Evidence of meeting #72 for Procedure and House Affairs in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was donations.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Duff Conacher  Co-Founder, Democracy Watch
Jean-Pierre Kingsley  Former Chief Electoral Officer, As an Individual

11 a.m.

Liberal

The Chair Liberal Larry Bagnell

I call the meeting to order.

Good morning, everyone. Welcome to the 72nd meeting of the Standing Committee on Procedure and House Affairs. This meeting is being held in public. Today we are continuing our study of Bill C-50, An Act to amend the Canada Elections Act (political financing).

Our witness during today's first hour is Duff Conacher, co-founder of Democracy Watch and chair of the Money in Politics Coalition.

Thank you for being here, Mr. Conacher. You have 10 minutes for your opening statement. The floor is yours.

11 a.m.

Duff Conacher Co-Founder, Democracy Watch

Thank you very much, Chair.

To members of the committee, thank you for this opportunity to present to you today on Bill C-50. As mentioned, I am co-founder and coordinator of Democracy Watch and chair of the Money in Politics Coalition, which is made up of 50 organizations with a total membership of 3.5 million Canadians.

The coalition has been advocating changes to the federal and provincial political finance systems now since 1999, and is calling for changes to Bill C-50 to stop cash for access and the influence of big money in federal politics.

The bill, I believe, based on the framework, in that it addresses contributions in some sections and others, can be amended by the committee and sent back to the House, and should be, to make changes to ensure that wealthy individuals cannot use money as a means of unethical influence over politicians or parties, and also to stop the funnelling of donations, which has happened in every jurisdiction in Canada that has banned corporate or union donations but that has maintained much too high a donation limit, such as at the federal level.

The $3,100 a year to a party and its riding associations is much more than an average voter can afford. That amount violates the fundamental democratic principle of one person, one vote. It allows people with money, who can afford to make that maximum donation, to use money as a means of influence.

To think that anyone who is donating the maximum does not get some kind of return on that is naive, based on what we've seen in the past across Canada with various fundraising scandals. Even if it is simply an invitation to a Laurier Club event, that is access that you can only buy, and is therefore undemocratic and fundamentally unethical.

Sports referees can't take gifts from players, so why are politicians continuing to allow themselves, as the referees of what is in the public interest, to essentially be influenced by large gifts of money, property, or services, up to $3,100 annually, in terms of what can be given to a party or a riding association?

The coalition and the more than 11,000 voters who have signed the petition on change.org are calling for changes that will stop big money in federal politics and stop cash for access. These are to lower the donation limit to $100, as in Quebec; strengthen enforcement and penalties for violations; and only bring back per-vote funding or some kind of matching public funding such as Quebec has if the parties can actually prove, and candidates can actually prove, that they need this public financing in order to prosper financially.

These are the major changes that we are calling for.

As well, loans should be limited to the same amount as donations. If donations are limited but loans are unlimited, then federally regulated financial institutions can use loans to essentially buy influence with the parties. Yes, they have to give those loans on the same terms as they loan to anyone else, but giving a loan to a candidate or a party helps the candidate or party.

Clinical psychologists have tested thousands of people across the world, and found in every case that even small gifts have influence on decision-making. One of the best-documented areas is with doctors and prescriptions, even with doctors receiving free samples from drug companies that they don't use themselves but can pass on to their patients. It doesn't save the doctor any money at all, but just giving free samples to doctors has been shown through clinical testing to influence their prescribing decisions, although the doctors deny it across the board.

To think that donations do not have an influence over any politician or party official is to pretend they are not human. Humans across the world have been tested by clinical psychologists in double-blind studies, and it's been found that even small gifts influence everybody.

That's why the solution, the way to stop the influence, is to limit the donation that can be given annually to an amount that an average voter across the country can afford, and that's $100. That's what Quebec has done. It's a world-leading system. The public financing is too high. It doesn't have to be as high as it is. In terms of the donation limit, the fact that a donation above $50 has to be routed through Elections Quebec ensures that funnelling cannot happen and that people are only giving their own money and only giving no more than an average voter can afford.

The too-high donation limit federally also facilitates funnelling, which has been seen at the federal level with SNC-Lavalin. In Quebec, finally Elections Quebec did its job in 2011 and looked back five years and did an audit of donations. It had banned corporate and union donations in the late seventies and there had always been rumours that corporations were funnelling donations through their executives and their family members and through employees and their family members. Elections Quebec finally did an audit in 2011 after the corruption scandal broke there, and they found $12.8 million in donations that had likely been funnelled from businesses through their executives and family members. That was $12.8 million over a five-year period.

