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Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs

Issue 27 - Evidence


OTTAWA, Wednesday, September 25, 1996.

The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill C-243, to amend the Canada Elections Act (reimbursement of election expenses), met this day at 4:00 p.m. to give consideration to the bill.

Senator Sharon Carstairs (Chair) in the Chair.

[English]

The Chair: This afternoon we will deal with Bill C-243, a private member's bill introduced by the Honourable Ian McClelland, Member of Parliament. He is here with us both to explain his bill and to answer questions from us. We also have with us today Mr. Jean-Pierre Kingsley from Elections Canada, who will help us in our further deliberations this afternoon.

Please proceed, Mr. McClelland.

The Hon. Ian McClelland, M.P.: The genesis of the bill took place during the last election. At that time, it seemed inappropriate that the tax base should be supporting parties that were determined by some, including myself, to be parties that did not seem to have a broad appeal, despite their right to be part of the electoral process. Furthermore, if it was appropriate that individuals running for office should be required to meet minimum standards of acceptance in the body politic before being eligible for reimbursement for a portion of their election expenses, then the parties that the individuals represented should also have some minimum level of support in the electors of Canada. The question then became: How is that minimum level to be determined so as to be fair and to provide for the emergence of neophyte or new parties while at the same time respecting the fact that we have a fiduciary duty to be cautious and careful in how we spend other people's money - in this case, the taxpayers' money?

My original private member's bill on first reading had a somewhat higher threshold and did not include the ability for a party to receive fewer votes in a region than it did across the country. The bill that you see before you here is a reflection of Parliament working as many people wish that it would.

The bill passed first and second reading in the House of Commons and went to committee. At committee stage the bill was changed, based on input from the government and the Bloc Québécois, to ensure that regionally centred parties would be able to receive funding as a result of their electoral success even though they were narrowly focused.

The notion that a party must have 5 per cent on a restrictive number of seats marries the minimum number of seats that must be contested as contained in the Elections Canada Act. By changing the bill to accommodate the concerns that members of the government and members of the Bloc Québécois expressed, we ended up with a bill that exactly matched the recommendations promulgated by the Chief Electoral Officer.

I will be happy to answer any questions that you have at this time. Members of the committee might also wish to inquire about letters that have been received from other parties which would be negatively affected by this bill, and their response to it.

The Chair: I would remind senators that you have received several communications. On your behalf, I wrote to all the political parties to ask them if they had any concerns, interest or comments with respect to this particular piece of legislation. We have heard from the Natural Law Party of Canada and the Marxist-Leninist Party of Canada; we have not heard from the others.

We will begin with questions at this time.

Senator Lewis: At the end of your presentation, you stated that the actual bill was drafted along the lines recommended by the Chief Electoral Officer in his report. Could you elaborate on that?

Mr. McClelland: The Chief Electoral Officer will be testifying here subsequent to my appearance. This bill reflects exactly what is contained in the Chief Electoral Officer's recommendations.

Senator Lewis: Is that his report following the last election?

Mr. McClelland: Yes.

The Chair: Could you explain to me how it was possible for the Natural Law Party of Canada to get $712,000 on 0.6 per cent and for the Reform Party to get $329,000 on 18.7 per cent?

Mr. McClelland: To date, the reimbursement to political parties is determined by the amount of money that is spent, so the reward is for spending money, not for having a popular appeal.

The stack of reports on electoral financing is approximately four or five feet high. I must be somewhat circumspect in what I say to try to keep myself in line with party policy within the party that I represent, but in Canada, public financing of the electoral process has been seen, and has been proven, to make politics accessible to a broad cross-section of people, while keeping it relatively free of influence peddling, purchasing of votes, and so on.

There are those who suggest that it would be appropriate for political parties to be compensated per vote received, starting with the first vote. This point was raised by some of the other political parties, who felt that this law would exclude them from the funds that they needed to continue to operate. It turns out that they did not receive any reimbursement anyway because they had not spent enough to qualify. However, if we were to proceed with the notion that a political party would, for instance, receive 50 cents per vote cast in order to finance itself, it is conceivable that we would end up with a proliferation of political parties led by people who just want to take advantage of a good thing. Even if this eventually became part of the election financing apparatus of our country, we would still require a minimum hurdle over which individuals or parties would need to leap in order to qualify for public financing.

Senator Beaudoin: Madam Chairman, I believe that in a democracy, such as our parliamentary democracy, it is a good thing to reimburse election expenses. I cannot agree more in that regard. I take it that your figures, which are at the basis of the reimbursement, are not arbitrary figures. If they are arbitrary, then I have a problem. After all, we have to treat all parties in the same way. Equality before the law is a basic principle in our country. Unless you can explain why those minima exist, then I have to conclude that, to a certain extent, they are arbitrary. Are they or are they not?

