Wednesday, August 12, 2009

Party Funding - Not So Simple

Recently, there has been talk of removing the public party funding from the Bloc Quebecois. It was first brought up in a Globe and Mail editorial by a former Conservative, and more recently was brought up by Minister of State Steven Fletcher, responsible for democratic reform.

Chantal Hébert has a scathing, and in my view justified, opinion on that matter.

One of the basic elements of the argument is that the Bloc is dependent on the public subsidy for survival, and that Canadian tax-payers are funding a sovereigntist party. Of course, the $1.95-per-vote subsidy is actually funded by the voters themselves. If you vote for the Conservatives, your $1.95 will go to the Conservative Party. If you vote for the Bloc, your $1.95 will go to the Bloc. That is a very democratic way of giving the parties public funding.

But the argument falls flat when you realise that private donations to political parties are subsidised at between 50% to 75%. So, if you donate $400 to a political party, you will get $300 back on your taxes. In that way, Canadian tax-payers are funding political parties in an undemocratic way. For example, if a party gets about 60% of all private donations (as the Conservatives did last year), but only had 36% of the vote, that party would be funded by tax-payers in a proportion larger than their portion of the vote.

So, I thought I'd look at how much money each party actually receives from this subsidy on private donations. These are rough, rounded numbers, but according to my calculations should be very close to the actual amount each party has so far raised in 2009 that will come from this private subsidy:

Conservatives - $5,400,000
Liberals - $3,700,000
New Democrats - $860,000
Greens - $270,000
Bloc Quebecois - $210,000

In addition to the $5.4 million the Conservatives will receive from this private subsidy, they have also received $5.1 million from the public per-vote funding. Taking both the public funding and the private donations into account, the Conservatives have raised about $13.4 million. Of that $13.4 million, only $2.9 million will actually be coming out of the pockets of private donors. The rest is coming from the public funding and the private subsidy - or a total of 78% of all of their funding.

In that sense, it is incredibly hypocritical to criticise the Bloc for relying on public funding, paid for by the Canadian tax-payer. The Bloc will only receive a total of $1.6 million from public funding and the private subsidy.

The Conservatives will be receiving about 6.5 times more funding than the Bloc from tax payers, while they only had 3.7 times more votes.

The number of 86% is often thrown around as how much of the Bloc's funding comes from the public per-vote funding, compared to the 38% of the Tories. The Bloc reports donations differently. Unlike the other parties, funds are raised in and for the local ridings to spend. The Bloc does not do major national funding and then distribute it to the riding associations, as the other parties do. As far as I can understand from the reports on the Elections Canada website, the Bloc raised $191,811 in donations at the national level so far in 2009. At the riding association level, they've raised $140,631, for a total of $332,442 - or 24% of their total revenue. So, if my calculations are correct, the Bloc's funding comes 76% from the per-vote funding. Still high, but not so high.

UPDATE - Thanks to The Pundits' Guide for pointing out that my calculation of the fundraising of the Bloc in the individual ridings is mistaken. It seems to be very difficult to figure out how much money is raised at the local level by the Bloc, though I'm sure there is a way. Suffice to say, the 86% is still incorrect as the Bloc, according to Bloc MP Pierre Paquette, raises as much money at the local level as they used to do with the national campaigns - somewhere around $1 million.

UPDATE II -
This post fills in some of the gaps and corrects some of my errors.

14 comments:

  1. The crux of the point you make is a reasonable one.

    However, if you are arguing that one needs to consider all forms of taxpayer funding, then one should also include a third form: campaign expense reimbursements from Elections Canada.

    The Bloc seems to do very well on that score so that would doubtless impact the overall ratios.

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  2. True, but that only takes place during an election and so is a different matter altogether - and the Bloc isn't alone in receiving that reimbursement. They don't spend nearly as much as the other parties do, so one would come to the conclusion that it would not favour the Bloc over the other parties.

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  3. Éric,

    It is not possible to determine how much the ridings have fundraised in the first part of this year, as they only have to report on their own fundraising annually, and not until the May after the end of the calendar year.

