Money Talks

The problems with Alberta’s lax political-party funding rules

By Mark Lisac

Let’s say I buy you a drink—coffee or wine, your choice. You might feel grateful, you might not; you might think you would have picked a better café. Now let’s say you’re thirsty and broke, and I buy you a couple of drinks every Friday and a bottle of whisky every Saturday. Would you feel a little more solicitous of my friendship? A little more careful about remembering my name?

Money buys a lot of things. It doesn’t buy votes, but money—in the form of political donations—does buy politicians’ attention. It does serve as a marker of political friendship or approval. It does decide which politicians get the biggest electoral machines and the most media space. Money buys indirect influence and serves as a reward for past decisions. And in Alberta, money does all of the above in the context of the highest political contribution limits in the country (although BC and Saskatchewan have no limits) and little apparent interest in changing the rules.

Even Bill 7, the Election Accountability Amendment Act, 2012, which the government tabled in November, didn’t address fundamental issues. The bill did not lower contribution limits, prohibit donations from corporations and unions, or cap campaign spending. The bill did not change leadership-race financing other than by requiring financial reports to be filed. Parties now must report financial statements every three months rather than annually, and the threshold for reporting contributions was reduced from $375 to $250.

The parties are so used to public indifference that the Progressive Conservatives took about one-quarter of their election contributions last spring from Edmonton billionaire Daryl Katz, members of his family, his business associates and associated corporations. The revelation that from $300,000 to $430,000 of contributions had flowed from Katz’s world—by means that the chief electoral officer decided to investigate—did provoke some outrage. Katz’s appeals for provincial money to help build his planned hockey arena made it easy to insinuate he donated expecting something back. Without this factor, how many Albertans would’ve been upset? PC fundraisers knew the contributions would be reported publicly six months after the election. They may have been so desperate for cash in the campaign’s closing weeks that they were prepared to accept the consequences. Almost certainly, they calculated they could withstand any blowback.

Alberta’s major political parties accept more than $7-million annually. About 14,000 Albertans donate to parties in a given year. About 6,000 (there’s some overlap) donate to constituency associations. All told, some 15,000–20,000 people financially support the basic institutional structure of politics in a province of 3.8 million. In addition about one-third of total party funding comes from 1,300 to 1,500 corporations. Most of that money goes to the governing PCs, who typically raise a little more than half their money each year from nearly 1,000 corporations. Union donations are often mentioned in the same breath, but they’re negligible in comparison: in 2011 Alberta’s political parties received $2.1-million from corporations and $63,304 from trade unions.

The heavy corporate presence makes Alberta increasingly anomalous in Canada. The federal government prohibited corporate and union political donations with passage of the Federal Accountability Act in late 2006. A number of provinces have done the same. Alberta trails the federal government and the rest of the provinces in other ways. This province also has a record of not vigorously monitoring donations or enforcing what rules do exist. We ban political contributions by public bodies, but—as a recent scandal over illegal contributions by municipalities and universities demonstrated—we haven’t aggressively enforced the ban. Most glaringly, the province continues to resist calls to tighten financial controls on party leadership campaigns. The 2011 PC leadership race saw more than $6-million raised and spent under haphazard rules and with haphazard scrutiny.

This province has the highest political contribution limits in the country and demands very little in the way of reporting.

The PCs do not win elections with money alone, but money has for decades made elections easier for them. Their advantage begins well before each election call. Only the PCs have been able to employ several staff while also saving enough money to finance a campaign. In 2011 the Wildrose party recorded the most remarkable surge in opposition party support since the Liberals’ explosive growth in 1992. Yet the Wildrose finished the year with $533,906 in net assets compared to the PCs’ $2,858,395.

Official reports from the 2012 election show that the balance of individual donations tipped in March and April toward the Wildrose—a shift that reflected the party’s lead in polls. The PCs reported $1.52-million in receipted contributions during the campaign; the Wildrose reported $2.94-million. The PCs, with a huge cash reserve built between elections, won the election anyway and vastly outspent the Wildrose in the process. With the help of the Katz money and their store of savings, they spent $4.66-million on their election effort, blowing 55 per cent past the then-record $3.01-million they spent in 2008. The Wildrose spent $3.09-million in 2012.

