CBC In Depth
Political contributions: money, money, money
CBC News Online | June 5, 2006

Hitting the campaign trail is not a cheap endeavour. Entry fees, staff, campaign signs, even paper and pens can run up a hefty tab.

For example, here's how much the major parties spent in 2004 federal election:

  • Bloc Québécois: $4,511,087.12.
  • Conservatives: $17,284,256.91.
  • Liberals: $16,640,947.00.
  • NDP: $12,041,249.32.
A party leadership race can be costly too. In the 2006 Liberal leadership race, candidates were required to pay $50,000 just to enter the race, and the campaign spending limit is $3.4 million.

So, candidates hit the fundraising trail to finance their activities. But where that money comes from has been the focus of much electoral reform, scandal and scrutiny.


In the 1970s, there was growing concern over political fundraising and financing of parties and election campaigns. And in response, in 1974, the Canadian government introduced the Election Expenses Act. It was the first attempt at regulating party finances in the country.

The act brought in more election spending controls, such as expense limits, and required disclosure of where exactly the money went. The act's premise was that the financing of elections should be open to public scrutiny. It tried to curb runaway spending and also introduced partial funding of campaigns with public money, to make the political process more financially equal between parties and candidates.

Fast forward to more recent times. In June 2002, then-prime minister Jean Chrétien introduced a new ethics package that forced all ministers to disclose any political donations, including contributions for potential leadership campaigns. They were now required to disclose funds within 30 days of a donation, unless the funds go into a blind trust. In that case, they will have to disclose the funds no later than 30 days before a leadership convention.

"I believe that these new guidelines strike an appropriate balance between responsibilities to constituents ... and the perception that a minister may seem to have been exerting influence that ordinary members of Parliament do not have," Chrétien said in a news conference.

But the most significant overhaul came in 2003, with Bill C-24, An Act to amend the Canada Elections Act and the Income Tax Act (Political Financing), also introduced by Chrétien. Prior to this, political contributions could be made by individuals, corporations, unions and other organizations, Canadian or not, a point which was widely criticized. In the past, Canada's election law had focused more on spending limits, rather than who gave what. Bill C-24, in effect, restricted contributions to Canadian citizens and permanent residents, with some minor exceptions, and enforced a limit on the amounts given.

Once the bill came into effect in January 2004, corporations and unions could only give no more than $1,000 annually, with adjustments for inflation. But, some organizations aren't able to give that either. Corporations that don't do business in Canada, unions that don't hold bargaining rights for Canadian employees, and Crown corporations that get more than 50 per cent of their funding from the government aren't eligible. Canadians, however, could give $5,000 annually, also with adjustments for inflation. But, indirect contributions are prohibited. Plus, any person or corporation who gave more than $200 would have their name and address published. "Contributions" also included goods and services donated "in-kind."

But, recognizing that these limits would hamper campaign fundraising ability, the bill further increased public money put toward the political process. There was now a direct subsidy given to the party. And the money given was directly tied to votes. Parties that earned more than two per cent of the vote nationally, or five per cent in a riding, would be given $1.75 (indexed for inflation) for every vote they receive. Elections would now be financed almost 90 per cent by the public.

While elections were subject to spending limits before Bill C-24, for the first time, federal party leadership races were too.

"Leadership races were now regulated by Elections Canada, which had never happened before," said Nelson Wiseman, politics professor at the University of Toronto. "And so before, you know you could get your money, anywhere, anyhow from anyone. Now it's regulated the way elections are regulated."

"With these new rules, there will be no more black holes for campaign contributions," said Chrétien during the bill's second reading in 2003. "No more allowing un-receipted money and unaccounted expenses." This made the election process more grassroots, quelling the public's fear that corporations making large donations would wield undue power in the government. Chrétien said there was "a perception that corporate and union contributions buy influence." He said Bill C-24 would address the issue head on. "I firmly believe that the elimination of contributions to political parties by business and trade unions will greatly improve the political culture in Canada."

Contribution controversy

Before the Canada Elections Act was amended by Bill C-24, campaign donations had been a touchy subject.

In July 2002, Paul Martin came under fire after he said he could not reveal the names of people who donated to his leadership campaign. He said the new disclosure rules, brought in a month earlier, only applied to current cabinet ministers and not him, then a former cabinet member. And, he said he didn't think it was fair to name those who donated before the new rules were in effect.

Later that year in October 2002, then Canadian Alliance leader Stephen Harper refused to release information on who donated to his leadership campaign. He later backtracked, and quietly posted a partial list on his party's website. But, he only posted 54 donors who gave more than $1,075 each, leaving out the names of 10 other large donors who refused to go public, and more than 9,000 people who gave less than $1,000 each.

In May 2003, Chrétien hailed the end of corporate donations, ironically, at a $500-a-plate corporate fundraiser for the Liberal party. Since coming to power, the former PM had raised more than $30 million from these dinners, holding 10 such events each year, one in every province. But, citing his bill, Chrétien said no longer would he, or his successors, take large corporate donations.

In July 2005, the RCMP was investigating how Surrey Conservative MP Gurmant Grewal handled donations to his 2004 re-election campaign. There were allegations by some of Grewal's contributors who said they didn't know where their money went. Barj Dhahan, a Vancouver businessman, said he donated to Grewal's campaign expecting to get a tax receipt, but didn't.

The Conservatives' national office said it reviewed the donations and found nothing wrong. William Stares, the party's communications director, said since the donations were made outside of an election period, no receipts were required. The RCMP probe is continuing.

In May 2006, Liberal leadership candidate Joe Volpe, took some flak for the source of his campaign funds. It was revealed that two of his campaign donors were 11-year-old twin boys, and a 14-year-old boy who donated $5,400 each, the allowed maximum. The boys, and several other donors, were in some way connected to head honchos at Apotex Pharmaceuticals, contributing $5,400 each, for a total of $108,000. On June 1, 2006, the former immigration minister gave $27,000 of the donations back to those donors under 18, to avoid the misperceptions. But, Volpe insisted that nothing illegal was done.

No law was broken, said politics professor Wiseman, but, in politics it doesn't matter. Perception is what counts. "The big angle in this story isn't the legal side," he said. "If the law was broken, the perception is the spirit of the law is violated. That hurts."


Sober second thought
RELATED: 39th Parliament 38th parliament Harper at the helm Canada Votes

Political Contributions by Corporations and Trade Unions � New Rules on January 1, 2004, on the Elections Canada Web site

Bill C-24: An Act to amend the Canada Elections Act and the Income Tax Act (Political Financing), on the Parliament of Canada Web site

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Paul Martin

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