Ottawa·Analysis

Ottawa councillors unrattled by ban on corporate campaign contributions

Among recent amendments to the Municipal Elections Act is a ban on corporate and union donations. But even Ottawa city councillors who rely heavily on such campaign contributions say they're not worried about raising funds in 2018.

Biggest recipients of corporate fundraisers insist they're not worried about new contribution rules for 2018

(Kristy Nease/CBC)

In the flurry of end-of-session activity at Queen's Park, amidst a cabinet shuffle and a $1-billion announcement for the second phase of Ottawa's LRT project, an update to the Municipal Elections Act passed without much fanfare.

But the legislation was amended in ways that could have a big impact on the next round of civic elections in 2018.

Changes include:

  • Allowing municipalities to use ranked-ballot voting in the next election.
  • Regulating third-party paid advertisements in support or against candidates or referendum questions.
  • Shortening the campaign period.

But it's the banning of corporate and union donations that is arguably the biggest change. These types of donations have long been controversial. This marks the first time they've been banned in Ottawa, and for councillors who have relied heavily on corporate donors — there are relatively few union donors — raising money in 2018 could be quite different.

Kanata South Coun. Allan Hubley raised 57 per cent of his 2014 campaign finances from corporations.

Kanata South Coun. Allan Hubley wasn't the biggest fundraiser among his council colleagues, but he did raise a whopping 59 per cent of his $22,360 in contributions from corporate donors. About 57 per cent of Barrhaven Coun. Jan Harder's fundraising came from corporations. And corporate donations accounted for about half of the money raised by Osgoode Coun. George Darouze, Beacon Hill-Cyrville Coun. Tim Tierney, Cumberland Coun. Stephen Blais and Gloucester-Southgate Coun. Diane Deans.

Not worried, councillors insist

Mayor Jim Watson, who has historically argued against the ban, accepted it when the province imposed it. He told CBC that it was fair because it would be imposed on all municipalities in Ontario, creating a level playing field. This makes no sense, of course, as Watson is not running against mayoral candidates in, say, Hamilton or North Bay.

It's not something I lose any sleep on at all.- Barrhaven Coun. Jan Harder

And should he run again in 2018, he likely wouldn't have too much trouble raising cash from individual donors. Of the $397,718 Watson raised in 2014, only 24 per cent came from corporations.

Indeed, the councillors we spoke with insist the ban won't negatively affect them if they run for re-election.

"Given the amount of money that I've raised over the last 30 years for community groups and charities, I can put those skills to good use come election time," Hubley wrote in an email.

Barrhaven Coun. Jan Harder said she isn't worried about the ban on corporate donations, despite relying on them for more than half her fundraising in 2014. (CBC Ottawa)

"These are people that live in this town and can contribute under their own name if they wish to do so," said Harder. "I don't see a big change in that regard. And it's not something that I lose any sleep on at all."

Blais agreed, adding that most companies involved in municipal politics are family-owned, and the executives of these corporations may be more likely to donate on a personal level.

Still, it's not clear that executives will be willing to personally cover the gap that the corporate donation ban will leave. For example, Ottawa Senators president Cyril Leeder donated $250 to Harder's campaign, while Capital Sports & Entertainment Inc, which owns the team, donated $300.

Now that Capital Sports is no longer able to contribute, is it reasonable to presume that Leeder will donate $550 personally to a single candidate? And remember, Harder isn't the only one to whom Leeder and Capital Sports donated in the last election.

Blais also pointed out that  a shortened campaign period requires fewer dollars, which should help all candidates. At a personal level, he's not concerned.

"I raised almost $20,000 in personal donations both in this most recent election but also in my first election in 2010," he said. "So I do have a strong base of personal supporters who are willing to contribute."

Resistance to corporate donation ban 

Although some politicians have argued for a ban for some time — former councillor Alex Cullen comes to mind— councils who have been elected using corporate and union donations have been loathe to nix those sorts of contributions.

Watson and 18 of his council colleagues voted against Rideau-Rockcliffe Coun. Tobi Nussbaum's motion to ask the province for permission to ban corporate and union donations.
Coun. Tobi Nussbaum won the Rideau-Rockcliffe race in 2014 without corporate or union donations. (CBC)
 

Watson and others have argued that corporations are important players in the city, and hence should be able to contribute to election campaigns. They have also argued that banning corporate donations would make the process less transparent, as voters usually recognize company names but wouldn't always recognize whether individual donors are connected to companies.

Councillors have also defended corporate donations because of the cost of election campaigns, which vary ward by ward, but are generally in the $30,000 range. A mayoral race can cost about $500,000.

Corporations do contribute to city life — and pay property taxes — so there's a valid argument to be had over whether a corporation is a "citizen." But the rest of the arguments against the ban are flimsy.

Avoids doubling contributions

Corporate donations are not necessarily more transparent. Darouze, for example, received five donations from numbered companies, making those corporations effectively anonymous.

As for the argument that fewer people will recognize the names of corporate executives instead of the company names, perhaps. But as it stands now, there are countless examples where a corporation and its executives donate to the same candidate, which allows multiple contributions by the same interests. Banning corporate donations will, at the very least, eliminate that double-donating by a company and its CEO.

The ban will also wipe out possible rule breaking that is not enforced by the province. In 2014, for example, developer DCR Phoenix donated a total of $10,000 to 17 candidates. That's double the allowable amount of $5,000. The contravention was discovered by local activists. So what happened to DCR Phoenix? Nothing. No fine, no penalty, no nothing.

In another instance, three nominally separate Cavanagh companies each gave $750 — the maximum allowable donation — to Innes Coun. Jody Mitic. If those companies are related, as defined by the Income Tax Act, then Cavanagh broke the rules. But it's almost impossible to find out if private companies are related unless someone from those companies admits it. 

No provincial body is checking into this. Banning all corporate donations closes this loophole, eliminating the over-contribution of corporations by eliminating them altogether.

​Corporate-free campaigning nothing new

As for campaigns being expensive, many candidates have been able to run successfully for office without corporate and union donations. In Toronto, they haven't been allowed in the last two municipal elections there.

A number of Ottawa councillors won in 2014 without corporate and union donations, including Nussbaum, Somerset Coun. Catherine McKenney, Kitchissippi Coun. Jeff Leiper and West Carleton-March Coun. Eli El-Chantiry.

There are some who believe that developers already have too much influence at City Hall, and suspect it starts with the amount of money companies and individuals in that sector donate to election campaigns. Whether that's the case is debatable, but there's no denying that the decisions made around the council table have direct impact on developers' businesses.
The new campaign finance rules won't eliminate fundraisers like the one held in September 2014 by two development executives for Mayor Jim Watson. (CBC)

But while the new rules will ban the companies, individuals connected to those corporations will still be free to donate. 

Neil Malhotra of Claridge and Ted Phillips of Taggart hosted Watson's single-biggest fundraiser in 2014, where the mayor collected $52,600 from development types. That sort of fundraiser will still be allowed, as long as the donations are made in individuals' names.

Or take Hubley's 2014 contributions: He raised most of his 2014 contributions from corporations. But it also appears that nine of his 10 individual donations were from people connected to companies who do business with the city, mostly in the development sector. Those contributions will still be allowed in spite of the changes to the legislation governing municipal elections in this province.

ABOUT THE AUTHOR

Joanne Chianello

City affairs analyst

Joanne Chianello is an award-winning journalist and CBC Ottawa's city affairs analyst. You can email her at joanne.chianello@cbc.ca or tweet her at @jchianello.

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