Procedure and House Affairs Committee on May 31st, 2007

[Karen Redman, Liberal, Kitchener Centre, ON]

Well, I missed some answers, and I suppose they were great. I look forward to expert testimony and to witnesses we will have come over time to address some of these issues.

When the Liberal government brought in the new financing regime, one of the things we did was put limits on the amount of money individuals and businesses could give to all political parties. Clearly it wasn't just for our benefit, because we can statistically demonstrate that there are other parties that had more to gain. It was replaced by public funding, which leveled the playing field, because it was based on the number of electors, as we all know. I think it's now $1.78 that every party gets.

That aspect is not there at all in this piece of legislation.

If I understand your answer to my question about the ability of some people to actually get a bank loan, you said that it's dependent on the undertaking that they would give their rebate back. But you only get a rebate if you get 10% of the vote.

[Lucienne Robillard, Liberal, Westmount—Ville-Marie, QC]

And if you were elected before.

[Karen Redman, Liberal, Kitchener Centre, ON]

If you were elected before, the incumbency will advantage some.

If I'm a new candidate and I want to represent the “brown bread people” or some obscure party, or dare I say even a party such as the Green Party, which has not seen a member in Parliament and may well not get that 10%, then I don't see how this would advantage me or advance democracy in any way, because I am not going to be able to get that bank loan. I'm not going to be a good risk from the bank's perspective, because I probably won't get 10% of the vote.

[Peter Van Loan, Conservative, York—Simcoe, ON]

There are a couple of different things here.

First, on the previous Liberal legislation, you suggested that it limited what corporations and individuals could give to political parties. It actually prohibited, of course, corporate contributions to political parties. They could only continue to operate at the riding level. That should be clear.

Speaking to your concern that there's no public funding element to this legislation, the public funding exists. It's very generous. This is to deal just with loans, not with contributions. We aren't talking about funding parties this way. We're just talking about loans.

If we were perhaps wiping out or eliminating the possibility of individual contributions, or cutting them down to $100, I think there might be merit in your argument. But we're talking about loans here. I don't see that regulating loans, or putting a limit on them, or requiring that they come from banks should have some respective check-off, such that you should get another dip into the taxpayers' money. I don't think that follows at all. I don't see a need for any change in the public funding regime right now.

You mentioned that you only get the rebate if you've been elected before. That's not the case. It's just 10%.

[Karen Redman, Liberal, Kitchener Centre, ON]

No, you only get the rebate if you get 10% of the vote, and that's much easier for an incumbent than for an unknown.

[Peter Van Loan, Conservative, York—Simcoe, ON]

That's absolutely right. But under this bill, if you as a candidate don't get your 10% and you have a loan, that loan survives to your riding association. The Green Party riding association still continues and goes forward. If that association gets dissolved, it goes to the party.

As we know, a political party like the Green Party gets generous public financing every year from the taxpayers of Canada, to the tune of over $1 million, I think it is. So a bank will be aware that at the end of the day there's a source from which to recover their funds.

[The Chair, Conservative, Gary Goodyear]

I'm going to allow you to do a bit more.

[Karen Redman, Liberal, Kitchener Centre, ON]

It's just a closing comment. Thank you, Mr. Chair.

I appreciate how convinced you are that this doesn't limit democracy. I'm not convinced. I will look forward to the expert testimony of future witnesses who can support unreservedly this piece of legislation the way you do.

[The Chair, Conservative, Gary Goodyear]

Thank you, colleagues. I have no more names on my list, so I'm going to assume that we are in fact finished with this witness. If there are any questions outstanding, perhaps you can submit them through the chair and we can get answers for you. The opportunity exists to call the witness back, but it sounds to me as though we're finished.

I want to thank the witnesses for coming in this morning. Honourable Minister, we appreciate your being here and being forthright with your answers.

Colleagues, we have another witness on the way in. I'm going to suspend the meeting for one minute so that we can move witnesses in and witnesses out.

Thank you. The meeting is suspended.

[The Chair, Conservative, Gary Goodyear]

Colleagues, we'll bring the meeting back to order.

I want to give a special welcome and a deep thank you to our witnesses this morning.

This morning, colleagues, we have, for the second half of this meeting on Bill C-54, the Chief Electoral Officer, Marc Mayrand.

I'm going to offer Monsieur Mayrand the floor in a moment to introduce his team. However, I just want to bring to the members' attention the fact that Monsieur Mayrand and his team were very kind. It was with great difficulty that they were able to come this morning. The team testified in a Senate committee yesterday, and they have done a phenomenal job in preparation for this meeting. I want to acknowledge that in public and let them know how much the chair, and I'm sure the members from the House, appreciate their extra efforts in getting this information to us this morning.

I will offer you the floor. Perhaps you would introduce your team, Marc, and then say anything you have to say. Then we will open the usual round of questions.

Monsieur Mayrand.

[Marc Mayrand, Chief Electoral Officer, Office of the Chief Electoral Officer]

Thank you, Mr. Chair and members of the committee.