The Wildrose’s corporate support was concentrated in the energy industry. More tellingly, the party received money from hundreds of individuals whose names aren’t on provincial PC fundraising records. And many were wealthy: more than 300 Wildrose donors gave $1,000 or more. That concentration of wealth helps explain why the Wildrose has joined other opposition parties in calling for a ban on corporate and union donations, but would only reduce individual donation limits to $10,000 in an election year and $5,000 in non-election years.

NDP leader Brian Mason often claims that political donations influence public policy. It would be difficult, however, for any one business to affect decisions that way. What counts is the sentiment of entire sectors, such as the energy or construction industry, or business owners as a whole.

Alberta’s smaller opposition parties rely more on the commitment of a few thousand people. In 2011 the NDP received $651,024 in 3,016 contributions from individuals. Brian Stokes, the NDP’s provincial secretary, says the party has significantly raised its rate of contributions from its existing donor base in the last few years. In 2011 the party appointed a full-time fundraiser for the first time. The more focused effort doesn’t change the quirks of individual donors, however, most of whom need care and attention. Some give only during elections. Some want to give only at party events. Some want a discussion over lunch and a direct request.

The Alberta Liberals receive the occasional corporate contribution, but like the NDP they tend to rely on a popular base—2,771 contributions from individuals yielded $435,836 for the Liberals in 2011. Regardless, neither the Liberal party nor the NDP has been able to translate the flow of cash into a reserve fund going into elections. The Liberals ended 2011 with $40,132 in net liabilities. They ran a skimpy election campaign last spring to avoid a new flood of red ink; their total expense was only $150,667. The NDP paid down its debt by $100,000 in 2011 but ran it up again during the 2012 election with a campaign costing just over $654,000; as of September 2012 they owed $360,000 on a line of credit. The party also owed $270,000 to its constituency associations.

The NDP’s Stokes says he tells people from other provinces about Alberta’s annual limit on political contributions “and their jaws just drop.” Alberta’s Election Finances and Contributions Disclosure Act permits contributions of up to $15,000 per party per year. Donors can also give up to $30,000 to each party during a campaign (less any amount already given to the party that year). Donations to individual candidates can be as high as $2,000 during a campaign, with a cumulative cap of $10,000 for up to five candidates in a given party. Contributors gave nearly $188,000 to Alison Redford’s constituency for her personal re-election campaign last year; several other MLAs and cabinet ministers raised more than $50,000 each.

The only province more awash in big political donations is BC. A superheated partisan atmosphere there, combined with a lack of contribution limits, sees some individuals and corporations give $50,000–$100,000. Mining giant Goldcorp gave the BC Liberals $210,000 in 2011. Saskatchewan has no limits but has only a few donors in BC’s $50,000+ league.

Other jurisdictions have much tighter rules and procedures. Each was prompted by worries about undue influence over political decisions. Federal law limits contributions to federal parties to $1,200 per year and bans corporate and union contributions. The ban was enacted while the federal parties were still getting a public subsidy for each vote they received in the election—a common tradeoff where corporate and union donations have been banned. Prime Minister Stephen Harper is now leading a move to phase out the roughly $24-million a year in subsidies by 2015. Eliminating that source will leave individual donors as the only major source of political-party funding. Six provinces currently provide public grants to parties based on their share of the vote. The exceptions are Alberta, Ontario, BC and Newfoundland.

Like the federal government, Nova Scotia, Quebec and Manitoba ban corporate and union donations to provincial parties. They limit annual donations to $5,000, $3,000 and $3,000, respectively. Quebec last year asserted much more stringent control of contributions by requiring they be made to the province’s chief electoral officer, who sends the money on to the parties. A system like that would have prevented some of the suspicions raised about the Katz donations. Ontario allows corporate and union contributions and has high donation limits: $9,300 a year, plus $9,300 per campaign. Ontario, however, is more restrictive than Alberta and has real-time reporting requirements to boot—deposits must be reported to Elections Ontario within 10 days and are posted on the Elections Ontario website within another 10 days. They are then archived on the website.

Tight federal contribution limits and a ban on corporate and union donations went into effect on January 1, 2007, under the Federal Accountability Act. That law is largely the legacy of former prime minister Jean Chrétien, yet it was embraced by Harper. One reason may be that the Conservative Party has proven itself more skilled than the other parties at raising money from individuals. Political finance reforms often mix idealism with political motivation.

