Liberal Party Rules for the Grit race: what to look for: A great deal of money will have been spent before rules come into effect

The National Post reported last week that the Liberal Party's rules for the leadership race leading up to the convention in mid-November, 2003, are likely to be announced on Feb. 10. The Post said the party is expected to set a limit of $4- million on each candidate's expenditures, impose a service fee of $50,000 to $100,000 on each candidate, and take 20 per cent of all money raised by each candidate. To put the $4-million into context, recall that the Liberal Party's spending limit for leadership candidates in 1990 was $1.7-million. When "pre-election call expenses" were eliminated, both Jean Chretien and Paul Martin were just under the limit.In 1993, Kim Campbell spent $3-million to win the leadership of the Progressive Conservative Party. If the Liberals' limit in 1990 were adjusted for inflation, it would be $1.96-million in 2003. Thus, the Liberal Party is doubling the expenditure limit in real terms. But, as we shall see, a great deal of money will have been spent before the rules come into effect.The purpose of this column is to set out the key questions which should be used to review the Party's rules when they are made public.Question #1: What is the time period covered by the rules? It appears that it will be from Feb. 10 to the convention in November. Party President Stephen LeDrew has been quoted as saying, "To ask for a retroactive accounting is a mug's game." If this proves to be the case, a big part of Paul Martin's expenditures (possibly as much as $2-million), and which have apparently given him a long lead in the race, will not come under the official limit. And it means that disclosure of donations prior to the official start of the race, will depend on the guidelines established by the Prime Minister for Cabinet ministers on June 12, 2002.These "Guidelines to Govern Ministerial Activities for Personal Political Purposes" deal with fundraising for leadership races: a) Ministers may opt to put contributions in a blind trust (after consultation with the Office of the Ethics Counsellor) that will be disclosed no later than 30 days before a leadership convention, or b) Donations to a minister's leadership campaign including contributions in kind, collected outside a blind trust or which otherwise become known to a minister, must be disclosed every 60 days. Further, all contributions to a minister's leadership campaign received before the publication of the new guidelines must be disclosed within 30 days (i.e., by July 11, 2002). Finally, the new guidelines do not apply to "campaign expenditures," nor to "funds raised for a political party," both rather obvious loopholes.The new guidelines focus on "funds raised for personal political purposes," and they also refer to funds raised for a leadership campaign as if they are the same thing. Not so. When a minister raises funds for re-election as an MP he is obviously doing so for "personal political purposes." Indeed, some of the money for some ministers' leadership campaigns came from the surplus they generated during the November, 2000 general election. For example, John Manley's riding association contributed $96,000 to his leadership campaign, out of a total of $171,950 raised by July 11, 2002. Allan Rock's riding association collected $236,592 in 2001 (not an election year!) from corporations and individuals, according to The Globe and Mail (July 4, 2002). The association could give it to Rock's leadership campaign.Question #2: What must be disclosed? Canadians should be told the name and address of each donor, the amount for all donations over $200 (the threshold for contributions to parties and MP candidates), and the date of the donation. Recall that the Canadian Alliance did not require its leadership candidates in 2002 to disclose the names of donors and the amount each gave. Winner Stephen Harper, who raised $1.1-million, later released a partial list of donors - only 54 of the 64 donors who gave more than $1,075. Some 8,289 individuals gave under $200 while another 1,212 gave between $200 and $1,075, according to The Globe and Mail, (Oct. 2, 2002). And shouldn't donors be required to reveal if they have had dealings with a minister or his/her department? Recall that the Ethics Counsellor required Ministers Copps, Manley and Rock to return a number of donations to their campaigns as they would have placed them in a conflict of interest.Question #3: When will disclosure be made? In the past, parties have never required disclosure until after the vote for the next leader. But the PM's Guidelines for cabinet ministers say that contributions put into a blind trust (as Mr. Manley, Ms. Copps, Mr. Rock and Mr. Martin have done) must be disclosed no later than 30 days before the convention. Paul Martin refused to disclose the donors to his unofficial campaign, saying he would do so at least 30 days before a leadership convention (Globe and Mail, July 12, 2002; The Hill Times, July 22, 2002). Martin released the names of donors of $110,857 he raised in July and August 2002 (Globe and Mail, Sept. 12, 2002). From Sept. 11 to Nov. 6, 2002, Paul Martin raised $1,159,789 (Globe and Mail, Nov. 8, 2002).Question #4: What is the limit on contributions by individuals, trade unions and corporations? The Liberals, Tories and Canadian Alliance have never put a limit on the amount contributed by any type of donor for any leadership race. But the PM said in December, 2002 that he wants to legislate such a limit for federal parties and candidates for the Commons. Further, he has mooted the idea of limiting donors to electors (as does Quebec and Manitoba). It