The Conservatives' budget bill tabled Tuesday will end taxpayer-funded subsidies for federal political parties, a proposal that helped spark the 2008 coalition crisis but was promised again by the Tories in the spring election campaign.

The entire 642-page budget implementation bill is necessary to enact measures contained in the federal budget, which cleared the House of Commons in June following the election of Prime Minister Stephen Harper's majority government. Ending the political party subsidies is only one of a long list of changes the bill would bring into force.

During the spring campaign, the Conservatives pledged to phase out the subsidies over four years. The promise was a revival of several Tory pledges made over the previous three years to do away with taxpayer funding for partisan politics.

The 2011 Tory election platform cited $27.4 million as the cost to the taxpayer last year of the current $2 per vote subsidy. It proposed cutting the subsidy by 50 cents per year until it was completely phased out.

Subsidies targeted by Tories in 2008

The per-vote subsidies have been controversial since they were first proposed by the Conservative government in the fall economic update following the 2008 election. Opposition parties cried foul, and passionate public debate over the pros and cons of using public money to fund the democratic process began.

The Conservatives dropped the proposal after opposition parties panned it in 2008. But they vowed to bring it back once they were in a position to pass it in the House of Commons, as they are now with a majority government.

A desire to stop the government's plans to phase out the subsidy was said to be one of the issues that led to the agreement signed by the opposition parties that fall to work together to defeat Harper's government and replace it with a coalition government. The effort failed when then governor general Michaëlle Jean agreed to the prime minister's request to prorogue Parliament to avoid losing a confidence vote.

Opposition parties denied at the time that they were motivated to forge a coalition agreement in the face of this threat to their current levels of public financing.

On Tuesday, interim Liberal Leader Bob Rae maintained that the threat of losing the political subsidy wasn't what drove the opposition parties back then, pegging it instead on the 2008 fall economic statement, which Rae still considers a "completely and utterly hopeless" response from Harper government to what was a fast-developing economic crisis at the time.

Debate continues over merits

Former prime minister Jean Chrétien's government first introduced the per-vote subsidies to compensate parties for campaign finance reform measures implemented by his Liberal government that imposed new limits and rules on party donations.

At the time, allocating public money according to the amount of support voters expressed in the previous election was seen as a way to keep a small group of wealthy individuals, businesses and other groups from disproportionately influencing the political process with their donations.

The Conservatives disliked the reforms. The 2011 Tory election platform noted that the subsidies are given even to "parties that make no effort to raise funds on their own."

The other parties generally, but the Bloc Québécois in particular, do not match the Conservatives' ability to fundraise from grassroots party members. An end to the party subsidies puts parties that are not effective at grassroots fundraising at a major financial disadvantage.

Returns filed with Elections Canada for 2010 show the Conservative party raising $17.4 million from some 95,000 donors. Other parties were far behind: the Liberals raised approximately $6.4 million from over 32,000 donors, while the NDP raised $4.3 million from just under 23,000 donors. The Bloc Québécois, then the third-largest party in the House of Commons, raised only $640,000 on its own from fewer than 6,000 donors.

The Bloc was reduced to only four seats in the House of Commons in the last election and has lost official party status. However, based on the total votes it received in 2011, it will continue to receive taxpayer subsidies until they are fully phased out.

The party is currently trying to regroup, running a low-key leadership race to succeed former leader Gilles Duceppe, who resigned after losing his own seat on May 2 in the midst of the Bloc's crushing electoral defeat.

"Political parties enjoy considerable advantages over other organizations in fundraising, including very strong tax incentives for donors, and rebates on money spent at the national and local levels," the Conservative platform argued. "Governments have a duty to use Canadians' tax dollars with great restraint, when families are struggling to make ends meet."

Party fundraising already changing

Reacting to the measures in the new bill on Tuesday morning, Rae was philosophical about the road ahead for his party without public subsidies.

"The simple consequence of it is that we have to go out and raise more money. And we're doing that," Rae said, noting a Liberal email campaign that raised $150,000 in recent weeks.

"We're not going to whine and complain. We don't agree with the government on it. We think it's actually a mistake. But we know what we have to do. We have to go out and raise more money," Rae said.

While not supporting the government's move, NDP finance critic Peggy Nash also seemed resigned to the change.

"We don't think that's a good idea. We think that when you have government involvement in election financing that you have less likelihood of corruption and bias in election funding," she argued. "On the other hand we're doing very well in our fundraising."

Nash added that the NDP is concerned about "smaller parties who may not have the economic wherewithall to fully participate in an election," but said the subsidy phase-out would not be a major obstacle to the NDP's success.

Passing the budget implementation bill, which the government has named the "Keeping Canada’s Economy & Jobs Growing Act", is a priority for the Conservatives this fall. Without it, a long list of previously-announced and promised economic measures the government has spent considerable energy promoting, such as tax credits for volunteer firefighters or caregivers, or an enhanced gas tax transfer for municipalities to use on infrastructure spending, will not be enacted.