Political Financing Bill Closes Some, But Not All, Donations Loopholes

This week, Prime Minister Chretien introduced a bill to limit federal political donations and place a partial ban on corporate and union donations. While the law needs strengthening, it is a welcome effort to limit the political influence of wealthy special interests.

A hard look at existing donation patterns shows that those who have the greatest stake in government decision-making are the same interests who are bankrolling the political process.

For example, a recent Democracy Watch study revealed that of the top 25 federal government contractors, 17 are major Liberal donors. Moreover, these companies donate to the Liberal party versus all other political parties, at a ratio of six to one. At the candidate level, this ratio is 30 to one.

Federal political fundraising rules have remained more or less unchanged since their inception in 1974. Since that time, the parties have become highly dependant on a small number of wealthy donors. Today, just 3 percent of donors provide 45 percent of party revenues. Of the largest 100 donors to the Liberals in 2001, 95 were businesses, and they donated a total of more than $2.5 million.

In the case of the Canadian Alliance, 95 of the top 100 donors were businesses, giving a total of $764,000 to the party. Eighty-eight of the top 100 Tory donors were businesses, donating a total of just over $942,000.

Businesses donate far less to the NDP and Bloc. But of the largest 15 donors to the NDP, 14 were labour organizations, contributing nearly $1.2 million.

The Bloc used to follow the Quebec system, only accepting donations from individuals, but they abandoned that practice in 2001. As a result, nine of their top 10 donors became corporations, donating a total of almost $32,000. Interestingly, their top donor was the Parti Quebecois, at $26,133.

(It should be noted that donations are always considerably higher in election years. In 2000, for example, the top 100 donors to the Liberals were all businesses, giving more than $4.2 million.)

Major donors are not at all representative of the Canadian economy. Rather, almost uniformly, they tend to be government contractors, regulated industries, and companies seeking policy changes from the government. For example, in 2001 Bombardier Inc. made the largest single donation ($142,503) to the Liberals. Bombardier was the second largest federal government contractor in 2001, with a total of more than $117 million in contracts. The big five banks and their subsidiaries donated a total of just over $325,000. Eight telecommunications companies donated a total of just over $302,000, while eight oil and gas companies donated a total of just over $267,000.

For companies that live and die by government regulation and contracting decisions, a donation to the governing party is increasingly seen as the price of admission. With these large donations comes tremendous potential for corruption of the political process.

Party bagmen steadfastly deny that political donations buy influence. But they readily admit that a hefty donation buys -- access a seat at the fundraising dinner, a returned phone call, a meeting with the minister on short notice, and so on. Even if their argument is true, there is, in reality, little difference between access and influence. Suppose you have two lobbyists: one with access and one without. Which one do you think is going to be successful?

And that is why the recently announced reforms are so important. When wealthy interests are granted preferential access, it is at the expense of ordinary Canadians.

A ban on corporate donations, together with a limit on all other donations from individuals, is the best way to democratize Canada's fundraising rules. The proposed new law contains these key measures, although the limit of $10,000 is far too high, and the ban contains a loophole that allows a corporation to donate to individual politicians and their trust funds.

All MPs reached Parliament Hill on the current fundraising system. It will take tremendous pressure from their constituents to force them to change that system. But with the key elements in place and hopefully strengthened as MPs review the bill -- Canada has a unique opportunity to force federal political parties to broaden the base of their support, and ultimately help clean up government.