By Peter Cowan
Political parties are central to a functioning democracy in Newfoundland and Labrador, and while their role is clear, the best way for them to pay their bills and fund election campaigns is not.
Right now, political parties rely heavily on corporate money. Many companies and a few unions make big donations (more than $5,000 in a year) and there are very few controls to limit corporate and union influence on the democratic system. Technically, a company could write a cheque to pay for an entire party’s operations.
Unlike many other provinces, there are no limits to individual, corporate or union donations, and parties rely heavily on those big donations. For the provincial Progressive Conservatives and Liberals, their two big fundraisers every year are a golf tournament and a $500-a-plate leader’s dinner. Very few people pay for the tickets themselves. The tables are generally bought by corporations (and a scattered union), many of which have direct business dealings with the government.
For example, at the Liberal’s fall 2016 fundraiser, the accounting firm EY bought a table. Since the Liberals took power, the company has been awarded several untendered contracts to produce reports on the provincial library system and the Muskrat Falls hydroelectric project. This situation is just one example of something that happens under governments of all stripes.
When the Progressive Conservative Party was in power, companies that did business with government were also filling the party’s coffers. In 2013, Hearn Fougere Architects gave more than $6,500 to the PCs and received more than $1.7 million in untendered contracts in 2013–14.
The rules in Newfoundland and Labrador desperately need to catch up.
The New Democratic Party has never held power and its balance sheet reflects this fact, with some union donations but substantially fewer corporate donations.
Under current rules neither the parties nor the companies are doing anything wrong, and the parties that benefit have shown little interest in cutting off the flow of corporate money.
It undermines public confidence in the system when doubt is cast about whether government contracts are being awarded in the best interests of the public or the best interests of the party. Even if buying a table doesn’t give you a contract, it is clear that it gives you access. These fundraisers are filled with MHAs and cabinet ministers, and part of the value some companies feel they get out of these events is the face time with those in power.
Other jurisdictions have recognized this conflict and modernized their election financing rules. As the former head of Elections Canada, Jean-Pierre Kingsley, told the CBC: “People don’t put money into something unless they expect that it will have a return.”
The rules in Newfoundland and Labrador desperately need to catch up. The solution implemented by other provinces and the federal government is to ban corporate and union donations and to put a cap on individual donations. It has worked at the federal level since a ban was implemented in 2007.
If companies aren’t paying to keep parties running, then who does? Parties will be able to make up some of the losses by expanding their fundraising efforts to more individual donors, an area parties don’t target heavily when they can rely on deeper corporate pockets. However, that may not be enough; in many provinces, taxpayers help fund party operations.
Per-vote subsidies of between $1 and $2.50 exist in six provinces and were used at the national level to wean parties off corporate money. Federally, the parties have millions of individuals to ask for support, but in a small province it’s much harder to make up that loss of funds with individual donations.
The idea of taxpayers putting their money into the partisan work of parties is a tough sell. In some provinces parties refuse their subsidies because of the optics. Based on similar-sized subsidies the cost to the taxpayer would be $200,000 to $500,000 a year.
It’s not just who is donating that needs to change but the transparency around how those donations are reported. Right now district associations and leadership races are not obliged to report who supports them. Rules need to be brought in to change that.
Elections Newfoundland and Labrador reports party and candidate donations but is often very slow at providing that information. It often doesn’t post donation or expense information until 12 to 14 months after an election or the end of a year. That means a government can be one-quarter of the way through its mandate before the public gets to see who helped it get there. That’s unacceptable.
Federally, the information is posted within two to three months after an election, and there’s no reason Elections Newfoundland and Labrador can’t follow similar timelines, but these timelines need to be enshrined in legislation to guarantee proper transparency.
These measures amount to a substantial change in how political activity is funded, but they are changes that are badly needed to restore public confidence in our political system and to ensure that politicians are motivated to work in the interests of those who elected them instead of those who financed them.
About the Author
Peter Cowan (CBC NL) has covered Newfoundland and Labrador for a decade with the CBC, first in Happy Valley-Goose Bay and now St. John’s. His investigation into illegal corporate campaign contributions received by Conservative cabinet minister Peter Penashue forced Penashue’s resignation and led to convictions against his campaign manager. Peter has also been recognized for uncovering the Humber Valley paving scandal. This article is an excerpt from “The Democracy Cookbook: Recipes to Renew Governance in Newfoundland and Labrador” (ISER Books, 2017).