Funnelling is happening at the federal level. Elections Canada promised to do an audit four years ago. It hasn't done it yet. If they do, they will find it. It's been found in Toronto and it's been found in every jurisdiction that's banned corporate and union donations but left a donation limit that is too high and that facilitates funnelling, as the federal donation limit does. With the $3,100 limit, you get 10 executives and their spouses to each give $3,100, and boom, you've given $62,000 to a party.

That's big money. That has big influence, and the only way to stop it is to lower the donation limit.

Democracy Watch has filed complaints about the fundraising events held last year and in years past with the Commissioner of Lobbying. We're hoping that the Commissioner of Lobbying at least will stop lobbyists who are registered or should be registered from participating in such events, but Bill C-50, despite making the events transparent, is not going to stop cash for access. MPs will still be allowed to do the events. The staff of cabinet ministers can be at events without it even being disclosed under Bill C-50, so there's not even transparency about a senior government official being at an event, only people who are candidates or party leaders or cabinet ministers. The bill will not stop cash for access. It will not stop the influence of big money.

There is a problem with big money. I will give you just one example of an analysis that Democracy Watch did. It was very difficult to do because of the way Elections Canada discloses the donations, but I did a ton of number-crunching and I determined that in 2015 the federal Liberals received almost 23% of their donations from just over 4% of wealthy donors, who gave $1,100 or more to the party. To do that analysis of what happens at the riding association level is not impossible, but it would take months and months, because Elections Canada doesn't consolidate any of those figures. That's just donations to the party: 23% of the party's money came in from donations from just 4% of wealthy individuals who could afford to give $1,100 or more. That's a cash-for-access system. Those people at the time would have been invited to a Laurier Club event, possibly other events. I'm quite sure if the Access to Information Act were to be extended to ministers' officers, we would find that they get their calls returned more quickly than others, get meetings more quickly than others, get access to staff and senior government officials more quickly than others across the board. We don't have the kind of transparency that would prove that. I hope we will get it through Bill C-58, as the Liberals promised to extend the act to ministers' offices, or through the changes to the Lobbying Act, which has to be reviewed this year.

Within the framework of Bill C-50, I believe it's completely within order under the parliamentary rules for you to make these changes to Bill C-50, because the bill mentions contributions and all the other areas I've talked about.

I have not made a written submission to you today, but there is a news release up today on Democracy Watch's website that will be translated and distributed by the clerk, so you will have all the details.

I welcome any of your questions. Thank you very much.

11:10 a.m.

Liberal

The Chair Liberal Larry Bagnell

Thank you very much, Mr. Conacher.

Now we'll go to a round of questions of seven minutes each, and we'll start with Mr. Graham.

11:10 a.m.

Liberal

David Graham Liberal Laurentides—Labelle, QC

Thank you, Mr. Conacher, for being here. I appreciate it.

I think I'm the only Quebecker at the table, so when you talk about Quebec, I'm actually familiar with it, and it's a very interesting system.

I want your thoughts. You said that the line should be at $100, but that small gifts have an influence, however big they are, so why $100? Can you compare it to other jurisdictions as well?

October 5th, 2017 / 11:10 a.m.

Co-Founder, Democracy Watch

Duff Conacher

You could go to a system that is entirely public financing, but I believe that parties should be encouraged to reach out to voters and hear their concerns in order to prosper financially. That's why I believe the public financing in Quebec is too high. It provides the parties with much more than just a base of funding.

The conversation about public financing should start with how much parties actually need to operate across a jurisdiction. The overall answer is that they don't need any more than what their opponents have. Instead, what's happened in Ontario and now in B.C. and in Quebec is they just assumed they needed the same amount of money that they had at the time that they changed the law and put in public financing to make sure that any drop in donations as a result of limiting donations would be replaced by public financing. That's not where the conversation should start. There could be a report by the Auditor General or Elections Canada on how much parties actually need to reach people. Then you determine if you even need public financing.

If you're going to have a donation limit, it should be an amount an average voter can afford. Yes, small gifts can have influence, but if thousands of people from various viewpoints and perspectives are each giving $100, their influence cancels each other out. The current system has 4% of Liberal donors giving 23% of the money. They're going to have more influence than those who give $100 because they're giving a huge portion and are much more valuable to the party as donors. That's what you need to eliminate, and you can do that with a $100 donation limit.

