In June 2003, the federal government passed Bill C-24, a long overdue updating of Canada's political fundraising rules.  Democracy Watch and the Money In Politics Coalition (organized and coordinated by Democracy Watch since 1999), have been the leading citizens' voice advocating changes to these rules to make them more transparent and democratic.

The new law, which will come into force January 1, 2004, includes the following measures:

• New limits on political donations:
• corporations, unions and other organizations are limited to donating only to candidates (no donations to parties allowed), with an annual donation limit of $1,000 total to all candidates (and funnelling donations through subsidiaries, executives, employees or anyone else is prohibited); 
• for individuals, the annual donation total is limited to $5,000 to each party (including donations to the party's candidates);
• these donation limits apply to donations made to parties, candidates for nominations by riding associations, candidates for election as a Member of Parliament (MP), and candidates for the leadership of any federal political party.
• New disclosure obligations make it easier to know who is donating to political parties and candidates:
• political parties are required to disclose their donations and donors every three months (currently disclosure only happens once each year);
• riding associations are required to disclose their donations and donors once each year;
• disclosure of donations to party leadership and riding nomination candidates is required before the vote;
• the terms of bank loans to parties and candidates are required to be disclosed annually.
• Spending by candidates in riding nomination races is limited (as spending by election candidates is now limited);
• A general anti-avoidance provision -- a general rule will make it illegal to try to donate through another person or organization.

There are some elements of the law not supported by Democracy Watch, as follows, and these flaws must be corrected in order to have a fully transparent, democratic, and ethical federal political donations system:
Donations can still be made in secret directly to federal politicians, as long as the politician does not use the secret money for "political purposes."  This loophole will encourage donors to continue to funnel money to politicians in secret, a recipe for corruption.

Also, donations made during election campaigns still do not have to be disclosed before the vote takes place on election day.  This loophole means that voters will not have a right to know who is bankrolling candidates and parties in federal elections.

In addition, new public subsidies will more than compensate the parties for the expected shortfall in revenues from the new donation limits.  In total, parties will receive about $40 million annually in public funding.  The proposed subsidies, including a provision granting parties an annual subsidy of $1.75 per vote received in the previous election, are excessive, and will not encourage the parties to increase the base of their support.

Also, the new law will increase the election campaign spending limit for parties by roughly $1 million.  Typically, only the governing party spends the maximum amount allowed, so this measure will increase the advantage of the governing party in elections.

Overall, to be fully transparent, democratic and ethical, the federal political donations system still needs to be strengthened through the following measures:

• prohibit donations from corporations, unions and other organizations (as Québec and Manitoba have done);
• prohibit politicians and parties from having secret bank accounts, and require disclosure of every donation above $100;
• cut annual public funding from $1.75 per vote to 75 cents per vote received by each political party (which would force the parties to appeal to individual Canadians to join and donate to them);
• limit individuals to donating $1,000 total annually to each party and all the party's candidates (this limit is closer to what an average Canadian could afford to donate, and would prevent wealthy individuals from using donations to influence politicians and political parties);
• roll-back the increase in the spending limit for parties during elections, and only increase it in the future by the inflation rate each year.

For a complete analysis of improvements made to the bill by the committee that were eventually passed into law, please see: Bill C-24 Analysis (June 6, 2003)

For an analysis of Bill C-24 as it was when it was first introduced in Parliament , please see: Bill C-24 Analysis (March 5, 2003)