Nova Scotia, for example, went through a two-stage reform process. In 2006 a Conservative government capped donations at $5,000 and banned money from out of province. New Democrats said the changes deliberately targeted them by ending large union contributions. A subsequent NDP government banned all corporate and union donations in 2010, ending the many $1,000–$5,000 annual corporate contributions the Conservatives had long enjoyed.

If any area of political fundraising in Alberta qualifies for a “wild west” description, it’s leadership campaigns. Leadership races for the PCs now attract about as much money as all the parties combined spend on elections. Yet leadership campaigns have not been governed by finance law. There’s been a drift in the past five years toward parties adopting a version of the rules for general political contributions. But a PC-dominated legislature committee ensured that nothing was written in law before the PCs’ 2011 leadership campaign.

In that contest, all camps’ reports varied in format and level of detail. Sixth-place finisher Rick Orman refused to release any information. And the filed reports don’t have a permanent home—unlike party annual reports, which by law must be made available on Elections Alberta’s website. Some information survives on the Internet, but the five statements filed with the party have been removed from the PC website. Those records showed that Alison Redford’s team spent about $1.3-million to win. Gary Mar’s team spent about $2.7-million to finish second. Doug Horner finished third after reported campaign expenses of about $1.2-million. Ted Morton spent about $1-million and Doug Griffiths approximately $130,000.

The generally agreed estimate on what was needed to avoid embarrassment in the contest was about $1-million (the entry fee alone was $40,000). Money makes a serious campaign feasible. If a person aspiring to the leadership of the PC party can’t raise enough money in advance, he or she won’t be considered a credible candidate. In that way, corporations and wealthy individuals become gatekeepers. They are particularly important during the run-up, when fundraisers are checking how much money will be available. As a glaring example, just 12 corporations and individuals provided half the contributions to Doug Griffiths’s PC leadership campaign; he also took a $15,000 loan to help pay the entry fee.

Leader’s dinners blur the lines between political choice, lobbying and status-seeking. The system breeds suspicion.

While other jurisdictions exercise more control over leadership races—the Ontario Liberals, for example, have put a $500,000 spending cap on the contest that will replace Dalton McGuinty—the lax environment in Alberta means the primary rule is that the wealthier the donor, the better. The door remains open to contributions from spouses and from businesses associated with people who gave as individuals. Sandy and Cecile Mactaggart, for example, gave a total of $85,000 to three candidates; another $60,000 came from Maclab Enterprises, the property developer that Mactaggart co-founded. Irving and Dianne Kipnes gave $72,000 to a number of candidates, while businesses associated with Irving, a liquor magnate, gave at least $10,000 and possibly more than $30,000 (amounts were not precisely identified in some reports). Sam and Melissa Kolias (Sam is CEO of Boardwalk REIT) gave $50,000. Wild Buffalo Ranching, owned by Ian MacGregor, a principal in the North West bitumen upgrader project, gave $50,000 to five candidates.

One of the more intriguing entries in the reports was $15,000 identified in Doug Horner’s campaign revenues as coming from “Money Order—RBC Trust Bahamas.” No rule compelled further disclosure.

None of the opposition parties made political financing an election issue last spring. The PCs’ main interest in campaign-finance reform in recent years has been its clampdown on ads by “third parties.” New legislation was quickly enacted after unions threw a scare into the government with ads that accused it of having “No Plan” during the 2008 election, even though the estimated $2.5-million spent on that campaign did not prevent a PC landslide win.

Tighter rules could, in any case, leave the four main parties’ positions relatively the same. It takes money to make money. In 2010 the PCs’ budget for fundraising and advertising jumped by 41 per cent to more than $1-million, reportedly because they entered a contract with a fundraising firm. Kelley Charlebois, the PC executive director, says only that the party has at some point spent money on a phone technology called a predictive dialer to contact donors.

Meanwhile, leader’s dinners are the single most important fundraising tool for the PCs and Wildrose. The PC dinners also offer social visibility. Some attendees buy the $500-a-plate tickets out of loyalty. Some show up to rub shoulders with perceived movers and shakers. Some show up because it’s expected. The dinners blur the lines between political choice, lobbying and status-seeking. Being able to draw on those multiple factors creates a primary difference between the governing party and the rest.