11:10 a.m.

Liberal

David Graham Liberal Laurentides—Labelle, QC

In my riding, my biggest donors are myself and my wife, so I suppose I have undue influence on myself.

How do you see the structure of public financing? What structure works?

We've often heard about per-vote financing as an idea. The trouble with it, in my view, is that how I voted in 2015 may not reflect who I support in 2016, 2017, 2018, 2019.

What kind of structure do you see?

11:10 a.m.

Co-Founder, Democracy Watch

Duff Conacher

I favour Democracy Watch's position and the coalition's position, which is that the matching funding that Quebec has is a better way to go. The matching funding should be higher in Quebec and the per-vote funding lower. Per-vote funding is fine as long as it's just a base amount that's being given. It's proportional, so it makes it more fair for the parties that don't win as many seats as they should based on the percentage of votes they receive, and that's an important thing.

One of the biggest public subsidies to the parties is that our first-past-the-post system gives some parties more seats than they deserve. Each one of those politicians who's elected gets $450,000 in public money each year. That's a huge public subsidy. The per-vote subsidy at least is democratic because it's based on votes that are received, the actual percentage of votes the party receives, so if a party doesn't get as many seats as it should based on percentage of votes, at least it gets that money.

Matching funding is better, though, because it would go up and down each year based on how much the party raised. You can also do it for candidates, but you can't do the per-vote funding for candidates. It would be unfair to anyone challenging an incumbent.

Quebec has both. It could also be on a sliding scale, as in Quebec. Quebec has a higher amount of matching funding for the first $100,000 that you raise, or $10,000 that you raise as a candidate, and that helps level the playing field as well. Someone may have a lot of donors who can only afford to donate $50 in Quebec; let's say that person has 1,000 donors, so they only raise $50,000, but the first $10,000 is matched at a 2:1 ratio, so they get another $20,000. If someone has 1,000 donors but they each can afford to give $100, they could raise $100,000, but the matching makes it a bit more even because the one ends up with $70,000 and the proportion isn't as much out of whack.

That's why I favour matching funding, it goes up and down each year as well for the parties. If the party breaks all its promises and loses a ton of support, it won't get the matching funding.

11:15 a.m.

Liberal

David Graham Liberal Laurentides—Labelle, QC

When we had per-vote funding, there was a 2% threshold below which you didn't get any funding. Do you think that's appropriate?

11:15 a.m.

Co-Founder, Democracy Watch

Duff Conacher

Yes, I agree with a threshold for the funding, and if the system was changed to a proportional representation voting system, having the threshold would also be appropriate. I think that you should have a certain percentage of support in order to be able to tap into that funding. The Supreme Court of Canada ruled in the challenge that the 2% threshold was constitutional.

11:15 a.m.

Liberal

David Graham Liberal Laurentides—Labelle, QC

If you have these thresholds, how does it affect independent candidates, independent MPs, and so forth?

11:15 a.m.

Co-Founder, Democracy Watch

Duff Conacher

In Quebec, they have matching funding for independent candidates. At the candidate level, there isn't a threshold in Quebec. If you run as an independent, you'll get the matching funding for what you raise for your campaign. That also levels the playing field much more for independent candidates, who are discriminated against currently in the Canada Elections Act. They cannot raise money between elections, as riding associations are allowed to for the next campaign, so the matching funding helps. Removing that prohibition on raising money before the writ is dropped from an independent candidate is also something that should be changed to make the system more fair.

11:15 a.m.

Liberal

David Graham Liberal Laurentides—Labelle, QC

Should, in your view, donations be tax deductible? If so, should they be refundable or non-refundable? How do you do that? In Quebec, they're not.

11:15 a.m.

Co-Founder, Democracy Watch

Duff Conacher

Yes, Quebec eliminated that because of the $100 donation limit. Currently the tax deductions favour those who can give more as well, and there's a huge taxpayer subsidy that exists. The per-vote funding subsidy from taxpayers meant that you had to vote for a party before you get back some of the taxes you pay, and everyone pays some taxes. Even if they don't pay income taxes, they're paying product and service taxes. That ensured that you had to vote for the party before it would get your two dollars. It was only two dollars. No one's money went to any party he or she didn't support. It was a fallacy that this ever happened, because everyone pays more than two dollars in taxes annually. It was democratically structured. The current subsidy is not democratically structured; it favours wealthy donors.

