Party Financing

The Cabinet and parliamentary systems tend to centralize power and funds in the hands of the leadership, but the influences of FEDERALISM result in a dispersal of both among competing national and provincial governments and party structures. From Confederation until about 1897 party funds were an essential tool in overcoming the divisive tendencies of weak partisanship - the "loose fish" phenomenon and dominant ministerialism.

Party chiefs such as John A. MACDONALD were intimately involved in fundraising and in distributing election funds to ensure the election loyalty of their followers. Inevitably they were also involved in questionable dealings with financial interests in search of concessions, contracts and favours, as exemplified by the PACIFIC SCANDAL of the 1870s and other railway scandals (see PATRONAGE).

As partisanship crystallized, party leaders tried to disengage themselves from the raising of campaign war chests, but W.L. Mackenzie KING's entanglement in the Beauharnois Scandal of 1931 - King, who had accepted money from a promoter of a hydroelectric plant, called it his "vale of humiliation" - proved that it continued to haunt them. Fundraising specialists gradually assumed this role, freeing party leaders from immediate involvement in this necessary but messy aspect of party politics (see CORRUPTION; CONFLICT OF INTEREST).

Until recently, the large industrial and financial interests of Toronto and Montréal (hundreds rather than thousands of givers) provided nearly all the funds required by the LIBERAL and PROGRESSIVE CONSERVATIVE parties. Although recent reforms at the federal and provincial levels have modified this pattern, campaigns at all levels, including the municipal, depended largely on the same sources as the central party funds. Currently, multinational firms and their Canadian branches play a large role in the financing of the Canadian PARTY SYSTEM.

Fundraising was traditionally the responsibility of committees in Toronto and Montréal and of various satellite groups in Hamilton, London, Winnipeg, Calgary and Vancouver, though western fund raisers have lately become more prominent because of shifts in the Canadian economy. The main fund raisers were not responsible to the formal, elected party organs and rarely held elective office.

Appointed by the party leader, they were usually co-opted from the legal or financial communities, or else they inherited their positions from older family members. Their usual reward when a party achieved office was appointment to the Senate or the bench.

The traditional model was altered by the rise of third parties and the resurgence of provincial economic and political power after WWII. The CO-OPERATIVE COMMONWEALTH FEDERATION (CCF), the SOCIAL CREDIT movement in Alberta and Québec, and the PARTI QUÉBÉCOIS tapped new financial resources and became largely self-financing. The NEW DEMOCRATIC PARTY has relied heavily on its membership but receives substantial support from trade unions (in the 1993 federal election, for example, roughly a third of the funds raised by the central party came from this source).

The emergence of provincial power has not lessened party dependence on business but has altered the entry point for party monies and reduced the former dependence of provincial organizations on federal ones.

As a result of the demise of the notorious UNION NATIONALE machine of Maurice DUPLESSIS and because of scandals in Ottawa and the provinces, - and perhaps also due to the effect of the American Watergate scandal - there was a movement for the control of election expenses during the 1960s and 1970s. A Federal Advisory Committee on Election Expenses led to the ELECTION EXPENSES ACT (1974) while the Ontario Commission on the Legislature led to the establishment of the Commission on Election Contributions and Expenses in that province - both reforms, perhaps significantly, being introduced during periods of minority government.

Reforms have now been adopted in all of the provinces, and in some cases enabling legislation permits municipalities to introduce their own expense regimes. The role of party funds, formerly ignored, has thus been recognized. Control bodies have been instituted and ceilings imposed in most cases on party and candidate spending and contributions. Disclosure of the amounts of donations over $100 and sources of income and expenses is mandatory. Incentives for individual donors have been provided in the form of graduated tax credits favouring smaller gifts.

Subsidies in the form of reimbursements for a portion of the total permitted expenses for candidate and party spending at election time are now provided at the federal level and in a majority of provinces. On the other hand, no other jurisdiction has yet followed Québec's lead in banning corporate and other organizational contributions altogether. In that province only individuals are permitted to give money to the parties.

The maximum permitted expenditures for parties and candidates at the federal level is adjusted according to the rise in the CONSUMER PRICE INDEX. In the 1993 federal general election 2156 candidates raised over $42.2 million from 160 944 contributors and spent over $41.2 million, $14.9 million (36%) of which was reimbursed from the federal treasury. Total reported central registered party spending for the 1993 campaign amounted to over $37.8 million, of which nearly $7 million was reimbursed solely to the five parliamentary parties by the federal treasury.

In the 1993 election campaign all parties and candidates raised over $96 million, of which the Progressive Conservatives collected $34.1 million, the Liberals $27.6 million, the NDP $14.9 million and the REFORM PARTY $13.6 million (figures not available for the Bloc Québécois). These sums were more than twice the amounts raised by these parties in the 1984 federal general election (Reform did not exist at that time). The effect of the changes which have been legislated since the 1970s can be measured by the fact that in 1993 nearly half ($43.7 million) of all funds raised came from individual contributions and only about $32.6 million from business and commercial sources. Total spending by parties and candidates in the 1993 campaign amounted to just under $80 million, of which nearly $23 million was reimbursed.

The parties are permitted a combined total of 6.5 hours broadcast time; the allocation to each party is roughly determined by the number of seats held and the size of the popular vote won at the previous election by each party represented in the outgoing Parliament. For the 1997 federal election the parties were unable to agree on a division and an arbitrator therefore established it at 118 minutes for the Liberals, 51 for Reform, 43 for the Bloc Québécois, 34 for the Progressive Conservatives, 26 for the NDP, and 118 for all others.

Much of the mystery surrounding political funds has been eliminated, with consequent equity among political competitors, and escalation of costs has been checked to some degree. Grass-roots donations have been encouraged and the number of individual personal gifts has multiplied, with the result that even the Liberals and Conservatives (traditionally the most dependent in the corporate sector), today raise almost as much money from individuals as they do from business and commercial sources. The Reform Party is very strongly dependent upon individual contributions while also drawing some support from business. Both the Bloc Québécois and the New Democrats are overwhelmingly grass-roots parties, but trade-union contributions to the NDP continue to amount to roughly a third of its revenue.

The effect of over twenty years of reform, therefore, has been to substantially reduce the influence of corporate money in the Canadian electoral process. Short of all jurisdictions adopting the Québec scheme, what remains is a need to control both expenses and contributions more thoroughly and consistently at the provincial level.

Author KHAYYAM Z. PALTIEL Revised: JOHN M. WILSON

Suggested Reading
Khayyam Z. Paltiel, Political Party Financing in Canada (1970); Four research studies prepared for the Royal Commission on Electoral Reform and Party Financing: W.T. Stanbury, Money in Politics: Financing Federal Parties and Candidates in Canada (1992); F. Leslie Seidle, ed, Provincial Party and Election Finance in Canada (1992), Comparative Issues in Party and Election Finance (1992) and Issues in Party and Election Finance in Canada (1992).

Links to Other Sites
Liberal Party of Canada
The official website of the Liberal Party of Canada.

Conservative Party of Canada
The official website for the Conservative Party of Canada.

The Hill Times
The website for the Canadian newsweekly "The Hill Times." Features news and opinion about Canadian federal politics.