is far more important to limit the total amount given by any entity to a leadership candidate than it is to do so to a party or candidate for MP. Why- because power in Ottawa is highly concentrated in the hands of the PM and the next leader of the Liberal Party may well become the next PM.Question #5: Will leadership candidates be permitted to flow donations through the party for the purpose of allowing donors to receive the income tax credit (maximum value $500 in each calendar year)? While the Chief Electoral Officer has tolerated this practice in the past, this use of the tax credit was never contemplated when the original legislation creating it was passed in 1974. Nor was this use specifically discussed when the last set of amendments were made in 2000.Question #6: Who will be eligible to vote for the next leader? It seems clear that the battle to sign up new members will continue to the cut-off date to be announced on Feb. 10. It is likely to be no more than 30 days before voting day. But Paul Martin's supporters are not only far ahead in this race, they have also "captured" key executive positions in the Liberal Party and re-made the rules in Mr. Martin's interest. Will the party change the rules for signing-up new members?Question #7: Will leadership candidates be permitted to accept contributions from foreigners? The Canada Elections Act specifies that federal parties and candidates for the House of Commons may not accept money from foreigners.The National Post reported last week that the Liberal Party's rules for the leadership race leading up to the convention in mid-November, 2003, are likely to be announced on Feb. 10. The Post said the party is expected to set a limit of $4- million on each candidate's expenditures, impose a service fee of $50,000 to $100,000 on each candidate, and take 20 per cent of all money raised by each candidate. To put the $4-million into context, recall that the Liberal Party's spending limit for leadership candidates in 1990 was $1.7-million. When "pre-election call expenses" were eliminated, both Jean Chretien and Paul Martin were just under the limit.In 1993, Kim Campbell spent $3-million to win the leadership of the Progressive Conservative Party. If the Liberals' limit in 1990 were adjusted for inflation, it would be $1.96-million in 2003. Thus, the Liberal Party is doubling the expenditure limit in real terms. But, as we shall see, a great deal of money will have been spent before the rules come into effect.The purpose of this column is to set out the key questions which should be used to review the Party's rules when they are made public.Question #1: What is the time period covered by the rules? It appears that it will be from Feb. 10 to the convention in November. Party President Stephen LeDrew has been quoted as saying, "To ask for a retroactive accounting is a mug's game." If this proves to be the case, a big part of Paul Martin's expenditures (possibly as much as $2-million), and which have apparently given him a long lead in the race, will not come under the official limit. And it means that disclosure of donations prior to the official start of the race, will depend on the guidelines established by the Prime Minister for Cabinet ministers on June 12, 2002.These "Guidelines to Govern Ministerial Activities for Personal Political Purposes" deal with fundraising for leadership races: a) Ministers may opt to put contributions in a blind trust (after consultation with the Office of the Ethics Counsellor) that will be disclosed no later than 30 days before a leadership convention, or b) Donations to a minister's leadership campaign including contributions in kind, collected outside a blind trust or which otherwise become known to a minister, must be disclosed every 60 days. Further, all contributions to a minister's leadership campaign received before the publication of the new guidelines must be disclosed within 30 days (i.e., by July 11, 2002). Finally, the new guidelines do not apply to "campaign expenditures," nor to "funds raised for a political party," both rather obvious loopholes.The new guidelines focus on "funds raised for personal political purposes," and they also refer to funds raised for a leadership campaign as if they are the same thing. Not so. When a minister raises funds for re-election as an MP he is obviously doing so for "personal political purposes." Indeed, some of the money for some ministers' leadership campaigns came from the surplus they generated during the November, 2000 general election. For example, John Manley's riding association contributed $96,000 to his leadership campaign, out of a total of $171,950 raised by July 11, 2002. Allan Rock's riding association collected $236,592 in 2001 (not an election year!) from corporations and individuals, according to The Globe and Mail (July 4, 2002). The association could give it to Rock's leadership campaign.Question #2: What must be disclosed? Canadians should be told the name and address of each donor, the amount for all donations over $200 (the threshold for contributions to parties and MP candidates), and the date of the donation. Recall that the Canadian Alliance did not require its leadership candidates in 2002 to disclose the names of donors and the amount each gave. Winner Stephen Harper, who raised $1.1-million, later released a partial list of donors - only 54 of the 64 donors who gave more than $1,075. Some 8,289 individuals gave under $200 while another 1,212 gave between $200 and $1,075, according to The Globe and Mail, (Oct. 2, 2002). And shouldn't donors be required to reveal if they have had dealings with a minister or his/her department? Recall that the Ethics Counsellor required Ministers