Mr. McClelland: No, senator, the 2 per cent and 5 per cent figures are not arbitrary. Ensuring that they were not was the main point of the committee meetings.

In its first election campaign, the Bloc Québécois generated more than 5 per cent of the total votes. In the 50 seats which they have, they had to have 5 per cent of the 50 cumulatively. Nationally, the Reform Party, had to have 2 per cent. That was a different standard because the first time around the Reform Party ran in about 80 or 90 constituencies.

In the case of 2 per cent, there were government representatives on the committee who looked at this in some depth. They felt that the standard should be somewhat higher. There were others who felt that the standard should be somewhat lower. Even in the situation to which I referred, had it gone down one-half of 1 per cent, the only party that would have been affected negatively would have been the National Party of Canada. In the last election, that party received 1.4 per cent of the votes cast.

On the bottom end, there were those who suggested that our numbers should be lower. The question then was: What is low enough? We looked then at the situation of individuals who run. In order to be reimbursed their expenses, individuals must receive 15 per cent of the total votes cast in their constituency.

The numbers were not arbitrary. It was members of the Bloc and the Liberals who were going back and forth over those figures. I was just watching it happen. It seemed to me to be a compromise that worked.

Senator Beaudoin: That is a good explanation. They are not arbitrary in that sense, but where is the magic? When does it become an acceptable figure? I would like to know a little more about that.

In law, it is argued that what is reasonable in a free and democratic society is all right. Therefore, the court will go along with that. Do you say that this is based on the concept of what is reasonable?

Mr. McClelland: Senator, I understand and appreciate your point. My response is that it would be intuitive logic.

Senator Beaudoin: What do you mean by "intuitive logic"?

Mr. McClelland: I mean that it makes sense to the average person. In my experience it is difficult to quantify. The figures of 2 per cent and 5 per cent may not be appropriate. Perhaps they would be better at 1.5 per cent or 1.4 per cent. We do not know that. However, experience will tell us if they are right or wrong. If they are wrong, then we will have to consider changing them.

Senator Beaudoin: I have always accepted the reasonableness test in law.

Senator Milne: I have some confusion in my mind about these percentages. The reimbursement in the 1993 election amounted to 22.5 per cent of the actual expenses. I understand that since 1974 there has been a 50 per cent reimbursement for individual candidates, whether they represent a party or not, which applies if they receive at least 15 per cent of the vote. Where is the discrepancy here? Is it because some of those candidates did not receive 15 per cent of the vote?

Mr. McClelland: No. The difference is that the reimbursement for the political party, as separate from the candidates, is provided so as to give the political party the ability to sustain itself during the dry spell between elections. The purpose of this particular bill is to bring the financing or the reimbursement to political parties in line with the financing of individuals. Individuals, as you stated, must receive 15 per cent of the total number of votes. Prior to this bill, political parties did not have to do anything other than to spend 10 per cent of their allowable limit. This is the reason, of course, why some spent a lot of money and some did not.

Senator Milne: I am still not clear. The candidate himself receives 50 per cent as long as he hits the 15 per cent magic level. However, are you saying that, in addition, the political parties receive 22 per cent?

Mr. McClelland: Yes, it is in addition to and separate from what the candidate receives. The resources that go to the candidates themselves are controlled and handled differently depending upon the political party. In my case, after the election, the reimbursement cheque went directly to the constituency association. If I am the candidate in the next election, I will be able to draw upon those funds. However, if I do not win the nomination, then the candidate, whoever he or she is, will be able to draw on those funds.

It is interesting to note that the money held by individual candidates, in the manner of a quasi trust - which is something the Chief Electoral Officer may wish to address - is substantially more than is held by the political parties. This particular bill merely scratches the surface of electoral financing reform, a task which many people have been working at for many years, and this is just one very small step. However, since this is a private member's bill, I thought it would have better chance of passing if it were a small step.

Senator Milne: You are probably right.

Senator Doyle: If this bill had been in force during the last election, do we know how much money would have been saved?

Mr. McClelland: Yes, senator. The Government of Canada rebated to political parties, independent of the rebate that went to individuals, $8,005,561. Had this bill been in place, the reimbursement would have been $6,821,984. I have not done the arithmetic, but it would have been a saving of about $1.5 million.

Senator Doyle: That $1.5 million would largely have been saved by not giving money to people who had very little response from the electorate.

Mr. McClelland: Yes, that is correct, senator.

Senator Doyle: But are they not the very people we started out to help?

Mr. McClelland: No. This is, of course, the nub of the argument. Should either individuals or political parties be reimbursed strictly because they have the ability to spend money, or should they be reimbursed because their message resonates?

I will give you a few examples from the last election. The Natural Law Party received a reimbursement of $8.45 per vote. The Reform Party received something like 50 cents per vote. The Natural Law Party received 87,000 votes compared to 2 million votes for the Reform Party.

