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Getting Big Money out of Alberta Politics

By Max Fawcett

Even by the dubious standards of Alberta politics at the time, it was still a brazen move. Tom Brown, an executive with Ledcor, was part of a coalition of construction companies that donated nearly $200,000 to Alberta’s PC party between 2009 and 2013. In 2012 he wrote an email to then-premier Alison Redford on the coalition’s behalf requesting a meeting concerning changes to the provincial labour code. His message was anything but subtle. Noting that Ledcor and PCL Construction “…both made major contributions to Redford’s leadership campaign and to the PCs’ election campaign fund,” he wrote, “there will be considerable disappointment and possibly misgivings within our coalition if I do not have something concrete to report next week.”

The industry’s desired changes to the code—to make it easier for companies to use non-unionized workers—never came to fruition. That probably had less to do with a prevailing sense of integrity in the premier’s office than with the scandal the emails triggered when they were made public through an access to information request filed by the Alberta Federation of Labour and passed on to CBC reporter Charles Rusnell. But they show just how cozy the relationship between money and politics had become in Alberta—and why changing that was the NDP’s first priority when it formed government in 2015.

“There’s a disconnect between how much of a priority Canadians make of this issue and how our democracy and government functions,” says David Coletto, CEO of Abacus Data in Ottawa. “I believe it’s one of the most important things—maybe more important than the electoral system itself, because it determines who can play and how they play.”

How they play in Alberta was best exemplified by the $430,000 cheque that Edmonton billionaire Daryl Katz scratched out to Redford’s PCs during the 2012 provincial election. Katz skipped the formality of having the 17 donors whose names were on the cheque (which ranged from his mother and father, Ida and Barry, to his company’s chief financial officer) actually write individual cheques themselves. Bulk donations were (and remain) perfectly legal. Indeed, as Elections Alberta spokesperson Drew Westwater told the National Post in 2013, they are common. But what’s unusual, he said, “is the amount is quite large [this] time.”

Therein lay the rub for those worried about money’s influence in politics. The annual donation limit of $15,000 doubled during an election year. Also allowed was an additional $1,000 to five different constituency associations, an amount which also doubled during an election. When you added up constituency and party donation limits, factored in the election-year boost and included the ability to kick an additional $15,000 per year to a third party advertiser, an individual could theoretically have pumped $160,000 into Alberta’s political process over a four-year cycle.

When money talks, politicians listen, says University of Calgary political science professor Melanee Thomas. She cites how Redford responded to the revenue crisis caused by the so-called “bitumen bubble” without even considering a corporate tax increase. “We can look at the PCs’ returns from that particular period, and they’re getting most of their money from corporations,” Thomas says. “That sounds like policy dictated by donors.” Likewise, she says, the Stelmach government’s retreat from its 2007 royalty increases was in part a reaction to the speed at which money began flowing away from PC coffers and into those of the then-upstart Wildrose.

Money can’t guarantee electoral success, of course. In the last provincial election dozens of candidates spent under $10,000 and ended up beating incumbents who spent five or six times as much. The NDP’s Brandy Payne, for example, needed just $240 to knock off former PC cabinet minister Jonathan Denis, who spent nearly 150 times as much. “This last election shows that [the PCs] could have spent 10 times that much and still gotten creamed,” says Alberta Party leader Greg Clark, who was outspent by almost $60,000 by Gordon Dirks in Calgary-Elbow. “It didn’t matter how many lawn signs, how many robocalls, how many paid ‘volunteers’ they had—they were not going to win that election, and no amount of money was going to change that.”

But while there isn’t a causal relationship between the amount a candidate spends and their prospect of getting elected, it’s hard to deny that money isn’t important. Money “gives you the resources you need to reach out to more of the electorate,” says Ian Urquhart, a University of Alberta political science professor and long-standing advocate of party finance reform. “Does this automatically mean the biggest spenders will win? No. But it certainly gives them an advantage.”

You can trace Alberta’s no-funds-barred approach to party finances to the group that held power for more than 40 years. The ease with which money entered the system suited the governing PCs just fine, and with their continuous majority in the legislature nobody could force them to change anything. The province’s neighbours also allow donations to flow largely unchecked, which hasn’t helped Albertans pushing for reforms. BC, for example, has no limits to how much any individual, union or corporation wants to donate to a candidate or party, while Saskatchewan has an equally laissez-faire attitude.

And then there’s the US, which completely abandoned any notion of restricting the influence of money on politics in the wake of the 2010 Citizens United Supreme Court decision—and made a mockery of their founding principles in the process. “Everybody who runs for federal office in the US must be massively independently wealthy,” says Thomas. “That’s what an oligarchy looks like. That’s not what a democracy looks like.”

