individuals or corporations. Put the private loans aside—those covered by Bill C-21.

[Marc Mayrand]

Well, for unpaid loans there is probably something I could share with the committee, if there is interest.

If we're looking at the last three GEs, generally for candidates—I'm talking about candidates here—outstanding amounts at four months after the polling date stood at between $3 million and $4 million. That's about 7% of all the funding available to candidates in elections. After 18 months, those amounts have been reduced by about 25%.

I hate to do a quick average, but after 18 months, it stood, I think, at about $1.3 million, so still after 18 months there was $1.3 million outstanding. After 36 months—three years, the period provided by Bill C-21—we are still talking about half a million dollars in total debts outstanding among all candidates, and here we're talking about 1,400 candidates.

There is effort. What this shows is that there are continuous efforts on the part of candidates to reimburse their debts, but some are struggling in terms of the time needed to reimburse them.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

With that in mind—because I imagine this is, particularly on the 2006 leadership contest by the Liberals, fairly frustrating for you and your office, and has been for a number of years—you made a series of recommendations in your 2010 report. Based on the discussion we've been having here today—and now having had a chance to take a look at Bill C-21 as well, of course—would you feel that you're in a better position to come back to this committee with an updated series of recommendations, including recommendations on the particular point of repayment of leadership contest loans?

[Marc Mayrand]

Until those debts are repaid.

Again, when I suggest that, I go from.... We need to balance all the principles here and the objectives. If we are truly concerned about bringing finality to those debts, I think we need to think of other measures than the ones that are in Bill C-21.

[Marc Mayrand]

Again, I would support that. One of the key objectives of the bill is to prevent self-lending, but unfortunately it forgot to deal with self-supply, which also exists in a campaign. It's not rare to see that.

I'm not sure that the provision of the statute is open in Bill C-21. I think you would need to get advice on that aspect, but, again, it would require an amendment to the legislation. It can be done, certainly, and it should be done.

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

Exactly.

The question now is on this whole issue of unpaid loans becoming deemed contributions. There was some reliance from the minister in his testimony last session on the fact that a provision in Bill C-21, which says that a loan becomes an unpaid loan when it's been written off by the lender as an uncollectable debt and then it kicks over to the EDA being responsible, would more or less be pro forma.

That's exactly what banks would do, and therefore a bank would never really end up in the position of potentially being found to have committed an offence under the act. They wouldn't actually have a deemed contribution because they would always use this mechanism.

I notice in your remarks you said:

…according to the information reported by candidates after the 18-month statutory period, none of the $2.6 million in unpaid loans was written off by a creditor.

I'm wondering if there's some serious tension between what the minister was telling us about the likelihood of banks simply using this writing-off provision and Elections Canada's experience with the fact that this doesn't seem to happen very often. Is there any tension, or are we talking about two different actors?

[Marc Mayrand]

That's my reading of the legislation after Bill C-21.

[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?

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Thank you, Chair, and thank you, Mr. Mayrand, for being here.

I think the chair is right, we're going to have a lot of questions. You've given us a lot of information to consider.

I note that your predecessor, Mr. Kingsley, had recommended to this committee back in 2007 that a number of changes be made to the loans regime, which we have done, and which are contained in Bill C-21. I hope you agree that those changes, generally speaking, address the concerns that Mr. Kingsley had. But I'd like to focus on one possible recommendation that you made. As opposed to individuals being allowed to contribute only up to their maximum contribution limit on a yearly basis, you felt that we might want to consider an exemption so that candidates could loan themselves any kind of money on a one-time basis.

I'd like to ask if you could clarify that, going into a little bit more detail. While one could certainly argue that this would violate the spirit of the individual contribution limits, a more serious consequence could be that if you had a particularly well-heeled candidate who was able to lend himself $5 million or more, he might not ever have to go and seek loans or contributions again, because this one-off loan would be sufficient to run his entire leadership contest.

So my questions to you would be: do you still feel this would be an appropriate qualification to put into this bill, and if so, what should the limits be on a candidate loaning himself money?

[Marc Mayrand, Chief Electoral Officer, Elections Canada]

Thank you, Mr. Chair.

I am pleased to appear before your committee today to contribute to your review of Bill C-21. Appearing with me are, on my far right, Sylvain Dubois, recently appointed to the position of Deputy Chief Electoral Officer, Political Financing. To my immediate right is Stéphane Perrault, Deputy Chief Electoral Officer, Legal Services, Compliance and Investigations. To my left is François Bernier, the outgoing Deputy Chief Electoral Officer, Political Financing.

Bill C-21 builds on the 2004 and 2007 political financing reforms by seeking to curtail the undue influence that can arise from loans to political entities. To do so, it proposes a series of three measures. First, it provides that only individuals, financial institutions, and political entities authorized to transfer funds under the act, may make loans to political entities.

Furthermore, in the case of individuals, it places a $1,200 overall limit on contributions, loans, guarantees and suretyships. Furthermore, it requires the provision of more detailed information on such loans. Lastly, it makes electoral district associations or, if none exist, the political party, liable for candidate loans that are written off by the lender.

It requires the association or the parties to assume the liability for repaying these loans as if they had guaranteed them. Although the principle of the bill is laudable, I must, at the outset, note that the measures proposed raise a number of concerns.

First of all, the bill proposes an overly complex regime that will be very difficult to apply for political entities and their supporters. Second, the proposed regime does not succeed in adequately eliminating loopholes to the political financing rules. Lastly, the bill does not bring closure to the management of political entities' finances.

I would like, as a first step, to expand on these three concerns, which are actually closely interrelated. I will then speak to the elements that, in my opinion, should form the basis of a more effective reform.

First, I would like to express my concerns regarding the complexity of the proposed regime and the increased regulatory burden it would impose on all stakeholders, whether these be political entities, those wanting to provide loans and make contributions, or even Elections Canada, which would need to administer the regime.

This complexity arises mainly from one specific feature of the proposed regime, namely the method of calculating the limit on individual loans, guarantees and contributions. Under the bill, all loans, guarantees and contributions made by an individual cannot exceed, at any time during a calendar year, that individual's contribution limit. Excluded from this calculation are the amounts of a loan that were repaid during the year in which the loan was issued, as well as the amounts for which the individual has ceased to be liable in the year the guarantee was given.

This will create considerable uncertainty for political entities, as they will need to determine, at any given moment, whether an individual's limit has been reached. The amount of allowable loans and contributions will fluctuate over the course of the calendar year, depending on the amounts that have been given, repaid or loaned. This situation will be even more complex when limits are for contributions and loans made to a “family of entities” during a calendar year (for example, all of a party's candidates, nomination contestants and registered associations).

This level of complexity is equally problematic for both political entities and individuals wishing to provide them with financial support. There is also a risk that this would lead to a proliferation of cases of non-compliance and create an incentive to find ways to circumvent the rules. And that is my second concern.

By limiting loans of more than $1,200 to financial institutions, the regime seeks to curtail the influence of individuals who finance political entities through loans, and to eliminate the use of loans as a means to skirt contribution limits. That being said, since the bill in no way affects credit sales, an individual could sidestep the new rules on loans by becoming a supplier of goods and services. For instance, while no longer able to lend $10,000 to the campaign, an individual or the candidate himself or herself would still be able to acquire goods and then sell them on credit to the campaign. This transaction would not be governed by the new restrictions on loans.

I also note, unlike the current provisions dealing with contributions, that nothing in the bill specifically prevents loans from being funnelled through other individuals. In addition, in order to be effective, the regime should bring closure to the management of political entities' finances by precluding the possibility of loans remaining unpaid for extended periods. However, and this is my third concern, the bill does not allow for this closure to be achieved.

As I already pointed out, the bill proposes a new provision whereby the registered association or, if there is none, the candidate's political party would assume liability for the unpaid portion of the candidate's loan that has been written off by the creditor. I welcome this type of measure. Unfortunately, it is too often missing from the current law, which is based almost entirely on criminal sanctions. The intent is to ensure compliance with the new three-year statutory deadline for candidates to repay their loans, but we must point out that the riding associations or the parties may only become liable for the unpaid loans of candidates and not for those of leadership contestants or nomination contestants.

In addition, that liability will take effect only in cases where a loan is written off, but not in all cases of loan default within the statutory deadline. It is difficult to predict the likelihood of loans being written off so as to trigger the liability of the electoral district association, or EDA. For the 39th and 40th general elections, according to the information reported by candidates after the 18-month statutory period, none of the $2.6 million in unpaid loans was written off by a creditor. This was also the case for the remaining $1 million in other unpaid claims.

Furthermore, the proposed regime for loans would latch onto the existing, and significantly flawed, regime for unpaid claims. I pointed out these flaws in my June 2010 recommendations report. This remains a complex and cumbersome regime that affords neither transparency nor closure.

The authorizations currently provided for to pay beyond the statutory deadline are largely unnecessary, except to allow the Chief Electoral Officer to impose as a condition the requirement to report financing sources and thus address certain shortcomings in the existing statutory regime. Currently, a candidate or leadership contestant who pays campaign debts after the filing of his return, but before the end of the statutory period, is not required to file an amended or updated return disclosing the source of funds.

Also, the current provision whereby a claim that remains outstanding after 18 months is deemed to be a contribution is a major source of confusion. Adopted at a time when the law did not limit contribution sources or amounts, this deeming entails no civil, administrative, or penal consequences. Deemed contributions do not, in and of themselves, entail a violation of the rules on contributions. Enforcement of the contribution rules and the imposition of criminal sanctions requires an assessment based on the facts of each case. They cannot simply stem from the mechanical application of a statutory fiction.

By continuing to subject loans to the flawed regime governing unpaid claims, Bill C-21 serves only to perpetuate these difficulties.

Even in the unlikely event that a riding association were made liable for a loan written off by the creditor, the unpaid claims regime would offer no reasonable guarantee that these loans would be repaid with diligence by the association.

These concerns lead me to suggest broad strokes of what I view as more effective legislative reform. First of all, such a reform must address not just loans, but also rules governing unpaid claims. Some of the key elements for reform can be found in my June 2010 recommendations report, while others are already part of Bill C-21; however, they should not be enacted piecemeal, independently of one another.

On the one hand, we must simplify the regime of unpaid claims by eliminating the current presumptions and authorization mechanisms. The law should also give the Chief Electoral Officer the power to obtain documents—as I recommended in 2010—and to examine entities that may have relevant information concerning a transaction. On the other hand, in order to ensure closure, political parties should be liable for repaying any outstanding claim, including any loan that remains outstanding after 36 months. This measure would be modelled after Bill C-21, while at the same time deviating from it in several respects.

First, parties should be liable for the outstanding debts of all their affiliated entities, with the possible exception of leadership contestants. Second, the parties should be liable, whatever the reasons or circumstance, for the payment default. Moreover, the parties should have a relatively short period—for example, six months—in which to pay the outstanding debt; otherwise the sum would fall due to the Receiver General and could be deducted from the public financing given to the party.

To be effective, political loan reform should also propose rules that are simple enough to be understood and followed by both the political entities and the electors supporting them. In this respect, I think it is absolutely essential to shelve the idea of a combined loans contribution limit for which implementation would fluctuate in step with repayments and contributions made. One solution would be to follow Ontario's lead and do away with individual loans, since the benefit the political entities would derive would be, for all intents and purposes, dwarfed by the severe regulatory burden imposed on them.

If individual loans must be allowed, they should be subject to a limit that is separate from the contribution limit and, above all, applicable for one calendar year regardless of the amounts repaid during the year. This change could no doubt be made in the current bill, but I think a more in-depth revision is necessary, and I doubt that this could be done within the limited framework of this bill.

Thank you, Mr. Chair. My colleagues and I would be pleased to answer any questions.

[The Chair, Conservative, Joe Preston]

I call the meeting to order. We are in public today with our Chief Electoral Officer, Monsieur Mayrand.

Welcome. It's great to have you here.

We're here pursuant to the order of reference of Tuesday, October 2, for Bill C-21, An Act to amend the Canada Elections Act.

Our witnesses today are all from Elections Canada, and we have a two-hour session with lots of questions, I hope.

Monsieur Mayrand, I'd like you to lead off and introduce the guests with you today. We'll have lots of questions for you after you're finished.

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

No, I understand. That was the answer before, but how clear is that and where are we getting that? The only retroactivity clause is 34 of Bill C-21 and it is not at all clear that is the result. I am wondering if more clarity is needed or if I haven't found it in the provisions.

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

Thank you, Mr. Chair.

Thank you, Minister, for coming.

I have two questions to ask in my four minutes. The first is to return to the clarification that Mr. Lukiwski received on retroactivity, which is with respect to the period of leadership loans. The new system is that you can have somebody donate on a yearly basis and not just on a per-event basis.

Did I understand correctly that the interpretation is that the new Bill C-21 provisions would allow past leadership candidates to actually pay off old loans under this new arrangement? If so, is it clearly in the new provisions?

