HAFF Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Procedure and House Affairs

EVIDENCE

CONTENTS

Tuesday, May 6, 2003

Á

1105

The Chair (Mr. Peter Adams (Peterborough, Lib.))

Mr. William Cross (Professor of Political Science, Mount Allison University)

The Chair

Mr. Robert MacDermid (Associate Professor, Department of Political Science, York University)

The Chair

Mr. François Côté (Lawyer, As Individual)

Á

1110

Á

1115

The Chair

Mr. William Cross

Á

1120

Á

1125

The Chair

Mr. Robert MacDermid

Á

1130

Á

1135

The Chair

Mr. Ted White (North Vancouver, Canadian Alliance)

Mr. William Cross

Mr. Ted White

Mr. François Côté

Á

1140

Mr. Ted White

Mr. François Côté

The Chair

Mr. Jacques Saada (Brossard—La Prairie, Lib.)

The Chair

Mr. Jacques Saada

Á

1145

Mr. François Côté

The Chair

The Chair

Â

1210

Mr. Jacques Saada

Mr. François Côté

The Chair

Mr. Jacques Saada

Mr. François Côté

Mr. Jacques Saada

The Chair

Mr. Jacques Saada

The Chair

Mr. Michel Guimond (Beauport—Montmorency—Côte-de-Beaupré—Île-d'Orléans, BQ)

Â

1215

Mr. François Côté

Mr. Michel Guimond

Mr. François Côté

Â

1220

The Chair

Mr. Geoff Regan (Halifax West, Lib.)

The Chair

Mr. William Cross

Mr. Geoff Regan

The Chair

Mr. Robert MacDermid

Â

1225

The Chair

Mr. François Côté

The Chair

Mr. Dick Proctor (Palliser, NDP)

Mr. François Côté

Â

1230

The Chair

Mr. Dick Proctor

Mr. William Cross

Mr. Dick Proctor

Mr. William Cross

Mr. Dick Proctor

Mr. William Cross

Mr. Dick Proctor

Mr. Robert MacDermid

The Chair

Mr. William Cross

The Chair

Mr. Joe Jordan (Leeds—Grenville, Lib.)

Â

1235

Mr. William Cross

Mr. Joe Jordan

Mr. Robert MacDermid

Mr. Joe Jordan

Mr. François Côté

Â

1240

Mr. Robert MacDermid

The Chair

Mr. Rick Borotsik (Brandon—Souris, PC)

Mr. William Cross

Mr. Rick Borotsik

Mr. Robert MacDermid

Mr. Rick Borotsik

Mr. Robert MacDermid

Mr. Rick Borotsik

Mr. Robert MacDermid

Mr. Rick Borotsik

Mr. Robert MacDermid

Mr. Rick Borotsik

Mr. Robert MacDermid

Mr. Rick Borotsik

Â

1245

Mr. Robert MacDermid

Mr. Rick Borotsik

The Chair

Mr. Jacques Saada

Mr. François Côté

Mr. Jacques Saada

Mr. François Côté

Mr. Jacques Saada

Mr. Robert MacDermid

Mr. William Cross

Mr. Robert MacDermid

Mr. Jacques Saada

The Chair

Mr. Jacques Saada

The Chair

Mr. Ted White

Â

1250

Mr. Robert MacDermid

Mr. Ted White

Mr. Robert MacDermid

Mr. Ted White

Mr. Robert MacDermid

Mr. Ted White

Mr. Robert MacDermid

Mr. Ted White

Mr. Robert MacDermid

The Chair

Mr. Dick Proctor

Mr. William Cross

Mr. Dick Proctor

Mr. William Cross

Mr. François Côté

Â

1255

The Chair

Mr. Robert MacDermid

The Chair

Mr. Geoff Regan

Mr. William Cross

The Chair

Mr. Robert MacDermid

Mr. Geoff Regan

Mr. Robert MacDermid

Mr. Geoff Regan

The Chair

·

1300

Mr. François Côté

The Chair

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CANADA

Standing Committee on Procedure and House Affairs

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NUMBER 038

l

2nd SESSION

l

37th PARLIAMENT

---

EVIDENCE

Tuesday, May 6, 2003

[Recorded by Electronic Apparatus]

Á  (1105)  

[English]

    The Chair (Mr. Peter Adams (Peterborough, Lib.)): Colleagues, we will begin.

    As I think you all know, there will be a vote at 11:45. It's going to be a 30-minute bell, so we'll have some time then. I'll explain that again to our witnesses when I introduce them.

    Before we begin, please look at the proposed calendar. Tomorrow night our meeting will be in our regular committee room, but it will be televised. The principal witness will be Mel Hurtig. It remains to be seen who else will be there.

    Thursday we're hoping to have representatives from Quebec and Manitoba. As you know, in Manitoba there's a particular complication because both the professional electoral officials and the political people are involved in an election. Rick Borotsik has agreed to help there, and I hope Dick can as well. If you have any contacts, my understanding is we're looking for people who are practically involved in the actual process, rather than academics. Thomas will be grateful for any help you can give. Michel, we will be grateful for any help you can give us in Quebec on the same basis.

    On the round table for MPs, the notice has already gone out. It will be at 5:30 on May 13, a week from today, in this room. I hope you will announce this in your caucuses so we can get as many members here as possible.

    I want to correct something I said the other day. I mentioned that the Federation of Independent Business has declined. They don't want to come as witnesses, but they have submitted a written brief. We've circulated it, and we're very grateful for that.

    Now I'm going to proceed directly to the witnesses. I want to welcome François Côté. Tu es très bienvenu ici, François. C'est un plaisir pour moi. François is here as an individual. He's a lawyer.

    From Mount Allison University we have William Cross, professor of political science. Is it William or Bill?

    Mr. William Cross (Professor of Political Science, Mount Allison University): Bill.

    The Chair: Bill, it's a pleasure to have you here.

    From York University we have Robert MacDermid. Is that okay with you?

    Mr. Robert MacDermid (Associate Professor, Department of Political Science, York University): Yes.

    The Chair: Robert MacDermid is in the department of political science.

    We welcome you here.

    You heard me mention a vote. We all know there will be a vote at about 11:45. At some time during your presentation the bells will likely start to ring. You should relax because it will be a 30-minute bell, so there'll be quite a bit of time. As we get closer and I see where we are in the proceedings, we'll make some decision as to what we will do following the vote, if that's okay with you.

    I understand you're each going to make a short presentation. I'll be grateful for that. If it's okay with you, I'll go in the order we have you here on the agenda,

    François, tu peux commencer.

[Translation]

    Mr. François Côté (Lawyer, As Individual): Thank you, Mr. Chair.

    I thank you all for inviting me to appear before the committee and share some point of views on Bill C-24.

    A couple of aspects of this bill have struck me as particularly interesting. It is obvious, when reading Bill C-24, that the government's intent is to focus on democratization of our political system. This bill regulates more than ever before the financial dimension of political parties' management. Presently, Section 404 of the Canada Elections Act aims at preserving our political system from any foreign interference, but now this bill goes further in that it focusses on the quality of democracy, particularly regarding party financing.

    First of all, we must applaud the proposal of limiting electoral contributions exclusively to citizens, the so called individuals. Thus, party financing should reflect the eminently democratic character of their very existence and activities. Political parties must be managed and controlled by their members. This is true for internal decisions made by members, and it also becomes true of the funding when the money comes from individuals, all of them being members or eventually becoming members of the party.

    I would like first of all to make a suggestion, that is to define in the same way the elector in Section 3 of the Act and the individual that can contribute to a political party in the proposed Section 404. The use of different terms by the legislator clearly implies that some people could be eligible to vote but could not contribute to a political party, or the other way around.

    We should also discuss the wisdom of including in the proposed Section 404.1 the derogation allowing contributions up to $1,000 from corporations or trade unions, after having so clearly expressed in Section 404 the principle of the integrity of our political parties financing. The $1,000 exception seems to clash with the rest of the bill since it flatly contradicts the fundamental premise of this bill.

    There is in this bill another mitigation to the principle of democratizing the financing of political parties, that is the $10,000 limit for individual contributions in the proposed Section 405. This limit must be assessed in the light of the levels for reimbursement of eligible electoral expenses. This amount of $10,000 appears to me to be excessively high, given that the levels that are set elsewhere in the Act obviously aim at distributing the reimbursement of expenses equitably among all electors and should be seen as a clear indication of the widest possible distribution of funding sources.

