CAROLYN FISHER

Bad Optics

Alberta confronts its wild west municipal election campaign funding rules—the laxest in the country

By Naheed Nenshi

Just before election day 2004, as I was wrapping up a quixotic campaign for alderman in Calgary, the envelope arrived. My campaign manager and I stared at the cheque inside. It wasn’t big—only $400 for a campaign that was spending about $25,000—but it was unexpected and would certainly come in handy.

The unexpected part was its source—the cheque was from Calgary’s largest developer. Most developers had agreed to meet with us. The meetings were polite, but we clearly had different agendas. I argued that development and construction needed to change in order for the city to grow more sustainably. Much of what I proposed, the industry had been fighting tooth and nail against for years. And yet, following our meetings, most developers sent me money—the most unexpected cheque being the last one. When I questioned this practice after I’d lost the election, I was told that this is standard, that developers send candidates a cheque if it looks like they have any chance of winning. Just a matter of covering risk, I was told.

Few Albertans pay attention to municipal politics. Calgary, for example, had a mere 18 per cent voter turnout in the 2004 election; Edmonton had double that for a race featuring an unpopular incumbent. Because so few citizens engage at the municipal level, most campaign donations come from corporations. And since urban planning is so important to cities, the majority of donors are in the development business—e.g., land developers, home builders, architects, engineers and real estate firms. The development industry therefore influences which candidates run a well-financed campaign and so are more likely to win office.

Does any of this matter? Municipal election campaigns, of course, cost money. People have a right to donate to political candidates. Donations have to be declared after an election. Municipal politicians’ decisions are subject to public scrutiny. So, as long as politicians are honest and do their best to represent constituents, developers’ donations, in and of themselves, would not seem to be a problem. Why should Albertans care about this issue—companies spending money on would-be politicians?

While not immediately obvious, there are problems with the way Alberta’s municipal election campaigns are funded—primarily the cynicism created by the bad optics, the entrenchment of candidates and the assumption that the aims of developers and the aims of city government are the same. Indeed, getting campaign finance reform right is the single most important thing that municipal governments need to do. Jurisdictions across Canada have recognized problems and changed their rules. Why haven’t we done so in Alberta?

Canada, by and large, has reasonably restrictive rules about donations to political campaigns. Unlike in the US, where donations have been ruled as speech—that is, free of restrictions, protected under the First Amendment to the Constitution—Canadian courts have ruled in favour of regulating electoral campaign financing.

As a result, union and corporate contributions are banned in federal politics in Canada. Individuals may not donate more than $1,100 per candidate per year. Campaign spending limits of 70 cents per elector apply to parties, and other voter-based limits apply to candidates (in Alberta, these range from $76,000 in Edmonton-Mill Woods-Beaumont to $104,000 in Peace River).

In order to encourage people to support candidates, the government offers tax deductions—starting at 75 per cent for donations under $400. Folks who donate more than $1,275 (to more than one candidate or party) get a maximum $650 tax deduction. And some party and candidate expenses are reimbursed. For example, if a candidate receives 10 per cent of the vote and complies with the Elections Act, the government reimburses 60 per cent of their election expenses.

In provincial politics, however—and particularly in Alberta—the rules are much more lax. In Alberta, individuals, unions and corporations may donate up to $15,000 per party in a non-election year, and up to $30,000 in an election year (plus up to $2,000 to individual candidates). While tax deductions similar to the federal ones are available, campaign expenses are not reimbursed. And there are no campaign spending limits in Alberta and Yukon, the only jurisdictions that have none.

The rules are similarly loose for municipal politics in Alberta. In fact, until recently, there were almost no rules at all.

Municipal electoral funding is governed by provincial statute. In March 2009, Alberta’s laxity was thrust into the political limelight. First-term Athabasca-Redwater MLA Jeff Johnson introduced a private member’s bill in the legislature, arguing that Bill 203 “would define province-wide standards for municipal election finance and disclosure requirements, allow for greater transparency and ultimately enhance the integrity of the democratic process.” The bill’s most significant proposals included a $5,000 cap on donations (a change from no limit), a requirement that campaign surpluses be used only for future elections or donated to charity (a change from allowing candidates to keep surpluses) and new bookkeeping rules (candidates would be required to create a bank account in their campaign name, keep receipts and be subject to audit).