[Tim Uppal, Conservative, Minister of State (Democratic Reform)]

I'm happy to be here and I thank you, Mr. Chairman and colleagues, for inviting me to speak today to Bill C-21, the Political Loans Accountability Act.

I am joined by Matthew Lynch, an official from the Privy Council who will help with technical questions if needed.

As you know, this bill proposes to amend the Canada Elections Act to establish stronger rules and better transparency requirements for political loans. The establishment of high and consistent standards of transparency and accountability in our electoral system is an underlying objective of our government's larger democratic reform agenda.

This bill, as with our other efforts, seeks to increase the confidence Canadians have in the integrity of our political process. For Canadians to have that confidence, our government believes that voters must be the primary actors in the electoral process. That is why the Federal Accountability Act completely banned political contributions by corporations, unions, and associations.

Furthermore, we believe that voters must be able to participate in the electoral process on an equal playing field. Neither voters nor candidates should have privileged access to the political system solely because of their financial resources or wealthy contacts. That is why the Federal Accountability Act reduced the yearly contribution limits for individuals. That limit now stands at $1,200 per year for each category.

These principles of transparency and accountability, the primary role of citizens, and equality are the motivations behind this bill.

Bill C-21 is necessary because the regulation of political loans has not been updated to reflect the other recent changes to the rules for political contributions. Currently there are no limits on loans that corporations, unions, or wealthy individuals can grant to political entities. Right now the deck is already stacked against potential candidates who might not have connections to wealthy donors or significant wealth themselves or within their circle of family and friends. That unfairness is made worse by other loopholes that exist.

In the worst cases, loans can potentially be abused as a form of disguised contributions over and above the limits on donations that we have set. At the very least, the regulations and reporting of loans is inconsistent. The lack of limits on amounts loaned is entirely out of sync with the rest of our donation rules, and the rules on who can and cannot donate money to politicians don't apply to loans at all.

What's worse, the current rules don't provide for genuine deadlines for repayment or for genuine consequences to politicians who break the rules.

This situation needs to be fixed.

Ordinary Canadians are expected to pay back their loans under strict rules and timelines. The same should be expected of politicians.

The political loans accountability act is designed to fix these problems by making the regulation of loans consistent with the rest of our political financing and contribution system.

I'll provide a brief overview of the bill's provisions, which would apply to all political entities—parties, associations, candidates, and nomination and leadership contestants.

With respect to transparency, the bill would establish a uniform and transparent reporting regime for the terms and conditions of all loans to political entities and require the Chief Electoral Officer to publish reports on loans.

These changes would achieve greater transparency by ensuring that all political entities are subject to consistent reporting standards and that the lending practices of financial institutions to different parties and candidates are visible for all to see.

With respect to accountability, the rules for the treatment of unpaid loans would be tightened to ensure candidates could not walk away from them.

Bill C-21 would accomplish this by making electoral district associations responsible for unpaid loans taken out by their candidates. If there is no association, then the party would be responsible for unpaid loans.

Ultimately, electoral district associations and their members endorse these candidates, as do the parties and party leaders themselves. Loans that remain unpaid by those candidates need to be dealt with. We believe this mechanism would provide for the most logical, transparent, and accountable solution to that problem.

With respect to the principle that voters should be the primary influence in an election, Bill C-21 aligns the loans regime with that of the rest of our political financing regime by prohibiting corporations, unions, and associations from making political loans.

Bill C-21 would only allow financial institutions and other political entities to make loans beyond the current annual contribution limit of $1,200.

I'll also add that loans made by financial institutions, and there are literally hundreds of eligible institutions covered by this bill, must be made at fair market rates of interest.

Turning to the principle of equality, under Bill C-21 total loans, loan guarantees, and contributions by individuals cannot exceed the annual contribution limit for individuals. With Bill C-21, wealthy individuals would not be able to bankroll their campaigns by making large loans to themselves, or by taking large loans from friends or family. This places all candidates, including women and minorities, on an equal playing field.

I would also like to note that this bill incorporates recommendations made by chief electoral officers and previous input by this committee.

The bill is substantively the same as Bill C-29, which was passed by the House of Commons in the 39th Parliament but died on the order paper in the Senate. Several amendments were made by this committee and are included in this bill. Those changes include: a three-year period after which unpaid loans become deemed contributions, which this committee increased from the originally proposed 18 months; requiring the Chief Electoral Officer to hear representations from an association, party, or lender before making a determination about a deemed contribution; and providing that the amount of any loan given or guaranteed and that is subsequently paid back within the same calendar year is returned to the lender's annual contribution limit for that year.

Bill C-21 also makes a change to the contribution limits for leadership contestants. Currently, contribution limits for leadership contestants are set on a per-contest basis. Under the bill, the contribution limits for leadership contestants would be set on an annual basis, similar to the contribution limits for other political entities. I would also note that the bill would not apply to loans that were entered into prior to the coming into force of the bill. For clarity, the change from per-contest to annual donation limits to leadership contestants would apply to leadership contestants who continue to be contestants because of their outstanding unpaid loans or claims, subject to any conditions imposed on them by the rules, courts, or the Chief Electoral Officer.

The coming-into-force provision states that the bill will come into force six months after royal assent. This is consistent with the corning-into-force provisions of other electoral laws and is designed to give Elections Canada sufficient time to implement the changes.

Our government believes that Bill C-21 is essential to preserving and enhancing the trust of Canadians in the integrity of their political institutions. We believe that politicians have a responsibility to manage their funds prudently and to make sure that they are borrowing and spending within the means of their campaigns. Regular Canadians must manage their own household budgets, and it is incumbent on politicians to do the same.

I hope you will support this bill. I would be pleased to answer your questions.

[The Chair, Conservative, Joe Preston]

We are here on the order of reference of Tuesday, October 2, Bill C-21, An Act to amend the Canada Elections Act.

We have Minister Uppal with us today. Thank you for coming today, Minister. I understand you have an hour for us today.

Our meeting is only scheduled until noon. The chair has to leave very quickly after that, so if something were to come up, the vice-chair could always fill in.

Mr. Lukiwski, you want to mention something.

[The Chair, Conservative, Joe Preston]

We will call our meeting to order. We are in public this morning.

I would like to discuss some committee business at the end of our meeting today. We will set aside some time to talk about where we're going further on this review of the standing order on access to information requests and parliamentary privilege. We also want to talk about our witness lists for the study of Bill C-21 and how we're planning our time for that.

Perhaps we could leave a little bit of time for that, and for a couple of budgetary requests, too, at the end of the meeting.

Monsieur Bosc, Monsieur Denis, it's good to have you both here today. Hopefully you can help us with this. The Speaker has referred this issue to us. We're looking to you for a little knowledge this morning.

Monsieur Bosc, will you be going first?

[The Chair, Conservative, Joe Preston]

This is meeting 45 of the Standing Committee on Procedure and House Affairs.

We were to be meeting with Madam O'Brien and the acting law clerk this morning, but due to some health reasons, they are not able to join us today. They will join us on the first Tuesday we are back. We had set aside some committee business for today, so I thought it was still important that we meet and use our time for that. We will move on to that.

Bill C-21 has been referred to our committee. With the committee's permission, I would like to move on it as soon as we can. I would like to get witness lists from each group. Thank you, Mr. Garneau, for already supplying us with yours. Great work. If we could get witness lists from each group for the morning of the first Tuesday we are back, we could start. We will have a quick bit of committee business on that day to discuss how we're moving forward.

Mr. Lukiwski.

Canada Elections Act

[Pierre Poilievre, Conservative, Parliamentary Secretary to the Minister of Transport]

Mr. Speaker, I thank the sponsor of the bill who, I believe, does so with good intention and with a skilled hand as a legislator in this place.

The bill would amend the Canada Elections Act to increase the fines for serious election offences. It would provide that the Chief Electoral Officer could contest an election of a candidate under part 20 of the act.

I think everyone in this place can agree that it is our responsibility as parliamentarians to always look for ways to continue to ensure strong, free and fair elections in Canada. Our electoral system must have the trust and confidence of Canadians. Our Conservative government has a proud record of achievement when it comes to strengthening our democracy, a point which I will return to a few minutes later.

We certainly agree that people who commit election fraud and those who break the law should be held to account with tough penalties, and we certainly do not have a problem with tougher penalties. In fact, we welcome the agreement I think we have here in the House on fines and tougher penalties for serious election offences. That agreement is something I hope we will be able to come back to as this session of Parliament continues this fall.

We probably all agree more generally with some sort of strengthening of the enforcement mechanisms of the Canadian Elections Act as well. However, we believe that changes to the Canada Elections Act should be considered in a broader context than that presented in the bill. Piecemeal amendments such as these do not encompass the broader context of the act.

That context is illustrated by the fact that just earlier this year the procedure and House affairs committee produced its 15th report in response to the Chief Electoral Officer's recommendations following the 40th election. That report contained 50 recommendations to the act, and that was not even a comprehensive review of the act. It was simply a review of issues that came up during that particular election.

One of those 50 recommendations dealt with fines. The government is currently reviewing this recommendation and the report as a whole and will put forward a proposal in due course. Therefore, we will have that issue covered in the future and in a more comprehensive way than this bill can provide for. That is plain to see. This bill has two elements. The procedure committee report has 50, so we are talking about a vast difference in scale. That is the broader context at stake.

However, I will not leave it at that. There is a serious problem with the bill. The bill has only two main elements and one of them is, unfortunately, disqualifying in nature. The problem is that the bill would completely undermine the neutrality and impartiality of the Chief Electoral Officer. The bill must be defeated on these grounds alone, even if there were no others.

Right now, participants in an election are able to contest that election. That means any elector or candidate in the electoral district in question can contest it. The application must be accompanied by a security cost in the amount of $1,000. By inserting the Chief Electoral Officer in the arena, we would be undermining his impartial role. The officer is an independent player who represents Parliament. He is not a participant in an election and must therefore act in a manner that is neutral and impartial to all parties and candidates.

Each actor in an election has his or her role. The officer supervises the conduct of elections, kind of like a referee in a hockey game. He does not pick up a stick and start paying. At least he should not.

All complaints alleging offences to the act are referred to the commissioner of Canada elections. The commissioner investigates and enforces the rules. When the commissioner believes that an offence has been committed, the commissioner may refer the matter to the director of public prosecutions who would decide whether or not the matter should be prosecuted.

While the administration and enforcement is left to others, the contestation of elections is left to the political actors, that is candidates and voters. Once again, the Chief Electoral Officer is kept above this fray.

The Chief Electoral Officer should not be an active player in making an election contested. Otherwise, he or she would be put in a conflicted position of potentially filing a complaint against himself or herself. He or she is, after all, the officiator and any bill that requires him or her to make complaints on how an election is officiated would effectively turn his or her own sword on his or her own person.

As such, no measures should be put in place that would risk giving rise to even the perception of any favouritism on the part of the Chief Electoral Officer. I think we can all agree that any favouritism or bias on the part of the Chief Electoral Officer would bring the officer and Elections Canada as a whole into disrepute. The power to contest elections would create just such a risk. The Chief Electoral Officer would have to pick cases to be brought to court. Invariably, those denied will complain of favouritism, having to bear the cost of litigation, and rightly so.

Furthermore, irregularities that may call an election result into question may have been the result of actions or omissions on the part of the Chief Electoral Officer or Elections Canada staff themselves. Imagine if actions or omissions of the Chief Electoral Officer became the subject of a potentially contested vote, and then imagine we had a legal regime that required that same electoral officer to file a complaint against himself or herself. The conflict is obvious and inescapable.

We saw this was the case in the contested election of Etobicoke Centre. In such a case, the Chief Electoral Officer would find himself or herself in a conflict of interest were he or she called upon to defend the actions of his or her staff while at the same time initiating the complaint against the process that he or she ran. So it is clear that the bill would put the Chief Electoral Officer in an intolerable position of conflict. As such, this proposal alone renders the bill unsupportable by the government. Thankfully, we are taking other actions and we hope to co-operate with the hon. member for Beauséjour and the opposition in order to see them to a successful conclusion.

Last night, Bill C-21, the political loans accountability act, passed at second reading in the House. The bill would fix the current rules for political loans, which have been made a mockery of by the opposition parties. Six of the nine NDP contestants in the recent leadership contest failed to meet their filing deadlines for disclosure. They claimed software glitches or having to attend a conference. They had six full months to get their books in order but they could not meet a generous reporting deadline.

The Liberal Party's record is worse. Four Liberal candidates from the 2006 Liberal leadership race, six years ago, have still not paid off their debts despite very generous extensions to the deadline. We are moving to tackle this problem and these abuses through the political loans accountability act.

Finally, we are moving forward with Bill C-377, which would require disclosure of union finances, this being extremely important after the recent discovery that the unions gave $340,000 in illegal money to the NDP.

I encourage the opposition parties to work with us to expand accountability and strengthen the democracy that we all enjoy.