Party finance rules are “maybe more important than the electoral system itself, because they determine who can play and how they play.” -David Coletto

In a move to get big money out of politics, the first legislation passed by the Notley government, Bill 1, banned corporate and union donations to political parties. Last November they introduced the Fair Elections Financing Act, which has substantially reduced both the amount of money individual Albertans can donate to political parties and the way they can do it. Gone is the $15,000 annual donation limit and other outsize allowances. In their place is a hard cap on donations of $4,000 per year—including election years—and an election spending limit for both parties and candidates of $2-million and $50,000, respectively.

The Fair Elections Act represents a substantial improvement to Alberta’s once permissive party finance laws. The province has now cleared the way for a political culture in which money may speak but is no longer allowed to dominate the conversation. “This is really catching Alberta up in a place where we’ve lagged other jurisdictions for quite some time,” says Christina Gray, the minister responsible for democratic renewal.

Forcing political parties to raise money from rank-and-file voters rather than special interest groups, unions or corporations, could help keep them in touch with the needs and concerns of those voters—and avoid perpetuating the alienation that fuels movements like the one Donald Trump rode into the White House. “One of his core value propositions is that he’s not beholden to the establishment,” says Kai Nagata, communications director of Dogwood Initiative, a BC-based environmental advocacy group that’s been pushing to reform party finance laws there. “That’s a big part of the Trump campaign: that he’s a reaction to these years of brokerage politics between the Republicans and the Democrats and their big-moneyed interests, and he’s here to smash all that. That’s what you get when things get too bad—the radical backlash to the system of entrenched interests.”

The Wildrose opposition supported the Fair Elections Financing Act. “There’s a lot of common ground between the NDP and Wildrose on getting what we call ‘big money’ out of politics,” MLA Jason Nixon told The Globe and Mail. But the NDP’s changes weren’t without controversy. The decision to commingle donations made to constituency associations and the parties themselves under a single umbrella, for example, angered opposition members, given that the NDP depends less on its constituency associations for fundraising than its competitors do. The spending restrictions on nomination and leadership races also drew ire.

“I don’t know how many nomination contests the NDP had before the 2015 election,” says Alberta Party leader Clark. “But it was less than half a dozen, probably. So that’s not a problem they have.” And that, he says, is his overarching criticism of how the Notley government has approached the whole issue of party finance reform. “It’s a great opportunity to engage in a real conversation about how we actually want to run things. It’s not—and shouldn’t be—an opportunity just to tilt the playing field towards the governing party.”

That’s not how Urquhart sees it. The U of A professor says the NDP’s latest bill contains measures that clearly tilt the playing field away from them. “There are changes in there that respect some of the grievances that centre-right parties have had,” Urquhart says. “What really stands out is corporations, unions and employee organizations being prohibited from giving their employees paid time off to volunteer for a political campaign.”

But the government may not have gone far enough. Donation limits are still nearly three times higher than the federal limit. The government declined to introduce any form of public subsidy to political parties to replace their lost donation revenue. The new legislation, meanwhile, put few limits on spending by so-called third-party groups, the kind that now dominate US politics—and which underwrote Jason Kenney’s pre-campaign campaign for the leadership of the Alberta PC party.

Ironically, the best example of what true reform might look like comes from a place often associated with corruption, cronyism and other forms of political mischief: Quebec. Indeed, precisely because of that reputation for corruption and cronyism, Quebec has some of the strictest party finance laws in North America.

During the course of the 2011–2014 Charbonneau Commission hearings, which looked into political corruption, the province’s then-PQ minority government lowered the cap on individual donations to political parties from $1,000 to just $100, and dropped the limit on total campaign spending from $11.5-million to $8-million. In order to compensate parties for the lost revenue, the government expanded an existing system of public support to include a $2.50 matching subsidy for every dollar raised up to $20,000 annually, and a $1 matching subsidy for the next $200,000 (so, for example, if a party raises $220,000 in a given year, it would receive $250,000 in matching public funds). Quebec also nearly doubled its annual per-vote allowance paid to parties based on the results of the last election, from $0.82 per vote to $1.50.

The per-vote subsidy model is popular among those who study political science for a living. “All the academics like it,” Melanee Thomas says. “[It’s] a really democratic way of using state funding to support parties. But academics are much more receptive to the idea of using state funding to support political parties, because we see [parties] as this key linking institution between society and the state.” By providing them with a steady source of cash flow, a per-vote subsidy helps political parties serve an important democratic function.

It also gives citizens a way to express their democratic preferences in a first-past-the-post electoral system that makes many votes irrelevant. “Every time a voter would vote for one of those parties, knowing they weren’t going to get a seat, at least they could say ‘Well, I know I’m giving $2.50 to the party of my choice,’” says Trevor Harrison, director of the Parkland Institute. “That would give them enough financing to perhaps survive another day and still have a voice in the system.” In a piece for iPolitics, journalist Susan Delacourt described public funding as a “form of proportional representation,” noting that “under the subsidy system, every voter is equal.” A per-vote subsidy helps parties spend more time engaging with constituents and voters and less time asking them for money.