    In this sense, it contradicts the philosophy of this bill to allow a few individuals to fill up the totality of what seems to be the financial pool suggested in the bill. Moreover, the amount of $10,000 suggested in the bill is certainly prohibitive for the vast majority of Canadians whose democratic life the bill aims at improving. In Quebec, this amount is limited to $3,000; perhaps we should apply that formula.

    I am also concerned about the right of third parties in the electoral context. It is obvious that we cannot bypass the severe limits that are set for electoral spending by allowing any organization to intervene in a campaign without having in place any control mechanism for such interventions. There is a limit to freedom of expression. It is obvious that any regulation would be a laughing stock if unlimited propaganda could be made by third parties.

Á  (1110)  

    However, in this process, it is obvious that various interests must be put in the balance. For example, an organization should not be put in a position where it could be attacked by a political party during an electoral campaign while being muzzled by regulations controlling electoral spending. We could draw our inspiration from the recent experience of the trade union movement in Quebec, during the last provincial election.

    There would be much to say about the public character of political parties financing. We must definitely support the principle of government subsidies, not only at the level of electoral spending reimbursement, but also in terms of financing the democratic activities of political parties between electoral campaigns. However, the direct link between the level of allocations granted to political parties and electoral results is a cause for worry. According to this scheme, the party that had the most votes in an election would be allocated for the whole duration of the newly elected parliament, amounts that would be higher than those allocated to other parties. Although there is some logic to this proposal, the parties that were less fortunate in the election should be able to receive a core governmental funding to allow them to play their role in the democratic life.

    Thus, the proposed system, in terms of having an effect on the public perception of political parties, distinctly favors the party that had the most votes in the last election. So the system is tilted in favor of the status quo, in maintaining in power the government that is in place. There should be a better balance between these two notions, so that all parties that meet the criteria set in the Act should be eligible to benefit from an equal core funding that would cover some basic expenses that are common to all parties, still leaving a surplus that could be distributed according to the popular support given to the various parties.

    There would be a lot to say as well about the mechanisms for controlling prohibited contributions. I think particularly about the possibility of circumventing the Act through the creation of trusts allowing corporations to fund a political party through fictitious intermediaries. This kind of practices is prohibited by law, in principle. However, given the more compelling characteristics of this bill, perhaps it would be wise to reinforce the controls in this regard. I am talking about the whole domain of trusts, loans, securities and other guaranties that are being offered by organizations that are prohibited by law to give any contribution.

    In conclusion, this bill must be supported because it represents a step forward in our quest for a more democratic political life. However, it appears to me that the details of implementation should enhance the underlying principles of the bill and not limit their effectiveness.

    I wish to once again thank the committee for having invited me to take part in these discussions.

Á  (1115)  

    The Chair: I thank you as well, François.

[English]

    Now from Mount Allison we have Bill Cross, professor of political science.

    Mr. William Cross: Let me begin by thanking the committee for this opportunity to appear before you.

    The legislative amendments you are considering, if adopted, would have profound effects on the practice of Canadian electoral democracy, and I wish you well in your deliberations.

    My primary area of academic research and writing is in party democracy. I'm interested in political parties as participatory, dynamic, vigorous political institutions. I have a second more practical interest in the area of campaign finance. Earlier in my professional life I was a campaign finance attorney in the United States, having served as in-house legal counsel to one of the national party committees for a few years, and as legal counsel to a major presidential candidate. I will draw upon that experience a couple of times, so I set that out at the outset.

    Bill C-24 is very broad in scope and includes many important provisions. Some of these, such as the extension of the regulatory scheme to include party leadership and nomination contests, and the lowering of the threshold for candidate eligibility for public financing, are significant advances for Canada's campaign finance scheme. In the interest of brevity, I won't comment on these and many of the other provisions, but of course I'll be pleased to do so if you desire afterwards.

    In the short time I have I would like to identify a few important principles that I hope the committee will keep in mind while doing its work, and to comment specifically on a few of the most important provisions of the bill.

    The first important principle is that money in politics is not necessarily a bad thing. Too often when we talk about money in politics we begin from the premise that it is suspect and necessarily a negative influence. While it certainly can be, I think it's important to begin from the position that our political parties and their candidates engage in very important and useful activity that is fundamental to the practice of Canadian democracy, and that this activity is inherently expensive. In considering campaign finance legislation, I believe it's imperative that, with all the best of intentions, we do not starve our parties and candidates of the funds they need to be the primary actors in a vibrant, participatory, dynamic electoral process.

    To put spending in Canadian elections in some context, I think we want to keep in mind that corporations like Tim Hortons spent approximately $70 million on advertising alone in 2000 to peddle their doughnuts and coffee. Our political parties spent about half that much in the federal election of that year for all of their expenses, not just advertising. There are estimates that more than $3 billion was spent in the U.S. federal elections of the same year. While we surely do not want to follow the U.S. lead in this regard, I simply suggest to you that there is not too much money in our political system.

    The second related principle is we want to be careful we do not adopt legislation that pushes our parties further away from voters and diminishes their ties with civil society. One of the essential functions of our political parties, and indeed political parties in all representative democracies, is that they serve as conduits of ideas between voters and their elected officials. Parties also offer an accessible and approximate opportunity for political participation by voters in their home communities. If anything, these ties need to be strengthened. Our parties in recent years have lost the confidence of many voters as worthwhile vehicles for public participation. Opinion polling indicates that, by wide margins, Canadians prefer activity in interest groups to participation in the parties.

    My colleague, Lisa Young, from the University of Calgary and I have been engaged in a large study of political party membership in Canada, and the findings are not encouraging. Only approximately 1% of Canadians belong to political parties between election and leadership campaigns. This places us at the bottom of western democracies.

    Party membership is particularly unattractive to young Canadians. The average age of a party member in 2000 was 59 years old, with less than 5% of party members being younger than 30. Even among those partisans who do formally belong to parties, there's widespread sentiment that the parties are out of touch and not sufficiently interested in and responsive to the views of their grassroots members. I believe we need to be careful not to adopt campaign finance legislation that will further remove the ties between parties and their grassroots supporters.

    In his comments in the House of Commons on the proposed legislation, the Prime Minister suggested that one of the important results of this legislation would be that 90% of the funds spent by parties would be public funds. The provision of such a large percentage of funds directly from the public treasury, without any requirement of seeking ongoing support from voters between election campaigns, raises the possibility of parties becoming more distant from their voters. I encourage you to consider alternative means of public financing that require the parties to first solicit and receive ongoing support from voters. One brief example here may be helpful.

Á  (1120)  

    One aspect of the much maligned U.S. campaign finance system that works very well is the matching fund scheme for presidential primary candidates. Candidates have the first $250 of all contributions received from individual voters matched in public funds. The benefit of this approach is that candidates receive substantial amounts of public financing, but it is predicated on their ability to attract large numbers of relatively small contributions from actual voters. It encourages candidates to interact with voters.

    The final principle I wish to raise is the law of unintended consequences. This is a most important principle in the area of campaign finance, and it relates to Bill C-24 particularly in the attempt to essentially prohibit parties and candidates from raising funds from trade unions and corporations. The principle of restricting financial participation in an election to voters has obvious appeal. The problem, as I see it, is it likely will not result in a complete removal of corporate and trade union funds, but rather will result in a diversion away from parties and candidates and away from the regulatory scheme, so they will continue to be present but will, for the most part, be completely unregulated.

    Think of this, if you will, as being similar to the “whack-a-mole” game you find at carnivals and county fairs across the country. The mole pops up in one place, the player whacks it down with their hammer, and it randomly pops up somewhere else; it doesn't go away. My fear is that this will happen with corporate and union dollars if the provisions of Bill C-24 are adopted.

    This has been the U.S. experience, first with the dramatic increase in corporate and union political action committees, and then with the rise of soft money being spent by national party committees and the rise in third party or independent spending, diverting funds away from the parties and outside of the regulatory scheme. There is some suggestion that corporations and trade unions in Quebec have found ways to circumvent the prohibition in that province.