The House resumed from September 28 consideration of the motion that Bill C-21, An Act to amend the Canada Elections Act (accountability with respect to political loans), be read the second time and referred to a committee.

Political Loans Accountability Act

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I am pleased to rise to speak to Bill C-21 which, for reasons I will explain in a moment, the Liberals will oppose.

The bill does a number of things. It amends the Canada Elections Act in the following ways: All loans to political entities, including mandatory disclosure of terms and the identity of all lenders and loan guarantees, must be uniform and transparent. We are fine with that. Unions and corporations are prohibited from making loans to political parties, associations, or candidates. That is fine. Limiting the amount of loans and loan guarantees that individuals can make within the framework of the permitted individual annual contribution is also fine. Limiting the ability of financial institutions and political entities to make loans beyond the annual contribution limit for individuals and only at commercial rates of interest is the part we do not agree with. Finally, there are tighter rules for the treatment of unpaid loans to ensure candidates cannot walk away from unpaid loans.

The Liberal caucus certainly is in favour of full transparency and disclosure of political loans. We are also in favour of forcing those loans to bear commercial interest rates.

What is a problem for us is when the bill says that only financial institutions or banks will have the authority to make these loans.

Before entering politics, 12 years ago, I worked for the Royal Bank. So I am well aware of how banks work. In my view, it is not the banks that asked for this exclusive authority, but rather the government that wants to give it to them. This puts too much power into the hands of the banks. Basically, the banks would have the authority to make political choices by lending money to the candidate they like the most and by not giving a loan to a candidate they do not like. I am not saying that that is what they would do, but all the same, it gives excessive power to the financial institutions.

Furthermore, with these rules, the candidates with more money, the candidates who are wealthier, would have an advantage, because they would have a better credit rating than candidates who are not as wealthy. This kind of system would favour the rich rather than treating everyone fairly. The system might also be unfavourable to women, especially to those who are going back into the labour market after a number of years at home. They might be less able to borrow money from a bank because they would not have as much money.

For all of these reasons, the Liberals will be voting against this bill.

I want to emphasize that it is only the exclusive aspect of the banks being the only lenders that we object to. We are entirely in favour of total transparency, total disclosure, the requirement to pay commercial interest rates, and so on.

In closing, I would remind the House that the Prime Minister has not, to this day, disclosed any of the names of the people who contributed to his leadership campaign, let alone the sums involved, let alone whether he borrowed any money. I would say that what is sauce for the goose should be sauce for the gander. I would suggest that as the government is moving forward with this law, now would be a good time for the Prime Minister to disclose at least the names of his donors, if not the amounts.

Perhaps during questions and comments one of the Conservatives could give their view on the proposition I just put forward.

[Annick Papillon, NDP, Québec, QC]

Mr. Speaker, I thank my colleague for bringing up this important point.

We can never repeat it enough: the NDP made a historic achievement when 40% of its elected candidates were women; no other party has ever achieved such a record. I believe we can congratulate ourselves, because it is fantastic. I thank my colleague for bringing it up. Women's rights are important. This is a point we have also raised when discussing other bills, which shows how strongly we support it.

Bill C-21 really aims to eliminate the influence of the richest participants in politics, so that one candidate is not favoured over another, or a female candidate is not favoured over a male one. This is a very important objective, in my eyes. The goal is not to favour one party or one group over another.

This is what we will need to discuss in depth when the committee studies this bill, to ensure there is no favouritism and all candidates have an equal chance. I believe it is important, and it also speaks to what democracy is all about. I know everyone on this side of the House shares this idea with deep conviction.

[Annick Papillon, NDP, Québec, QC]

Mr. Speaker, I am very pleased to rise here in the House and to take part in today's debate on Bill C-21. I would like to begin my comments on this bill by paying tribute to a former leader of the New Democratic Party of Canada, who represented the Ottawa Centre riding, for he was the first person to point out that the political donation regime in this country has a very obvious loophole. Mr. Broadbent had the sense to recognize that even though the maximum amounts of money that can be donated to a political campaign or to a political party had been reduced, by allowing these huge loans, which never really have to be paid back, it was obvious that somebody with a lack of ethical standards would take advantage of that loophole and act as though there were no financial limits. I therefore wish to recognize Mr. Broadbent for raising this issue for us in his ethics package.

The reforms to our political financing regime introduced by the Liberal government in 2003 limited donations to political parties from individuals and corporations, but, they did not limit political loans. The Federal Accountability Act, which passed in 2006, amended the political financing regime by lowering private contribution limits from $5,000 to $1,000, but it did not address the question of loans. That explains why we are debating this here today, and that is what Bill C-21 is meant to correct. Everyone agrees that this is a problem. We need to listen to all of the solutions being proposed and, together, come up with the best way to solve the problem.

Bill C-21 proposes prohibiting unions and corporations from granting loans to political parties and election candidates. Most of these changes were requested by the Chief Electoral Officer some years ago. Indeed, in 2007, the Chief Electoral Officer published a report on political financing that included a series of recommendations. The Chief Electoral Officer's proposed changes were aimed at limiting the influence of individuals or corporations on political parties, since this can occur through financing. Bill C-21 is based largely on those recommendations, which is why we support it at second reading.

This bill, if passed, would establish a strict reporting regime for all political loans, which would include the mandatory disclosure of the identity of the lender and the terms of the loan, such as the interest rates. In addition, loans by individuals would be limited to $1,100 and only banks and political parties would be authorized to lend higher amounts. Under this bill, loans from individuals not repaid within 18 months would be considered contributions, and loans not repaid to financial institutions would be transferred to riding associations, which would become responsible for their repayment.

At present, the rules for political loans do not satisfy the standards of accountability, integrity and transparency that Canadians expect of their political process. I cannot emphasize enough how important this is. In that regard, Bill C-21 seems to be a step in the right direction and that is why the NDP will support it. Believe me, we are here to support any good initiative. For once, the government is headed in the right direction.

These new measures will foster greater fairness and ensure that the political process is and will always be in the hands of the people. A campaign should always be about ideas and not about who can spend the most money. That is not what a leadership race should be about. Members must first and foremost be accountable to their voters. It is important to eliminate the possibility of undue influence of elected representatives by corporations.

Bill C-21 would also amend rules for leadership races. In that regard, the most striking example, and the one that has garnered the most public attention, is the Liberal Party of Canada leadership race.

Even if companies and unions did not have the right to contribute a single dollar, they could still lend tens and hundreds of thousands of dollars. Individuals could also lend much more than they were allowed to donate. We do not want to see a repeat of what happened with that party, where six years later, leadership candidates seem to have simply abandoned the idea of repaying their campaign debts. It is completely unacceptable.

If that is the case and a candidate was backed by individuals, then in reality those individuals bankrolled a big part of the candidate's campaign. If the debt is never paid off, then we end up in exactly the situation that we are trying to avoid, which is single individuals, single corporations and single unions providing tens, and possibly hundreds of thousands of dollars to one candidate.

Liberal members point out that Bill C-21 could prevent more women from entering politics. I think that the reverse is true. The bill will level the playing field so that people who are sponsored by companies, as was the case in the Liberal Party of Canada leadership race, will not have a competitive advantage over a woman who does not have this sort of backing. The purpose of Bill C-21 is to eliminate the influence of the wealthy in politics, while the under-representation of women in politics is a complex issue due to many factors that go well beyond political loans.

Some members are wondering how they will be able to raise money if backers are only authorized to donate a maximum of $1,100 per candidate. They are also concerned about the fact that Bill C-21 will prevent donors from making a donation to a leadership contestant if the candidate has outstanding debts.

The Chief Electoral Officer, Marc Mayrand, recently made a very important statement. He said that it is virtually impossible to enforce the law on political loans because it is “not only overly complex, it's incoherent and ineffective.”

We have this expertise, we have recommendations from Elections Canada. This is an example that relates to Bill C-21. However, in all kinds of other scandals where we have to shed light on what happened, it is important—I cannot repeat that enough—for this government to listen to recommendations from Elections Canada and the experts working in the field, to take the necessary action.

A number of these concerns from people in the field are legitimate, and that is why we must carefully examine each clause of this bill. I hope that there will be some latitude in committee to discuss what kind of system to adopt and what protection measures could be implemented. Every time we consider limiting the ways Canadians can collect funds to participate in an election, we must ensure not only that the system is fair, but also that everyone has access to funding, regardless of political affiliation.

We support the idea of eliminating the loophole. However, we feel that some improvements are necessary in order to strengthen our system.

We are very concerned to see banks and other financial institutions become the sole sources of financing without being required to subsidize all parties, regardless of the circumstances. This is a big problem, but we can resolve it. If we want, we can find ways to include conditions that would be acceptable to everyone involved, in order to make things fairer.

I am sure that we could find a solution that would meet the government's objectives—to standardize the financial rules—and ensure that our electoral laws are applied equally across the country, so that in future federal elections, everyone—and I mean everyone—has equal opportunity and those who are supported by certain companies do not have an unfair competitive advantage.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

Mr. Speaker, I would first like to say that I greatly admire my colleague from Vancouver East for her great wisdom and all the experience she brings to our discussions.

Earlier, she mentioned the shortcomings of Bill C-21. Based on her experience, which important issues should be discussed in committee, once the bill reaches the committee stage?

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, many of the provisions in the bill are based on recommendations that came from the Chief Electoral Officer, and that is as it should be. This is an impartial individual who oversees the Canada Elections Act.

On the positive side, Elections Canada is a very well-reputed organization. It has good standing with an international reputation. However, as the member points out, this stuff gets complicated, even for MPs. We want to follow the rules and do what is right, but there are so many nuances and things to pay attention to in terms of election financial reporting and so on. Therefore, anything we can do, through this bill or other measures, would make the process clearer and more transparent for both ourselves and the general public in terms of accountability.

We have seen all kinds of awful situations. For example, the in and out advertising scheme that the Conservatives engaged in. They basically denied that they did anything wrong and then pleaded guilty at the end and had to pay fines. Clearly there are issues that still have to be addressed and I think that we should pay attention to the Chief Electoral Officer.

Bill C-21 is one step, but this is something that needs our ongoing vigilance.

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I am pleased to rise in the House today to speak to Bill C-21, which would amend the provisions of the Canada Elections Act that affects loans and guarantees to political entities, whether registered parties, registered associations, candidates, leadership contestants or nomination contestants.

I am splitting my time with the member for Québec.

It is an important bill and, as I said earlier, it is a complex issue. We should recognize that when people run for leadership for a political party, it is a huge undertaking financially and in terms of a political commitment to their family, community, party and the country. It is easy to focus on some of the problems that occur, and there are problems, and that is why the bill has come forward. We should also remember the enormous sacrifice that people make, no matter what party, when they decide to run for the leadership.

The NDP just went through a leadership race. It was an incredible democratic process. We had hundreds of thousands of Canadians engaged in that process, culminating in the election of our new leader from Outremont.

When we went to the candidate meetings or had interaction with the candidates, our party could see how incredibly hard-working they were and the time and energy everybody put into their campaign teams.

We need to recognize that because politics gets such a bad name. People feel cynical and it is partly because of financial issues. Bills like this one tend to reinforce the negative side. Therefore, let us also be positive and celebrate the fact that individuals make this commitment to give that kind of public service. I wanted to begin my remarks with that because it needs to be said.

We support the bill at second reading. There will be a general rule that loans and guarantees to political entities are prohibited. There are exceptions to that. Financial institutions can give loans to political entities at a market interest rate and in writing, so that is a very clear, transparent thing. Individuals can as well, as long as they respect the limit under the act, which, as of January, was I believe $1,200, and as long as the loans are repaid, a very key point, within the calendar year or guarantees for which an individual is no longer liable in the calendar year will not be taken into consideration for an individual's contribution, loan and guarantee limit.

Finally, one of the three exceptions is that political parties or associations can make loans or stand surety for loans to a candidate or an association as long as it is in writing. There are some very clear rules.

Just by way of background, I was in Parliament in 2003 when the original bill, and I do not remember the name of it but it was under the Jean Chrétien government, came forward and reformed political financing. It sought to limit the donations to political entities from private individuals and legal persons, but at that time it did not limit political loans.

That was very important legislation and it did create a benchmark to ensure that Canadian political process and running in an election and so on was fair. It was a very historic.

I would compare us with the United States where there is virtually no rules. An individual has to raise millions and millions of dollars. Most of us could never run in the U.S. We simply would be unable to raise the kind of money as progressive people taking strong stands. We would never get all the lobbyists and so on. I always think about the situation in the U.S. where it is so much controlled by big lobbyists and big financial contributions. Therefore, the bill introduced in 2003 was very important.

In 2006 the Federal Accountability Act was the first legislation introduced by the Conservative government, and the NDP was very instrumental. I remember the member for Winnipeg Centre worked very hard with the minister at the time. That also was an important act, which lowered the maximum annual limit from $5,000 to $1,000, but it did not address the issue of political loans.

