HAFF Committee Report

            The Standing Committee on Procedure and House Affairs has the honour to present its

 

 

THIRTY-SIXTH REPORT

 

1.      Pursuant to its mandate under Standing Order 108(3)(a)(vi), the Committee is pleased to report as follows.

 

2.      Bill C-24, An Act to amend the Canada Elections Act and the Income Tax Act (political financing), received second reading on March 18, 2003, and was referred to the Committee. We spent considerable time studying the bill and heard many witnesses. The Committee completed clause-by-clause consideration of the bill on June 3, 2003, and the bill was reported back to the House, with amendments, on June 5, 2003.

 

3.      During the course of our study of the bill, a number of related issues were raised by members of the Committee and witnesses. Moreover, during our clause-by-clause consideration of the bill, some amendments were ruled inadmissible as being beyond the scope of the bill, or affecting the Royal Recommendation. For these reasons and others, the Committee felt it would be useful and important to prepare and table this report. In it, we set out issues and concerns that the Committee, or some of its members, have expressed. The intent is to signal possible areas for legislative change or future study.

 

4.      Bill C-24 represents the most significant reform to Canada’s electoral and campaign finance laws since the 1974 Election Expenses Act established a regime for the financing of federal elections in Canada. The main components of the bill are a ban (with minor exceptions) on political donations by corporations and unions; a limitation on individual contributions; the registration of constituency associations, with reporting requirements; the regulation of nomination and leadership campaigns; and enhanced public financing of the political system, particularly at the level of political parties.

 

5.      Bill C-24 will impose new requirements on sections of the electoral system. While most members of the Committee believe that these new obligations are justifiable, many members are concerned about the administrative burdens on constituency associations, and the costs of compliance. Some Members foresee difficulties in finding and keeping volunteers as a result of the new requirements. As volunteers are the backbone of the political and electoral systems, clearly this is an area that will require close monitoring. The Committee recommends that Elections Canada and the registered parties ensure that adequate training and preparation of electoral volunteers is in place, and that they assist them with the introduction and transition to the new regime.

 

6.      As a result of new reporting requirements for registered parties, electoral district associations, candidates for leadership, and candidates for nomination under the bill, there are enhanced needs for audited financial statements. Bill C-24 provides for audit fees of up to $1,500 to be reimbursed, but some members of the Committee believe that this figure is inadequate. An amendment to increase this figure to $2,500 could not be considered during clause-by-clause consideration of the bill as it involves the expenditure of public funds. Nevertheless, the Committee recommends that the reimbursement of auditors under the bill be set at the government rate for auditing, or, alternatively, tied to the market value of such professional services. This would apply to all audit requirements – registered party, electoral district associations, candidates for leadership and candidates for nomination. It has also been suggested that the payment of remuneration and expenses to, or on behalf of, a person for their services as an official agent, registered agent, or in any other capacity may need to be reviewed as a consequence of the passage of the bill.

 

7.      Existing provisions in the Canada Elections Act provide that certain services are to be deemed non-monetary contributions or campaign expenses. This can create difficulties for candidates. Particular problems have been experienced where persons with professional training or particular skills volunteer on a campaign, and use their professional skills of behalf of the campaign. This area needs to be examined and reforms considered. The enactment of Bill C-24 could complicate this issue, particularly in case of single-person professional corporations, and clarification will be required.

 

8.      Public funding of the political process is widely accepted in many jurisdictions. The Committee heard evidence that, at present, at the federal level, the government subsidizes up to 60% of the costs of the electoral process, through rebates to parties and candidates and the political tax credit. Bill C-24 would increase this level of public funding. At least one member on the Committee, and one recognized party in the House, questions the basic principle of public funding of political parties.

 

9.      On the question of the public funding to the registered political parties – which is integral to Bill C-24 – there was considerable discussion among witnesses and Members as to what should be the basis for determining the public funding component. Several alternatives were put forward. The most repeated were based on memberships and on tax credits. Mr. Mel Hurtig proposed that the government provide matching funds to parties based on the numbers of donors they had. Another proposal was to have funding set according to regular polling results on a standardized, regulated poll. Several members and witnesses discussed a mixed-proportional funding formula where a base level goes to all parties equally, with a proportional top-up. On reflection, however, the consensus of the members of the Committee is that the results of the last general election, while not perfect, are the most fair, most reasonable, and most objective way of proceeding.

 

10.  The goal of the new public funding provisions in the bill is to compensate parties for the reduction in income from corporate and union fundraising. The legislation is intended to be revenue-neutral. The Committee believes that care must be taken that, so far as possible, parties are not negatively affected by the foregone revenue not being replaced; similarly, parties should not reap a windfall because of the change in financing. Some Members feel that an increase in the amount per voter should be  considered, for instance $1.75, rather than the proposed $1.50.