    A better system might be similar to one used in some of our provinces, which limits contributions from corporate and labour unions to amounts similar to those in place for individual contributions. In my home province of New Brunswick, the limit is $6,000. This might be coupled with pre-election disclosure, to increase transparency in the process and perhaps put a limit on the percentage of party and candidate spending that is derived from union and corporate sources.

    I'll stop here, but of course I'll be happy to entertain any questions the committee may have.

Á  (1125)  

    The Chair: Thank you very much for that. We appreciate your presentation.

    Our next witness is Professor Robert MacDermid of York University.

    Robert, we appreciate the paper you've submitted. We're having it translated, and then it will be circulated to all of our members. Please proceed.

    Mr. Robert MacDermid: Thanks very much for the opportunity to come and talk about a subject I really love to talk about. I've bored more than a few students to death, I'm sure, about the topic of public finance.

    Most of my experience has been looking at Ontario's laws, but I've also written about funding at the federal level. In a burst of enthusiasm I tried to put together a paper from other research I'd done, to actually provide some evidence behind some of the opinions and recommendations I'm going to suggest in the paper. Unfortunately, I wasn't able to translate that into French, not because of the shortage of time but because of my inadequacy in French.

    I want to talk about just a few sections of the bill, because as everyone has said, it's an enormous bill with a number of different changes, some of which I think are completely uncontroversial. Let me just mention those to begin.

    I think the disclosure requirements for constituency associations in non-election years are more or less a no-brainer. Almost every other political jurisdiction in Canada has such an arrangement. It's long past due, and it's often been referred to as the black hole of campaign finance at the federal level.

    The regulation of nomination races is also something I think is long past due. It occurs in the United States and in many other jurisdictions. When we hear about Canada spending more money on a nomination race than they actually spend on a general election, it's time to think seriously about the kinds of favours that are incurred in that process. So I laud the government for that restriction as well.

    The final one is leadership spending and disclosure. This, of course, is occurring right now. The federal NDP had a system set up, and the Liberals are doing more or less the same thing at the federal level. In Ontario at the provincial level, leadership races have also been regulated by Elections Ontario. So all of these things have occurred elsewhere, and I think they're long past due at the federal level.

    Let me go on to talk about six or seven areas that I think are a little more contentious and controversial, and make some suggestions on each of them. I'll also suggest some small amount of research and logic that I think goes behind them.

    The first is the partial ban on corporate and trade union contributions. You should all know, and probably do know, that campaign finance legislation has a long history of reversals, flips, and flops. In fact, corporate contributions to political parties were first banned in 1908. In 1920, trade union contributions to political parties were banned, and in 1930, at the urging of J.S. Woodsworth, who didn't like the fact that trade unions were caught in the same incorporation designation as corporations, they were removed. Since 1930 we've allowed corporations and trade unions to make contributions.

    Political parties were largely run on corporation contributions until the period when disclosure was required. Citizens began to see this, and because of the tax credit arrangements, also began to contribute. So the vast history of Canadian politics at the federal and provincial levels--and I dare say the municipal level as well, which I've done some research on recently--is that corporations fund politics. I think that's a shame, and many people have written about this before.

    There are a couple of basic premises why we shouldn't accept that. We should even remove the allowances that are left in this bill for corporate and trade union contributions--remove the $1,000 limit at the local level. Why is that? Democratic equality is based on perhaps a utopian notion that equal political power pertains to everyone, but if we allow individuals with the economic means in any society to translate that into political inequality, which is what occurs when we allow corporations to give money, then we are breaching a fundamental democratic premise.

    Those who control or own corporations are essentially allowed to give more than those of us who don't. I don't think that's an appropriate provision in any kind of democratic society. Every person should be allowed to give once, and by removing that possibility we're still allowing owners and managers of corporate wealth to give through their own means, as individuals, in the same way other people do.

    But it's not only that. It's also the fact that controlling corporate contributions is an impossible task. For one thing, there's the existence of transnational corporations. At the federal and provincial levels in Canada, about 25% of all contributions from businesses flowing into political parties comes from transnational corporations. What is best for Glaxo Wellcome--long-running drug patents and high drug prices--is not necessarily best for Canadians. I think we need to be very aware of that incursion of transnational corporations into political funding, and for that reason we need to remove it.

Á  (1130)  

    The second reason is because of the ability to combine contributions. In my research in Ontario, I looked at one group of companies run by Peter Munk, who controlled Barrick Gold and TrizecHahn at that time. He gave $721,000 to the Ontario PC party between 1995 and 2000 through 28 corporations he controlled. That's just one example in Ontario. Of course at the federal level, corporations like SNC-Lavalin gave to the Liberals in 2000 over $200,000 through about six or seven different corporations. I'd be happy to provide the evidence for that later on.

    So corporations can always combine, and the possibility of giving is limitless. The Bronfmans could give hundreds and hundreds of times, and could presumably own a party if they wanted.

    The other difficulty is just getting information on corporations. Private corporations are private corporations. You and I cannot tell who owns them. We can never determine who instructed money to be given through a private corporation, as you all know. That information is held in the minutes book of the corporation, and therefore can never be public. Ultimately, we want to know what individuals directed the money, not the fact that 236941 Alberta gave that money.

    Finally, we have to recognize that corporate money, just like trade union money, is not allocated evenly to all parties. It goes unequally to some parties. In Ontario, 80% of all the money that comes from corporations goes to the Progressive Conservative Party of Ontario. At the federal level, about 60% of all the corporate money went to the Liberal Party in 2000. This money is not allocated fairly the way some people suggest. Businesses are not philanthropic; they give as a form of investment, and that creates inequalities in the political system. All parties are not equal when it comes to raising funds, or where they get them.

    So the first thing I'd recommend is that the committee extend Bill C-24 to ban all corporate contributions, thus complying with the logic that led to the reduction in these contributions. Those who own and control businesses are permitted to make contributions as individuals, and should be governed by the same limits as all other citizens.

    The second area I want to talk about is the increase in public subsidies to parties. The bill quite rightly increases public subsidies in a number of ways by increasing the percentage that comes back in campaign expenditures. But the most controversial element of it is the granting of this allowance.

    I do think more money should go to political parties. The question is how it should go and how much it should be. A number of suggestions have been made, and we can come back and talk about them. One was a tick-off box on an income tax form. I doubt that would be effective, because I don't think most Canadians really want Revenue Canada to know their political persuasion. Some people have suggested that Elections Canada try to judge the amounts, based on the party membership. I don't agree with that either, because I don't think the state should be interfering in the matters of political parties. Then somebody suggested doing a poll.

    I want to suggest an idea along the lines of what Bill Cross suggested, and that is to consider another mechanism that would allow increased subsidies through matching funds. I'm suggesting here that parties be given a subsidy based on the number of individuals who contribute to the party, which is very similar to what Bill suggested. Each additional contribution from an individual would be matched by a set subsidy. For instance, if somebody gave $120--there would have to be some minimum so parties didn't gain the situation--there would be some matching arrangement, and that would happen every year. So parties would be forced to go and find people to give them money, and in return would be awarded some public subsidy. That would set in place the mechanism Bill referred to, where parties would be required to go and talk to voters, and in talking to voters they'd have to hear voters as that $125 cheque was handed over.

    The third area is contribution limits. I think the contribution limit of $10,000 is too high. We all know that Quebec and Manitoba have levels of $3,000. You may also know that contributions to candidates for the House of Representatives and the Senate are actually $1,000 in the United States. Of course, all of that is subverted by corporate money and PACs, but the actual limit is $1,000. Corporations and trade unions cannot give to a campaign for the House of Representatives at all. At the back of this paper is a disclosure form from a representative campaign.

    I think the limit should be lower; maybe not $3,000, but probably down below $5,000. What's the logic of that? In one paper I did some research on what Progressive Conservative MPs in Ontario gave to the Ontario Progressive Conservative Party. Guess what? In most years, they didn't even give $500, and these are people who are passionately interested in politics and have a salary of about $80,000.

Á  (1135)  

    The bill calls for increased expenditure limits. We don't need more expenditure, we need less. If we're going to conquer the problem of money in politics, we need to drive down what people can spend. This is too high and should be returned to about 50¢ per voter. All expenditures should be included under the cap. All parties gain on this thing; they're always moving things out from under the cap. If we want to force parties to talk to people, we have to reduce what they can spend.