    You might be confusing riding fundraising with transfers that riding association make into the party headquarters. Those are reported quarterly by the central party. However, the transfers going in the other direction (i.e., from party to riding) are only reported by the ridings and parties annually, and again in the May or June after the year is over.

    Here is a link to the page from my new Party Finance Module, showing the Bloc's quarterly fundraising performance. I'm intending to add in the public subsidies there (and on the Annual Page), and also the riding annual fundraising totals as well, but haven't got to it all yet.

    The transfers from ridings and candidates in the post-election period have to do with settling out accounting arrangements between parties and local election campaigns. Nothing to do with fundraising.

    You could measure Net Transfers as a source of central party revenue (but again, they're only available going in quarterly and coming out annually). Or you could just measure party and riding fundraising separately at the end of the year and ignore the transfers between the two, but include transfers to and from candidates. Or ... well you get the picture.

    cheers,

    (p.s., Could I give you the feedback that I hate this commenting widget! It doesn't respect copy and paste conventions, you can't see much of your comment in progress, and the thing frequently bumps you out when you're trying to authenticate and preview a comment. I realize you want to use Captcha for security, but this thing is really awful to work with. Hey, only your friends would tell you!)

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  4. Tihs is only the set-up body blow to get back to the overall party funding issue, which in my opinion is a good one for the Conservatives.

    The fact they are trying to highlight is that the Bloc shut down its federal fundraising to the betterment of the PQ.

    The finishing uppercut will hopefully be a renewed debate over the vote subisdies before the next election.

    The Bloc and PQ may be a good outlet for Quebecers, but they also make a fine boogyman to much of the rest of Canada.

    I wish very much that Meech had succeded, and feel that Treudeau had treated Quebec badly in the past, but I feel that partys that only represent one region are in any way good for the Country as a whole. The one where we are stonger together.

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  5. As far as the 75% subsidy I will just say that people speaking with their own wallet add a competition to Canadian politcs instead of a watered down my vote is my $2.

    What I mean is that the more politically minded would be the ones more likely to donate and/or buy party memberships.
    75% re-embersment does seem a little excesive thou.

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  6. In my view, neither the donation subsidy nor the public funding is a bad thing. They are both good things in that they increase participation in our democracy. The first encourages donation, and thus implication, and the second gives further reason to vote for faint-hope parties. A Liberal or an NDP supporter in Alberta, for example, would not be entirely wasting their time voting.

    It's the rhetoric that bothers me. The holier-than-thou attitude. If you want to attack the public funding, fine, that is a legitimate position. But to frame it as a question of one party sucking off the government teet is completely dishonest. As I've shown, every party receives a vast majority of their funding from the government, be it indirectly from donation subsidies or directly via the per-vote funding.

    Now that the Liberals are raising as much as the Conservatives, I'm not so sure they have a reason anymore to get rid of this funding. It won't hurt the Bloc, they prospered without it during the 1990s and early 2000s. And if it is to indirectly hurt the PQ, well, the PQ has lost two elections since the federal funding was put into place so it doesn't seem to have had much of an effect. The PQ, too, receives funding from the provincial government in Quebec, as do the other parties.

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  7. TPG,

    You are correct that I equated the transfers to the riding fundraising. But if I'm not mistaken, are they not the same thing? IIRC, the individual ridings send the money to Montreal, and the money is then returned to the riding from Montreal. Money that is raised via the national campaign but intended to be used locally is also funneled to the ridings after being processed in Montreal. Am I incorrect in this?

    Have you been incorportating the riding-fundraising into your numbers at all? Is there a way to do that?

    -- "Hey, only your friends would tell you!"

    I'm just using what Blogger has available. Do you have another suggestion?

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  8. I object quite strenuously to the subsidy-per-vote scheme but for somewhat different reasons than are usually cited.

    The first is basic fairness.

    The tax money distributed under the scheme comes from all taxpayers but the money is only distributed to the big parties. If someone casts their ballot for a minor party, then their taxes are still forcibly directed to the other parties.

    The same is true for independant candidates -- even if they win their ridings. The voters who elected Andre Arthur as MP had their tax money directed to the big parties instead.

    In this respect, the donation credit is much more fair because everyone is eligible for it no matter their voting decision.