A per-vote subsidy was introduced by Jean Chrétien’s government in 2004 as part of a package of reforms that removed union and corporate donations and limited individual donations. Under the new law, parties that earned at least 2 per cent of the vote in the preceding election (or 5 per cent of the vote in districts in which it ran a candidate) were given an annual $1.75 subsidy for each vote cast in their favour.

But the Conservatives portrayed the system as a taxpayer giveaway, and when they won their majority in 2011 they began to dismantle it. Now, Coletto says, the model has become politically radioactive. “Parties and governments are hesitant to use it,” Coletto says, “because the federal Conservatives effectively discredited direct subsidies as being wastes of money.” That’s particularly true in Alberta, Harrison adds. “A lot of Albertans thought of the per-vote subsidy as very foolish, and so to bring back such an unpopular policy is probably a bridge too far.”

The hundreds of public submissions to the Alberta government’s special select committee on ethics and accountability, which in 2016 reviewed party funding among other things, made it clear that people did not want public funds to go to parties. Wildrose leader Brian Jean and PC leadership wannabe Kenney spoke out not only against per vote subsidies but against campaign expense reimbursements. The latter was “a bad idea,” tweeted Jean; the NDP’s even considering it proved they were “out of control,” wrote Kenney. Curiously, both former MPs voted in favour of public campaign reimbursements when the Harper government introduced them federally in 2014.

Whatever its technical and academic merits, a per-vote subsidy was never given serious consideration by Alberta’s NDP. That may be partly because of tactical considerations—a per-vote subsidy would help smaller parties, such as the Greens, who could chew into the NDP’s available pool of voters. But it’s more likely because federal conservatives have so undermined public funding’s legitimacy. The NDP government clearly listened to objections. “In these tough economic times,” Gray says, “seeing public tax dollars go towards political parties was not something people found palatable.”

The biggest question now is what the next election will look like under these new rules—and whether the money that once flowed easily to parties will simply find new ways to express itself. In solving one problem, will the government create a new one? That’s what Stephen Carter, a veteran campaign strategist who helped guide Alison Redford and Naheed Nenshi to unexpected election victories, is worried about.

“Everybody who runs for office in the US must be independently wealthy. That’s what an oligarchy looks like, not a democracy.” -Melanee Thomas

“Is the wide-open system perfect? Of course not. But be very wary of which imperfect system you create on the other side,” he says. For example, stricter donation and spending limits risk squeezing money out of the system and into less transparent channels. The new rules, he says, are “begging for spending outside of the system, begging for third-party spending.”

Carter’s concern about the rise of so-called PACs—political action committees of the sort that now underwrite much of the increasingly toxic US electoral system—is well founded and widely shared. Indeed, virtually everyone, from left wing to right wing and from academic to politician, seems aware of the threat. “If you don’t address the potential of third-party advertising you’re going to regret it down the road,” Urquhart says, “because we’re going to have mini versions of American super PACs.” And while third-party spending in Alberta’s 2015 election was non-existent, the ban on union and corporate donations will almost certainly change that.

Case in point: the Unite Alberta PAC that Kenney created in order to support his leadership bid for the PC party raised (and spent) $497,000 in the first nine months of 2016. Indeed, the fact that the money was spent before the leadership race officially began speaks to another point Carter makes about the knock-on effects of cracking down on money in politics. When one door closes, campaign operatives like him try to find another.

Think of it as the law of conservation of political mass. “For everything you do, there’s a consequence,” Carter says. “And people will blame people like me for those consequences, but my job is to get someone elected. And generally speaking, that means we have to communicate with people more, not less.”

The NDP’s latest bill does little to restrict third parties other than to limit their election spending to $150,000. Outside of elections, however, these groups can spend all they like. The NDP opted for transparency over limits—guided, perhaps, by the legal challenges BC invited when it tried to clamp down on third-party advertising in 2008.

“We’ve put no limits on free speech,” Gray says. “Third-party advertisers can say whatever they want and spend however much they want. We’re only asking that they identify who they are in their ads, that they register with the chief electoral officer, and that they disclose their donors. Albertans deserve to know who’s paying for the political messages they’re hearing—particularly in an election.”

But while the NDP’s first two party finance reform efforts could have gone further, they addressed the biggest problems. “One of the things we see across Canada, and certainly in the US, is a growing sense of cynicism by citizens about the role of money in politics,” Harrison says. “I think these changes send out a positive message that money alone isn’t going to turn the tables here. Even though we live in a marketized society, where everything seems for sale, your government isn’t.”

Max Fawcett is a writer formerly based in Alberta who now lives in Vancouver.

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