It is curious that in both 2003 and 2006, neither of those pieces of legislation from two different governments and two different political parties dealt with the question of political loans. I would like to put on the record that the NDP has always been in favour of limiting what we would characterize as the influence of third parties, both on political parties and during leadership contests.

It seems to me that the principle here is to ensure that there is transparency, that there are clear rules, that there are not ways to get around the rules and make oneself a loan or have someone make a loan that we know would never be repayable. Our party has always had an understanding, support, and advocacy for this kind of principle in favour of limiting the influence of third parties. This is why we are supporting the bill.

I would go further and say that Ed Broadbent, the former member for Ottawa Centre, former leader of the NDP, and a very well-known member of Parliament, made an enormous contribution in his time serving the House. He put forward a platform that called for transparency, clear rules, cleaning up politics for stronger accountability, and financing rules for leadership contests. That is what we are also talking about today. Sometimes we forget these things, so it is good to put on the record the work of a former colleague who really did make a difference and who espoused these principles of fairness, transparency, and accountability. I want to give kudos to Mr. Ed Broadbent for doing that.

When we debated the accountability act in 2006, we were very clear that it should have included provisions on political loans. We deplored the fact that it was silent on this matter. Again, the member for Winnipeg Centre did an enormous amount of work. We ended up agreeing as far as the bill went that we would support it, but we always believed that it should go further.

Here we are today in 2012. The bill before us has had quite a history and has already been hanging around for almost a year. It was previously Bill C-19 and C-29. It has had various versions, and here it is being debated today. I think it was the government House leader who said earlier that the government would push and convince all the opposition parties to deal with the bill. Quite clearly, for us in the NDP, we have always supported these kinds of measures and we will support the bill in principle.

I want to end on this note. This is a very complex issue. One has to really go through this stuff with a fine-tooth comb and see whether or not there are loopholes. I hope that when it gets to the committee, its members will almost look at it from a negative point of view, from the point of view of how someone can get around it. We need to ask ourselves that question to ensure that the bill is sufficient and adequate and covers the principles that it espouses. I am glad that we are supporting the bill and look forward to it being at committee.

[Charmaine Borg, NDP, Terrebonne—Blainville, QC]

Mr. Speaker, I will pick up where I left off earlier.

Bill C-21 states that political entities must report loans in their financial statements. They must specify the amount of the loan, the interest rate, the lender’s name and address, the dates and amounts of repayments of principal and payments of interest, as well as any guarantor’s name and address and the amount guaranteed. The financial agent must report any amendment to the Chief Electoral Officer.

I would like to talk about this measure because I think that it will make transactions more transparent in terms of the lenders and the political entities receiving the loans.

This measure will also help the public find out where the money is coming from, when and how much. This is extremely important. Unfortunately, some entities are still not behaving ethically. We have seen the Conservative Party's questionable practices. In Quebec, the Charbonneau commission is looking into allegations of fraud. People are very concerned about this issue.

Many of my constituents are asking me what is going on and whether they can trust their representatives. These people watch the news and read the papers, so they are informed citizens. However, when they see things like this, they wonder whether democracy really exists in Canada and to whom their representatives are accountable.

I think that such measures will help boost public confidence in our democracy. People will certainly have more confidence that their representatives are following the rules and funding their campaigns appropriately.

Bill C-21 must move forward. I expressed some concerns about financial institutions. We will have to take a closer look at that issue. In general, we all agree that this bill should go to committee.

The House resumed consideration of the motion that Bill C-21, An Act to amend the Canada Elections Act (accountability with respect to political loans), be read the second time and referred to a committee.

[Charmaine Borg, NDP, Terrebonne—Blainville, QC]

Mr. Speaker, I am pleased to rise in the House today to speak to Bill C-21. I will start by saying that we will support this bill at second reading. I know it is rare for us to support a bill, but it is also rare for us to be able to examine an individual bill that is not part of a big omnibus bill. I ask the Conservatives to take that into consideration.

This bill prohibits corporations and businesses from granting loans to political entities. “Political entities” refers to political parties, associations, leadership candidates or candidates for nomination. Furthermore, this bill sets a time limit for paying back loans taken out by political entities: three years for leadership candidates, four months for a leadership candidate and three years for an association or party.

It is important to set limits on repaying loans. Otherwise, debts could accumulate indefinitely. Moreover, there is typically interest on these loans, which can be very detrimental to someone who, after running for leader or for election, will unfortunately have a lot of debt for a very long time.

Political parties will be responsible for paying back loans that are not paid back by the candidates themselves. Obviously, it is important for the financial institutions granting these loans to know that someone will be responsible for paying them back.

Another measure that I find very interesting is the measure that will enable leadership candidates to receive gifts up to a maximum amount per year instead of an amount per campaign. If someone is still in debt two years after the leadership campaign and has already asked all of his contacts, friends, family members and supporters to make a maximum donation, he is in trouble because those people cannot give the maximum amount again, which limits candidates' ability to raise funds to pay back loans within the deadline. This is a very interesting measure. I congratulate the government for having thought about this problem and for putting this measure in Bill C-21.

It is very important for us, as parliamentarians, to try to find solutions to the problem of debt incurred by candidates during elections or leadership races. These people end up with huge amounts of debt that they are unable to repay. We know that some of the candidates in our own leadership race still have a little bit of debt. There are also candidates in the leadership races of other parties who unfortunately still have a great deal of debt.

This measure is important for someone who will stand for election because they will know the consequences of ringing up that amount of debt. If they know that they have three years to repay the money, they may think twice about how much money they are going to spend and if they are capable of paying it back. This will also make people who stand for election more accountable.

In 2007, the Chief Electoral Officer released a report on political financing, which contained a number of recommendations. The changes proposed by the Chief Electoral Officer were intended to limit the influence of individuals and corporations on political entities, an influence that can be exercised through financing. Bill C-21 takes these recommendations into account. Once again, I congratulate the government for responding to the Chief Electoral Officer's recommendations. We know that quite often the government does not follow through with recommendations made by various stakeholders.

The changes proposed by Bill C-21 seek to eliminate the influence by the more well-to-do in the political world. If a lobby, corporation or individual with a lot of money can provide a loan to a candidate, the latter may be influenced by the ideas of the group, corporation or individual.

For example, if a group campaigns for a certain cause, the person may feel obligated to advance that cause in particular. I think that it is extremely important to bring back this aspect of democracy and to limit this type of individual or corporate loan. It would be extremely unfair if this could happen. It is thus extremely important that we take action, that we support these measures and that we limit financiers' influence on politics.

As we know, there are groups that may have really good ideas or policies, but they may not be able to provide a loan because of financial difficulties. It is thus important to be able to level the playing field so that people cannot say that certain groups with more money will be listened to but it is tough luck for everyone else.

I am also calling on the government to assess the point that my colleague mentioned in her speech. Some financial institutions may be more inclined than others to give parties loans. This is a cause for concern. I understand that financial institutions are supposed to act in an impartial and non-partisan manner, but one never knows. I think that it is this government's duty to assess the issue in committee in order to determine if there is a way to prevent this phenomenon.

I would like to once again applaud the measures put forward. However, I would just like to point out the fact that it is somewhat contradictory to promote these measures that will improve transparency by trying to limit candidates' debt and yet, at the same time, be prepared to limit the amount of money that political parties receive for each vote.

I see that my time is up. We will certainly be able to get back to this issue later on, Mr. Speaker.

[Nycole Turmel, NDP, Hull—Aylmer, QC]

Mr. Speaker, I thank my colleague for her question.

It is very unfortunate that it has taken a year. We know how the Conservative Party does things. If they really wanted to make Bill C-21 a priority, they could easily have done it. Our party could have had discussions with them, as could all the other opposition parties, and we could have moved it forward and resolved this situation.

[Alexandrine Latendresse, NDP, Louis-Saint-Laurent, QC]

Mr. Speaker, I thank my colleague from Hull—Aylmer for her speech. She is a very brilliant woman who understands the issues perfectly. It is terrific to be able to work with her.

What does she think about the fact that the bill was introduced over a year ago and seems to have fallen into some sort of limbo? We heard no more about it. The Conservatives have tried to ram through a whole pile of other bills any which way, and now they tell us they were simply waiting for everyone to agree.

I would like my colleague to comment on that, and tell us what she thinks about the very long time it took for Bill C-21 to come up for debate.

[Nycole Turmel, NDP, Hull—Aylmer, QC]

Mr. Speaker, I am pleased to share my time with the hon. member for Terrebonne—Blainville.

Bill C-21, Political Loans Accountability Act, contains a series of measures to tighten the political financing rules. Among other things, the bill proposes to prohibit political entities from receiving corporate or union loans. Financial institutions, individuals, political parties and associations will still be authorized to grant or guarantee loans, as long as the terms of the loan, such as the interest rate, are divulged and everything is put down in writing.

As my colleague mentioned, Bill C-21 is a step in the right direction. The bill, to its credit, prevents situations like the one the Liberal Party currently finds itself in from happening again. Let us remember that, six years after the leadership race, many candidates still have not reimbursed the total amount of the loans they received to run their campaigns.

The issue even went before the Supreme Court of Ontario, which recently found the failed candidates with loans in arrears guilty of violating the Canada Elections Act. The court sentenced them to pay a fine of $1,000 or to serve three months in prison. It is important to note that, under Bill C-21, these loans that were not repaid would be considered political contributions after a period of three years.

In the report that he submitted to Parliament in 2007, the Chief Electoral Officer of Canada said:

The loans granted by lenders—who are not in the business of lending, who lend money at non-commercial rates, with terms that are not available to others, or in cases where there is little prospect of reimbursement—may be perceived as a means to influence the political entity to which the funds are provided.

The Chief Electoral Officer highlighted a weakness in our election financing system: lenders might try to influence political entities. That weakness had to be remedied. We have a duty and a responsibility to do everything we can to limit the influence of outsiders over political entities in this country. Bill C-21 proposes a solution worthy of consideration, and that is why, as was noted earlier, we are going to support it at second reading.

Once it is sent to committee, we will be able to improve it. While Bill C-21 means we are taking a step in the right direction, it is still in need of improvement. Yes, we support it, and I hope the Conservative Party will also be open to our solutions. For example, limiting the number of potential lenders is a good idea in theory, but in practice, problems might arise.

Take the case of financial institutions. As the bill now stands, there is nothing that provides for establishing rules that can guarantee a degree of impartiality on the part of the banks in granting loans.

Bill C-21 contains nothing that could guarantee that this process is fair to all candidates, regardless of party. The minister himself said in the past that he did not see the benefit of making the banks subject to a regulatory framework under Bill C-21. That is quite surprising to hear from the minister, because if his objective is to make the process transparent and democratic, it would be to our benefit to see this kind of thing in the bill.

Without clear rules to guarantee that the lending process is fair, we can easily imagine that the banks might be, let us say, more inclined to lend to certain candidates than to others.

That is not to say that this would happen systematically, but the risk of a bank denying a candidate a loan for political reasons exists, and that should never be the case. It is important to address that issue. Without clear rules, we are opening the door to the possibility of a bank denying a loan to a political entity on the grounds that it advocates an agenda the bank considers to be against its interests.

For example, would a bank agree to lend to a political entity that was proposing higher taxes on its profits? Perhaps; it might. The risk of it refusing based on the ideas advocated by the entity in question is our justification for making amendments to the bill. That is exactly the situation that has to be avoided.

Mr. Speaker, you will tell us that the banks are already free to grant or deny a loan to whomever they see fit. Fine. But by limiting the number of entities that are entitled to make loans, Bill C-21 places more power in the hands of the financial institutions. That power must not have an impact on candidates’ ability to finance their campaigns. That would completely defeat the objectives and the intent of the bill.

I hope that the minister and his Conservative colleagues will agree to work with the official opposition to prevent Bill C-21 from creating two classes of candidates: those who have no trouble raising campaign funds because they advocate ideas that will help banks make money, and all the other candidates.

After introducing the bill, the Conservatives issued a news release stating their intent to implement high standards of integrity in the political process. That is all well and good, but the government must work with all parties to ensure that integrity in the political process is achieved.

If that is truly their intention, why did they recently condemn public funding of political parties, which had the advantage of avoiding and eliminating any possibility of allegiance or political scandal?

It seems to me that the best way to curb private money's influence in the political sphere is to remove private money from the equation. Unfortunately, that is not the approach the government chose.

The NDP believes that any action taken to ensure that political funding and loans are as transparent as possible is a very good thing.

That is why, as another colleague said, we will support Bill C-21 at second reading. I sincerely hope that the Conservatives will be open to the changes we propose in committee, even though that has not been our experience in the past, I must say. We all have an interest in guaranteeing the independence of the people's representatives in this country. It is our duty to be above reproach, and we must prevent politicians from using their influence to obtain favours.