    On disclosure of contributions and expenditures, again this is lamentable. The bill should be looking at what is done in the States. We should have an electronic reporting system, good heavens. If the Americans and the financial industry can do it; if my university can arrange to have people register for courses on the Internet, then Elections Canada can require that parties file disclosure lists promptly and immediately.

    In the United States and in Britain, disclosure is required every three months and before election periods. So that needs to be improved.

    The Chair: I do apologize. We did say there would be short presentations, in this case particularly so. We appreciate having the material, and we particularly appreciate having experience from Ontario because we have some interest in that.

    Colleagues, I suggest we begin the questioning now. We'll have five-minute exchanges of questions and answers.

    We'll begin with Ted White of the Canadian Alliance, and then go to Jacques Saada of the Liberals.

    Mr. Ted White (North Vancouver, Canadian Alliance): Thank you, Mr. Chairman.

    My first short question is to Bill Cross, because he first brought up the topic of matching funds. I just wonder whether he feels that the tax rebate system actually achieves that. Although he made the suggestion that there should be straight matching funds from the government--actually from taxpayers--for anything that's given, does the tax rebate system not achieve that?

    Mr. William Cross: It does. It works on the same principle that parties are rewarded with public taxpayers' funds--you're right to say they're taxpayers' funds--dependent on their ability to raise relatively small contributions. The tax credit system favours small contributions.

    On the point I was trying to make, if we go beyond that and if there are going to be these annual or quarterly allowances, there are better mechanisms for determining how much parties receive than to look at the number of votes they received in the past election.

    Mr. Ted White: Thank you for that clarification.

    My second question is to François Côté.

    Why do you take the position that political parties should be given money from taxpayers? When we say the parties need to stay in touch with voters and keep close to voters, why is there any excuse at all to force taxpayers to give money to political parties? Isn't that exactly the opposite of what you would argue for? Surely political parties should have to get out there and sell themselves eyeball to eyeball--which was a term used by one of the other witnesses a week ago--and get their contributions directly from the people they claim to support.

    Mr. François Côté: Certainly, in a Utopia--

[Translation]

such an outcome would be desirable. However, the reality of life tells us that we must make choices. I very much doubt that such a scheme could work, unless alternative methods of financing are put in place, for example corporate financing.

    If we believe that we must rule out all contributions by corporations and trade unions and accept only smaller contributions by individuals as defined in the Act, I very much doubt that this would result in a very rich political landscape in our society.

    I very much like this kind of trade-off whereby we put aside all corporate financing while promoting public financing. In my view, one can hardly go without the other. On the other hand, in an ideal society, perhaps the financing could be ensured only by individuals. However, I do not believe that this can realistically be contemplated as an option.

Á  (1140)  

[English]

    Mr. Ted White: The Canadian Alliance raises almost all of its money from individuals--very little from corporations. The NDP has certainly in the past, if not now, raised most of its money from individual contributions. We certainly argue it's unnecessary to take money from taxpayers.

    I'd just like to pursue the $1,000 limit for corporations. One of the arguments for having that--and I'm from a small business background myself--is that sometimes it's convenient to write a cheque from the company simply because you don't work out your tax details until the corporate year end. For small corporations that's the way you do it; you often write corporate cheques and the accountant sorts it all out at the end of the year.

    Why do you think there would be any more influence on a member of Parliament from a $1,000 small-business cheque than from getting it from the individual directly? Doesn't it amount to the same thing for a small corporation?

[Translation]

    Mr. François Côté: Your question is quite valid. In my view, determining whether an amount of $1,000 could influence politicians or not has nothing to do with the basic issue, which is an issue of fundamental principles. Do we accept contributions by corporations in our political life? Of course, nowadays, enormous contributions are being made to various political parties, as professor MacDermid underlined, and they can have some influence. But if you decide to prohibit them, you cannot base your decision on that principle and then make an exception, even a minimal one. I put the question back to you. If we are to prohibit contributions by corporations and trade unions, what would be the use to have a little exception which, in my view, would simply confuse the situation that is being dealt with in this bill?

[English]

    The Chair: Okay.

    Thank you very much.

    Jacques Saada, I'm afraid you'll have to be brief. You can continue afterwards.

[Translation]

    Mr. Jacques Saada (Brossard—La Prairie, Lib.): Do I have three minutes?

[English]

    The Chair: Yes, about that.

[Translation]

    Mr. Jacques Saada: I thank you all for your presentations. They were all extremely interesting. My questions will deal mostly with Mr. Côté's presentation.

    Mr. Côté, you submit that accepting contributions by corporations that would be made locally is contrary to the spirit of this bill.

    However, it seems to me that corporations have an extremely important community role to play. They do play an important role in the areas of sports, entertainment, education, culture, etc. Why would it be inappropriate for them to play a role as well in the area of community politics? I have put this same question to other people in the past and I am not quite satisfied with the answers that I have had up to now. I trust that you will do better.

    Moreover, if I understood correctly, you would be in favor of some sort of core financing for all parties. Some marginal parties--this is not a value judgment, but only a statistical observation--get some votes because voters want to protest against other parties and are using their votes as a means to express themselves.

    If these parties were to get federal funds according to the number of votes, would the elector not be tempted to abstain completely from voting rather than ensuring through his or her vote that these parties will indeed get funding? Would there not be a risk of having an even lower return rate in elections?

    I would like to add a brief comment. You said that an amount of $10,000 is prohibitive for the average citizen. I agree with you. This is a limit and there is no obligation, but I do agree with you and I support the principle that we must reduce this limit.

Á  (1145)  

    Mr. François Côté: I have laid out the principle that corporate financing is not desirable in the political field; however, I do want to bring about a major distinction regarding the terms that you are using. I am not saying that the business world should not finance political parties; I was talking about corporations. Businessman François Côté Inc., who operates a corner store, could very well, as a businessman and individual who is active in the economic life of his community, contribute to the political life, support his candidate and promote his interests.

    The problem, in the case of corporations, is the following: by its very nature, a corporation is based on the principle of ownership by shareholders, and not on personal contribution by individuals. We all know that decisions in the corporate world are not being made through the voice of shareholders, but merely according to the number of shares. This is not a bad thing; quite the opposite, it is a very good system and our economy is very well served by it.

    The corporate world is not anti-democratic. It is not democratic either. I would say that is is “ademocratic“. It is an entity that should not intervene either in favor or against any political party. It should not be a significant player in the political field because by its very essence, it is based on assets that are held in the form of shares. Its decisions are made according to the number of shares and not the opinion of individuals, as would be the case, for example, of some association.

[English]

    The Chair: Please hold that thought.

    Colleagues, I'm going to suspend the meeting until after the vote. I urge you to come back. My intention after the vote is not to go late, and I say this with due respect to the witnesses. We all have obligations here. We'll go until the regular time. These have been very interesting presentations, and I hope you'll come back promptly.

    Witnesses, if there's a complication and we are unable to come out of the House of Commons, we will send you a message. Thank you very much.

    The meeting is suspended until after the vote.

Á  (1147)  

---

  (1209)  

    The Chair: Colleagues, we will resume. I apologize to the witnesses for the delay. The vote is now over.

    François, did you finish your reply? We're still in Jacques Saada's time.

  (1210)  

[Translation]

    Mr. Jacques Saada: You have mentioned corporations that are based on ownership by shareholders, as opposed to businesses where there is a direct individual responsibility. What about organizations such as the associations that are advocating various causes, that are excluded as well from the process?

    Mr. François Côté: I was saying earlier that there is a kind of fundamental contract in this bill. We have put aside contributions by both corporations and organizations, for example the trade union movement, to put in place a system of public financing. What I am telling you does not apply to organizations, but in the context of this bill, I believe that both have been and will be dealt with together.

    However, I do not see any moral or political impediment that would prevent a group of owners or tenants to unite. There would be one vote for each individual and, out of the common fund, a contribution could be made to members of Parliament who speak for their interests in Ottawa. I do not see anything that could be called anti-democratic in such a system. Quite the opposite, this should be promoted. However, I believe that the present debate is not going exactly in this direction.

[English]

    The Chair: Jacques, one minute if you wish.

[Translation]

    Mr. Jacques Saada: I would like to have an answer to my second question.