11:15 a.m.

Liberal

The Chair Liberal Larry Bagnell

Thank you, David.

Mr. Nater, you have seven minutes.

11:15 a.m.

Conservative

John Nater Conservative Perth—Wellington, ON

Thank you, Mr. Chair. I want to begin by apologizing for my tardiness. I was enjoying a very exciting race outside in front of the Hill and didn't quite make it here in time.

I appreciate the opportunity to meet with you, Mr. Conacher, and I apologize to you, as well, for missing the initial couple of minutes of your opening comments. If I ask any questions that you've already covered, just direct me back to the blues, and I can read them.

In your comments, you mentioned in passing the Laurier Club and Laurier Club events. As you would be aware, the legislation specifically exempts donor appreciation events that are held at a party convention. This raises the question of whether people will be encouraged to donate the maximum amount to the party by, in this case, attending a Laurier Club event at a party convention where the Prime Minister or where ministers would likely attend, and not have to report.

Do you see that as a challenge with the legislation?

11:20 a.m.

Co-Founder, Democracy Watch

Duff Conacher

Very much so. In that way and in many other ways, this bill does not stop cash for access. Staff of cabinet ministers are not even covered. They're often important people for somebody to be able to see at an event, connect with and have a chance to corner and lobby a bit.

It's not a bill that's stopping cash for access; it's making a bit of it a little more transparent.

11:20 a.m.

Conservative

John Nater Conservative Perth—Wellington, ON

I appreciate that.

As I was walking in, you suggested as well that any loans should be at the same level as donation limits. In that case, you suggested a $100 limit was acceptable. It would probably make a loan more or less irrelevant if it's at a $100 limit.

Is that where you are going? Should loans effectively be somewhat irrelevant?

11:20 a.m.

Co-Founder, Democracy Watch

Duff Conacher

Yes, the only way that Democracy Watch thinks that loans should be allowed is if you set up a public fund and the loans come from a public fund. The current taxpayer subsidy on donations is essentially a public fund, so replace it with something that replaces loans that are given by federally regulated financial institutions so that when a party gets a $30-million loan for an election, it has to be on the same terms as a $30-million loan to anyone else.

That kind of loan would be a huge favour that a bank has now done for a party that will have a finance minister who makes decisions about the Bank Act if that party wins. Wow. It seems a pretty blatant conflict of interest to me. Why would you leave that loophole open? It's a big-money loophole.

11:20 a.m.

Conservative

John Nater Conservative Perth—Wellington, ON

You would envision some kind of entity, whether it's administered by a government corporation or something, having a pot of money that a candidate or a party could then potentially borrow from in the campaign period—

11:20 a.m.

Co-Founder, Democracy Watch

11:20 a.m.

Conservative

John Nater Conservative Perth—Wellington, ON

—and the federal banks.

11:20 a.m.

Co-Founder, Democracy Watch

Duff Conacher

Yes, but very publicly, and it would be disclosed. All donations should be disclosed before people vote. That's another big flaw in our system. I didn't go into all the details of every single one of the 11 changes that we're calling for, but all donations should be disclosed before people vote so that they know who's bankrolling the party.

11:20 a.m.

Conservative

John Nater Conservative Perth—Wellington, ON

Would you mind elaborating on that? What time frame do you think would be ideal for disclosure of names of donors, or in this case attendees at a regulated event?

11:20 a.m.

Co-Founder, Democracy Watch

Duff Conacher

Thankfully we have a perfect working model at the federal level with leadership candidates. Coming up to an election is the real problem area, because although quarterly donations are disclosed by the parties, an election can take place in between that, and people don't see the donations made during the election campaign.

However, party leadership candidates have to do that right up to a few days before the vote. Then we also have a working model for real-time disclosure in Ontario, whereby donations are up within 10 days and those kinds of details, such as whether they came through any kind of event, can be included .

11:20 a.m.

Conservative

John Nater Conservative Perth—Wellington, ON

You mentioned as well—and I'm not as familiar with the Quebec system as some of my colleagues may be, but I'd like you to elaborate on donations over $50 having to be done through Elections Quebec. Would you mind elaborating on that and how you might potentially see that happening at the federal level through Elections Canada? Could that system be mirrored?