[Alexandrine Latendresse, NDP, Louis-Saint-Laurent, QC]

Mr. Speaker, I feel that Bill C-21 is a step in the right direction if we want to achieve that goal. Thanks to good laws already in place, such as the Elections Canada Act, money matters less in our democracy than it does in other countries.

I think that we can take more steps in that direction to create one of the most user-friendly democracies in the world, a democracy meant for people, not for members of a select group that grease their own palms and hand out taxpayers' dollars to their friends.

I think that there are many ways to improve our democracy, and Bill C-21 is one of them.

[Alexandrine Latendresse, NDP, Louis-Saint-Laurent, QC]

Mr. Speaker, since I am opening the debate today for my party, I would like to provide some background for the people who are watching us. There must be quite a lot of them this Friday morning.

In 2006, during the Liberal Party of Canada leadership race, some of the candidates took out campaign loans that they have never been able to repay in full. In so doing, they violated the Canada Elections Act.

The public will understand that those unpaid debts represent, in a sense, illegal loans. The money was used. So it represents an unfair advantage, even if the candidates were defeated or withdrew from the race.

In an election campaign, every penny counts. Everything is recorded, measured and filed. That is the surest way to be certain the electoral process is absolutely transparent and is not usurped by elements that have too great a vested interest or are too wealthy.

We can see this in a number of other countries in the world: money and power often coincide and sometimes are simply indistinguishable. Plutocracy, mafia states, tax havens and the rest are more the rule than the exception. When Canadians find themselves looking at governments like those, they shrug their shoulders and dream of Westminster parliamentarianism, as unshakable and incorruptible as the Rock of Gibraltar.

We have confidence in our democracy. Just as well, because the world is already dark enough.

Bill C-21 is one more step we are taking to make sure our system continues to be incorruptible and reliable.

Certainly, in the case of the four unsuccessful candidates for the Liberal leadership, none of it has anything to do with the forces of darkness. It is simply a case of biting off more than they could chew. The candidates borrowed more than they could repay.

When it came time to clamp down on those abuses, no one really knew what to do. I note that these events date from 2006. A lot of water has passed under the bridge since then. There have been two leaders, who have seen their party’s fortunes decline with each election. The Liberal Party has found itself, little by little, packed into the back of the House.

There is still no resolution in sight.

Recently, the Ontario Superior Court delivered a judgment convicting the four individuals at fault. The judgment says there was a violation of the Canada Elections Act, and the guilty parties have to pay a fine of $1,000 or serve a custodial sentence of three months.

I want to say immediately that I have some reservations about the seriousness of the crime, because we do have to be honest with the public, who may not have followed the case closely. The embarrassment these four candidates have experienced has been widely exploited by the Conservative Party in its never-ending war of blind hatred for the Liberal Party.

The debts of these four candidates would have been repaid long since if the rules had not been tightened just at the right time by the government, which for once demonstrated Machiavellian skill. What a surprise. Ordinarily, its big, finely orchestrated schemes are about as airtight as a Zeppelin on fire.

Political game-playing has therefore played a big role in dragging this situation out beyond all reason. Officially, Bill C-21 is an attempt to prevent abuses like this from happening again, but let us be frank: everyone was very happy to be able to heap scorn on the guilty parties for as long as possible.

Personally, I find that cruel and stupid. But in politics, it is all a game of tug-of-war. Everyone loves a good fight. Leave your flank exposed and you will be knifed. These malicious rules are so widely accepted that even the victim applauds.

It is malicious, but apparently we must accept it and make the best of it.

Fine. And so I have the honour of announcing a first. I rise today to support the government’s bill. Surprise.

I hold no illusions as to the motives that have prompted the Conservatives to tighten the party financing rules, nor do I believe that this is a particularly brilliant effort at legislating, but what can you do? It is a sort of a step in the right direction.

If my enthusiasm seems a little lukewarm, it is because I see all too well the childish political games hiding behind this bill. This is the fifth attempt the Conservative government has made since it came to power to reform party financing. It has dragged the process out long enough to entrench the offence and prevent it from being resolved.

The Chief Electoral Officer has said that any offence under the Canada Elections Act relating to financing is very difficult to punish properly. Today, we are seeing that ourselves for the umpteenth time. It all dates back to 2006, before the Conservatives came to power. The Chief Electoral Officer has even told me, and it is very clear, that the law as it is now written is “not only overly complex, it’s incoherent and ineffective”.

And we have the evidence of that as well. Eight years later, nothing has been done. The Chief Electoral Officer has repeatedly asked Parliament to resolve the many problems associated with the law regarding loans.

As my colleague the parliamentary secretary said just now, one of the biggest changes proposed in Bill C-21 would amend the limit on donations by individuals during leadership races. At present, because of the way the system is designed, people may contribute only once per leadership race. Under the proposed changes, those limits would apply on an annual basis.

These are probably the changes that will help the people who still have debts at present the most.

Again, as my colleague said earlier, Ms. Findlay, who took part in the Liberal leadership convention, has even said that under the new changes proposed by Bill C-21, she would be able to pay off her campaign debt in three days. That would in fact be surprising, given that it has been several years since those loans were taken out.

We believe it is important to make changes to this act, because everyone is calling for them. We know it is badly designed, it is badly formulated, and it generates a host of problems when it comes to political financing.

The Conservative Party can feign indignation at the Chief Electoral Officer if it likes and call for the act to be enforced, but everyone knows that at the end of the day, they are very happy to be able to torture the four guilty parties and use that back door to strip their old adversaries of all possible merit while they are down.

We believe it is very important for these changes to be made as quickly as possible and for the little political games to end. There is a lot of talk about that leadership convention in particular, because the debts incurred are still enormous. But still, they are not the only ones. We are talking about 80 candidates, 21 of them Conservatives, who still have debts they have not paid off because the law was too badly designed. The law regarding political loans really has to be changed.

There are several points in Bill C-21 that need to be examined. We in the NDP have decided to support the bill so it can be sent to committee, so we can look at each of those points properly, and so we can go ahead and make changes that are not just desirable, but absolutely necessary, because as it now stands, this act is not satisfactory. That is why I recommend that our party support this bill at second reading.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, I thank my colleague, the minister responsible for democratic reform, not only for the question but for his leadership on this file and for introducing Bill C-21 to begin with.

He has asked a very good question. I think I referenced in my speech that Canadians have many concerns regarding the entire political process. Some Canadians feel there are too many loopholes which allow politicians from all sides of the House an opportunity to abuse existing rules when it comes to political financing and political loans.

This bill goes a long way to giving the general public the needed assurance with respect to financial transactions when dealing with leadership campaigns that contribution limits, et cetera, will be adhered to, because Bill C-21 does close a number of loopholes. I mentioned the most obvious. Bill C-21 will prevent individuals from lending money to candidates. That has been the biggest source of abuse that we have seen.

In past leadership campaigns, in opposition parties in particular, we have seen a steady pattern of wealthy individuals lending several thousands, and in some cases, hundreds of thousands of dollars to a leadership candidate with no obligation for the candidate to repay the loan.

I say “loan” very suspiciously because if there was an agreement at any time between a candidate and a lender, where the lender said, “I will give you $100,000 for your leadership campaign and don't worry, brother, you'll never have to repay it, because I'll simply write it off”, it would not be a loan; it would be a contribution. That would seriously violate the current election financing and Elections Canada laws with respect to contributions to candidates.

We want to see that potential abuse stopped. Bill C-21 does exactly that. It closes the loopholes that have existed for far too long.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, the reality is that we have been trying for well over a year, since Bill C-21 was first introduced, to get agreement from both opposition parties. We had agreement from the official opposition for many months. It wanted Bill C-21 to go forward.

The difficulty was trying to get agreement from the Liberal Party. I do not know the rationale behind why the Liberal Party did not want Bill C-21 to come forward for further debate but that is the reality. Finally, as I mentioned two days ago, the Liberals indicated to us that they would be willing to support Bill C-21 to at least send it to committee.

We would have had Bill C-21 at committee many months ago if we had agreement from the opposition parties that they would support it. Even though we have a majority, the reason their support is necessary is that House time is very valuable and we do not want to introduce bills that will be delayed unnecessarily by filibusters, amendments and hoists, all of which are available technically and from a procedural standpoint to the opposition parties to delay passage of a bill.

Rather than trying to delay House proceedings by introducing Bill C-21 when it would not get support from the opposition parties, we kept trying to negotiate behind the scenes with them, to ask them to let us know when they were finally ready to offer their support. We got that acceptance on Bill C-21 two days ago. It is introduced today. I fully expect debate to conclude today, which means we will probably be voting at second reading next week.

We want Bill C-21 to be passed. We have wanted it since we introduced it. Now that we finally have support from the opposition parties it will go forward.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, in answer to the first question about loopholes, I would not want to suggest there are no loopholes. That is why bills have to be examined carefully at committee.

However, there is something that the committee, during its examination of Bill C-21, should consider. As written, Bill C-21 states that if candidates at the local riding association level fail to repay any debts they incurred during their candidacy, the registered association or party would then be responsible for their debts. That is a good thing, so there cannot be any debts written off at the local level.

Bill C-21, however, does not provide for any debts incurred by leadership candidates of a registered federal party to be backstopped by the federal party. In other words, if someone runs for the leadership of the Liberal Party, and we know that the Liberals will be entering a leadership campaign shortly, whoever wins that campaign is obviously going to incur some debt. All candidates do. If the candidate becomes leader of the Liberal Party and still has unpaid debt after several years, Bill C-21 does not allow, or does not oblige, the federal Liberal Party to pay that debt. It does at the local level but not for leadership candidates at the federal level.

We may want to examine that at committee to make the same provisions at the federal leadership level as we do at the candidate level.

With respect to whether it is retroactive, right now leadership candidates from 2006 in the Liberal campaign have this debt encumbrance. Bill C-21 would allow the new rules to come into effect for existing debt, but everything else would be on a go-forward basis. Bill C-21's provisions would only apply after it comes into effect, with the one exception being existing debt.

[Tom Lukiwski, Conservative, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, it is a pleasure to resume debate on Bill C-21. I last spoke to this bill in December of last year. Unfortunately the time was not sufficient for me to complete my presentation, so I would like to continue, but before I do, I would like to point out a few elements of Bill C-21 that I spoke to in December.

It is very important for all members to understand the reasons Bill C-21 has been introduced and some of the elements of the bill that will make the political loans regime a much more fair, open and transparent process for all parties and for all candidates.

Without question the rationale for Bill C-21 and its genesis came as a result of the 2006 Liberal leadership campaign. As most members know and most Canadians know, there were several candidates who contested the leadership for the Liberal Party in 2006 who still have outstanding debts, in some cases, several thousands of dollars of debt. In fact there is one sitting MP, the member for Vancouver Centre, who was a nominated candidate for the leadership of the Liberal Party who has still yet to repay her debts.

We believe that to be absolutely unacceptable. Bill C-21 would remedy that.

I also want to point out that Bill C-21 will prevent individuals from lending money to leadership contestants. That is important because in the past there have been abuses of the loans regime. Let me give an illustration. Under the regime that we are currently working with, a wealthy individual, friend or relative could lend money to a leadership campaign candidate and have absolutely no realistic expectations of that loan ever being repaid. In fact, there could be times when an agreement would be struck between the lender and the candidate, and the lender would assure the candidate that he or she would never have to repay the loan because the lender would simply write it off.

If that happened, it would be a clear abuse of the political loans regime and a clear abuse of the rules. Yet there is nothing under the current Elections Act provisions to prevent that from happening. If that happened, the so-called loan would in fact not be a loan at all. It would be a donation. It would be a contribution and there are laws and rules in place to prevent contributions from exceeding a certain limit. In order to prevent that type of abuse from occurring, Bill C-21 will prohibit individuals from lending money to leadership candidates.

In future, after Bill C-21 is adopted, only registered financial institutions, whether they be chartered banks, credit unions, caisse populaires, trust companies, et cetera, will be allowed to lend money. In addition, those institutions, as is the normal practice, will have to openly transmit their practice of lending, the interest rate, the terms of repayment and all other information that should be in the public purview and in the public domain.

Bill C-21 will bring into force provisions that will increase accountability and transparency. Overall it will give the public the assurance that there are no abuses in the leadership or any candidate's campaign. I say that because Canadians have told us loud and clear that they do not agree from time to time with the regime of political donations exceeding the Federal Accountability Act levels.

However, abuses have occurred. I think all of us here can point to at least one or two examples where abuses have occurred, and unfortunately, the Chief Electoral Officer and Elections Canada are prevented from doing anything meaningful to stop them. Bill C-21 would do exactly that.

There are a few other provisions in Bill C-21 that are not only timely but would assist all candidates in a leadership contest from incurring these debts, or at least would assist them in the repayment of their debts.

We have read media reports recently where one of the candidates in the 2006 Liberal leadership campaign, Ms. Martha Hall Findlay, has stated that because of the current rules she has found it difficult if not outright impossible to repay her debt, which she still has six years after she ran for the leadership of the Liberal Party.

