B.C. joins national trend to clean up political fundraising — and we're paying for it

British Columbia is introducing political contribution limits, banning union and corporate donations and asking taxpayers to make up the difference, bringing the province in line with fundraising rules in most other jurisdictions in Canada.

Political fundraising in B.C. was virtually unlimited. Parties could accept contributions from individuals, corporations and unions in any amount and from anywhere — not only in the country, but from abroad as well.

Banning those corporate, union and out-of-province donations and putting a limit on contributions was one of the major planks of the B.C. NDP's election campaign this spring.

It was also one of the stipulations of the agreement with B.C. Green Leader Andrew Weaver that put the NDP's John Horgan into the premier's office.

In addition to the bans, the B.C. government has introduced legislation that will set the limit of individual contributions at $1,200 annually. Fundraisers attended by party leaders, cabinet ministers and parliamentary secretaries will also have to be publicly reported, while those in private residences will have donation limits of $100.

These changes will have significant repercussions on political fundraising in the province. To cope with the drop in revenue, the parties will be given a subsidy worth $2.50 for every vote they received in the 2017 election. The subsidy will be lowered and phased out over five years.

Part of wider trend

Though Quebec banned union and corporate donations and put a cap of $3,000 on contributions 40 years ago — the limit was reduced to just $100, the lowest in the country, in 2012 — changes to political fundraising rules have been accelerating over the past few years.

Manitoba banned union and corporate donations in 2000 and limited contributions to $3,000 (since increased to $5,000), followed by the federal government bringing in limits and banning union and corporate donations to parties in 2004. Nova Scotia followed suit in 2010.

But the pace of reform has picked up since 2015, when Rachel Notley's NDP government in Alberta banned union and corporate donations. This was followed by a $4,000 limit on contributions in 2016.

Faced with fundraising scandals, the Ontario Liberals banned union and corporate donations that year and also brought in a limit of $3,600, down from over $30,000 before. The Liberals also prohibited members of the legislature, candidates and party leaders (among others) from attending fundraising events.

After feeling the heat over his attendance at so-called "cash-for-access" fundraisers, Justin Trudeau's federal government introduced new rules this year banning the presence of party leaders, cabinet ministers and leadership contenders at private fundraisers.

New Brunswick also recently brought in a ban on union and corporate donations and cut the $6,000 contribution limit in half.

With B.C. moving forward, that leaves only Saskatchewan, Newfoundland and Labrador and Prince Edward Island as provinces that allow unlimited union and corporate donations.

The Liberals in P.E.I. have delayed promised changes that would limit contributions and ban union and corporate donations — something the government is reconsidering.

Unions, corporations are lucrative sources

It might be tempting for political parties to permit union and corporate donations. They are very lucrative. In 2017 until the May election, the B.C. NDP took in 40 per cent of its contributions from unions, while the Liberals brought in 60 per cent of their donations from corporations.

In Saskatchewan, the governing Saskatchewan Party garnered $2.6 million of its $5.7 million in contributions in 2016 from corporate donors. The opposition New Democrats reaped $1.3 million from unions and corporations out of a total of $2.4 million raised.

In New Brunswick, just over 60 per cent of the $451,000 the Liberals raised in 2015 came from corporations, while a CBC News analysis found 57 per cent of all donations in Prince Edward Island that year came from either unions or corporations. 

Adapt to survive

Adapting to the new reality, however, can be difficult. The federal Liberals did not develop a robust grassroots fundraising organization before the federal rules changed, and they were slow to build one afterward.

Between 2001 and 2003, the Liberals raised $43.4 million, but those revenues dropped to $22.1 million in 2004-06.

The New Democrats also saw their revenues cut almost in half.

The Conservatives, however, adapted quickly. Their fundraising grew from the $24.8 million raised by the PCs and Canadian Alliance in 2001-03 to $55.9 million by 2007-09. They have continued to out-fundraise the Liberals in every year since.

Taxpayer subsidies in some form

Topping up party coffers from taxpayer funds has been one way to ensure parties don't starve to death after stricter fundraising laws take effect.

Federal parties received per-vote subsidies between 2004 and 2015, when they were phased out.

Ontario, Quebec, New Brunswick, Nova Scotia and now British Columbia provide provincial parties with per-vote subsidies, while Alberta, Saskatchewan, Newfoundland and Labrador and Prince Edward Island do not. Manitoba's PC government, elected in 2016, recently abolished them.

In B.C., the per-vote subsidies will cost $16 million until they are phased out. 

But whether or not parties receive per-vote subsidies, they nevertheless benefit significantly from public dollars.

Contributors receive tax credits

With the exception of Quebec, tax credits are awarded to contributors. The maximum credit varies per province, topping out at $650 at the federal level. The Department of Finance estimates the cost of the political contribution tax credit at $25 million every year.

Parties also have a portion of their election expenses reimbursed. Taxpayers were on the hook for $105 million in the 2015 federal election. In B.C., the price tag will be $11 million for the 2017 vote.

Tax credits and reimbursements mean the more successful parties are in raising money, the more it costs the treasury in forgone revenue. And the more money they raise, they more they have to spend — and be reimbursed for — in elections.

The trend toward stricter political financing rules has significantly reduced the potential and real conflicts of interest politicians were forced to put themselves in to keep their parties solvent and capable of mounting credible election campaigns.

In more and more parts of the country, the result is that wealthy Canadians, unions and corporations are no longer bankrolling politics. But a fairer and more transparent democracy comes at a price. One way or another, taxpayers foot the bill.

• All taxpayers pitch in for $1,500 fundraising tickets