Not everyone welcomed Bill 203. “I’m just shocked… it’s an absolute slap in the face,” Edmonton mayor Stephen Mandel told a local radio station. “It’s ludicrous. Certain areas of the province have no accountability. Deal with them, don’t deal with us.” The province does grant councils power to enact their own rules about campaign surpluses. Since 1993, Edmonton has required that councillors donate surpluses to charity or have the city hold them in trust between elections.

When I asked Jeff Johnson for his motivation in championing Bill 203, he said it was prompted by the “appearance of impropriety” that municipal politicians work under. Unlike most private member’s bills, this one passed—unanimously. However, then-Minister of Municipal Affairs Ray Danyluk, after singing the bill’s praises in the legislature, refused to proclaim it.

In December 2009, Calgary City Council, having “found religion” (or perhaps realizing that the province’s new rules would not apply to money already raised), proposed a bylaw that mirrored Bill 203, including donation limits of $5,000. Surpluses would be used only for future campaigns or given to charity, and candidates would have to submit a list of donations on nomination day, not several months after the election.

There’s no limit to how much a candidate can spendor what they can do with a campaign surplus.

University of Calgary political scientist Lisa Young told the Calgary Herald that aldermanic candidates would comply with the bylaw because they would fear questions about why they didn’t. “It would look pretty bad not to,” she said. Alderman Diane Colley-Urquhart, however, told the same reporter that the rules—which would have overstepped the City’s authority—only went so far: “None of [this will be] worth the paper it’s printed on if we can’t enforce it.”

In February, new Minister of Municipal Affairs Hector Goudreau finally proclaimed Bill 203. He said that it will be subject to further amendments this spring—a sign, say some observers, that rules about campaign surpluses may not be part of the final law. Others may be surprised that Bill 203 has come even this far: St. Albert blogger David Climenhaga predicted in 2009 that Bill 203 would never become law, as it “sets a dangerously good example of how to reform Alberta’s Swiss-cheese provincial election finance laws.”

Even if all of Bill 203’s rules are in effect in time for Alberta’s 2010 municipal elections, they won’t go nearly far enough. At least two problems remain with how municipal elections are funded in Alberta: the system is steeply tilted in favour of incumbents, and a relatively small pool of players has disproportionate influence in the political process.

It’s very easy for incumbent aldermen to raise funds, and many start as soon as they’re elected. When a company that does business with the city sees that an incumbent councillor is hosting a fundraiser, it buys tickets. Indeed, in Calgary, it is accepted practice for councillors to do at least one large fundraiser a year. This gives the incumbent a huge advantage over challengers. Indeed, many incumbents have raised enormous war chests.

This tends to scare away challengers. The average aldermanic campaign in Calgary now costs $47,000 (up 50 per cent from 2001). Total spending on the Calgary mayoral race topped $2-million in 2007 (with runner-up Alnoor Kassam spending a record $1.5-million).

It’s not hard to see how the system perpetuates itself. In Calgary’s 2007 election, alderman Ric McIver, facing only token opposition from a McDonald’s employee, raised $108,000 and spent $22,000. He can do whatever he likes with the remaining $86,000, including fund his rumoured bid for mayor this year. If he chooses to use the money for re-election, he doesn’t need to raise another cent and could still spend almost double the average. Whatever job he bids for, McIver has a huge head start. Colley-Urquhart, who was acclaimed in 2007, raised $53,000 and enters the 2010 campaign with $98,000 in the bank.

Until Calgary formally changes the rules, its politicians can keep campaign surpluses even if they never run for office again. Colley-Urquhart could have used that $98,000, and whatever else she raised since the 2007 election, for anything—from financing her 2009 bid to become MLA for Calgary-Glenmore, to buying a Lexus. It would all have been perfectly legal.