    Mr. François Côté: The second question had to do with the risk that we could end up providing subsidies to a vast number of parties, some of them more or less serious, allowing them to survive even though they would not have any purpose without this system. That could weaken the interest among voters and increase their cynicism toward the political process.

    I understood that in the system that is being proposed in the bill, the only parties that would be eligible for this kind of financing would be those who have garnered 10% of the votes in an election. I believe that level has been reduced from 15% to 10%. I can tell you that you need quite a lot of work to obtain 10% of the vote.

    Mr. Jacques Saada: That's not exactly it. I was talking about reimbursement of electoral expenses. I refer to the financing of $1.50 per elector per year, for which there are other levels of eligibility. I believe that it is 5% of the vote in a given riding or 2% throughout the country. That is what I am referring to.

[English]

    The Chair: We have 30 seconds.

[Translation]

    Mr. Jacques Saada: Could we wait until for the next round in order to have a more complete answer? I believe that it is an important question.

[English]

    The Chair: By all means. It might be simpler, François. I understand you were interrupted and I did give you extra time, but we are a bit constrained here.

    It's Michel Guimond, Jeff Reagan, Dick Proctor, Joe Jordan and then Rick Borotsik.

[Translation]

    Mr. Michel Guimond (Beauport—Montmorency—Côte-de-Beaupré—Île-d'Orléans, BQ): Thank you, Mr. Chair.

    My question is for you, Mr. Côté. Are you familiar with the system that has been in place in Quebec since 1997? Do you have some knowledge of or some experience with the system that have been put in place by René Lévesque in Quebec? Did you have the opportunity to work within that system or to get familiar with it? Since you have volunteered to appear before us as an individual, you may not want to tell us about your previous history, but I would like to know whether you have some specific knowledge of the Quebec system.

  (1215)  

    Mr. François Côté: If you will allow me to answer directly to your question, I will tell you that I have been actively involved in politics for more than 30 years. On the provincial level, I have been involved in politics, I would say actively so, for the Parti québécois, and on the federal level, for the New Democratic Party.

    I have dealt with the Quebec political system as frontline organizer. I did not take part in the development of the system and have never been a member of any focus group on the project, but I have lived in that system at the grassroot level. What I am saying today reflects not only what I have dealt with at the rank and file level, but also the analysis that I have made of the Quebec Elections Act and Bill C-24 for the trade union movement.

    Mr. Michel Guimond: Regarding Bill C-24, you said earlier that you thought the $10,000 limit for an individual was to high compared with the Quebec system, where the limit is set at $3,000. That is my first observation.

    I would like to tell you about a concern that I have. I don't know whether you have followed the debate or read the transcript of the committee hearings, and I don't know either whether it was broadcast on CPAC, but last week, I raised the following question: an individual who does not want to comply with the law will attempt to find the means to go around it, sometimes with success, and sometimes he will hit the wall.

    Do you believe that there is a gap, particularly in the proposed Sections 404.1, 404.2, 404.3 and 404.4? For example, a bank operating throughout Canada could have at its head office some executive vice-presidents or operations vice-presidents, and as well in its regional offices, in Quebec, it could have yet more vice-presidents. It is possible for a bank to have some 40 vice-presidents. The bank could tell its vice-presidents, by giving them bonuses or other roundabout methods, that they have to support a given political party by giving a $10,000 contribution. So, indirectly--and obviously this would never appear anywhere--the bank could give $400,000, in my example. Is the present wording of the bill tight enough to prevent this kind of abuse?

    Mr. François Côté: It is difficult to foresee where human imagination can go. One only has to put in place a law to witness the prodigious and boundless imagination that our fellow citizens can deploy in order to circonvent it. I know that the present act provides clearly and precisely that it is not legal to make contributions through an intermediary. We know as well that the limit of contributions for corporations includes their affiliates and any person that they control.

    To talk about the Quebec experience--I have had discussions about it with the Office of the Chief Electoral Officer--I would say that it is indeed a problem because it is impossible to probe every individual to find out whether there is a link between the contribution that was made and some eventual benefit that the individual could have received from his or her employer or corporation.

    I would say at first blush that this is one of the grey areas I was referring to. As soon as you start granting some benefits, it seems to me that the control mechanisms should be tighter than they are.

  (1220)  

[English]

    The Chair: Geoff Regan.

    Mr. Geoff Regan (Halifax West, Lib.): Thank you very much, Mr. Chairman.

    Thanks to the witnesses for coming today.

    First of all, I want to ask you about the comparison between the influence companies might have through donations to parties, in relation to government, and the influence they might have due to relationships with departments or civil servants.

    Do you think this solves the issue of perception of influence? Are there other things that are needed in relation to the suggestion, for example, that companies hire people who have been in the civil service and have close relationships with the departments? There's sometimes an unstated suggestion that others might get jobs later from such companies. To what degree is that an issue? Is that a bigger problem than the political donations, or is it a lesser problem?

    Secondly, we've heard some arguments that improved disclosure of donations is really the answer to this issue, as opposed to banning or limiting donations.

    I'd like everyone's responses to both of those issues.

    The Chair: Bill Cross.

    Mr. William Cross: I'll start with the second question. I think improved disclosure could go a long way, particularly pre-election disclosure. I think there are three purposes of disclosure. First is to allow enforcement of any restrictions that are in place. Second is to allow people to watch for sort of quid pro quos that might arise while a government's in session. Those two can happen from post-election disclosure.

    The third is to provide information to voters that might be useful to them on who the candidates and parties are aligning themselves with, and use that as part of their voting calculus. When the disclosure comes post-election, that's not useful for that purpose. We can look around at other jurisdictions and see that it is possible to do. I think Mr. Kingsley has said he could work with the parties and candidates to come up with a system to allow that to happen.

    On the question of influence, I think you're right it's much broader than simply campaign financing. Some of the things you point to are very important.

    On the question of campaign financing, I'm fortunate to work at a university that draws some of the best and brightest students from across the country. I teach a fourth year honours class in party politics, and we talk about campaign financing. These are kids who we wish were involved in politics and parties, but they're not. They're very interested in public policy, they belong to interest groups, and they have lots of social capital engaged in the communities.

    When we talk about parties and campaign financing, what they point to as most troublesome is not the $100,000 contribution from the Royal Bank to the Liberals or to any of the parties, although they think that's not a good thing. They point to the overall percentage of the parties' money that comes from corporations or trade unions. They're highly troubled, for instance, that in the last few years the governing party took $6 out of every $10 from corporations in the 2000 campaign.

    That's why I suggest you might think of a ban or a limit on the total percentage of spending derived from corporate or union sources.

    Mr. Geoff Regan: I just want to interject that I recognize that Mount Allison has excellent students. Speaking as a graduate of St. FX, I'd say that Mount Allison is very near the top.

    The Chair: Robert.

    Mr. Robert MacDermid: American and British systems of disclosure are much better. In both countries, parties are required to disclose contributions in excess of a certain amount quarterly. Prior to a campaign in the United States, all contributions up to the 20th day before election day have to be disclosed.

    We're also very squeamish about disclosure. We seem to think we shouldn't be telling people certain things. In the United States--and you can see these on the website for the Federal Election Commission--the disclosure rules require that people disclose their occupation and their employer, which comes back to the question you asked. It would be quickly apparent, if everyone who was employed by the Royal Bank was making a contribution of a similar size, something was afoot that might require some inquiry.

    On the issue of lobbying, we're not going to defeat the influence of corporate lobbying through a donations bill only. I think there are other ethical issues that surely are addressed in other pieces of legislation.

  (1225)  

    The Chair: François.

[Translation]

    Mr. François Côté: Mr. Chair, on the second question dealing with greater disclosure at the level of constituency associations, I am all in favor of virtue, and this initiative is certainly welcome. However, I make a plea in favor of smaller associations that could have 10, 20, 30 or 50 members. I would hope that they would not be pressed upon to fill out a bunch of reports and paperwork that would unnecessarily make their life more difficult.

    On the second point, I must tell you that for me, the influence of corporations in the political arena is more in the realm of the unknown. There are some kingmakers who are difficult to pin down.

    For example, how can we justify or interpret the fact that a large corporation gives dozens of thousands of dollars to a party and yet gives the same amount to the adverse party, while these two parties are fighting one another? How can this be interpreted, if not by saying that this constitutes a strategic donation? I do not believe that the people think that this is being done only to promote the political system and democracy. This only increases the level of cynicism.

