May 23, 2017

Getting big money out of BC politics: 5 ways to do this right

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With the provincial election behind us, there’s at least one thing that the overwhelming majority of British Columbians seem to clearly agree on: we need big money out of our politics.

The corrupting influence of vast sums of cash from (primarily) corporations and the wealthy in BC’s political system has received a great deal of attention over the past year (including a Corporate Mapping Project/CCPA report revealing the extent of fossil fuel industry donations and lobbying). And while there’s been a lot of public discussion about just how profoundly unhealthy and undemocratic our current electoral finance rules are, there’s been much less conversation about exactly how to fix them.

Once we ban direct donations by corporations and unions, powerful elite interests are still going to be with us. You can bet big money will still be looking for an outlet to influence public policy. Trying to contain the role of big money can be a bit like squeezing a balloon: press it in one place, and watch it expand in another.

This is a long-standing problem, which intensifies as inequality rises. In the words of US Supreme Court Justices O’Connor and Stevens, “money, like water, will always find an outlet.” Political scientists call this the “hydraulic theory” of money in politics. Others might simply call it a game of “whack-a-mole.”

That’s why it’s not enough simply to put an end to direct cash donations by corporations and unions.

1) Make sure the ban is comprehensive

That means banning contributions of property and services, and prohibiting loans or the guaranteeing of loans. It also means banning all institutional contributions to party leadership races, and to constituency races to nominate and select a party’s local candidate. Neither should corporations and unions be allowed to purchase tickets to partisan events.

What about already-accumulated war chests? The BC Liberal Party—which relies primarily on large donations from corporations and well-heeled individuals—closed out 2016 with $7.6 million in surplus funds, which dwarfs the spending power of the other parties (and doesn’t even count the large sums the Liberals have raked in so far in 2017). It’s also more than enough to fight one or even two more provincial elections.

While there is likely no legal way to bring in a retroactive ban, it’s important to highlight that corporate influence on our elections will be with us for some time yet. That said, the ban could be made effective as of the date the legislation is tabled in the legislature, or possibly even back to the May election date.

2) In a deeply unequal society, we also need strict limits on individual donations to political parties

One of the most important foundational principles of our political system is one-person-one-vote—in other words, the idea that democracy rests in the hands of citizens who each have an equal say in determining how we will govern ourselves. Money shouldn’t be allowed to distort this principle, regardless of whether it comes from institutions or wealthy individuals.

For this reason, limits on personal donations exist in most jurisdictions across Canada—but they’re typically still quite high. The maximum annual political donation is $3600 in Ontario and $4000 in Alberta, for example. High donation limits are unfair to the majority of the population who can’t possibly contemplate such large contributions. And in practice they encourage parties to focus on courting the affluent.

As with the ban on corporate and union donations, we need to ensure limits on individual contributions are airtight.

There is an obvious solution: limit political donations to a much lower level. That’s exactly what Québec did in 2013, capping donations at $100 per year (with an extra $100 allowed during election years). At this level, a much broader swath of British Columbians could realistically donate. We should also limit donations to permanent residents of BC (currently, anyone anywhere in the world can donate as much as they want).

As with the ban on corporate and union donations, we need to ensure limits on individual contributions are airtight. Quebec’s system is extremely well thought out and offers a model we can draw on. For example, parties cannot charge an entry fee for events (e.g. dinners) greater than 5% above the real cost of the activity (e.g. renting a hall or paying for catering). Individuals also can’t loan a party more than $25,000 or cut a special deal on the interest rate. We could also follow Quebec’s lead in cancelling the tax deduction that comes with political donations (more on this below).

Individual contributions to party leadership races and constituency races should likewise be capped.

3) Reduce the amount of money parties can spend during and between elections

The expense limit for political parties in the 2017 BC election was a whopping $4.9 million. The expense limit for candidates was over $77,000—regardless of how big or small the riding.

Allowing that much money to get funnelled into our elections means parties with big bucks can finance slick advertising and armies of campaigners. A lower election spending limit would favour parties that campaign on dynamic ideas and build momentum through authentic grassroots engagement with potential voters.

In Quebec, party election spending is limited to $0.68 per elector (and adjusted regularly for inflation). If we applied that formula in BC, parties would be limited to spending about $2.3 million. Spending limits for candidates should likewise be set using a per-voter limit (in Quebec it is $0.74).

There is currently no limit on party spending between elections. Too strict a limit would favour the incumbent government, which has a tremendous advantage in being able to communicate with British Columbians (it’s high time for a conversation about reforming the rules on government advertising, but we’ll save that for another day). But without a reasonable ceiling, parties can heavy-load expenses in the months and weeks leading up to the formal 28-day campaign period. And given the huge war chest the BC Liberal Party has already accumulated thanks to massive corporate donations, a spending limit between elections will curb the undemocratic influence of corporate money going forward.