A related problem caused by the lack of rules is a small pool of players that has a disproportionate influence in the political process. Based on my own study of campaign finance disclosure statements, about 90 per cent of all campaign donations by value in Calgary come from corporations (and some individuals) affiliated with the development and construction industries. (This is not very scientific, since sometimes people donate under numbered companies or have others make donations on their behalf. Nonetheless, I think 90 per cent is a good estimate.)

This is true regardless of political affiliation: tried-and-true Conservatives like alderman Ray Jones get their money from developers, and so do inner-city and high-density advocates such as alderman Druh Farrell. In Farrell’s case, all donors who gave her over $1,000 have interests in the real estate business.

Unlike at other levels of government, traditional big businesses—banks, say, or oil companies—and influential people, such as the Murray Edwardses and W. Brett Wilsons of the world, don’t seem to get very engaged at the municipal level. This leaves the playing field open for developers. (To be fair, others have tried to take that field, with some limited success. I lost my 2004 aldermanic bid to Helene Larocque, who essentially had only two donors—both public sector unions, each of which gave her over $10,000. They gave similar amounts in 2007, but Larocque lost her seat to Jim Stevenson.)

As MLA Johnson points out, it’s not whether this kind of financing has an impact on the decisions made at city council—this would be difficult to prove—but whether the “appearance of impropriety” matters. To me it does. Decisions made at City Hall might sometimes seem like a quid pro quo.

A small pool of players has huge influence. And the system is tilted in favour of political incumbents.

For example, the mayor’s second-largest campaign donor, a Calgary developer called Intergulf-Cidex, sold an entire condominium building to the City for affordable housing. The deal itself may well have been a good decision, but my concern is the way it happened. The company was able to contact the mayor and pitch its idea. Council made its decision very quickly, behind closed doors. This wouldn’t have been possible if the company hadn’t been able to call the mayor, to get a meeting, to pitch its ideas. Ordinary citizens don’t have this kind of access.

I don’t believe that political favours can be bought so simply. But I do believe that a kind of influence, originating in campaign funding, has taken root at City Hall. I also believe this is partly why we see such cynicism about politics in Alberta, especially at the municipal level. It may also help explain our low voter turnout.

Concerns about municipal electoral funding came to a head in Alberta in the summer of 2009, as Calgary Council was embroiled in discussions around the city’s 60-year development and transportation plans, known collectively as Plan It. Over 18,000 Calgarians were consulted and came to remarkable consensus on limiting the city’s sprawl and building complete, denser communities.

Much of the development industry fought hard against this, seeming genuinely surprised to encounter opposition. All summer long, rumours circulated that developers would no longer continue their policy of supporting nearly every alderman. Mike Flynn, the head of development lobby group The Urban Development Institute, told the Herald, “In the past, everyone has gone to everyone else’s fundraiser… [Plan It] will definitely lead to a larger discussion down the road [about] whether we want to look at who’s been supportive of our positions and who hasn’t.”

After much open debate over the summer, a series of amendments to Plan It went to Council for final approval. The Friday before the vote, citizens started hearing about meetings between Council members and key players in the development industry. When Noel Keough, an appointed citizen representative to Plan It’s advisory committee, asked for his own meeting with the mayor, he was rebuffed and told these meetings were actually just “courtesy calls.”

On the Monday, in spite of months of public input and all the citizen voices at the public hearing, Council passed an amendment to Plan It which reduced required densities by 20–25 per cent. Indeed, the new projected densities are in many cases lower than what is built today. Urban planning experts including Keough estimate that this change will ultimately cost taxpayers $2-billion, primarily in higher infrastructure costs.

As Keough told me: “It was deeply disturbing that, having given freely of our time, in the end the mayor decided this was an issue to be settled with developers behind closed doors, [and] that our request for a meeting was refused.”

When an angry group of citizens (including me) met with one alderman who had originally championed Plan It, he didn’t understand why we called this a “backroom deal.” He argued it was a “compromise,” suggested that it was the only way to get the development industry to agree to the plan, and said it should be seen as a victory. I pointed out to him that Council actually has the power to pass something with which developers disagree.

