Politics: Time for Real Financial Reform

TORONTO, ONTARIO - I agree with Canadian Prime Minister Stephen Harper and his Conservative Party on at least one matter--the $1.95 a vote subsidy of political parties in Canada should end. However, rather than replacing it with nothing, as the Conservatives proposed to do in the Fiscal Update that led to the current political crisis in Canada, it should be eliminated as part of the implementation of a "clean elections"-style system with significant public financing--and spending limits.

While the opposition parties cried foul because the end of the subsidy would mean that they would lose much of their revenue (86% in the case of the Bloc Quebecois, 65% for the Greens, 63% for the Liberals, and 57% for the NDP, while just 36% for Conservatives), I actually have little sympathy for that argument. In the United States, Barack Obama used the Internet to find 3.1 million donors whose average contribution was $200. Surely, the left-leaning parties in Canada could come up with 300,000 similar donors in Canada that could give $100 and potentially raise a combined $30 million, far more than the $16.8 million they collectively earned from the subsidy.

The problem is that we shouldn't be asking any of the parties, including the Conservatives, to be raising more money. Barack Obama may have been a great fund-raiser on the left, but he essentially killed campaign finance reform in the US once and for all by refusing public matching funds and instead collecting these contributions. While it came mostly from small donors, reducing the potential for being tied to special interests, Obama raised about $650 million. That's the new bar for presidential races in the US--each party will now think it needs to raise $750 million in each election cycle. Even applying the one-tenth rule, do we really want Canadian parties spending $75 million in each election someday soon?

The real answer seems to be a "clean elections" law, such as that implemented in the state of Maine in 1996. Under these laws, which are slowing spreading to other US states, candidates who are able to raise a large number of nominal $5 contributions from citizens can apply to be "clean elections" candidates and receive a set amount of public funding for their campaign--and agree to have their campaign spending limited to a set amount. This can be violated only if a non-"clean elections" opponent exceeds the limit or they are targeted by independent expenditures, in which case the candidate received additional matching funding.

The impact has not only been to reduce the influence of special interests (the number of votes for health care reform have been about doubled in Maine, for example), but it has made more people interested in running for office (resulting in fewer races with only one candidate), and the "clean elections" candidates are increasingly winning elections. In the state of Arizona, another early "clean elections" adopter, many statewide offices were contested only between candidates abiding by the new rules. Because there is a spending cap, candidates cannot engage in buying up media--they have to work at the grass roots. Politicians like it, since they don't have to spend time raising money, and most citizens like it, since they feel like they are more important than special interest groups.

In a nation that is so devoted to ideas and debate like Canada, one would think that this would be a preferred course to follow. All five major parties, and some smaller ones, would likely be able to reach the threshold to "clean elections" financing in most ridings. Arguably, since the Conservatives are likely the only party advantaged in the present system, they would rather stick with the current system, but if any other party takes power, it would seem that a "clean elections" law could be passed.

Canada made significant progress against shady politics in 2003 by capping individual contributions to political campaigns at around $1000 and the banning of money from corporations and unions. However, the controversial $1.95 a vote subsidy, tax rebates for political contributions, and campaign expense reimbursements remain. It's time to throw out all three of those subsidies and instead implement a "clean elections" system--hopefully, all of the parties can agree on that.