[English]

    The Chair: Dick Proctor and then Joe Jordan.

    Mr. Dick Proctor (Palliser, NDP): Thanks very much, Mr. Chair. I want to say at the outset how impressed I have been with all the presentations this morning. I'm hoping I can get a quick answer from each of you in the next five minutes.

    To François Coté, Mr. Cross talked about the whack-a-mole game, where the money is always there; you hammer it down and it pops up somewhere else. It's kind of following up on Monsieur Guimond's question to you, François.

    You're saying we'd be better off if we didn't have the $1,000. I agree, but based on your experience in Quebec politics, are there areas where these things inevitably pop up; where people of influence can find ways to contribute to political parties?

[Translation]

    Mr. François Côté: There are indeed some soft sectors, as was mentioned earlier. I have had the pleasure to be invited as an observer to the Bloc québécois convention, where this issue has been discussed. I found that discussion absolutely fascinating. Some sectors are difficult to control. On the other hand, it would not be realistic to conclude that no regulation can be put in place or can be implemented.

    Let me give you only one example. In the last provincial electoral campaign in Quebec, a political party has made a direct attack against the trade union movement. The ADQ has directly targeted the trade unions for the positions that they had put forward. The trade unions responded publicly--I have brought with me the pamphlet that has been circulated--and has refuted all accusations that had been made. That is an electoral expense that was banned by the courts. The Chief Electoral Officer ordered them to stop the distribution of the 500,000 copies of that pamphlet. So, one cannot say that we are plugging one hole only to bounce the problem elsewhere. The Chief Electoral Officer is, to my knowledge, quite vigilant, but there are obviously some aspects of the act that are softer. Whenever there is some discretion to be exercised, he has always exercised it with a view to putting into practice the basic principle of the Act, that is the prohibition of contributions.

  (1230)  

[English]

    The Chair: Dick.

    Mr. Dick Proctor: Thanks.

    Merci, François.

    I have a very quick question for Professor Cross, and then a more substantive one.

    I don't have it in my notes--maybe you pronounced on it, maybe you didn't--whether you're in favour of the $1,000 or not.

    Mr. William Cross: I think it's too low.

    Mr. Dick Proctor: So you think there should still be corporate and trade union donations just to the $1,000. Would you extend that to political parties, or just to individuals?

    Mr. William Cross: Yes. In fact, something like the New Brunswick system that limits it to $6,000 would be preferable.

    Mr. Dick Proctor: The matching funds you talked about, which was seconded by Professor MacDermid, is interesting. The way the law reads now, as you know, the allotment will be based on $1.50 per vote on the previous election per year. It's about $8 million to the Liberals and lesser amounts to the opposition parties.

    The matching funds would get around that. I guess I would say, in as non-partisan way as I could, a party that had basically lived off corporate donations for a number of years would perhaps find it more difficult to agree to this. It would all of a sudden have to go out and try to recruit members in order to get the matching funds you spoke about. I like the concept; I just wonder what your reaction is to that.

    Mr. William Cross: There are studies that looked at the three jurisdictions of Ontario, Quebec, and New Brunswick to see what happened when limits on the amounts of corporate and union contributions were brought in. In all three cases, the parties were able to quickly adjust, reach out to voters, and raise more money in small amounts from individuals. So I suspect the parties could again adjust.

    You point to an important point that something like a matching point system would not only affect the disadvantage that smaller parties have, but also brand new parties.

    Mr. Dick Proctor: Yes, and it would engage the voters at the same time.

    I have a very quick question on the nomination races, Professor MacDermid. I must say I take the view that this is one that the political parties themselves ought to deal with. If they have a problem with the high cost of nomination races.... Members of this committee have said they've spent $100,000 to win a nomination race. In our political party, we simply have rules that say how much you can spend, and you transgress that at your peril.

    Is it worth having this in the legislation, or is this something for the political parties themselves to deal with?

    Mr. Robert MacDermid: I think you're going to a question of the logic behind election finance. Should we allow parties to tailor their own packages of control, and then voters can vote accordingly if that is as important? The problem is that most parties don't tailor their own packages of control, so voters don't really have much of a choice. At least amongst the large parties there isn't a control mechanism.

    It strikes me that if we're concerned about money creating favours in general elections, why is that not a problem in nomination races? We also have the precedent that Americans have legislated primaries, which are nomination races, for a considerable period of time. We have examples; this is nothing new. We should be regulating the accumulation of favours through the same system.

    The Chair: Next is Joe Jordan, then Rick Borotsik, and then Jacques Saada.

    Bill, before we go to Joe, you mentioned these papers comparing New Brunswick, Manitoba, and somewhere. Can you give us the references for that material, whether they're websites, journals, or whatever?

    Mr. William Cross: They're all in the reference studies that were done for the Lortie Commission. There's a volume on comparative provincial experiences. I don't remember the volume number, but it's one volume of the 21 research reports they did.

    The Chair: Thank you. We have that. We appreciate it.

    I would normally say this at the end, but we'd be most grateful for anything you could provide in the way of references, written material, or statistics.

    Joe Jordan.

    Mr. Joe Jordan (Leeds—Grenville, Lib.): Thank you, Mr. Chair. I want to echo the comments of my colleague. I think there have been very thoughtful presentations today. We're dealing with a lot because this is a rather complicated bill. I guess one of the things that confuses me a little bit is positive references to the American system.

    Mr. Cross, you say it costs them $3 billion a year for elections. Do they have a better system than us? I understood we were trying to go in a different direction. They may do some things well, but the banning of corporate donations doesn't seem to have eliminated money from the system. So is there anything you can do to help me there?

    I want to ask you specifically about one of the presentations. When we had the party representatives here, the Conservative Party talked about the requirements for filing for nomination. They said a lot of times parties that may not have much prospect of electoral success may try to get three or four people to run for the nomination to show interest, and by forcing everyone who runs for nomination to file and record we may be in the situation of spending dollars trying to track nickels. The suggestion was that we perhaps have some kind of scaled-in threshold for nomination expenses.

    If an individual's expenses were less than $5,000, they wouldn't have to do anything, as they don't have to do anything now. The only time we would kick in any kind of tracking mechanism or transparency was if the expenditures exceeded whatever that was--I'm pulling $5,000 out of the air. You talk about unintended consequences, Mr. Cross, and it may prevent people from getting in if they're confronted with a mound of paper that really doesn't serve any purpose, given the expenditures they're putting out.

    In your understanding of this bill--and I'll ask all three of you--do you see any problem with trying to have some kind of threshold on the nomination expenses, given also that they're not receiptable and our ability to track them is somewhat limited?

  (1235)  

    Mr. William Cross: On your first point, I don't think the U.S. has a better system, but I think you point to something very important: the continued attempts to get rid of corporate and union money have failed. The McCain-Feingold bill was just last week overturned in the courts, but even before that the parties had again figured out a way to circumvent it. In Canada, we don't yet have the final word on what's happening with third party spending and what the court's going to do. If we go down the road of adopting Bill C-24 before that, we just don't know where it's going to end up.

    I think you're right on the nomination contest question. The principle of bringing it into the regulatory scheme is a good one. In those cases where candidates are spending $40,000 to $60,000, it's important to get a handle on that. I did a survey of the constituency associations of federal parties after the 1993 election, and it was incredibly rare to find a nomination campaign where more than $10,000 was spent. Most of these are very low-key affairs, and we don't want to create a system again that chills participation in the process.

    Mr. Joe Jordan: Again, Mr. Cross, any documentation you can provide to that effect will be helpful.

    Mr. MacDermid.

    Mr. Robert MacDermid: How do we know how much the person has spent? They have to file a report, don't they? Are you suggesting we just take the person's word when they say they spent less than $5,000, therefore they're not going to divulge their expenditures and contributions?

    There will have to be some official acknowledgment that the expenditure was under a total. Presumably one would want to have some evidence of that. I agree that maybe the control doesn't have to be as great for minimal contests, and we're looking at contests that are hotly contested and spend a lot of money, rather than small efforts.

    Mr. Joe Jordan: Yes. I don't know what the mechanism is, but I think we have to be careful we don't overreact, to the detriment of the process. If somebody has put out professional flyers, has lawn signs for a nomination, has buses into a.... The person they lost to would probably be one who would try to trigger this.