Ms. Hall Findlay says the reason it is difficult to repay the debt is that under the current provisions donations from individuals to a leadership candidate may only be given on a per-contest basis. In other words, since Ms. Hall Findlay ran for the leadership in 2006, her supporters who wanted to give the maximum contribution allowable, roughly $2,100, could only do so once because the rules say a person can only give one donation to one candidate for one contest.

Bill C-21 would change that so that individuals could give contributions to a leadership contestant on an annual basis. In fact it would allow existing debts to be paid off by allowing the same contributor to donate yearly to the maximum amount. This would assist candidates like Ms. Hall Findlay and others who have existing debts to pay off their debts.

In fact, Ms. Hall Findlay has stated publicly that if the provisions of Bill C-21 were in force today, she would have her existing debt paid off in three days. I am not sure if that is an exaggeration or not, but we will see when Bill C-21 comes into effect how quickly Ms. Hall Findlay and other outstanding debtors pay off their debts.

Finally, in the limited time that I have, I want to refute a political argument, or at least a political piece of rhetoric, that has been coming from the Liberal Party lately. It suggests that our government has delayed bringing Bill C-21 forward because we want to let those leadership candidates from 2006 continue to twist in the wind. Nothing could be further from the truth.

We have continually, over the last several months, asked the opposition parties to give their tacit approval to Bill C-21 so we could debate it, send it to committee, after which speedy passage would then ensue. Until two days ago, we had not had that agreement. However, on Wednesday of this week, after several months of trying to get agreement from the opposition parties, we finally got their commitment to allow Bill C-21 to go forward with their support.

That is why today we are hoping the debate will end and Bill C-21 will be voted upon at second reading to send it to committee. We want Bill C-21 to come into effect. I know all Canadians support it. Hopefully, the opposition parties will as well.

The House resumed from December 8, 2011 consideration of the motion that Bill C-21, An Act to amend the Canada Elections Act (accountability with respect to political loans), be read the second time and referred to a committee.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, I thank the House leader of the official opposition for his kind comments about co-operation. It is true that we have been working together in a co-operative fashion on the bills he mentioned. In fact, without utilizing time allocation, after nine days of co-operative debate on things that everybody agrees on, we have been able to have one vote on one bill at one stage. If members wonder why it is difficult to get things done, that indicates why: we all agree on something and it still takes nine days to get one bill to one vote at one stage.

Anyway, this afternoon, we will continue with our helping families in need week with second reading debate on Bill C-44, which will undertake several steps to help hard-working Canadian parents in times of need.

Based on discussions, I expect that we will finish debating Bill C-44 today. If so, I will then call Bill C-21, An Act to amend the Canada Elections Act (accountability with respect to political loans), tomorrow.

I understand that there is interest in all corners of the House to see this legislation referred to committee quickly. I hope so, because I believe that all parties want it passed. We may be able to make that happen.

Next week we are going to focus on making our streets and communities even safer. From Wednesday through Friday we will consider second reading of Bill C-43, the faster removal of foreign criminals act, which will firmly show that Parliament does not tolerate criminals and fraudsters abusing Canadian generosity.

On Monday and Tuesday, we shall have the third and fourth allotted days. Both days will go to the official opposition. I am eagerly waiting to see what we debate those days. Perhaps the New Democrats will use the opportunity to lay out their details for a $21 billion carbon tax which would raise the price of gas, groceries and electricity. Perhaps I should correct the record; it would be a $21.5 billion carbon tax. I know there are some in the press gallery who want us to be precise about that.

If we have a hard-working, productive and orderly week in the House which sees debates on Bill C-44, Bill C-21 and Bill C-43 finish early, the House will also consider second reading of Bill C-37, the increasing offenders' accountability for victims act, which the official opposition supports, despite debating it for four days last week; Bill C-15, the strengthening military justice in the defence of Canada act; Bill S-2, the family homes on reserves and matrimonial interests or rights act; and Bill S-8, the safe drinking water for first nations act.

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

Mr. Speaker, last week on the Thursday question we asked the Leader of the Government in the House of Commons to respond to a sincere offer by the opposition to make Parliament work for Canadians by listing a number of bills on which the opposition was willing to work with the government. In response to that question, the government House leader spent a great deal of his time fabricating New Democratic Party policy rather than doing the job of House leaders, which is to formulate a strategy to make this place function for Canadians.

If the government spent at least 50% of its energy working with the opposition on such bills, it might acknowledge the progress on such bills as Bill C-42, Bill C-21, Bill C-44, Bill C-37, and Bill C-32. They are proof of the opposition's willingness to make this place function for Canadians. They also disprove the myth that the government had to use closure out of necessity rather than its own ideology and perspective of how a democracy ought to run.

The clear question in front of the government is twofold. When will we see the opposition days in the coming calendar for the official opposition? Also, a question which is on the minds of many Canadians with respect to a second budget implementation bill is, will we see a repeat of the one we saw in the spring? Many people called it a Trojan horse bill because it contained many measures that had absolutely nothing to do with the budget.

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, first, let me formally welcome back all hon. members to the House of Commons from their productive summers in their ridings, which I trust they had, working with and listening to constituents.

On the government side of the House, we heard loud and clear that the priority of Canadians remains the economy. It is our priority too. Not one person raised with me a desire to see a $21 billion carbon tax implemented to raise the price of gas, groceries and winter heat. I do not expect the member will see that in our agenda.

I also want to extend a warm welcome, on behalf of Conservatives, to this year's class of pages. I am certain that their time with us, here in our hard-working, productive and, I hope, orderly House of Commons, will lead to lifelong memories.

Yesterday, we were able to pass Bill C-42, Enhancing Royal Canadian Mounted Police Accountability Act, at second reading. I want to thank hon. members for their co-operation on that.

I am optimistic that we will see similar co-operation to allow us to finish second reading debate tomorrow on Bill C-37, Increasing Offenders' Accountability for Victims Act, which the hon. Leader of the Opposition talked about.

This afternoon, of course, is the conclusion of the New Democrats' opposition day. As announced earlier this week, Tuesday will be a Liberal opposition day.

On Monday, the House will start debate on Bill C-43, the faster removal of foreign criminals act. This legislation would put a stop to foreign criminals relying on endless appeals in order to delay their removal from Canada and it sends a strong signal to foreign criminals that Canada is not a safe haven. I hope we will have support from the opposition parties for rapid passage of the bill designed to make our communities safer.

Starting on Wednesday, the House will debate Bill C-44, the helping families in need act. Once the opposition caucuses have met to discuss this important bill, I am confident they would want to support the early passage of this legislation as well. It would enhance the income support provided to families whose children have been victims of crime or are critically ill.

If we have additional time tomorrow or next week, the House will consider Bill C-15, the strengthening military justice in the Defence of Canada Act; Bill S-2, the family homes on reserves and matrimonial interests or rights act; and Bill S-8, the safe drinking water for first nations act.

We are interested in Bill C-21, which deals with accountability for political loans and making that consistent with the other political contribution provisions. If we have a consensus among parties to bring that forward, we will certainly do that.

Similarly, if we can see a consensus among parties on passing Bill C-32 as it has been presented to the House, we would be pleased to do that on unanimous consent.

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

Mr. Speaker, I welcome my hon. colleague across the way back to this session. It is as boisterous as when we left it.

In an effort to provide some hope for Canadians that Parliament can work together, my Thursday question this week cites legislation that the NDP, the official opposition, would be keen to work with the government in getting these bills to committee stage. I will name them specifically and see if my hon. colleague can make some mention of them: Bill C-21, political loans; Bill C-30, the lawful access, which has only five more hours of debate until it goes to committee before second reading; Bill C-32, the civil marriage act; and Bill C-37, the victims surcharge act.

The opposition is interested in working with the government to see all of those go through to committee stage and seeks to start this parliamentary session in a hopefully more productive tone than the one that we ended with last session.

41st General Election

[Judy Foote, Liberal, Random—Burin—St. George's, NL]

Mr. Speaker, the government claims to care about political financing, pointing to Bill C-21, but its interest seems to stop when it comes to the riding of Vaughan. Three former members of the Conservative association there have each sworn an affidavit alleging that the Associate Minister of National Defence as a Conservative candidate kept two sets of books: an official one and a secret one that was used to bankroll nine other Conservative riding campaigns.

The government denies everything. Is it in fact accusing three Conservative supporters of perjury?

Political Loans Accountability Act

[Tom Lukiwski, Conservative, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Madam Speaker, I think we have had a meaningful debate this afternoon. I know that we will end up agreeing to disagree on a number of points.

I am completely supportive of Bill C-21 and the elements contained therein. In the limited time that I have, I want to point out a few of the reasons, but I also want to use my time to try and refute some of the arguments that I heard from members opposite as to why they seem to disagree. Perhaps I will start there, because we only have about 10 minutes left before the debate has to end.

I have heard from a couple of members opposite that they believe individuals should also have the right to lend money and that moneylending should not be restricted to financial institutions. The bill came into play because of the situation where wealthy individuals could lend money. We have seen many times in the past where supposed loans have been given to political candidates and were never repaid. That is simply unacceptable. The potential and probability for abuse under the current situation without Bill C-21 is extremely high.

The situation, quite frankly, is simply this. As it stands now, any individual could be in a position where he or she knowingly lent money to a political candidate with no expectations of repayment. It is quite conceivable that individuals could have consulted with a candidate and agreed upon a mechanism by which they could circumvent the rules, by lending a certain amount of money with very favourable interest rates, as low as 0%, and basically nudge, nudge, wink, wink, told a candidate not to worry about ever repaying it because it is a loan and the lender will end up writing it off or forgiving it. That is not a loan. That is a contribution. That is a donation.

As a government we need to step in to ensure that the potential for that abuse is completely eliminated. Bill C-21 would do exactly that. It would put provisions in place which would prevent anyone from trying to circumvent the rules again.

We have heard many times before, in committee and in debate this afternoon, some of the problems with the 2006 Liberal leadership campaign. Like my colleague from Hamilton Centre I will try to be as non-partisan as possible, but it was because of the abuse that we saw and still see as a result of unpaid loans from that leadership campaign that our government felt that some bill had to be introduced to prevent that type of situation from occurring again. Bill C-21 would do that.

I also want to point out that despite the protestations of members opposite, borrowing money from financial institutions does not empower those financial institutions. It does not give them a monopoly over political financing. It does not give them any untoward power to influence political parties or candidates. It is simply a commercial transaction that we as Canadians deal with on a daily basis. Whether Canadians secure a mortgage for the purchase of a house, whether they secure a loan to purchase a car or a heavy appliance and so on, they have been using financial institutions to secure loans for generations.

I do not believe that any financial institution, by lending money, whether it be $10,000, $20,000, $30,000 or $40,000 to a political candidate or a political party, would feel that it had some undue influence over that candidate because it entered into a commercial transaction. It is simply not true. In my view it is silly. This is a normal daily activity that most Canadians perform and have performed for the last 200 years, as long as there have been chartered banks in the world. We need to discount the argument completely that suggests financial institutions would have more influence over political candidates and therefore we should allow citizens to make loans.

What we are trying to achieve with Bill C-21 is to ensure that there is accountability and that there can be no circumvention of election financing rules by disguising contributions as political loans. The financial institutions would be obliged, as they are obliged in daily transactions with Canadians, to provide clear terms for both the rate of interest charged on the loan and for its repayment, something that we saw sorely lacking in the 2006 leadership campaign for the Liberal Party. Five years have gone by, and some of those loans still have not been repaid. That is not a loan, in my view, but a contribution, and it should not be allowed.

With Bill C-21 we would not only be putting in clear, transparent rules that would make candidates and political parties accountable; we would also be giving confidence to the Canadian electorate that there will be no funny business or circumvention of rules, and that everything will be done in a transparent, accountable manner acceptable to Canadians.

One of the consequences of Bill C-21 is that if there are unpaid loans, the political parties themselves, whether as riding associations or federal parties, would be responsible for backstopping those loans and repaying the money. We have yet to see any activity by the Liberal Party of Canada in this regard. Has the Liberal Party of Canada stepped up to the plate and said it has a number of unpaid loans from some of its former leadership candidates back in 2006, that it does not think such a situation is acceptable, that it is going to repay them right now and then make its own arrangements with those leadership candidates to reimburse the party? I have seen no evidence and heard no discussion to that effect in this debate.

Members opposite in the Liberal Party have stood in this place this afternoon and said that they want accountability and transparency, but they believe that they can still play fast and loose with the rules. Where is the accountability when the once great Liberal Party that governed this country for many decades now does not even want to speak about repaying loans that some of its leadership candidates incurred?

We are not talking about candidates from a local riding association who might have been defeated in an election; these individuals tried to become leader of the Liberal Party of Canada and the next prime minister of Canada, yet that party refuses to be accountable for the debts incurred by its candidates. Instead Liberal members stand here this afternoon and criticize our government for this bill, which is trying to bring accountability and transparency to the political process.

