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January 15th, 2015
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[Welcome, National Newswatch readers!]
UPDATE: See below for two points of clarification – on the indexation of third-party spending limits, and the scope of the limitation on fundraising cost exemptions.
RE-UPDATE: [Feb 2, 2015] On further examination of the legislation, Elections Canada lawyers believe the daily pro-rated value of the central and candidate expense limits should be increased by 1/36th for every day the writ period exceeds 37 days, not 1/37th.
Re-Up-UPDATE: [moments later] Never mind; 1/37th is the correct amount of the daily pro-rate. Mea culpa.
Anyone still debating the question of an early election date, versus a fall election date as planned, is completely missing the point. The question nowadays – thanks to a little-noticed amendment buried in the Fair Elections Act – is not what day the election will be held. It's what day the election will be called.
Until now, most of the conventional wisdom has sounded a lot like the unnamed Liberal source quoted by Paul Wells the other day:
“They’ve got $40 million to spend,” my Liberal source said of his Conservative foes, who are still winning each quarter’s fundraising competition. “They can only spend $25 or $26 million in a writ,” that is, during a formal campaign period, because Elections Canada monitors these things closely. “Why would they go now?”
The reason it sounded that way is because – until now – such a calculation would have been right.
It depended on the fact that, while there was no legal limit on the length of the writ period, there was a hard limit on how much could be spent during an election campaign, regardless of its length.
A fixed expense ceiling, but no fixed length to the campaign. That was the system we used to have. Then we added a fixed end to the campaign period in the Accountability Act, but no fixed beginning. Still, the fixed expense ceiling served as a financial incentive not to drag it out too long, and keep the campaign affordable enough for every party to be on the same level playing field – at least during the writ period. If, as they say, "campaigns matter", then at least there was reasonably affordable parity for serious entrants during the period that mattered.
But the fixed expense ceiling was ended in the Bill C-23 (Fair Elections Act), as part of its massive rewrite of "Part 18 – Financial Administration" of the Canada Elections Act. The version adopted by Parliament is now published as Chapter 12 of the 2014 Statutes of Canada, and although its provisions haven't been consolidated into the online version of the Act yet, they did come into force on December 19, 2014. Here's the relevant section:
430. (1) The maximum amount that is allowed for election expenses of a registered party for an election is the product of
(a) $0.735 multiplied by the number of names on the preliminary lists of electors for electoral districts in which the registered party has endorsed a candidate or by the number of names on the revised lists of electors for those electoral districts, whichever is greater, and
(b) the inflation adjustment factor published by the Chief Electoral Officer under section 384 that is in effect on the date of the issue of the writ or writs for the election.
Election period longer than 37 days
(2) If an election period is longer than 37 days, then the maximum amount calculated under subsaection (1) is increased by adding to it the product of
(a) one thirty-seventh of the maximum amount calculated under subsection (1), and
(b) the number of days in the election period minus 37.
A campaign has to be a minimum of 37 days – the day it's called plus 36 more. But it has no maximum length. So, in the olden days, you would have to take the campaign expense ceiling and make it last the length of the campaign, which meant that for well-funded parties with control over the election calendar, they'd delay the dropping of the writ as long as possible, and outspend in the pre-writ period trying to lay down the campaign narrative and define their opponents, knowing their less well-funded opponents had to keep their powder dry for the campaign whenever it came.
The extra-long campaign that spanned the Christmas holidays in 2005-2006, however, really stretched some parties' budgets. The need to make a fixed campaign budget last for a longer campaign led to a lot of the improvising that resulted in so-called In-and-Out scandal.
So naturally, the thinking would go, if you had a longer campaign you ought to be able to have a higher spending limit, right?
Except that having an unlimited pro-rated election campaign expense ceiling – without a limited campaign period – opens a huge back-door for a well-financed political party that controls the timing of an election to spend its opponents into the ground.
Setting a fixed election date in legislation was supposed to equalize the power over election timing between the government and the opposition. Everyone would know when the election was, and could plan accordingly. It didn't matter that no fixed beginning was set down in law, because the fixed election spending ceiling would keep the campaign relatively short.
But now, what's to stop the Prime Minister from calling the election on July 1st for October 19th? "Under the Canada Elections Act, nothing" replies Elections Canada spokesperson John Enright. "And the expense limits for parties and candidates would be pro-rated 1/37th per day for each extra day."
Wrap your mind around the implications of that one for a minute or two.
Suppose the national party's expense ceiling for a 37-day campaign works out to $26 million, as realistically ball-parked by Wells's source. The new provisions in the Elections Act mean that for every day longer than 37 days the writ lasts, the spending limit goes up by roughly $700,000.
For every extra week, then, it would increase by $4.9M.
An extra month? Add on another $21M.
Tack on the whole summer, for argument's sake, and suddenly you're looking at a 110 day campaign with a national expense ceiling of $77 million dollars to be competitive. Spending at those levels, given Canada's restrictive fundraising laws, is no longer an equalizer – it's a blunt instrument to beat your opponents to death and into bankruptcy with, and would leave the bankers to decide which of the government's foes to finance to the max to try and compete even remotely fairly.
And that would not even be the real limit, because the Act also exempted fundraising costs from the ceiling, and you can pack an awful lot of messaging and voter contact into fundraising, as anyone on the year-end party email lists could attest. [UPDATE: That was wrong. It exempts the costs of running a fundraising activity like a cocktail party, but the provision on telephone/email etc solicitation for funds was dropped.] (Not a lot of serious policy gets discussed, however, adding to the woes already identified by Chantal Hébert). And there would be no requirement to spread that spending out over the entire campaign period – instead you could just hold your fire and then dump millions and millions of dollars more in advertising into the final 3 weeks.
