Leonid Sirota: On political funding, we must pick from among bad options

All the choices are bad, albeit in different ways, which we need to understand to try making an enlightened choice.

By: Leonid Sirota

A couple of weeks ago, The Line published Colin Horgan’s plea for a return to subsidies to political parties, to be paid out each year in proportion to the number of votes received in the previous general election. This, Mr. Horgan argued, would obviate the need for parties and individual politicians to “ignore the dispassionate and level headed among us” to feed the “outrage machine” that generates desperately needed donations. The subsidy would provide “stability” to political parties and counteract, at least somewhat, the dumbing down and polarization of politics that seem to be so characteristic of the last 10 years or so.

Mr. Horgan isn’t the only one to worry about what the pursuit of a large number of small donations is doing to politics, either. At about the same time, in the United States, conservative anti-Trump journalists Jonah Goldberg and Nick Catoggio also wrote on this issue. So let us stipulate that these cross-partisan, cross-national authorities are right about the evils of a mode of political financing that, until quite recently, captured imaginations with democratizing promise. 

Still, that does not mean that Mr. Horgan’s preferred solution is right. There is no perfect solution, and even some of the ones I’m about to lay out are flawed in various ways. But readers who agree with Messrs. Horgan, Goldberg and Catoggio should understand that more than one option for addressing their concerns exists ― and, also, that this is not a choice between good and bad, let alone good and better. The choice is between bad and even worse.

The trouble with a per-vote subsidy such as existed at the federal level between 2004 and 2011 is two-fold. If the subsidy is the main or indeed only source of financing for parties, it creates a built-in advantage for incumbents. The bigger the winning margin in the previous election, the bigger the funding advantage in each subsequent year, until the next election. This is not insurmountable: Quebec governments, which have long benefitted from a similar arrangement, have managed to lose power from time to time. But, nonetheless, setting up our political finance system with a built-in advantage for incumbents is not obviously attractive.

And of course, the subsidy alone does not eliminate the need to court small donors. If anything, the parties that receive less than the others may be under even more pressure to do that by whatever means to make up for the uneven playing field they find themselves on. One solution to that is to ban other sources of financing (which also addresses Harrison Ruess’s concern that a subsidy will simply add more money for parties to play with). Quebec comes close to doing that, limiting permitted donations to parties to $100 per voter per year. But, quite apart from its dubious constitutionality, this approach may be morally unattractive. We may agree that excessive dependence on small donations degrades politics, but should we outright prevent people from putting their money where their political convictions are?

So not only is the per-vote subsidy model “not a panacea,” as Mr. Horgan acknowledges, it’s a remedy that comes with rather nasty side effects. The question is whether the alternatives are any better.

Perhaps the closest one is the system New Zealand uses for funding television advertising during election campaigns. This is a public subsidy too, and parties are prevented from using any of their own money to buy extra ads, but the allocation is done by the Electoral Commission on a discretionary basis that takes a variety of factors into account. The parties’ performance at the last general election is one of these factors, but so are the results of any intervening by-elections and recent opinion polls. The benefit of this system is that the incumbency advantage of a pure per-vote subsidy is mitigated. The disadvantage is that discretionary balancing of multiple factors is inherently non-transparent and vulnerable to charges of bias. New Zealand’s political culture has, so far, avoided the worst excesses of distrust of neutral institutions like the Electoral Commission, though the allocation has on occasion been challenged in court (albeit never successfully). Can we be confident that Canada would fare as well? I’m not sure.

If public subsidies aren’t the answer to the problems caused by small donors, can the solution be to let large donors back into the political financing game? When the per-vote subsidy was introduced in 2004, it was to make up for the shortfall created by the capping of donations to parties. Was that a mistake? Mr. Goldberg thinks that large donors, who tend to think more strategically and have a longer attention span that those occasional contributors who respond to the last act of political theatre, are the solution. Suspicion of “the rich,” the “moneyed interests,” has seeped deep into our political culture, but New Zealand does not cap political donations at all, and yet consistently ranks rather higher than Canada on Transparency International’s Corruption Perceptions Index. 

But then, perhaps that’s the point. Maybe here too New Zealand can get away with things Canada wouldn’t. The 2004 reform didn’t happen by accident or out of a disinterested commitment to good governance by the government of the day. It was the Liberals’ attempt to save their political skin in the wake of the Sponsorship Scandal. That gives one pause, though it is also possible to overreact to the occasional scandal and solve the problem it reveals only by setting the stage for worse problems down the road.

The last option that I will mention is to take a different tack and, instead of tweaking the ways in which politicians raise funds, radically reduce the need for them to do that at all by limiting the amount they can spend. We do that already, as Mr. Ruess noted, but we probably could do more. For example, Canada could follow the U.K. in banning political advertising on television, and so eliminate one major expense. We could also simply lower the existing spending caps. As with individual donations, at some point, one would run into constitutional difficulties, but Canadian courts have tended to look quite kindly on all but the most extreme limitations of political spending.

But, whatever the courts may say, strict constraints on political advertisements come with serious  repercussions for the freedom of expression ― and not just, or indeed not mainly, of political parties. This is because Canada’s approach to political campaigning already involves favouring parties by imposing even stricter limits on how much everyone else ― in practice, mainly labour unions, but in theory NGOs and for-profit companies too ― is able to spend to get their message across. These “third parties” are already effectively prevented from advertising on television during election campaigns. In recent years restrictions have been extended into a “pre-campaign” period ― a couple of months at the federal level, but now an entire year in Ontario. If the parties’ spending is limited further, maintaining their primacy in the political discourse will require everyone else to be silenced that much more. 

To repeat, there are no great or even good options here. All are bad, albeit in different ways, which we need to understand to try making an enlightened choice. I will not be the first to observe that he who increaseth knowledge increaseth sorrow, so I will conclude on two further downers. 

First, for politicians, these choices will be guided above all by self-interest. When the Liberals introduced per-vote subsidies, they stood to benefit the most, over a divided opposition. When the Conservatives abolished them, they expected to gain a long-term advantage from their then-superior ability to reach out to small donors. Whatever happens next will benefit those who will be making it happen ― in the short run, anyway. Long-term consequences are harder to predict. But any improvements to our politics will, at best, be a happy side-effect.

And second, as Mr. Goldberg observed in a recent podcast episode, the problem of small donors driving institutions that ought to know better to pursue grievance and outrage instead of sensible policy and moderation does not just affect political parties. Think-tanks and NGOs, to say nothing of media (replace small donors by subscribers) are vulnerable to the same pressures. It is not unreasonable to think that politics requires special regulation. But even so, we have to keep in mind that we cannot subsidize and regulate our way out of anger, incuriosity, and contempt.

Leonid Sirota is an associate professor at the Reading Law School (U.K.) and the founder of the Double Aspect blog.

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