I do not care what arguments they bring forward at committee. I will be there to ensure that I have a question for them: as a party, what do they plan to do about the unpaid loans? What happens if another five years go by? Will they still be advancing the same arguments as they have this afternoon? It is totally unacceptable.

Had we not seen the rampant abuse by the Liberals, we might not have seen the need for Bill C-21. Nonetheless, it is before us. It is a worthy bill, and one that deserves support from other parties.

I understand and appreciate the comments made by my colleague from Hamilton Centre that he wants to discuss this at committee. I would certainly be more than willing to entertain suggestions. I will certainly not commit that I would accept any of his suggestions; I have heard some of the arguments, I understand what he is going to be advancing at committee, and I think that is worthy of debate, but on its own merits Bill C-21, as it stands, deserves the support of all members in this place.

I know it has the support of all Canadians.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

Madam Speaker, although the Liberal opposition agrees with a number of the aspects of Bill C-21—I am going to repeat my sentence from the beginning because the minister was not listening.

Although the Liberal opposition agrees with a number of the aspects of Bill C-21 to amend the Canada Elections Act in terms of accountability with respect to political loans, we cannot support the bill in its present form because it contains a major defect. It gives financial institutions exclusive political authority that they should not have, that they do not want, and that will have the effect of discriminating against a large number of people, especially women. I first want to highlight the aspects we support, then the ones we do not support, before I propose a constructive amendment.

We support any legislative measure that seeks to ban the hidden power of money in politics. We also support any legislative measure that provides greater fairness and greater transparency in making loans for political purposes.

The Liberal Party strongly supports efforts to increase fairness, transparency and accountability in the electoral process. After all, we are the party that initially passed legislation limiting the role of corporations and unions in electoral financing and lowered contribution limits.

No loans should be made in secret and Canadians should not be kept in the dark. This is why under current legislation the details of all loans, including amounts and names of lenders and guarantors, must already be disclosed publicly.

We agree that all loans to political entities, including mandatory disclosure of terms and the identity of all lenders and loan guarantors, must be uniform and transparent. These rules should encompass loans, guarantees and suretyships with respect to registered parties, registered associations, candidates, leadership contestants and nomination contestants.

Thus we agree that financial reporting should be as transparent as possible, which is why we support clauses 5, 11, 25 and 32, which require disclosure of information regarding loan amounts, interest rates, lenders and dates of repayment.

However, we also favour transparent rules that guarantee the right and ability of all Canadians to run for office. It is a fundamental principle of democracy that all Canadians of voting age must have the opportunity to run for office.

In consequence, financial institutions should not be put in the position to decide who can run for office. Yet the bill would give financial institutions too much power to decide who would receive political loans, a power that would expose them to accusations of politicization and discrimination, real or perceived. Making banks the sole lending authority under clause 7 could potentially limit participation in federal politics to only those who would be able to gain credit from a financial institution, as defined under the Bank Act.

It would be a serious mistake to limit to financial institutions alone the ability to make loans beyond the annual contribution limit for individuals.

It would be a mistake to enable these companies to play a political role in deciding who would receive loans and the ability to marginalize certain applicants who did not fit particular criteria, or to discriminate against them.

Bill C-21 gives financial institutions a monopoly on decision-making that is completely contrary to the democratic values and principles of Canadians who do not want access to public services to be linked to a prospective candidate's financial status.

There is a fundamental difference between asking for donations or loans from people by appealing to their sympathy for the ideas or the qualities of a prospective candidate and lining up at a counter in a bank where strictly commercial lending policies are applied. You do not buy your way into a life of public service in the same way that you buy a washing machine or a snowmobile. We must not give Canada's financial institutions a political weight that they should not have and that they do not want, an unprecedented role that is dangerous on several levels. The role is dangerous for the institutions themselves. They are at risk of being accused of political favouritism or of discrimination in one direction or in another, either by turning a candidate down for a loan, or by approving one. They are damned if they do and damned if they don't, as the saying goes.

That is indeed a risk that financial institutions cannot allow themselves to take in these troubled times, when the financial sector is under the glare of the media and the scrutiny of citizens and a whole host of political and socio-economic groups. The reputation, independence and freedom of action of these financial institutions are essential to the proper functioning of our economy, our society and our democracy. The exclusive power that Bill C-21 grants them thus presents a twofold problem, a problem of perception and a real risk, the danger of politicizing our financial institutions and a risk of discrimination involving these loans.

Let us for a moment look at the criteria the banks would use to determine which candidates they would or would not lend money to. They could use a purely financial criterion based on the personal solvency of the candidates, which would favour the rich to the detriment of everyone else; or they could do a risk assessment based on the political probability that the candidate would obtain sufficient support, which would translate into a sufficient number of yearly contributions of less than a $1,000 in order to reimburse the loan. What this means is that we are asking financial institutions to make political judgments. Those institutions could even assess the probability of the candidate getting elected, and see that outcome as increasing his or her solvency. With all of this, we would be politicizing our financial institutions.

Let us now look at the problem of discrimination.

The bill would disadvantage lower income candidates who did not have the necessary credit history to receive loans. It would discriminate against people based on income and credit rating therefore favouring the rich and excluding many people from public service, notably many women, youth, newcomers and minorities in general.

Let me reiterate this. The lack of credit could potentially prevent not only low or middle-income Canadians, but also many women, aboriginal people and new immigrants from standing for office. The size of a wallet or bank account should not be an impediment to prospective candidates.

This is particularly worrisome as it applies to women.

This bill would disadvantage women candidates who had left the workforce for a period of time, resulting in a fluctuation of their financial status. The United Nations has stated that a critical mass of at least 30% women is needed in order for legislators around the world to produce public policy that represents women's concerns and for political institutions to begin changing the way they do business.

According to Equal Voice, Canada falls behind this standard. Despite enjoying economic prosperity and political stability, Canada has fewer women in Parliament than most of Europe and many other countries in the world. In Canada's Parliament, just about 24% of MPs are women. This places Canada 40th in the world on the Inter-Parliamentary Union, “List of Women in National Parliaments”. For Canada, 40th is not acceptable.

Further, Equal Voice notes that women encountered many barriers in seeking elected office at all levels, including lack of access to finances. This is the basic point. Restricting access to loans by financial institutions could disadvantage and create a new barrier to women entering politics.

This House should not do anything that would hinder women's success in politics. On the contrary, this House must do everything it can to promote women's successful participation in politics.

To conclude, the Liberal caucus strongly argues for full transparency and disclosure of political loans.

However, we are opposed to the idea of having financial institutions be the only ones that can grant loans in the political arena. That possibility must also be given to citizens, as long as transparency is made the hallmark of those loans. After all, it is much more legitimate for citizens than for banks to grant loans of a political nature, in keeping with their political convictions, and their confidence in the values or political credibility of a given candidate. We would be in favour of an amendment requiring that these individual loans only be granted at commercial interest rates.

I hope that this constructive proposal from the Liberal opposition will be well received by the government so that we can make our democracy more transparent and more open to everyone.

[Tom Lukiwski, Conservative, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Madam Speaker, it is always a pleasure to listen to comments from my colleague from Hamilton Centre.

I have to reciprocate. Not that this was supposed to turn into a lovefest here, but I do appreciate the work that the member for Hamilton Centre has produced at committee. In discussions, we are not always on the same page. We end up, from time to time, agreeing to disagree. I do believe that the member has the best interests of this bill at heart when he says that he believes there should be some changes.

I do not think I am going to end up agreeing with him on some of those points, but I do want to make a comment and ask the member to comment on one of the points he made that did not directly deal with Bill C-21.

The member talked about the need for public subsidies, public financing of political parties. I believe that we do not need that. We have so many other avenues through which the public can receive benefit. For example, as we all know, anyone who contributes $400 gets a 75% tax credit. There are also rebates to political parties and candidates.

I believe one of the fundamental aspects of democracy is, if people are running for political office, they should find support from like-minded people who wish to provide financing because they believe in the candidates and the democratic process.

I would ask my colleague to comment on that, please.

[David Christopherson, NDP, Hamilton Centre, ON]

I told you, Madam Speaker. They are a little slow off the mark. They should have been quicker on that one.

I want to say to the hon. members across the way that I participated in an election observation mission in Morocco in the last few weeks. What is one of the most important things to the people of Morocco? It is a struggling, emerging democracy in northwest Africa. One of the most important components they felt they needed was subsidies for political parties from the public purse to level the playing field.

When the government talks about a level playing field, it is often like we all have the right to live under the bridge, that old example. When we stand back and look at the macro picture, at the end of the day, money will play a bigger role in Canadian politics after the government than it did before. That is wrong.

I have given, at every opportunity, former Prime Minister Jean Chrétien as much credit as possible. I think the president of his own party used the expression, that was about as dumb as a bag of hammers. Why? Because the Liberals used to get all their funding from corporations. That was to be set aside, in large part, and replaced with the subsidies.

That was a good thing to do. It did make our democracy better. I have had the chance to participate in six or seven election observation missions. Anyone who is involved in elections around the world either has that component, or the one thing they desperately want is to get private money out of their political system and replace it with public funding. They are either doing this because they know it is important, or they want to because they know the damage and corrosiveness that money can play in a democratic system like ours.

My next comment will be on the same quote, when the minister used the word “accountability”. I love this. When the Conservatives say that word a lot, I want to bring into the broader discussion, to put the context of Bill C-21 in a more enlightened form, that under their new elect-the-senator bill, there is no accountability.

In fact, the senators would be prohibited by law from being accountable because they would run on a platform of promises, as we all do. They would serve nine years, which we do not. If we look at the model all of us here live by, if we want to stay in office beyond our term, we go back to the people and say, “Here are the promises I made. Here is what I did, what I said, how I voted. Now I ask you, my boss, how did I do, and do I deserve to get rehired or re-elected for another term, yes or no?”

However, elected senators, and I use that term loosely, would be prohibited by law from running again after nine years. Where is the accountability? There would be no accountability at the beginning, only promises. There would be no accountability in the middle. They would not even have constituency offices so they would not even be meeting Canadians, never mind being accountable. At the point when they should go back at the end of their terms, they would be prohibited by law from running again. Where is the accountability?

The minister also said in that same quote, “integrity”. That is pretty rich, coming from the party that gives us the current Minister of National Defence.

The last point is on the Conservatives' use of “transparency”. We do not need to look any further than today's question period and the Canada-U.S. border plan. We do not even know what is in the plan. It may be taking away massive amounts of Canadians' rights.

I raise all of that because the minister sets all these standards and uses these lofty words in his news releases. When we start to analyze piece by piece what the government is doing, it is undemocratic reform on a whole host of files. The words “accountability, integrity and transparency” are the last ones that Canadians are thinking of when they look at the actions and the agenda of the Conservative government.

I will end there. We are in support of closing the loophole. However, we think that there is some improvement needed to make our system stronger.

We have some serious concerns about having banks and other financial institutions as the only ones that can provide capital, with no requirement to actually provide it to all parties no matter what the circumstances. That is a huge problem, but it is solvable. I believe, if we wanted to, we could find ways to bring in conditions that would be acceptable to everyone concerned and make that aspect even fairer.

We hope that we can do something about the requirements for 20 or 30 people to get that initial line of credit. Here is one idea. One could be allowed to spend up to a certain percentage of the maximum. If one's limit were $100,000, one might be allowed to borrow up to $40,000 or $50,000 on the signature or collateral of the candidate.

I am sure we could find a regime that would still meet the goals of the government to level the playing field in terms of money, but also to make sure that our election laws apply equally across the country. The laws should not give an advantage or disadvantage to one's opponents in a general election or byelection.

If these concerns are not resolved, then there is no guarantee what position we will take at third reading. However, with those caveats, we are prepared to support the bill going to committee.

I hope the minister will allow us the same flexibility and tone that we had when we reviewed the previous bill, which we are voting against. The process at that committee was certainly as fair as I could have hoped for. At no time did I feel that the government was using a hammer to shut down democracy. I hope that we can look forward to the same relationship at committee on this bill. I hope we can make the improvements we need as well as look at other improvements to make it even better.

I always say that on bills like this, the ideal would be if we could all be standing in support of it. Would that not say a lot about a good piece of election law?

That is our goal; that is our position. We will see what happens.

[David Christopherson, NDP, Hamilton Centre, ON]

Madam Speaker, for the most part, the official opposition is generally supportive of the general direction of this legislation. It is our intent at this point, unless we have reason to change our opinion, to support the bill at second reading and send it to committee. It is at committee where I would like to pose my question.

I do not know whether the minister knows or not from talking to his predecessor, but discussions were held in the last minority Parliament when the government was looking for our support to carry this legislation. One of the areas that was a problem in that draft legislation, and it remains a problem in the bill, was the treatment of loans for riding associations once they had a candidate, and I will use myself as an example.