 

11.  Some members of the Committee further believe that the rebate to individual candidates should be increased from 50% to 60%. This would, to some extent, reflect the fact that candidates and constituency associations will lose the right to raise funds from corporations and unions (except to the extent of $1,000) but will not be compensated directly by a public subsidy. It has been suggested that the same increase in rebate could be extended to registered parties, as a one-time transitional measure  in the first general election held after the enactment of Bill C-24.

 

12.  Bill C-24 represents a significant change to the electoral system at the federal level in Canada. There was considerable discussion about when the bill should come into force. It was pointed out, for instance, that in the province of Quebec, there was a period of about three years for parties to adjust and prepare for a campaign, between the time the 1977 Act to Govern the Financing of Political Parties came into force and the first provincial campaign – the referendum of May 20, 1980. Amendments to delay the implementation date for Bill C-24 were rejected by the Committee. Nevertheless, members of the Committee are concerned about the transition to the new regime under the bill. Some Members believe that further measures are needed to temper the impact of the provisions contained in the bill. Suggestions include:  involving the parties in the implementation of the bill; increasing the public subsidy the first year; paying the public subsidy as a lump sum the first year (rather than quarterly); increasing the rebate to parties for the first general election after the bill is in force; and assistance from Elections Canada to get volunteers up to speed. Amendments have been made to the bill, but some Members continue to be concerned that information on donors and regarding registered parties be made available in a timely manner.

 

13.  We expect Elections Canada to work closely with the registered parties regarding the implementation of Bill C-24. We note the important role played by the consultative committee, composed of the Chief Electoral Officer and representatives of the registered political parties, which was re-established in 1998 following representations from this Committee.

 

14.  There are areas of concern in the bill, which have been addressed by amendments by the Committee, but which will bear monitoring in the future. These include the differential treatment of franchises and corporate entities; the equal treatment of union locals with corporate franchises and affiliates; the provisions regarding contributions that are flowed through “associations”; and whether the revised anti-avoidance provisions are sufficient.

 

15.  Several members of the Committee have expressed concerns generally about the costs of elections and campaigning. There was a desire to reduce the amounts it costs to run election campaigns. For instance, the Hon. Ed Broadbent, in his appearance before the Committee, suggested the provision of more free broadcasting time by government, as is done in some European countries, as a means of reducing the enormous costs incurred by parties in this area. The Committee reduced the spending limits for nomination campaigns (from 50% to 20%), but it was also suggested that spending limits should be imposed on leadership campaigns. We note that the Canada Elections Act requires that Chief Electoral Officer table a report in Parliament after each general election, including recommendations for legislative changes. Moreover, the Committee is responsible for monitoring electoral matters. We believe that Elections Canada and the Government, as well as the Committee, should carefully review the operation of the Act, with specific reference to the impact of the provisions contained in Bill C-24 before and during the next federal general election.

 

16.  Members were somewhat frustrated that while some dollar amounts in the Canada Elections Act are indexed to inflation, others are not. The Committee believes that there needs to be systematic indexing of all figures in the Act. We believe that this would aid consistency and avoid the uncertainty that currently exists. We accept that the only exception to this indexation should be income tax credits.

 

17.  Several members of the Committee – indeed, a majority of the recognized parties, although not a majority of the members – have reiterated their suggestion that returning officers be appointed by the Chief Electoral Officer, rather than by the Government.  This has long been a recommendation of the Chief Electoral Officer.

 

18.  All politicians are very concerned about participation rates in the political process, particularly voter turnout among young people. This problem is by no means unique to Canada, as it is common to all western democracies. Nevertheless, it is incumbent upon us to address this issue. Measures are required to entice the public to participate in politics and enhance public participation, especially young voters. For instance, it has been suggested that the government should review the tax breaks to individuals to encourage financial contributions. Other measures need to be  examined. Part of the objective of Bill C-24 is to help restore public confidence in the electoral system. While we may not all agree on specific approaches, we all share this goal, and are committed to doing what we can to achieve it.

 

19.  Many witnesses and all Members expressed concern that if the regulation of third-party spending in electoral campaigns are struck down by the Supreme Court of Canada, this will undermine the provisions contained in Bill C-24, and will require the provisions of the bill to be re-examined.

 

A copy of the relevant Minutes of Proceedings (Meetings Nos. 50 and 52) is tabled.

 

Respectfully submitted,



Peter Adams
Chair