Inside Politics

NDP hopefuls must mind leadership money pit

Here's one thing for the growing list of NDP leadership candidates (as well as BQ and putative Liberal candidates) to keep in mind: Know the rules and don't borrow too much.

For the Liberals especially, the ghosts of leadership past are around to remind everyone about the perils of ending up losing, loaded down with a ton of debt. Gerard Kennedy, a former Liberal leadership candidate, says he's tired of the notion of "woeful little Liberals."

He's talking about the deadbeats, as some would call them, from the 2006 Liberal leadership campaign. Five years later, many still have not paid off their loans, and face the public embarrassment of asking for yet another extension on Dec. 31, the deadline for cancelling the debt. (Kennedy says his debt will be paid off by then).

Almost all are in the bizarre situation of having to raise money to pay themselves back, with interest. Kennedy's point is it's not particularly fair when the rules change, and then change again.

Before 2006, leadership races were wide-open, money-fuelled extravaganzas. Unions, corporations, individuals could bankroll candidates in total secrecy.

In 2006, Liberal leadership candidates were the first guinea pigs to run under new rules imposed by Jean Chr├ętien. There was a limit of $5,400 per donor, which everyone understood, and another rule that came later which hardly anyone grasped, but its effect would be devastating. This rule said that, unlike annual donations to a party or an election candidate, donations to a leadership campaign could only happen once.

To top it all off, during that same Liberal leadership campaign, Stephen Harper changed the rules again, making the maximum donation $1,000. (Adjusted for inflation it's now about $1,100). He did it "to stick it to us," says Gerard Kennedy, a candidate in that leadership race.

What happens when Dec. 31 rolls around again and not everyone has paid their debts off? Will they then be fined by Elections Canada, adding to their money woes?

Former Liberal leadership candidate Martha Hall Findlay asks what a fine will accomplish.

There's such a small pool of donors in Canada and she can't go back to them, she says. If it weren't for that rule about donating only once, she says, "My debts would have been paid off years ago."

"It's absolutely brutal to raise money now," she says. "We are not irresponsible people, but we will ask for an extension again."

Most agree that the rules have to change, certainly to allow $1,100 donations every year, not just once, so that leadership candidates have at least have a fighting chance to pay off their debts, something Marc Mayrand of Elections Canada has recommended.

Instead, another change is in the works.

The government says it will re-introduce its bill about loans in political financing. The proposal from its last bill (which died before the election) stipulated that unions and corporations would be prohibited from making loans, and any loan bigger than $1,100 would have to come from financial institutions. There would be no loans bigger than $1,100 from the candidate's personal bank account. No more self-funding.

Loans are a "big, freaking, gaping hole in the election laws," says Pierre Ducasse, who spent only $38,000 in the 2003 NDP leadership race. (He finished second to last). "You start fundraising before you start spending, and you pay as you go. Unless there are exceptional circumstances, as there were with Jack, people have been thinking of this for months and years, and have their donors identified."

If they have to rely on loans, Ducasse says, "I don't know why they're running."

Gerard Kennedy disagrees. "A loan is just a cash-flow item. It has nothing to do with taking advantage. After all, the loan has to be paid back."

Whether it's a question of loans or fundraising, some would-be candidates have no idea of the money a good leadership campaign demands.

A few of them have been asking former NDP MP Lorne Nystrom, veteran of two leadership campaigns, for advice.

"You need $15,000 to register (the entrance fee set by the party). You've got to be careful about your parliamentary staff. You can rely on volunteers, but you're going to need at least two full time staff, particularly to run the media campaigns. You've got to pay someone about $1,000 a week," he says.

"You need a little office, maybe it's just a basement, you have to be careful about your MP's airline pass, so with travel and hotel bills, you're going to have to get a $50,000 line of credit."

His bottom line? $200,000 for a "minimum semi-serious campaign," maybe for someone who's running third and hopes to come up the middle; $100,000 for a "cause campaign"; but, "the top ones will be budgeting towards the limit, $500,000."

"It's a big, big decision," he says. He knows people who would love to run, but "can't risk the money. Do you want to run the risk of being 100 grand, 80 grand in debt? Just too risky."

Nystrom himself still has a debt of about $20,000, leftover from the 2003 campaign. The system needs reforming, he says. "Just get together an all-party committee, get a consensus. There's nothing ideological anymore, it's just practical. Get it done before Christmas."

Gerard Kennedy would add, "The rules have to be taken out of the control of the governing party."

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