Mine is not a rich riding in terms of demographics. We always have to borrow money through a line of credit and it always takes us the whole term to pay it back. We seem to pay it off just in time to get another line of credit for the next campaign. That is just the nature of my riding, because it is made up of mostly working people who do not have a lot of money to contribute to politicians. They contribute what they can but it is not a lot.

If I am interpreting Bill C-21 correctly, we will be in a situation where to get a $20,000 line of credit, after a candidate has been chosen and the election is either about to be called or has been called, it will take 18 to 20 people at a contribution of $1,100 each, because that is the maximum, to back it up. Given that it is a political loan, banks often want dollar for dollar collateral. Using the round number of 20 people, that is a lot in terms of contributions. That money is then tied up for the campaign and cannot be contributed.

Is the minister willing to roll up his sleeves and look at making some changes in this area?

[Tim Uppal, Conservative, Minister of State (Democratic Reform)]

moved that Bill C-21, An Act to amend the Canada Elections Act (accountability with respect to political loans), be read the second time and referred to a committee.

Mr. Speaker, I am pleased to have this opportunity to continue with our democratic reform week and begin the debate on Bill C-21, the political loans accountability act. The bill is another one of our government's long-standing commitments and I am happy we are moving forward on it today.

As we have shown with previous bills, our government is pursuing a principled agenda to strengthen accountability and democracy in Canada. In this case, we are addressing the rules respecting loans to political entities.

Currently, there are no limits on loans that corporations, unions, or wealthy individuals can grant to political entities. It is unacceptable that the political loans regime does not meet the same standards of transparency, accountability and integrity expected of the average Canadian. Hard-working ordinary Canadians are expected to pay back loans under strict rules, whether it is for starting a business, going to school, or purchasing a home, and the same rigorous standards should also apply to politicians.

As it stands, there is a loophole in political financing legislation. We are addressing the loophole with this bill.

Our government, in its first bill in 2006, established strong standards for political contributions in the Federal Accountability Act. The act eliminated contributions by corporations and unions. It changed the rules to ensure that politicians would not be beholden to those with deep pockets and unions or corporations that give too much money. However, our law still allows those with deep pockets to lend too much money. The rules concerning political loans should be consistent with the rules for political contributions.

One major issue regarding the treatment of loans in the Canada Elections Act is the loophole in the current standards that fails to impose restrictions on the source and the amount of political loans in a way that is consistent with the rest of the rules for political financing.

A second important issue that our government seeks to address is the inconsistency in transparency requirements for political loans. As it stands, the inconsistencies on how political loans are treated unduly complicate the enforcement of the Canada Elections Act and do not provide for consistent transparency across the Canadian political finance regime.

This lack of rules may result in loans being used as de facto contributions. Clearly, it is a situation where politicians could be beholden to those who lend them large sums of money instead of being beholden to those who brought them into office with votes. This is unacceptable.

By limiting the amount of a loan a candidate or another individual can make to fund political activities, the political loans accountability act would increase integrity in the political loans process by ensuring that all candidates are on a level playing field, regardless of their personal wealth or their connections with elite interests.

The bill would also ensure that members of Parliament are accountable to their constituents first by removing the opportunity for undue influence by unions and corporations on elected representatives.

However, the bill would also ensure that parties, associations and candidates will continue to be able to secure sufficient financing for their electoral campaigns. Political entities will be able to borrow money from a wide range of financial institutions, including trust and loan companies, credit unions and insurers.

The bill is consistent with a recommendation from the Chief Electoral Officer of Canada. It reflects a legal approach to political loans already in place in several provinces, including Ontario, Quebec, Manitoba, Alberta, and Newfoundland and Labrador.

To fully highlight the practical benefit of our proposed measures, I would like to discuss some of them in more detail.

The Federal Accountability Act established fixed contribution limits for individuals and completely eliminated contributions from corporations, unions and associations.

Following the passage of our flagship Federal Accountability Act, the Standing Committee on Procedure and House Affairs asked the former chief electoral officer to prepare a report on political financing issues with recommendations respecting the use of loans.

The Chief Electoral Officer's report was submitted in January 2007 with respect to the existing rules on political loans. He acknowledged that:

While Parliament has imposed an extensive regime to control the source and extent of contributions, it has not done so with respect to that other source of funding constituted by loans.

The Chief Electoral Officer suggested that loans to political entities by lenders that were not in the business of lending ought to be restricted, because such loans granted at non-commercial rates at terms and conditions that were available to the general public and without expectation of repayment may lead to the perception of abuse and undue influence by those with the financial means to grant these loans.

To prevent such abuse or unfair influence by those wealthy entities with the ability to make large loans or any perception of it, the Chief Electoral Officer made the following recommendations: that the limit on loans be made by individuals should be to their contribution limit; that political entities may borrow money in excess of the contribution limit only from financial institutions; that all loans by financial institutions be at commercial rates of interest; and that a separate regime for the treatment and reporting of loans be established in the act.

In response to these recommendations, our government introduced the political loans accountability act, which had it been adopted would have regulated the use of loans by political entities to ensure full disclosure and greater accountability in the financing of political campaigns.

This legislation was passed by the House of Commons as Bill C-29 in 2008 and was awaiting second reading in the Senate when Parliament was dissolved for the 2008 election.

The legislation we are discussing today is substantively the same legislation as passed by the House in 2008 as Bill C-29. Our government worked collaboratively with opposition members to pass Bill C-29, which was awaiting second reading in the Senate when Parliament was dissolved.

Some changes have been incorporated from its original version. For example, the bill now would exclude from the annual contribution limit any portion of a loan that was repaid to the lender and any unused loan guarantees, as proposed by our government during the committee's study period.

It would require the Chief Electoral Officer to hear representations from affected interests before making a determination about a deemed contribution, as proposed by the opposition.

It would establish contribution limits for leadership contestants on a per calendar year basis rather than a per contest basis.

These amendments demonstrate that our government developed the political loans accountability act in a collaborative spirit with opposition parties throughout the process. Indeed, when the political loans accountability act was introduced, with the amendments above during the last Parliament, in 2010, there was widespread support in the House, including among the NDP, for the updated bill.

We think these incorporated changes make the bill even better. The act we are discussing today is the reintroduction of this updated legislation from the last Parliament.

Here are some of the important changes brought by our bill to Canada's political financing regime.

The bill would establish a uniform and transparent reporting regime for all loans to political parties, associations and candidates, including the mandatory disclosure of terms, such as interest rates and the identity of lenders and loan guarantors.

Unions and corporations would be banned from making loans to political parties, associations, candidates and contestants, consistent with their inability to make contributions as set out in the Federal Accountability Act.

Total loans, loan guarantees and contributions by individuals cannot exceed the annual contribution limit for individuals established under the Federal Accountability Act, which is currently $1,100 in 2011. Only financial institutions and other political entities can make loans beyond that amount. Loans from financial institutions must be at fair market rates of interest.

Rules for the treatment of unpaid loans will be tightened to ensure candidates cannot walk away from outstanding loans. Riding associations or parties will be held responsible for unpaid loans taken out by their candidates.

By prohibiting loans from unions and corporations and requiring that loans from financial institutions be granted at a market rate of interest, this bill would prevent corporations and unions from doing indirectly, through loans, what they are now prohibited from doing directly through contributions.

Together with the Federal Accountability Act, this measure will no doubt yield more fairness for electors. Politicians will now have to seek financial support from voters, not corporate entities or special interest groups. Politicians will be entirely accountable to voters as opposed to corporations or union interests.

Requiring a fair market rate of interest will allow all parties and candidates to be on an equal playing field by no longer allowing situations whereby favourable or entirely unknown terms of loans are granted without transparency. This change will also serve parliamentarians, riding associations and parties by protecting them from perceptions that they might be indebted to unions or corporate interests.

In addition, our government believes it is unfair that a candidate can walk away from his or her campaign debts. Everyday Canadians are expected to pay back their loans under strict rules, and the same should apply to politicians. This is why our bill proposes to transfer a candidate's unpaid loans to riding associations. This will ensure that the money borrow will be repaid.

Another important impact of the proposed bill will be to subject loans made by individuals to their contribution limits. This measure will prevent the current ability to bypass a contribution limit by lending large amounts of money without any expectation of ever being reimbursed. This measure will ensure greater accountability to citizens and enhanced transparency and integrity in our political financing regime.

The last, but not least of these changes that I want to discuss today is the increased transparency requirements for loans to all political entities. From now on, all loans will need to be recorded in writing and reported to Elections Canada. This change will increase transparency, especially in the case of candidates and nomination contestants who currently have only limited disclosure requirements. Putting in place effective transparency standards for candidates and nomination contestants will allow Canadians to know who is financing their campaigns and under what terms. I think these measures will find wide support in the House of Commons and among Canadians.

I would like to emphasize how the bill, in conjunction with the Federal Accountability Act, democratizes the political financing regime by focusing on grassroots voters. Wealthy individuals will be unable to bankroll their own campaigns by making large loans to themselves. Candidates will be unable to rely on a small number of wealthy contributors to finance their campaigns. They will instead need to seek support from those they wish to represent in the House of Commons.

Lending will not be limited to banks. Indeed, there will be a wide range of financial institutions still able to provide loans. What the bill does is preserve the important role for small community lenders and financing grassroots political campaigns, such as families, friends, supporters, credit unions and caisse populaires. By making political parties and candidates dependent on their supporters for financial support, parties and candidates now have a greater incentive to be responsive to the average Canadian.

What I hear from my constituents, and indeed many more Canadians across the country, is that they do not want to see parties and candidates using large loans from wealthy individuals, corporations, or unions to finance their campaigns. Large individual contributions are not permitted, so large individual loans should also not be permitted. Corporations and unions are not permitted to donate to federal political entities, so corporations and unions should be unable to loan large sums of money to political entities.

When our government was elected in 2006, we made the Federal Accountability Act our first priority, which among other things tightened the contribution limits to ensure corporate and union interests and wealthy individuals would not unduly influence politics.

With the introduction of the political loans accountability act, we are building on our flagship Federal Accountability Act by bringing greater transparency and integrity to political loans. The bill would strengthen Canada's political finance regime, already one of the strongest political finance regimes in the world. This is good news for Canadians and for the political process.

I encourage all parliamentarians to vote in favour of the bill.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, this is here for law-abiding Canadians week.

This afternoon, we will continue debate on Bill C-26, the Citizen’s Arrest and Self-defence Act. If we finish that before 5:30, we will get back to Bill C-4, the Preventing Human Smugglers from Abusing Canada’s Immigration System Act.

We will conclude here for law-abiding Canadians week tomorrow, with third and final reading of Bill C-10, the safe streets and communities act. I expect the vote will be deferred until Monday before the bill moves to the other place where I am sure the senators will deal with the bill swiftly in keeping with our commitment to Canadians to pass the bill within 100 sitting days.

I noted the offer from the member for Mount Royal, which appears to be at least somewhat endorsed by the opposition House leader, and I will propose a motion in response, hopefully later today, that can address the amendments in question.

Monday will be the final allotted day for the supply period, which means that after debating an NDP opposition motion all day we will also be dealing with the supply bill that evening. I understand that the NDP has removed all its opposition motions from the order paper so we really have no idea what we will be debating that day. The House will have to await word from the NDP.

I am pleased to announce that next week in the House will be democratic reform week. During this week, we will be debating bills that are part of our principled agenda of democratic reform, specifically bills that would increase fair representation in the House of Commons, reform the Senate and strengthen Canada's political financing regime by banning corporate and big union loans.

The key part of democratic reform week will be Tuesday with report stage debate on Bill C-20, the fair representation act, which seeks to move Canada toward the democratic principle of giving each citizen's vote equal weight. I thank the procedure and House affairs committee for the consideration of this important bill. Report stage debate will continue on Friday, December 9.

On Wednesday, December 7, we will resume debate on Bill C-7, the Senate Reform Act , which seeks to give Canadians a say in who represents them in the Senate and limits the terms of senators. If more time is needed, which I hope will not be the case, Mr. Speaker, we will continue that debate on Thursday morning.

Filling out our democratic reform week agenda, on Thursday, we will start second reading debate on Bill C-21, the Political Loans Accountability Act. It is a bill which seeks to close the loophole which allowed wealthy individuals to bankroll leadership campaigns, thus circumventing the legal contribution limits.

Finally, there have been consultations, and in the interests of having members of the House use their place here in the forum of the nation to draw attention to an important issue that knows no party divisions and to encourage Canadians to sign organ donor cards, I, therefore, move, seconded by the Minister of Labour:

That a take-note debate on the subject of the importance of organ donations take place pursuant to Standing Order 53.1 on Monday, December 5, 2011.

Political Loans Accountability Act

[Tim Uppal, Conservative, Minister of State (Democratic Reform)]

moved for leave to introduce Bill C-21, An Act to amend the Canada Elections Act (accountability with respect to political loans).

(Motions deemed adopted, bill read the first time and printed)