With $40M on hand – and remember that the Fair Elections Act did not impose any limits on the 50% rebate of those paid election expenses either – the Conservatives could now leverage that $40M with bank loans of a further $40M (secured by their rebate) to spend the limit, and still have money left over to transfer to their candidate campaigns … who now would also have to cope with expense ceilings of three times their previous amounts. In other words, the typical candidate spending limit of $80K would in that hypothetical situation become nearly a quarter of a million dollars
And those candidates would have a much harder time than the parties to secure financing for the difference, thanks to the ridiculous and unworkable loan provisions also written into the Bill against the advice of such wild-eyes radicals as the Canadian Bankers' Association, who would have to administer them. The new regime requires bank loans to be guaranteed by a consortium of individuals each guaranteeing no more than their annual contribution ceiling MINUS the amount they'd already actually contributed in cash. No bank or credit union wants to issue a loan for $45,000 guaranteed by 30 people for $1,500 each. Not going to happen. So, if the riding association didn't already have most of the limit banked ahead of time, their candidate would be put impossibly behind the 8-ball in a mega-length campaign.
Now, there would be some down-sides to a mega-long election campaign from the governing party's perspective. For one thing, once a writ drops, most government advertising would have to cease, and most government-funded ministerial travel along with it. Cabinet ministers still managing complex, sensitive or risky portfolios (defence, security, or anything to do with financial markets or the price of energy are some contemporary examples) might have their attention impossibly distracted from either their role or their re-election. It would blow a huge hole into Elections Canada's own election budget, so I suppose there could be some public backlash as well, though the bet would be on it dissipating after a day or two. And long campaigns can be risky for incumbents.
But they're just as risky for challengers, especially ones who haven't personally experienced the pressure-cooker of a national campaign before. And the challenge of suddenly needing to raise and spend three times what you'd planned on might be insurmountable. Plus, Auditors-General don't usually release reports during election campaigns; just sayin'.
A final wrinkle is that the so-called "third parties" – groups who are not registered political parties, but who want to advertise during the election campaign, did NOT have their ceilings pro-rated. So, each group will have a hard $150K ceiling to work with for the entire writ period nationally, plus $3000 for any riding it wants to specifically advertise about, no matter how long or short the campaign. I expect a number of third parties – LeadNow.ca for example, or the pro-pipeline groups – have planned more expensive pre-writ ad campaigns that are not subject to those ceilings. But if the writ were issued early, all those ad buys would have to stop in their tracks. [UPDATE: of course those third party spending limits spelled out in the Act are at least subject to the inflation adjustment, so the Third Party national limit, for example is now over $200K.]
We'll get an early taste of what's to come with the required launch of the Peterborough by-election, which must be called by May 6. It has to be called by May 6, but the only restriction on voting day is that it be on a Monday at least 36 days after May 6. The first Monday at least 36 days after May 6 is June 15, but the Prime Minister could do what was done in Ottawa Centre before, which was to call an early by-election that then got folded into the general election campaign. This means the candidates in Peterborough should now expect to have to spend 4 1/2 times the old spending limit to get from May 6 to October 19. Same goes, though at a slightly lesser rate, for candidates in Sudbury (although notably, the Chief Electoral Officer still has not been notified by the Commons Speaker of Glenn Thibeault's January 5th resignation, so the clock hasn't started ticking on that riding's federal by-election just yet).
How the parties come out of this election financially will be critical to the future health of our democracy. Justin Trudeau has already signalled that he intends to turn his back on Jean Chretien's election reform of the per-vote subsidy. And unless any one party wins a majority of the 338 seats in the next House of Commons, the country could be back into an election again in 2017.
A democracy without a robust party system is a prime takeover target for monied interests. This is why all citizens should care so deeply about the fairness of elections. It sounds like it's all just dickering over inside baseball by party insiders, but it isn't. The political parties are the (for the most part, voluntary) bodies who identify, recruit, train and finance the candidates we all get to choose between on the ballot. Take away their level playing field, and you are only an election or two away from losing any real effective choice for yourself on that ballot.
Just because the Prime Minister could in theory call an election for the fixed election date early and spend his opponents into the ground, doesn't meant that he should, or would. A true leader is marked not only by his actions, but also his restraint and wisdom. Even though we fully expect the PM to vigourously contest the next election, he is no doubt also mindful of the fact that he's heading into the legacy stage of his reign.
For myself, I think the next Parliament should amend the Canada Elections Act again, to set a maximum length alongside the minimum length for a federal general election campaign period, and I hope to see that plank in one or more of the parties' election platforms.
As for all the #TeamSpring vs #TeamFall nonsense, I cannot bring myself to believe that the federal Conservatives would want to run an election campaign concurrently with either or both of the expected Alberta provincial election (mid-March call for a mid-April vote is the prevailing wisdom), or the Ontario Progressive Conservative leadership contest which concludes the first weekend of May.
I also remember how all the expected fuss over the tell-all book by Julie Couillard on Maxime Bernier in during the 2008 election campaign amounted in the end to nothing more than a half-day story at most, so I think the potential impact of Senator Duffy's trial is being highly-overrated by people who spend too much time living and breathing the Ottawa narrative.
Everyone I've spoken to who's in a position to know, or who knows someone in a position to know, says that the next federal general election will be held on Monday, October 19, 2015 as stipulated in the Canada Elections Act. Until now, however, no-one's thought to ask them when it will be called. Hopefully that can be rectified soon.