With me today are Mrs. Diane Davidson, who is the deputy chief electoral officer and senior legal counsel at Elections Canada; Mrs. Janice Vézina, who is the executive director of political financing and corporate services; and Mr. Stéphane Perrault, who is the senior general counsel at Elections Canada.

Thank you again.

As the chairman just said, it was only on Tuesday that we were invited to appear before your committee regarding this bill, which is very important for the political financing system. At that time, we were very busy preparing our appearance before the Senate regarding Bill C-31, which greatly hindered our ability to prepare a detailed and adequate analysis of the bill at hand.

Nevertheless, I think that it is important to share some comments with you today. I did not have the opportunity to prepare type-written notes. However, I would like to speak to you about certain issues that are raised by this bill. First, let me note that this bill responds to a recommendation my predecessor made and that it reflects his suggestions very well. Nonetheless, I must say that we were not consulted about drafting the bill. Therefore, we were informed about it only when it was tabled before the House.

The bill adds an important piece to the financial framework as regards the inflow of moneys to regulated entities under the Canada Elections Act. While the bill certainly responds to recommendations made by Elections Canada last January, it only touches one aspect of these recommendations, which is the loan aspect.

One observation I have in reviewing the piece of legislation is that loans should not be looked at in isolation from other rules regarding access to money, such as the one regarding stricter contribution limits, the existence or absence of spending limits for various entities governed by the act—mainly leadership contests—the rules governing transfers among various entities, and the availability of tax credits for certain entities during or outside the writ period, as well as other subsidies, such as the allowance offered to parties. The interaction of those evolving rules may have significant implications for candidates, lenders, and parties who have different financial needs and borrowing capabilities.

The proposed restrictions on loans, in conjunction with the recent contribution limit, will require entities to rely more heavily on loans from financial institutions to fund their activities. That's one likely outcome of Bill C-54.

The question arises as to whether financial institutions will be willing to play this role, and if so, to what extent, and how they will adjust their lending practices under the rules set out by Bill C-54. For example, a guarantor may not guarantee a loan for more than $1,100, except for parties and district associations. As parties are the only ones allowed to guarantee substantial loans, this may have an impact on the relationship between parties and candidates or between independent candidates and those supported by political parties. Will candidates or small parties be able to find sufficient financing to support their campaigns?

These are some of the questions that come to mind when we look more comprehensively at the financial framework for financial entities. I must admit that I have no answers at this time to those questions. It will require much more analysis.

Following our study which, I repeat, was only preliminary, I can say that this bill has some problems with implementation. Let me mention a few of them. For instance, the bill states that loans to candidates must be paid back 18 months after the date on which they were made rather than 18 months after the date of the election. In this way, a loan might have to be paid back even before the election is held. In our opinion, this is an operational problem.

Secondly, although the bill allows candidates to borrow from financial institutions, a candidate cannot use more than $1,100 worth of his personal resources or goods, for example his house, as collateral. We want to know whether a candidate can be exempted from these restrictions on loans or collateral, without violating the spirit of the bill.

A third example, which has more to do with the operations of Elections Canada, would be a situation in which a candidate tells us that the bank, following its usual accounting practice, considers a loan to be unrecoverable or written off. According to this bill, the Chief Electoral Officer must determine whether the loan has really been written off following the usual practice of the financial institution. However, nothing in the bill provides that the Chief Electoral Officer should have access to the documents of the financial institutions and that he will be able to verify their practices in such cases.

If a loan is written off, the riding association becomes responsible for the debt as if it had put up collateral. As we interpret the bill, this is more or less an automatic process triggered by writing off the debt. If this occurs, the association might not have agreed to collaterize the loan. Perhaps this is the intention of the bill, but I must draw it to your attention. Of course, these are only examples. A closer study would probably come up with more such examples.

In conclusion, Mr. Chair, I was--

[The Chair, Conservative, Gary Goodyear]

Excuse me, Monsieur Mayrand. We seem to have lost translation for the last minute.

The problem has been fixed.

Mr. Mayrand, my sincere apologies. Would there be a possibility that you could repeat the last minute of what you were saying?

[Lucienne Robillard, Liberal, Westmount—Ville-Marie, QC]

It had to do with associations.

[Marc Mayrand]

According to the bill, if a loan is written off, the association becomes liable for the debt. This seems to be an automatic consequence of the bill. The bill does not mention whether the association had agreed to collaterize the loan.

In conclusion, Mr. Chair and members of the committee, I believe you are looking to begin your work on the clause-by-clause shortly. Because it's a rather heavily technical piece of legislation, I would certainly offer that expert staff from my office be available to assist you on technical aspects as you go through the clause-by-clause. If that's something that would serve the committee, we will gladly make sure that resources, experts, are available to you to assist in your deliberations.

Thank you. Merci.

[The Chair, Conservative, Gary Goodyear]

Thank you very much. We will certainly take that under consideration.

We're going to start our first round of questioning, colleagues. We'll start with seven minutes and see how we do.

Mr. Owen, you're first.