4) Create a fair and transparent system for financing parties

Christy Clark has suggested in recent months that banning big money means taxpayers will have to subsidize political parties. But she forgets to mention that we already have public funding for parties in BC—just not a very fair kind. Currently, political donors get major tax breaks (much more generous than tax breaks for those who donate to charities, in fact). For example, a person who gives $1150 gets a whopping $500 tax credit. These tax breaks cost about $16 million per election cycle, or $4 million per year.

Here are three possible ways to better provide public funding to the political process in BC (that could go hand-in-hand with the above limits on donations).

Per vote subsidy. This is one of the most common ways to provide public funding. For example, between 2004 in 2015, federal political parties in Canada received annual funding equivalent to $2.04 per vote1 they garnered in the previous federal election. This model gives average voters substantially more control over political funding than the donation tax credit.

But the per vote subsidy has problems. First, it tightly binds a person’s vote with the allocation of funding, when citizens might often want to separate these (e.g. by strategically voting during a particular election, but wanting to give a funding boost to a different party they really like best). The per vote subsidy also locks in public funding between elections, whereas voters preferences may change substantially over the course of any given four-year term.

Imagine if we built incentives for bottom-up political engagement right into BC’s campaign finance system.

Indeed, this style of public funding has a fundamental status quo bias, disadvantaging political challengers relative to incumbent governments, and upstarts relative to established parties. Political scientists have gone so far as to warn that established parties may use this type of funding to effectively form “cartels,” trying to exclude new entrants onto the political scene.

While the per vote subsidy is familiar in Canada, it’s not the best option available to us.

Matching small donations. This model has the advantage of motivating parties to seek the support and engagement of average citizens between elections, especially if combined with a low limit on individual donations.

Under a matching system, small donations up to a certain amount (for example, $25) are matched with public funding. Under New York City’s innovative system, donations are matched at 6-to-1 ratio. So, a $10 donation from an individual becomes worth $70 to the party or candidate, leading them to value and pursue these types of donations.

The New York system has successfully increased both the total number of small donors and the proportion of small donations out of all donations. It has also led to a shift in the demographic profile of donors, which is now more representative of the population.

The New York system is set up to match donations as large as $175 and offers that very generous 6-to-1 matching ratio. But the threshold and ratio could be tailored as desired in BC. The total amount of public matching funds available could also be capped.

Think back to the energy behind Bernie Sanders’ presidential nomination campaign last year, and imagine if we built incentives for that kind of bottom-up political engagement right into BC’s campaign finance system.

Universal citizens’ voucher. Going one step further, another option is to empower citizens to control the flow of public funding via a universal citizens’ voucher. Such a system could be rolled into the elections section of an income tax return, where you could choose to direct your voucher amount (say $10 or $20 per year) to a party, or withhold it if you’re dissatisfied with all the options available. Alternatively, vouchers could be sent out by mail, like in a similar voucher system Seattle is implementing this year.

Under this system, all citizens would now be on equal footing in their ability to fund the political process. And if it’s already there on your tax form or arriving in your mailbox, it would likely encourage more widespread participation than even a matching system could muster.

A combination of options like these is also possible (such as in Quebec, which funds parties based on their share of the vote and via matching donations).

5) Don’t stop there

Finally, it’s important to remember that there are myriad other ways elections can be made more fair and vibrant. For example, most of the above recommendations could be extended to municipal elections as well. Elections BC could be given the authority to manage political financing at the provincial and local level, with real-time reporting. And why not provide more free public airtime for political contestants, so citizens’ donations to political parties don’t have to flow through to big media companies as advertising revenue?

We should also remember that changing how we finance elections is a critical first step in reducing the influence of wealthy interests in BC politics and policy. To truly contain the influence of big money is a much larger fight, and requires tackling problems like huge corporate investments in lobbying, dark money campaigns between elections, and the root cause of deepening inequality itself.

Banning big money should be the beginning of a conversation among British Columbians about restoring the integrity of our democracy, not the end of one. Money in politics is powerful, but it’s not all-powerful. To borrow a phrase: the only thing more powerful than organized money is organized people.

Notes

  1. The original amount in 2004 was $1.75 per vote, and this was indexed to inflation.

This post was produced as part of the Corporate Mapping Project (CMP). The CMP is a six-year research and public engagement initiative jointly led by the University of Victoria, the Canadian Centre for Policy Alternatives’ BC and Saskatchewan Offices, and the Alberta-based Parkland Institute. The CMP is supported by the Social Science and Humanities Research Council of Canada (SSHRC). 

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