Public Subsidies Of Federal Political Parties: Who Really Loses When They're Killed?

Prime Minister Stephen Harper’s plan to kill public subsidies of federal political parties will hurt his own party’s pocketbook, but it’s the opposition parties who will feel serious pain – at least until they step up their fundraising game at the riding level.

In today's budget, the federal government is expected to propose legislation that would scrap a provision of the Canada Election Act giving $2 per vote in annual subsidies to parties elected to Parliament.

If the subsidy was cut outright, the Conservative Party would miss out on more than $11-million a year for the next four years – more than any other party by virtue of its majority win in the May 2 election.

But the subsidy represents about 37 per cent of the Tories’ total fundraising in 2010, compared to the Liberals and NDP, which counted on subsidies for 53 per cent of their war chests. The Bloc Québécois takes the biggest hit: It raised 82 per cent of its funds from the subsidy.

“The biggest loser, in terms of dollars, will be the Conservatives,” says Derek Fildebrandt, acting Federal/Ontario director and national research director at the Canadian Taxpayers Federation. “But this won’t hurt them because they inherited the Reform Party tradition of large numbers of people making small donations.”

According to the Conservative Party election platform, the change will likely be phased in over four years, cutting the subsidy to $1.50 next year, then $1 and 50-cent before it's cut completely, which gives all parties time to adjust their strategies,

“We wouldn’t mind it if was cut completely immediately,” Fildebrandt said. “There are lots of other ways to raise money. An individual making a donation gets a 75 per cent tax credit while you only get 29 per cent credit for donating to a charity like the Red Cross. So, claims this is going to change the political landscape in Canada are hogwash.”

Fildebrandt said the shift will put the onus on parties to work more closely with the grassroots at the riding level, forcing them to get “to know them and their issues.”

Green Party Leader Elizabeth May sees it differently. Her party will net $1.15-million based on 576,221 votes, though she was the only candidate to win a seat (Saanich-Gulf Islands).

May said Tory plans to kill the subsidy are part of a larger agenda to bring back corporate and union donations, a channel shut down when the subsidy was first introduced in 2004 by the governing Liberals. They also set a $1,000 limit (now $1,100) for individual contributions to parties.

At the time, the subsidy was a compromise to create more transparent financing and to ensure big business and big labour did not unfairly influence federal politics, May said.

She said she’s concerned that once the subsidy is scrapped, there will be a constitutional challenge to the law that blocks large organizations from donating, on the grounds it violates freedom of expression.

“Mr. Harper doesn’t have to pass legislation to open it up again for businesses to fund the party because someone will go to court,” she said. “And that will bring U.S.-style lobbying and fundraising here. Do we really want that?”

The subsidy has allowed some parties to be insular, Fildebrandt said, calling it a form of “political welfare.”

The move is really no surprise: It’s been a long-standing thorn in Harper’s side, going back to his term as president of the National Citizen’s Coalition, and the Tories attempted to strike the subsidy in 2008 while leading a minority government, but backed off after the opposition parties threatened to defeat the government over it.

Nelson Wiseman, a political science professor at University of Toronto, said the Conservative rationale for ending the subsidy – that taxpayers shouldn’t fund a party they don’t support – is overblown because Canadians support those same parties in many other ways.

“The tax credit on political party donations, for example, is 75 per cent,” he said. “Using the fiscal argument is very selective.”

Candidates can also qualify for a 60 per cent refund on campaign expenses after an election.

Still, Wiseman said, of the three big parties, the Conservatives have built the most formidable grassroots fundraising machine, borrowing heavily from American techniques and technology that target individual core supporters.

He said it puts the Tories on a better footing going forward, though other parties will adapt as the subsidy is phased out.

The Liberals will likely have the steepest learning curve of all, he suggested, because they aren’t as ideologically-driven and don’t attract supporters with a passion for their cause in the same way the NDP and Conservatives do.

Being the party in power also attracts cash, but the money dries up quickly when the government falls, he noted, pointing to the post-2004 Liberals. Having the most money to spend doesn’t imply an automatic advantage since there are election spending limits and strategies can fail, Wiseman added.

“Just spending the most on advertising doesn’t always mean you’ll win because the ads can backfire,” he said.

Of the 14,720,580 votes cast May 2, the Conservatives drew 5,832,401. Under the law, they’re due an annual payout of $11.6-million, up from last year’s $10.4-million (based on 2008 results). That’s far ahead of the Liberals, who drew 2,783,175 votes for a subsidy of $5.6-million, down from 2010’s allowance of $7.3-million.

The NDP would have the most to gain in keeping the subsidy. Their take would be more than $9-million from 4,508,474 orange votes, up from about $5-million last year.

The biggest loser is the Bloc Québécois. With 889,788 votes, they stood to rake in $1.7-million, down from $2.8-million in 2010.