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

[The Chair, Conservative, Joe Preston]

Mr. Lukiwski, you have somewhere around five minutes.

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

I want to get right back into the leadership contest, because I think, as you mentioned earlier, that's where we have the most difficulty. Generally speaking, I agree with your analysis, Mr. Mayrand, that most candidates don't take out a lot of loans. If they do, it's normally a loan taken out by their chief financial agent and guaranteed by their rebate, but there are not a lot of individual loans.

Loans seem to come into play in leadership contests, because in those contests, depending on the political party, the limits for spending could be close to a million dollars. To try to finance a leadership run is an expensive process, and it seems that's where loans are the most logical form of getting quick cash.

That brings us to the question, as we've seen since the 2006 election, where there is still a number of unpaid loans. The current legislation really is toothless. You haven't got any ability. And you're right: do you fine somebody? What good does that do? The intent is to try to recover the money.

I'd like to ask you, even though you've talked on a number of occasions about perhaps exempting leadership contestants from this legislation, would it not make more sense to include leadership contests as a way of putting some teeth into the ability of taxpayers to see their money returned? I think, for example, if we included in this legislation the same provision as to the obligation of the political parties, there would be some serious consequences. I think the parties would perhaps be a little bit more diligent in examining who they allow to enter into the race, but I think, if nothing else, we could be assured that, if six years after completing a contest someone still owes $100,000 to $200,000, there is some mechanism by which we could recover that money.

Would you agree? I'd just like to get your thoughts on why you keep saying that maybe we make an exemption for leadership contests, instead of saying they should be included in this legislation.

[Marc Mayrand]

As we're having this discussion you're getting me thinking. Maybe one way for the party and for the regime to fix this problem is to have loans contracted by the parties themselves. After all, it's their event, and they may determine through internal rules how to allocate funds from those loans among all candidates. When their leadership contest is over, the party is responsible for reimbursing the loan.

That may be a test solution that needs to be performed.

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

I'm not disagreeing; I think that's actually the innovative way to look at it. But that would be up to the political parties to determine. Political parties would have to make that determination, would they not?

[Marc Mayrand]

Yes.

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

So that wouldn't be covered by legislation. I'm saying that—

[Marc Mayrand]

We could cover it in legislation. In fact, to work, I think it would have to be covered in legislation.

As to limiting loans in leadership races and the reimbursement to the parties, only the parties themselves.... Again, the parties are already setting spending limits for their leadership race, so they have the tools.

[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]

My recommendation from 2010 still stands.

The problem the committee will have is that many of these recommendations dealt with unpaid claims, and that is not opened in Bill C-21. So there's a procedural issue, I believe.

Similarly, concerning coming forward with a recommendation on leadership contests, I don't know that the provisions of the bill are broad enough to include them, because Bill C-21 is very limited to loans. It would not come with—

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

I agree with you, it doesn't deal with the elephant in the room, the unpaid loans by leadership contestants. I'm suggesting that we perhaps take a look at including some of those provisions in the bill. Obviously we have the ability to amend the bill. The minister may want to take a look at going back to the drawing board, so to speak.

But it would be interesting to see any recommendations you may have that we could consider legislatively, particularly with leadership contest rules and regulations.

[The Chair, Conservative, Joe Preston]

I have Mr. Gill for five minutes.

[Parm Gill, Conservative, Brampton—Springdale, ON]

Thank you, Mr. Chair.

I also want to thank the witnesses for coming to participate in this very important discussion and topic.

I'm wondering whether you're able to share your thoughts concerning loan defaults. Do you see more of a problem, say, with candidates running in general elections, or is this more a problem among the leadership contestants?

[Marc Mayrand]

I'm not sure I want to talk about defaults. I prefer to talk about outstanding loans, because these loans may be subject—and this is recognized in the current legislation, Bill C-21—to binding agreements. It doesn't mean they're necessarily in default.

What I can confirm to the committee is that for candidates there is still a significant number of outstanding loans and unpaid claims, even after three years. So it is something that exists in the system.

In the case of leadership contests, when you think of it, the new rules were introduced in 2007, so there haven't been many leadership contests. There have been a few. My sense is that there are general efforts to reimburse those outstanding claims—some less successful, of course.

[Parm Gill, Conservative, Brampton—Springdale, ON]

Can you define the word “significant”? Are you able to give us some sort of number of how many candidates are involved, or what the amount is, possibly?

[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.

[Parm Gill, Conservative, Brampton—Springdale, ON]

If you were to look at the last number of elections, which way would you say the trend is going? Is it getting better, election over election, or is it getting worse?

[Marc Mayrand]

I would say it's steady. That's why I'm thinking about seed loans being allowed. it seems pretty consistent across the system that candidates need a bit of money to start up their campaign. I don't see big variation from election to election. I will of course share this table with you, but you will see that there are no real peaks and valleys in it.

It is similar with unpaid claims. In addition to unpaid loans, we're talking about $1.1 million of outstanding claims after an election.

[Parm Gill, Conservative, Brampton—Springdale, ON]

Are you also able to share with us some stats under the current system? Where are most of the loans coming from? Are they being taken out using a financial institution, or individuals, or what other means are being used?

[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.

[The Chair, Conservative, Joe Preston]

Thank you.

I've run out of people on the list. Mr. Mayrand has suggested he could stay for a little while longer. I would suggest one more seven-minute round, if we can do it. If you want to share some time, you can do it, but we'll give each party one turn, if that's all right.

First we'll go to Mr. Williamson—and share your time, if you need to—and then to Monsieur Garneau and Mr. Scott.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Thank you, Chair.

I want to challenge you. You've mentioned the seed money several times, whether it's $4,000 or $10,000. Are you suggesting that this would come from the political organization itself, or would it be mandated, or...?

[Marc Mayrand]

It would not be mandated. All I'm saying is that, over and above the contribution regime, consideration should be given to allow candidates in an election—I'm not talking about leadership contests—to have access to small loans to get their campaigns started.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Correct me if I'm wrong, but I believe that's the case in the bill. The parties can lend money to riding associations if they choose to do so—or not—and I think they do or do not for a whole host of reasons. Has the candidate tried to raise money? Have they shown good faith?

If you're just suggesting that what works now should remain, I would agree with you, but if you're suggesting anything more than that.... I think that between the existing party structure that allows for it, as well as the very, very generous tax receipts that candidates can provide, there is an obligation here for candidates to go out and raise money themselves.

When you're able to collect $100 and return $75 to that individual, there is an obligation on the candidates themselves. I worry that we're drifting into territory that suggests the candidate has no obligation, or we're minimizing it and turning the responsibility over to others.

Could you clarify your $4,000, or whatever the figure is? How would it differ from what currently exists with the party loans and the financial opportunities that candidates have?

[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.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Thank you.

That was basically my point: to just highlight the moral hazard again.

I'll turn it back to you, Chair.