[Stephen Owen, Liberal, Vancouver Quadra, BC]

Thank you.

Thank you, Mr. Mayrand, and thanks to your colleagues.

I have just a couple of quick questions to start with.

Is it your opinion that the current Canada Elections Act provides for the conversion of loans into contributions after 18 months, under the current terminology? Has there been some doubt expressed about its not being as explicit as this is? Is that what we're trying to accomplish here, or do you see it as accomplishing that? My understanding was that these would always be converted into contributions after 18 months, under the current language. I understand it's perhaps more explicit now, but I wonder whether that understanding is correct.

I'm interested in the exceptions under proposed subsection 405.7(2). It is the exemptions to the provisions for deeming loans to be contributions. Just to make it easier, it lists a number of situations, including an unpaid amount that is subject to a legal agreement to pay. Other exemptions are being subject to legal proceedings, subject to a dispute. I'm not sure what an unpaid amount that is subject to a legal agreement to pay means. Maybe Ms. Davidson can give me that explanation. It sounds to me as though it means an agreement to extend the obligation to pay to a later date. If that is so, it's confusing to me, because it seems to subvert the intention of having it converted within 18 months.

The last question is much more general. Really I think you touched on it in your remarks. The specific concern is that the low amounts of contribution in Bill C-2, now $1,100 per individual, combined with the restrictions on who can provide loans—financial institutions—and therefore the obligations they will extract from the person they are lending to, guarantees or some sort of collateral, may create an unrealistic barrier to entry for people entering, say, a national leadership race in a party or even a nomination, and they may not have a political association to fall back on should they default. Up front, therefore, the financial institution may be very severely inhibited from extending them a loan.

[Marc Mayrand]

On your last point, I talked very briefly in my opening remarks of some of the possible impacts on smaller parties or candidates. That's why in the initial recommendation from my predecessor there was a suggestion that maybe consideration should be given to an exception. In my mind, certainly, without undermining the intent of the act, there could be a cap on the amount that could be extended. It could be a little higher than the $1,100. I leave that to your consideration.

As to the status of unpaid claims currently, the short answer is yes, they are considered contributions. As to the question of the agreement, I will ask Mr. Perrault to respond.

[Stéphane Perrault, Senior General Counsel and Senior Director, Legal Services Directorate, Elections Canada]

This provision reflects the current regime for unpaid claims. The requirement you referred to is that there be a binding agreement—essentially a binding, enforceable contract—to show that this is actually a bona fide, genuine transaction that has taken place. That is the current regime for all kinds of unpaid claims, which has been carried over into specifically the loans.

[Stephen Owen, Liberal, Vancouver Quadra, BC]

Under the current bill, it doesn't add anything, because there is a pre-condition that there be such a binding agreement in any event with the financial institution.

[Stéphane Perrault]

Yes, this will require showing the agreement, basically.

[Stephen Owen, Liberal, Vancouver Quadra, BC]

Thank you.

[The Chair, Conservative, Gary Goodyear]

Thank you.

Mr. Owen, you have three minutes left.

[Stephen Owen, Liberal, Vancouver Quadra, BC]

I will cede that to my colleague.

[The Chair, Conservative, Gary Goodyear]

That's perfectly allowed.

Madame Robillard, and then Mr. Reid.

[Lucienne Robillard, Liberal, Westmount—Ville-Marie, QC]

Mr. Mayrand, thank you for coming and for sending us your documents in answer to the specific questions we put to you during your last appearance.

Moreover, Mr. Guimond, Mr. Mayrand sent us a list of all the returning officers, both new and old.

We also have a profile of the employees, in answer to the questions that I had put. We also received that. I thank your team for this. I note that you are endeavouring to satisfy the requests made by the members of this committee. Thus, I would like to request a second thing from you today.

You said that your study of this bill was limited. You did not see it before it was tabled and you were busy working on another Senate bill. Could you continue your study of this bill? You will not have to come back with your team, but at least, you could tell us about it so as to answer some of our more specific questions. I think that it would be of great help to us. We greatly appreciate your offer of sending us experts to help with our clause-by-clause study of the bill. I think that in the meantime, a closer study of the bill would be of great help to us in adopting the right regulations.

More specifically, I must say that my colleagues Mr. Owen and Ms. Redman raised questions regarding access to loans for certain persons who want to stand for nomination. We are concerned about independent candidates or those who cannot easily get loans from financial institutions through the usual channels in their private lives. We, as women, are very aware of this. I know many women entrepreneurs who have had to deal with this problem during their lives. We are not talking about $100,000 loans, but about small loans for launching small businesses. Some women have never succeeded in getting a loan from a bank. Can you imagine what happens to women who have never stood as candidates and who must apply for a loan from a financial institution that would amount to, let us say, $15,000. It will not be as easy as some male colleagues in this room might think.

I would like you to pay attention to this. The bill intends to give equal opportunities to all those who want to stand as candidates, so that anyone can succeed in doing so, regardless of their financial means. The financial institutions must also understand this, or else, we will not meet the objectives of this bill.