    I don't know how it works, but I'm just concerned we don't put the hurdles so high that people will not get involved. It may not be worth their effort. There's the prospect of filling out all these forms, and the potential liability of filling them out wrong might be too high, I guess.

    Mr. François Côté: I can't object to your proposition; it certainly makes sense. As far as I'm concerned,

[Translation]

this reflects, up to a point, the reality as perceived from the outside by other political parties. On the other hand, within the party of which I am a member, there is a system of self-control and this could be made public tomorrow morning without any difficulty. I do not believe that the people would be discouraged from getting involved if they had to be accountable. That provision is welcome.

    Obviously, we are talking here about limits. This is about what is reasonable and not about the essential nature of the thing.

  (1240)  

[English]

    Mr. Robert MacDermid: In Ontario at the municipal level, if a campaign for office costs less than $10,000, they are only required to sign a statement saying that. They must still disclose contributions over the limit, but there are fewer reporting requirements. I can imagine a system like that would work.

    The Chair: Okay, next is Rick Borotsik. Then I want to warn you I have Jacques Saada and Dick Proctor. I hope on the second round we'll be brief.

    Mr. Rick Borotsik (Brandon—Souris, PC): Thank you, Mr. Chairman, I'll just take the one round. I should also apologize that I had to leave the room. We're trying to find someone to speak to the legislation from Manitoba, which is now in the throes of an election. Trying to find people to free up time is difficult, so I do apologize for my absence.

    Mr. Cross, in your presentation you indicated that disclosure was very important, and I couldn't agree with you more. Disclosure is absolutely vital in the whole process. But you also suggested that reducing the limits was not necessarily the way to go.

    Do you think that if there's an outright ban on corporate donations the issue will resolve itself; there will not be any influence or political favouritism; and there will not be any political pork-barrelling if the money is taken away from the political process?

    Mr. William Cross: Absolutely not. I am highly suspicious whether you can ever get rid of the money, in any event.

    Mr. Rick Borotsik: I appreciate that. It goes underground--I don't think you used that term, but I do--and we've seen it in the United States. So my question has been answered.

    I would now like to ask Mr. MacDermid the same question. Do you honestly believe that if you take away all the limits and there are no corporate donations--you mentioned a lot of the corporate donations in your dissertation, very large ones--those people will lose their influence in government because of those financial handcuffs or constraints?

    Mr. Robert MacDermid: No, of course not. They will still be able to give as individuals, as you and I can, and exercise influence that way. They will still be able to exercise influence by lobbying, but they won't necessarily be able to exercise influence through a fundraising event where they pay $5,000 for a ticket. We're at least limiting that.

    The logic of reduction is the logic of elimination. I don't know how you can be a little bit pregnant. It strikes me that's what this legislation is saying. “Oh, we'll just limit to here”. Of course, the money will go somewhere else. So why not just eliminate it and make the problem of regulation easier, for the reasons I stated? It's very difficult to track corporate...and the amount of money that's spent trying to limit corporate contributions.

    Mr. Rick Borotsik: But you've already admitted that, in itself, is not going to resolve what seems to be the perception out there of political influence. Regardless of whether we have a declaration, which might be better to get a handle on influence, or no contributions, which you're proposing, it isn't going to change that perception of political influence--not financial, but political influence, regardless.

    Mr. Robert MacDermid: Poll after poll says that corporations exercise too much influence in the political process. If we remove the possibility of that happening, presumably the public will think something else, because all contributions will come from individuals.

    Mr. Rick Borotsik: There is a proposal here to have individual limits of $10,000. In your opinion that's way too high and shouldn't have--

    Mr. Robert MacDermid: That's too high. It's a limit on rich people. I can't give $10,000, you can't, and nobody else in this room can give $10,000.

    Mr. Rick Borotsik: What should the personal contribution level be?

    Mr. Robert MacDermid: If you look at the actual figures, the median value of most contributions is below $1,000. Why are we making a rule for the rich?

    Mr. Rick Borotsik: In Manitoba--where I'm trying to get some people to speak to the legislation--there is a limit of $3,000. So you're saying that legislation is wrong.

    Mr. Robert MacDermid: No. In my presentation I think I actually said I would prefer a limit below $5,000. I also mentioned favourably the limits in Quebec and Manitoba of $3,000, and the American limits of $1,000 for individuals.

    Mr. Rick Borotsik: In Manitoba, they don't have any contribution from the province itself. There's no public funding. Is that the right way to go? You mentioned in your dissertation that public funding was acceptable. Did Manitoba do the right thing by not having any public funding?

  (1245)  

    Mr. Robert MacDermid: I haven't seen the outcome of that. I think all experiments take a year or two to work themselves through, and we're just coming up to an election. The delay in the disclosure of figures means it's hard to track this stuff, because it takes a year or more to actually know what the totals are.

    Mr. Rick Borotsik: That's where we're heading right now. You're exactly right we need some time to gauge what Manitoba does.

    Thank you, Mr. Chairman.

    The Chair: Thank you, colleagues.

    I realize that the session was broken by the vote, so next is Jacques Saada, and then Ted White, Dick Proctor, and Geoff Regan.

[Translation]

    Mr. Jacques Saada: I would like to redirect my question to Mr. Côté. Do you agree with the bill when it says that you need a minimum percentage of the popular vote to be eligible to this base funding that you are talking about? That is my question.

    Mr. François Côté: I believe you are referring to the proposed Section 435.01, which provides that a basis of 2% for the party and 5% in the constituency gives rise to an allocation of $1.50.

    Mr. Jacques Saada: You agree with that principle?

    Mr. François Côté: I look at the Quebec experience, where we have the same principle, even though the margin is somewhat lower: it is set at 50 ¢. I have not seen any proliferation of small units or more or less serious political parties. We thought that--

    Mr. Jacques Saada: I had misunderstood your interpretation and that is why I wanted to ask you the question a second time. We are on the same wave length on this.

    If you will allow me, Mr. Chair, I would like to ask a brief question to Mr. MacDermid and Mr. Cross.

[English]

    I'm very much interested in your formula of matching funds. Do you have any figures, studies, or surveys on any jurisdiction where this principle is applied? I'd like to have a chance to compare that eventually with the actual figures on voters and the $1.50, and so on, we are looking at, to see how it compares. Do you have any such thing?

    Mr. Robert MacDermid: We're talking about slightly different systems. I think there is certainly evidence on the American one.

    Mr. William Cross: Yes, the Federal Election Commission in the U.S. has lots of reports of the type you're asking about.

    Mr. Robert MacDermid: Mine was based not on the amount an individual gave, but just on the fact they gave a threshold value that would then be matched by something. So the incentive would be to pursue individuals who gave a minimum amount. Could we establish that? We could do that by looking at the contribution list to see how many individuals gave in excess of a minimum amount, say $120. Then we'd have to decide what kind of subsidy would be attached to that one contribution. I still think it should be less than what the current provisions allow, but then obviously the amount of the subsidy is something that one would have to determine.

    Mr. Jacques Saada: You see, the purpose of my question is very simple, and I would like very much to pursue that, if we can, with our researcher.

    The Chair: We heard what you said and we have that on record. If later on you get some ideas, we would appreciate any direction you can give us for this type of thing, and we appreciate the comments so far.

    Mr. Jacques Saada: The purpose of my request is very legitimate because I subscribe to the principle that you have to trade off what you reduce in income generated from corporations and unions, with public contributions. But at the same time, you want to make sure the public contribution is not an overburden on taxpayers' money. Of course, we have a difference of opinion with my colleague, Mr. White, on this issue.

    I do believe there is a role for public funding in political affairs, but at the same time I want to assess the impact of one versus the other. So if there is any way we can do that, I would appreciate it.

    The Chair: Ted White.

    Mr. Ted White: Thank you, Mr. Chair.

    My question this time is to Robert MacDermid. I'd first like to say I have a bit of a problem with your position that wealthy people should be restricted from contributing more to political parties than poor people, as if there's something evil about a person having been successful in life. I think we could probably engage in a lengthy debate about the value that wealthy people bring to this country, in terms of their ability to create jobs, and so on. Perhaps they should have more influence on the political system.