Copps, Manley and Rock to return a number of donations to their campaigns as they would have placed them in a conflict of interest.Question #3: When will disclosure be made? In the past, parties have never required disclosure until after the vote for the next leader. But the PM's Guidelines for cabinet ministers say that contributions put into a blind trust (as Mr. Manley, Ms. Copps, Mr. Rock and Mr. Martin have done) must be disclosed no later than 30 days before the convention. Paul Martin refused to disclose the donors to his unofficial campaign, saying he would do so at least 30 days before a leadership convention (Globe and Mail, July 12, 2002; The Hill Times, July 22, 2002). Martin released the names of donors of $110,857 he raised in July and August 2002 (Globe and Mail, Sept. 12, 2002). From Sept. 11 to Nov. 6, 2002, Paul Martin raised $1,159,789 (Globe and Mail, Nov. 8, 2002).Question #4: What is the limit on contributions by individuals, trade unions and corporations? The Liberals, Tories and Canadian Alliance have never put a limit on the amount contributed by any type of donor for any leadership race. But the PM said in December, 2002 that he wants to legislate such a limit for federal parties and candidates for the Commons. Further, he has mooted the idea of limiting donors to electors (as does Quebec and Manitoba). It is far more important to limit the total amount given by any entity to a leadership candidate than it is to do so to a party or candidate for MP. Why- because power in Ottawa is highly concentrated in the hands of the PM and the next leader of the Liberal Party may well become the next PM.Question #5: Will leadership candidates be permitted to flow donations through the party for the purpose of allowing donors to receive the income tax credit (maximum value $500 in each calendar year)? While the Chief Electoral Officer has tolerated this practice in the past, this use of the tax credit was never contemplated when the original legislation creating it was passed in 1974. Nor was this use specifically discussed when the last set of amendments were made in 2000.Question #6: Who will be eligible to vote for the next leader? It seems clear that the battle to sign up new members will continue to the cut-off date to be announced on Feb. 10. It is likely to be no more than 30 days before voting day. But Paul Martin's supporters are not only far ahead in this race, they have also "captured" key executive positions in the Liberal Party and re-made the rules in Mr. Martin's interest. Will the party change the rules for signing-up new members?Question #7: Will leadership candidates be permitted to accept contributions from foreigners? The Canada Elections Act specifies that federal parties and candidates for the House of Commons may not accept money from foreigners.Question #8: Under what conditions will each leadership candidate gain access to the party's list of members? Obviously, the list will be growing right up to the cut-off date. There is an incentive for candidates to register the new members they have recruited as late as possible so as to reduce the time rivals have to seek the support of these members.Question #9: How will the efforts of volunteers be treated in the Liberal Party's rules? On the one hand, the rules should encourage wide participation in leadership races - it's good for democracy. On the other hand, a standard technique of major lobbying firms is to have one or more senior personnel work for several weeks (even months) on a leadership campaign "during their holidays." These people have the skills of professional organizers. In the past, no party has required that the market value of their time be treated either as a contribution in kind, or as a campaign expenditure. Even if there are no limits on contributions, the fair market value should be reported, because it is likely to be among the larger contributions (e.g., if the market value is $1,500 per day and the lobbyist donates three weeks time, the amount is over $30,000). If reported as a campaign expenditure, candidates would have to think carefully about such help, because of the limits on total expenditures.Democracy Watch has argued that "lobbyists working for any party leadership candidate can easily violate Rule 8 of the Lobbyists Code of Conduct, which states that Lobbyists shall not place public office holders in a conflict of interest by proposing or undertaking any action that would constitute an improper influence on a public office holder." It notes that section 2(1) of the Lobbyists Registration Act defines public office holder as including "a member of the Senate or the House of Commons and any person on the staff of such a member."In conclusion, if past practice is any guide, look for the Liberal Party to write a set of rules that will disguise more than they reveal. And then look for the clever fellows working for each candidate to exploit the subtle loopholes. If the party's rules do not provide satisfactory answers to the questions posed above, they will provide a strong case for government regulation of party leadership races. Surely the failure to do so is the largest gap in the public regulation of political finances in Canada.W.T. Stanbury is a professor emeritus at the University of British Columbia and was an author of the Lortie Commission on Electoral Financing.

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Liberal Party Rules for the Grit race: what to look for

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Liberal Party Rules for the Grit race: what to look for: A great deal of money will have been spent before rules come into effect

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