Bill 203 did not go unnoticed—editorials and columns supporting it ran in all the major dailies and across the Alberta blogosphere. Support came from a wide range of citizens groups, from the Better Calgary Coalition (BCC ) to Canadian Taxpayers Federation (CTF). CTF Alberta director Scott Hennig said it would be “a crying shame” if the full complement of rules proposed by Bill 203 were not made law.

But even Bill 203 is really only a first step. Many other jurisdictions have adopted much stricter campaign funding rules. In Toronto, for example, strict rules are in place for 2010. Only residents of Ontario can donate to municipal candidates. The donation limit for council candidates is $750; for mayoral candidates, $2,500. Donors receive generous tax deductions. Campaign spending is limited to $5,000 plus 70 cents per voter for council candidates.

The Better Calgary Campaign proposes six changes, some of which are part of Bill 203. Other groups, including the Calgary Chamber of Commerce and the Canadian Federation for Independent Business have made similar proposals:

1. Limit contributions. The amount is up for debate. Bill 203 mandates a $5,000 limit, but BCC argues that $1,000–$1,500 per donor would be better, since $5,000 is actually very high; few municipal candidates receive donations this large anyway. In 2007 in Calgary, only mayor Bronconnier, alderman Jones and defeated alderman Larocque received donations over $5,000. In Edmonton, mayor Stephen Mandel had fewer than 10 donations over $5,000, and a few right at that amount. Of elected councillors, only Dave Thiele had a donation over this amount ($13,000 in-kind from CUPE), though there were several $5,000 donations in the mix. (And yes, this is mainly an issue in the big cities—Bawlf, Alberta, mayor Jerry Iwanus tells me he spent $365.70 in 2007 and had but one donor.)

2. Limit candidates’ spending. The BCC believes 50 cents per ward resident would be fair. This allows candidates to run effective campaigns without elections turning into money wars. It means that fewer citizens will be deterred from running for office by an incumbent’s war chest and that incumbents won’t have such an easy time getting re-elected.

3. Mandate that candidates give surpluses to the City or donate them to charity whether or not they run again. This goes beyond Bill 203 by suggesting that every candidate start every election cycle at zero.

4. Mandate immediate disclosure of donations and donors, to be posted on the candidate’s website within five business days. This isn’t difficult: most campaigns enter donors and donations into a spreadsheet, and it’s two clicks to the web from there.

5. Mandate that donations can be made only in election years. Otherwise, incumbents can have three unfettered years of fundraising, leading to the question of whether donors are supporting a future election or rewarding current performance.

6. Finally, in much the way that provincial MLAs have to divulge their investments and other potential financial conflicts of interest, Alberta needs a municipal-level registry. If, for example, a would-be alderman or councillor owns property along a proposed LRT line, citizens ought to know.

The “appearance of impropriety” matters. City Hall decisions might sometimes seem like a quid pro quo.

These would do for starters; other changes, such as tax rebates, could follow. And it’s not impossible to run an effective campaign under these rules. Calgary alderman Brian Pincott voluntarily agreed to a similar set in 2007 and won, even though his opponents operated without them.

In 2004, I ran a respectable municipal campaign. I didn’t spend any of my own money, and a very high proportion of my funds came from individuals who supported me personally or liked my vision for the city—teachers and stay-at-home moms, lawyers and accountants, artists and students, united as citizens with a stake in the future of their community.

I also received money from developers—about 20 per cent of my total. And in the end, I did accept that $400 from Calgary’s largest developer: the allure of radio ads during the final weekend of the campaign was just too appealing.

It’s people’s right to give money to and support candidates they like, regardless of the industry in which they work. And, of course, I like to think that as alderman I would have remained free of undue influence. But putting the right rules in place would help all citizens be confident that their leaders are acting in the best interests of the community. The trust they would engender would only make our communities stronger. #

Naheed Nenshi was an associate professor of business at Mount Royal University and a columnist for the Calgary Herald, and is currently the Mayor of Calgary.

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