Weeks after Premier Redford celebrated her April 23 election win, she spoke at her party’s biggest annual fundraising events—the leader’s dinners in Calgary and Edmonton. They attracted a total of about 3,300 guests. The net take after deduction of costs would have been about $1.4-million. A few weeks after the election, the party had restored its strong lead in the wallet poll.

Alex MacDonald, who’s worked off and on for the Liberals since the early 1990s, describes the process caustically: “Everybody in Alberta knows you have to go to the dinners to win a contract. It’s like fealty; you have to pay your dues.”

Many attendees would reject that statement outright. Yet there’s been confidential talk for years that the attraction of a leader’s dinner can be supplemented by perceived pressure to attend. The system breeds suspicion. Indeed, some of the entities that buy tickets are surprising. PC dinner supporters in 2011 included media (CTV, the Calgary Herald), a major sports franchise (Calgary Flames) and non-profit societies that receive millions of dollars in provincial grants each year (Calgary Exhibition & Stampede, Edmonton Northlands).

Charlebois is guarded when he talks about fundraising, but says the party needs about 100 volunteers to organize each of its leader’s dinners. Donors need careful tending. “Each donor is different,” Charlebois says. Establishing a relationship is important. Making the first communication with a potential supporter a request for money isn’t a great idea.

Several threads criss-cross in political fundraising in Alberta. One less-visible factor is networked political communities. The PCs have a huge advantage here. Some corporations make political contributions at the direction of their chief executives. Many create a budget and let government affairs staff decide—or recommend to a small management group—which parties should receive money. But after 41 years of PC government in Alberta, many of those government-affairs staffers have migrated to their corporate jobs from positions as aides to cabinet ministers or from other backgrounds closely connected to the government and/or the party. Wherever they’ve come from, they all know they have to work with a PC government for the foreseeable future. The web of connections includes many lobbyists, some of whom contribute to the party in their own names.

Documented evidence of the motivation behind donations is rare. But this year, an access-to-information request by the Calgary Herald turned up emails from the files of Roman Cooney, a former Herald manager who became the University of Calgary’s vice-president of external relations in the early 2000s.

One exchange shows how PC officials can guide decisions. Ron Liepert, later a cabinet minister but at the time the PCs’ constituency president for Calgary-West, told Cooney that a constituency fundraiser with the health minister as a guest speaker would be a “must-be-seen-at event.” Cooney replied: “We’re there.”

In 2007 Cooney responded to a pitch for a $100-a-plate dinner for MLA Neil Brown, saying, “We’re in for as many as you think appropriate—I can get the bodies.” His accompanying explanation offered a direct tie between financial support and political decisions. It said, without elaboration, that Brown had “really jump-started things for us last fall.” Magnify these exchanges by the hundreds, or even the thousands, and a picture emerges of political-party fundraising in Alberta.

Money makes a serious leadership campaign feasible, so corporations and wealthy individuals become gatekeepers.

Though the PCs benefit from the status quo most clearly, Alberta’s lax funding rules are a problem embodied in all parties. What better example than a moment from the provincial NDP convention last September? The NDP, so often the loudest critic of the influence of money in provincial politics, saw delegates at its convention approve a new leadership election process that will reserve as much as 25 per cent of the vote for party affiliates. The “affiliates” at the time of the convention were six union groups, and the party is interested in attracting even more union affiliates.

A handful of delegates weren’t sure the special treatment was a good idea. But Doug O’Halloran, a longstanding fixture in the United Food & Commercial Workers, responded with a bottom-line argument: corporations buy votes in other parties, and this was a counterbalance. “We affiliates have to abide by the principles of the NDP,” he said. “But if we’re paying a substantial amount of the tab, there should be some sort of weightedness.” Later that day, Brian Mason singled out the UFCW for thanks because of the money and volunteers it contributed to the party’s 2012 election campaign.

Corporate leaders don’t usually talk about such subjects with the same candour as unions. But they don’t hand out money to political parties just to feel good, either. Money is power.

Mark Lisac publishes Insight Into Government, a newsletter on government and politics.


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