Election financing laws: Re-thinking restrictions on third-party spending

I am a great fan of Canada’s political finance laws and the reforms enacted by both the governments of Jean Chretien and Stephen Harper. Among other things, our political finance laws prohibit significant third-party spending during election campaigns. I’ve thought that this limit on freedom of expression was appropriate in that its aim was to provide fair access to the public common during a writ period. Mostly, I look to the U.S. and see the distortions in their political system because of Big Money. Obama will likely spend $1 billion on his re-election campaign this year. $1 billion! I would be surprised if the total spending in Canada’s federal election last year for every local candidate and the national campaigns in 2011 hit $100 million.

But now, after reading an interesting essay from  Pauline Beange, a University of Toronto scholar, I’m ready to re-examine some of my assumptions about the restrictions we have on political financing. 

Beange’s essay was presented to the 2011 Canadian Political Science Association conference. It is titled “20 Years after the Lortie Commission and 45 Years after the Barbeau Committee: A Review of Canadian Scholarship on Party Finance”.

Beange is reviewing the scholarship on political financing and make what I think is an interesting point, namely, “that the literature continues to demonstrate a strong normative dimension, favouring further intervention and regulation of campaign finance, despite its findings of only limited benefits flowing from the reforms undertaken to date.” [My emphasis]

She spends a considerable amount of time looking at restrictions on third-party spending.

In Canadian federal elections, so-called third parties  – i.e. any person or organization that is not a registered candidate or registered political party — face strict limits on how they can advocate for or against a particularly party or position.  While registered political parties were allowed to spend up to $20 million during the 2008 election for their national campaigns, any other individual, union, NGO or advocacy group as varied as Greenpeace or the National Citizens Coalition were limited to spending just a fraction of that or $172,000 for a nationwide campaign.

In 2001, when he was president of the National Citizens Coalition, Stephen Harper  got the Supreme Court to rule on these restrictions, although they ruled against striking down the limits.

Attempts to “fix” election financing in Canada began as early a 1938 but federal legislators really didn’t take a serious look at the problem until the 1966 Report of the Committee on Election Expenses (known as the Barbeau Committee). That committee, which first convened in 1964 under the leadership of lawyer and future Quebec Superior Court judge Alphonse Barbeau, began, Beange says, “with the assumption that there was a “failure” and “obvious weakness” of the existing legislation.” And it was the first to really put voice to the fears of third-party spending that continue to exist. Here is Beange reflecting on that recommendation by Barbeau that there ought to be an outright ban, not just restrictions, on all third-party spending during a write period:

In coming to this conclusion, curtailing of free expression during an election campaign, the Barbeau Committee demonstrated its fear of Canadian political campaigns becoming like those in the U.S. where “ad hoc committees make limitation on expenditures an exercise in futility….” In so doing, however, it neglected to take into account differences embedded in Canada’s Westminster responsible government model versus the republican model of U.S. political institutions. Among such features are the separation of powers and the ability of members of Congress to introduce legislation, which together make individual members more identifiable and encourage more candidate spending; the extraordinary length of party nomination contests and presidential election campaigns plays a role; the varying terms of Congress and Senate make national elections more frequent. Finally the existence of the First Amendment and the legal climate surrounding First Amendment rights which had no legal equivalent (albeit a common law one) in Canada render the Barbeau Committee‟s recommendation on third party expenditures astonishing.

… the fear of Canadian election campaigns becoming “too American‟ can be seen as rooted in the anti-capitalist writing of C.B. Macpherson and the anti-American “lament‟ expressed by George Grant (1965) both of which were significant in Canadian scholarship not only of parties but also of party finance.

Beange suggests that Canadian scholarship on election and party financing has, ever since, taken that and other cues from the Barbeau committee:

… the recommendations of the Barbeau Committee were bold, broke with Westminster parliamentary tradition, omitted reference to the democratic model underlying its recommendations, made selective use of comparative cases and made no reference to the costs—monetary or otherwise—that could act as detracting arguments to its recommendations. These characteristics serve as harbingers for Canadian scholarship since that time.

There would not be a comprehensive look at election and party financing again until 1989 with the establishment of The Royal Commission on Electoral Reform and Party Finance (also known as the Lortie Commission). It was convened by the Mulroney Conservatives largely to examine how,if at all, the recently adopted Charter of Rights and Freedoms was having an impact on this issue. It would report to cabinet in 1991 with several recommendations. Beange notes that, so far as third-party advocacy spending was concerned, the Mulroney Conservatives were concerned about ad campaigns aimed at derailing the free-trade talks of 1988.

