Inside Politics

"Other Revenue": The Black Hole of Political Party Financial Reporting

There is, it seems, at least one unexpected benefit to the revelations regarding the NDP's sheepish about-face on those now infamous advertising fees that it quietly refunded to unions and other buyers earlier this year.   

Thanks to that internal NDP document posted online by the Toronto Star  as part of its initial report, we now know the source of at least some of the otherwise unexplained "other revenue" that the party reported in its annual financial statements for 2006 and 2009. (They still haven't submitted last year's return after requesting an extension to the original deadline last May.) 

But aside from that unprecedented, if not exactly voluntary, peek into the NDP coffers, not even Elections Canada is privy to the details of the hundreds of thousands -- in some cases, millions -- of dollars that political parties take in every year, over and above the income gleaned from donations, membership sales, election expense rebates and per-vote subsidy transfers from the government. 

Since the ban on corporate and union donations came into effect in 2005, the five major federal parties have reported over $10 million in otherwise unspecified "other revenue": 

Conservative Party: $5,838,758.00
New Democratic Party: $2,198,624.00
Liberals: $1,442,275.00
Bloc Quebecois: $785,820.00
Green Party: $219,710.00

The full breakdown, by party and year, as listed in their annual financial statements: 



It's worth noting that the NDP's formerly thriving sideline selling ad space at party conventions only came to light -- and, more crucially, to the attention of Elections Canada -- after an anonymous conventioneer spotted -- and took pictures of -- the signs in question, thus collecting the necessary evidence that ultimately found its way into the formal letter of complaint filed by Conservative MP Dean Del Mastro.

Had that particular bit of "other revenue" not been so, well, visible, it's unlikely that it ever would have been identified as a potential violation of the ban on union donations.

After all, it's not like the NDP made any effort to hide it -- those ad revenues were dutifully reported in the annual reports for the years in question, with nary a red flag being raised over its potentially problematic provenance. It wasn't until Del Mastro complained to Elections Canada that the agency started asking questions -- and since the party has refunded the money, we'll never know if it would ultimately have been found the NDP in breach of the law.  

(For its part, the NDP has pointed to a 2003 letter from Elections Canada that explicitly states parties can, in fact, sell advertising, provided that it does so according to fair market value. It also reportedly had experts ready to testify that this was the case with the convention ad fees, but eventually decided to cut its losses, refund the money and call it a day.) 

Under the current law, political parties aren't required to provide any information beyond brief line item notes. 

More crucially, at least from an enforcement perspective, although the statements do have to be audited, and must be prepared in accordance with generally accepted accounting principles, the Chief Electoral Officer can't even ask to see the receipts to back up those claims.

(That could change if the government lives up to its pledge to bring in legislation that would give the CEO the power to "request all necessary documents from parties to ensure compliance with the Elections Act," but it's worth noting that a similar proposal put forward by the CEO last year was rejected by the Conservative-controlled committee charged with studying his recommendations.)

So, other the fact that at least one party was able to make a little extra cash selling ad space at conventions -- which, by the way, is not, in itself, against the law, provided that such transactions are consistent with fair market value -- what do we know about those "other revenue" streams?

Not much, as it turns out. As noted above, political parties are allowed to engage in commercial transactions, which could include anything from renting out office space to playing the market.

They could invest in businesses, short stocks, dabble in real estate or finance an off-Broadway show -- in theory, that is. In practice -- well, see above. Unless the party itself imposes restrictions on how the money is to be handled, they're pretty much free to manage their finances however they wish.

"Well, why shouldn't they?" I can hear those of you who have made it this far into this essay ask -- and just to be clear, I'm not necessarily suggesting that they should not. What I do think should be required, however, is that any and all outside interests should be disclosed, on a regular basis, much as MPs, ministers and other public office holders are obliged to disclose certain holdings, investments, assets and liabilities. 

After all, most MPs are not only party members, but are uniquely dependent on the continuing fiscal solvency of those parties in order to secure future electoral success. Given all that, wouldn't it be a good idea to know whether a party could have a financial interest in a matter that could come before the House? 

In any case, unless the law is changed to tighten up the requirements for annual reporting, or the parties voluntarily share the details of their pecuniary interests -- which recent experience would suggest they're not terribly keen to do -- the sources of all that "other revenue" will continue to be kept secret. 



Tags: blackberry jungle, black hole, elections canada, political financing

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