    The second reason is the corruption of the electoral process.

    It is true that party affiliation is an important factor in how many people assess who to vote for. But at its root, our electoral system is about electing individuals. The subsidy-per-vote corrupts this by directing money to a PARTY becase a vote was cast for a CANDIDATE.

    I have sometimes voted for a particular candidate even though I didn't particularly like his/her party. With Chretien's scheme, I am now forced, via my vote, to also direct money to a party I may not like.

    In this respect also, the donation credit is superior, because it maintains the distinction between party and candidate and between a ballot and funding.

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  9. Martin,

    I agree that it might be a better idea to extend the funding to all parties who receive votes, as well as to independents. But, the number of these voters is very small, so only a few people are affected.

    I don't agree that the donation credit is "more fair". While everyone gets to participate, it takes tax money from all voters and awards those parties who have the best fundraising organisation and/or the most affluent supporters. Parties thus are being funded by tax payers in an undemocratic way, and even if, say, the NDP had as many donators as the Conservatives but the NDP donator had less to give, the Tories would have an advantage that has nothing to do with public support.

    To your second point, one must assume that your $1.95 that goes to the party will be used to help your candidate the next time around. It isn't a direct vote-to-candidate type of funding, but theoretically your concern is covered.

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  10. Eric:

    "will be used to help your candidate the next time around"

    Not so.

    Because the candidate that I supported in one election may not run at all in the subsequent one.

    To give an example, in 1997 I voted for the woman running in my riding as a PC candidate. I frankly hated the PC party but this individual impressed me.

    She lost and did not run again in 2000. If the subsidy-per-vote scheme had been in place at the time, my vote would have forcibly directed tax dollars into PC party coffers for several years.

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  11. Well, no system is perfect. Through the donation subsidy, my tax-dollars fund four of the majors parties I didn't vote for.

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  12. Éric ... I think there are several comment options available in your Blogger setup. Almost no-one uses this one that I've noticed. But I'm hardly an expert in that area. Poke around and see what else you find there.

    As to riding fundraising, you have to go to the section of the Elections Canada website on "Party Finance" and look for the annual "Registered Associations" returns, in order to see their fundraising, and transfers back and forth to candidates and to the central party.

    I've done a bit of work on that data ... not enough to get it included in the P.G. website yet, but I'm working on it. Meantime, here's a pivot chart that shows the average net worth of the parties' riding association in Québec over the period 2004-2008. I know you're after revenue instead, but net worth is what I had handy to reply quickly with.

    (hmmm, they won't let me post an image tag here, so I'll see if they let me post the link as text instead)

    http://www.punditsguide.ca/img/Party_EDA_Avg_Net_Worth_QC_2004-2008.PNG

    Anyways, the chart shows that at the end of 2007, the Bloc was significantly ahead of the other parties' riding associations in terms of their net worth. Of course at the end of 2008 no-one had much money because they were all waiting for their rebates, etc.

    Also, interestingly, last year the Bloc had fewer registered riding associations than some of the parties who are trying to organize to replace them, but they seem to be focussed on their best ridings and so have between 48 and 58 registered riding associations, while holding currently 48 seats in the Commons.

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  13. Interesting, thanks. I'll take a look at my comments options as well.

    It isn't too surprising that the Bloc has fewer riding associations - there are some regions in western Montreal and the Outaouais where the Bloc is very unlikely to have the minimum level of support required to be reimbursed for expenditures.

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  14. It's the same when it comes to campaign spending for them. They're down at the riding level since 2004, since they figured out they can win as incumbents without spending the whole limit. So, nothing wrong with targetting at all.

    Once you start delving into the data, you realize that the Bloc has taken some very deliberate and intelligent strategic decisions about how it raises and deploys its resources within the current parameters, and also appears to have an eye on future risks to that environment (by stepping up their central fundraising now). They are also invariably the first party to file their returns with Elections Canada, as I've started to notice lately, working with all this data.

    While I personally think Canada is richer with Québec and would be terribly sad to lose it, I have to admit that the Bloc runs a very professional show politically, when measured against any criterion I can come up with.

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