Beange notes that as recently as 2004, Canada’s Chief Electoral Officer continued to call “for further circumscription of third party activity during the writ, deeming it necessary to “fill the gaps in our electoral legislation” and has deemed third party expenditures during an elections “an anomaly”! That voices other than political parties should be deemed “an anomaly” is an extraordinary claim to make in a democratic society and yet no objection can be found in the party literature.”

Beange writes that she reads some scepticism from the Supreme Court judges about the claims made in favour of third-party spending restrictions.

Here are some paragraphs I’ve found that might be evidence of that scepticism from that judgement:

29                              The Attorney General has offered no evidence to support a connection between the limits on citizen spending and electoral fairness.  However, reason or logic may establish the requisite causal link; see Sharpe, supra; R. v. Butler, [1992] 1 S.C.R. 452.  In Thomson Newspapers, supra, the Court accepted as reasonable the conclusion that polls exert significant influence on the electoral process and individual electoral choice.  More to the point, in Libman, supra, the Court concluded that electoral spending limits are rationally connected to the objective of fair elections. While some of the evidence on which this conclusion was based has since been discredited, the conclusion that limits may in theory further electoral fairness is difficult to gainsay.

30                              Nevertheless, the supposition that uncontrolled spending could favour the messages of wealthier citizens or adversely affect the ability of less wealthy citizens to become informed on electoral issues is not irrational, particularly in a regime where party spending is limited.  It follows that spending limits may, at least in principle, promote electoral fairness.

34                              … The Attorney General presented no evidence that wealthier Canadians — alone or in concert — will dominate political debate during the electoral period absent limits.  It offered only the hypothetical possibility that, without limits on citizen spending, problems could arise.  If, as urged by the Attorney General, wealthy Canadians are poised to hijack this country’s election process, an expectation of some evidence to that effect is reasonable.  Yet none was presented.  This minimizes the Attorney General’s assertions of necessity and lends credence to the argument that the legislation is an overreaction to a non-existent problem.

The court was not unanimous in 2001. The judgment was 6-3 and the dissenting judges included Chief Justice Beverly McLachlin who wrote:

Because citizens cannot mount effective national television, radio and print campaigns, the only sustained messages voters see and hear during the course of an election campaign are from political parties. The right of a citizen to hold views not espoused by a registered party and to communicate those views is essential to the effective debate upon which our democracy rests, and lies at the core of the free expression guarantee. Any limits to this right must be justified under s. 1 of the Charter by a clear and convincing demonstration that they serve a valid objective, do not go too far, and enhance more than harm the democratic process. Promoting electoral fairness by ensuring the equality of each citizen in elections, preventing the voices of the wealthy from drowning out those of others, and preserving confidence in the electoral system, are pressing and substantial objectives in a liberal democracy.

However, the infringement of the right to free expression is not proportionate to these objectives. There is no evidence to support a connection between the limits on citizen spending and electoral fairness, and the legislation does not infringe the right to free expression in a way that is measured and carefully tailored to the goals sought to be achieved. The limits imposed on citizens amount to a virtual ban on their participation in political debate during the election period, except through political parties. … the Attorney General has not demonstrated that limits this draconian are required to meet the perceived dangers.

Beange, it seems to me, is echoing, to a degree, the concerns of the dissenting judges in the court, that there is no evidence in the scholarship on the subject supporting the claims that there are measurable benefits to third-party spending restrictions.

Beange sums up the work of Filip Palda whose study Election Finance Regulation in Canada: A Critical Review was published in 1995 by the Fraser Institute, a think tank that would certainly be politically aligned to the NCC, the Reform Party and Stephen Harper:

Palda argued that Canadian limits on campaign expenditures deter the flow of “useful information between candidates and expenditures”; that “spending limits accompanied by a government subsidy to candidates is even worse because it releases [candidates] from their obligations to constituents;” that tax credits for political donations are coercive in the sense that non-contributors are forced to pay for “political movements in which they do not believe;” and finally, that restrictions on third party spending represent a threat to citizen equality in their free access to information.

Breange also quotes University of Calgary scholar Lisa Young from her forthcoming book Regulating Political Finance in Canada: Contributions to Democracy?:

It is difficult to argue that reforms to Canadian political finance law have made significant positive contributions to rates of participation, degrees of inclusion or parties‟ responsiveness to the electorate…On the other hand, there is little evidence that the reforms have been damaging…

Beange closes with this challenge to scholars in this area:

“Campaign finance scholarship has scarcely adapted or incorporated a concern for civil society consequences of shifts in regulation and reporting. Yet to be addressed, for example, is the impact of preferential tax treatment for political contributions versus charitable contributions.”