    That having been said, let's go back to the political contributions issue. If you observe question period, the opposition parties in the House are able to look at these large corporate donations, just as you've done, and bring them to the attention of the government, and even bring to the attention of the government any contracts that may have been awarded to those same companies. As soon as you ban the ability for us to do that tracking by banning corporate donations, we can no longer connect events in that way. It may be incorrect to do so, but there's that perception out there, like you said. One way to air it is to get it on the stage in Parliament. If you honestly believe those corporations aren't going to find some way to influence government, I think you're dreaming in technicolor.

    Can you make a few comments on all of that?

  (1250)  

    Mr. Robert MacDermid: The last part strikes me as perverse. We want to allow something that subverts the system so we'll know it's going to subvert the system.

    Mr. Ted White: I guess that may be the reality of the world.

    Mr. Robert MacDermid: That strikes me as a perverse kind of logic. It would be more sensible to ban it and then deal with the enforcement implications of doing that.

    On the first point of whether we should make rules for the wealthy, good heavens, we make rules for the wealthy all the time, don't we? If you're suggesting that the wealthy should have a more important part, should have a greater ownership of democracy, then I think you're espousing an idea that's really quite alien to democracy. The notion that individuals have political equality in a democracy is a founding principle. What you're describing is an oligarchy, where somehow the rich have something more to say than the rest of us.

    I do agree there should be a limit. Why is that limit there? Even a limit of $10,000 is not a constraint on you and me, or most people; it's only a limit that relates to the wealthy. It constrains their desire to give money to the political system, and I'm wondering why we should make a rule for that. Why should they have a separate rule?

    Mr. Ted White: If a poor person wanted to sell his house to raise $10,000 to donate to the NDP, would you defend his right to do that?

    Mr. Robert MacDermid: They don't own houses, Mr. White, at least not in Toronto, so they don't have that opportunity. I think that's a silly example, really, because you know poor people are not wealthy enough to contribute to political parties. You know that most contributions come from affluent wealthy people and middle-income people; they don't come from poor people.

    Mr. Ted White: I think you're making assumptions about people's motives for donating to political parties, and I would repeat the question. Would you defend the right of a poor person to sell possessions to donate as much as he wanted to a political party?

    Mr. Robert MacDermid: No. They should live by the same rules as everyone else, and I think I said the rules are lower.

    I'd like to respond to what you said about the Alliance Party not receiving money from corporations. That's completely not true. I heard you say it the other day on TV. In 2000, 34% of the money going into the Alliance Party came from businesses and corporations.

    Mr. Ted White: My words were that most of the money comes from individuals.

    Mr. Robert MacDermid: No more than many other parties.

    The Chair: Would it be an oligarchy or a plutocracy, or is a plutocracy a subset of an oligarchy? Did you get that?

    Dick Proctor.

    Mr. Dick Proctor: While you're pondering your responses to that question, I know that both Professor Cross and François Côte talked about third parties, and I'd be interested in your view about that. My perception, and I think the collective wisdom, is if we have all these changes to the election financing and the third party advertising is not dealt with, we really haven't accomplished a thing.

    So I'd like all of your thoughts on that, as well as trust funds. That has not come up today, but I'd be interested in your views there.

    Mr. William Cross: On the first question, I think it's worse than you suggest. It's not that you won't have accomplished anything if the courts do what you hope they won't do on the third party spending thing. You'll have created a much worse system if that happens, because the money will go into the system but it won't go to the parties and candidates and it won't be regulated. The parties and the candidates will no longer be vibrant, dynamic forces in our political system.

    Mr. Dick Proctor: Will it be more difficult for a judge to rule against third party advertising if the political parties restrict from whom they can receive donations?

    Mr. William Cross: I don't think so. I'm an attorney, but not a constitutional attorney. The charter questions are the fundamental ones, and I'm not sure if limits to contributions to parties really get to that.

[Translation]

    Mr. François Côté: In my view, the issue of contributions and the participation of third parties, other than political parties, to the electoral process is probably the most complex issue that is being raised by this bill. We all know about the legal situation, the issue being presently pending in the Supreme Court of Canada following the Harper case in Alberta, where our legislation has been declared unconstitutional in this regard.

    There are differing interests. On the one hand, I am particularly strucked by the fact that we must still maintain the integrity of the political process. An electoral campaign cannot be submerged in a battle between third parties that are appropriating the political debate. The political debate must be held between political parties that want to be elected and that must be preserved, in my view. On the other hand, the third parties also have rights, as the Supreme Court has rightly indicated in the Libman case and the Appeal Court of Alberta has done so as well in the Harper case. How far can we go in terms of the individual right to freedom of expression yielding to the integrity of the political process? It is difficult to draw a line or to find a formula that could be applied to everyone.

  (1255)  

[English]

    The Chair: Robert, do you want to respond to the same question?

    Mr. Robert MacDermid: Third party spending is crucial, and if we don't have controls on it everything else is pointless. The other thing you didn't mention is there are no sections on pre-campaign spending. That's becoming more and more important. There are no controls over pre-campaign spending, particularly in Ontario and in the federal jurisdiction. I imagine parties will now move a lot of expenditures into the pre-campaign period to avoid controls.

    The Chair: Next is Geoff Regan, very briefly, I hope.

    Mr. Geoff Regan: Yes, Mr. Chairman.

    This is for Mr. Cross, and I'll invite the other panellists to comment if they like. You've argued that it's important to have public funding for political parties between elections--to have their ongoing operations. What do you see as the key benefits of that public funding, and why is that important? How do you respond to those who say no public funding should be required?

    Mr. William Cross: My point is slightly different. Parties need money between elections because we want parties to be participatory institutions. We want them to be organizations that allow voters to participate between elections and act as a conduit of ideas between voters and their representatives. What the source of that money should be is a different question.

    I think it's probably a good idea to have some public funding go to the parties between elections. We know now that in the aftermath of elections, parties often are almost bankrupt. They're paying off their debts from the past election and they're laying off staff. They're not engaged in those ongoing activities--engaging their supporters with the elected representatives as well as they might between campaigns. So some public financing to them in that period is a good thing.

    I'd just encourage the committee to not make it a free cheque for the parties, but rather somehow couple it with ongoing indication of support by voters. So there should be some sort of matching funds. Whether it's Professor MacDermid's formulation of simply the total number of contributors, or something more akin to the U.S. system are the fine points, but the principle's important.

    The Chair: Robert.

    Mr. Robert MacDermid: If we don't have public money we will condemn parties to be even more what they are now, and that is just fundraising organizations. If you look at what political parties do now at the local and national level, I bet well over 50% of those activities are dedicated to raising funds. If we remove public money, parties will totally be fundraising organizations. Frankly, that will do nothing for most ordinary citizens. The function of parties should be to devise policy and draw citizens into the political process through discussions about policy, not discussions about who's going to run the raffle.

    Mr. Geoff Regan: Just to interject, that hasn't been my experience with my association or the executive of my association. We meet every month and talk about all kinds of other things. There's a lot of discussion about policy, etc. So on what basis do you say that's the case in Canada?

    Mr. Robert MacDermid: I say that from observing a number of local associations. It may not always be the experience of a sitting MP, but there are thousands of other constituency associations out there that don't have sitting MPs.

    Mr. Geoff Regan: How do you observe them? Clarify how you know this. I'm trying to understand.

    The Chair: François has something to say, and this will be the last word.

·  (1300)  

[Translation]

    Mr. François Côté: I thank you for giving me the opportunity to conclude. I would simply like to conclude the debate with a general observation. I have a lot of difficulty understanding that one could wonder whether relatively limited public funds would be hill ill-advisably spent if they were used to keep our democracy alive.

[English]

    The Chair: François, thank you for that.

    Colleagues, our next meeting will be tomorrow at 5:30 in our regular room, 112 North. The principal witness will be Mel Hurtig. At that time we will do the other business from today's agenda, which has to do with the riding boundaries in New Brunswick and Manitoba. We have a number of housekeeping items that are outstanding. There will be food provided at that meeting.

    I'd like to thank our witnesses, colleagues, on your behalf. François Côté is a lawyer who's here on his own behalf. François, we appreciate that.

    We thank Bill Cross from Mount Allison University and Robert MacDermid from York University. It's been a very interesting morning. Again, I apologize for the break in the middle because of the vote.

    The meeting is adjourned until 5:30 tomorrow in room 112 North.