This bill says that the ability to spend money should not be the motivating factor for reimbursement from the public purse; rather, it should be the ability to resonate in the body politic. That is why individual candidates are not reimbursed unless they receive 15 per cent of the total votes cast.

Your point is very well made. In our democracy, we should do nothing to prevent new political ideas from coming to the surface. That is how we replenish ourselves. Historically, new parties have eventually been subsumed by existing parties which have in some way appropriated some of the new ideas. That is how we refresh ourselves. We should not do anything to hurt that.

Still, we have a fiduciary duty to protect the public purse. Our election financing should not be in the business of financing anyone who comes to the table and says, "I am going to get a political party going."

Your point speaks to the nub of the difficulty in Senator Beaudoin's question: As Solomon, what do you do with the baby? This bill is, at least in my opinion and the opinion of the house, a reasonable compromise. Your point is well made.

Senator Doyle: I see what you are saying. At the same time, I think there has been, at least in the public perception, some feeling that there is not too much wrong with the idea of assisting new parties. We are entering a phase, we are told, when new parties may dominate the scene for a period of time. We do not know, and we are waiting to see. However, we have a point now where we cut them off. We do not pay anything if they do not have a certain minimum; right?

Mr. McClelland: Senator, once any political party achieves the status of a political party, it has the right to issue tax receipts. The tax base does help new parties tremendously right from the very beginning. It is a tremendous advantage for a political party to be able to issue a tax receipt for people who support that party and donate to that party. This bill does not speak to that. Even if a party were said to be frivolous by others, if it meets the minimum standards to be a registered federal political party, it has the right to issue tax receipts. Parties do so, and we support them.

This bill has the sole purpose of ensuring that the ability to spend money is not the reason that they are reimbursed by the public purse.

Senator Doyle: You allow other people to give money to them.

Mr. McClelland: Oh, yes.

Senator Doyle: Since there still remains a minimum, which is made more dramatic in this bill, did you consider a maximum after which there would be no payment, where a party would be presumed to be so well established it might be expected to look after itself?

Mr. McClelland: Yes. I believe that that is envisioned in election financing today because the reimbursement for federal political parties is 22.5 per cent of the maximum allowable amount that the party is able to spend. There is an upper limit, and whether that upper limit is appropriate or whether it should be lowered is another story and may well be the subject of another private member's bill.

Senator Doyle: It is not something you would include in this bill?

Mr. McClelland: No, sir. The chance of any private member's bill seeing the light of day is remote. The less complicated it is, the more chance it has of flowering.

Senator Prud'homme: For those of us around the table who have been playing with these numbers for years, the exercise is easy, but I share some of Senator Milne's concerns about the various numbers, 2 per cent, 5 per cent, 10 per cent, 15 per cent.

It is understood that there are two kinds of financing. One issue is party financing, your subject today, and the other one is candidate financing. Those are totally two different issues. We are not addressing the subject of 15 per cent in order to get something back if you are under the umbrella of the candidate. Some people would like to make it 20 per cent, some 10. The subject is still pending in the Quebec courts. I think the NDP wants to use a 10 per cent figure. That subject has nothing to do with your bill. I believe Mr. Kingsley will tell us more about this subject later.

The maximum amount previously allowed to be spent by the party was five times what they received. There was about a $10 million limit on spending for the parties. The Conservative Party came very close to their maximum, so they got more of the 22.5 per cent; is that clear?

The same applied to the Natural Law Party. They had to have at least 50 candidates in order to be a recognized party. They could have spent up to $10 million. They got the money; that was the law.

When you say 2 per cent, do you mean across the board? You would be satisfied with that?

Mr. McClelland: Yes.

Senator Prud'homme: I believe we should never recognize a party in one province only, such as the Bloc. I think parties should be required to run candidates in a minimum of three provinces, even if they only have one candidate in a province.

The Bloc had around 75 candidates. To the best of my memory, I think they got at least 5 per cent of the vote in every district except the district of Mount Royal, where they got 3 per cent. They had more than 5 per cent everywhere and they qualified. They also got enough votes in Quebec to qualify under your 2 per cent. That is acceptable to you?

Mr. McClelland: That is correct, senator.

Senator Prud'homme: I should conclude my questioning of you, but I have some questions for Mr. Kingsley. This involves a question of fairness, a question of...

[Translation]

... which is reasonable. The Supreme Court, the Charter says, however, whatever is reasonable.

He is going to tell us the specific section.

Senator Beaudoin: Section 1.

Senator Prud'homme: It's section 1. When section 1 says "reasonable", what is reasonable has to be defined. It is my impression that the court could easily say that sections 2 and 5 are "reasonable". Why?

[English]

In many countries, in order to be a Member of Parliament, you need to represent a minimum percentage of the population. I think the most democratic country in the world is Israel where, as soon as a party gets one-half per cent or 1 per cent, it is almost sure to get a member to the house. With all the difficulty it creates, that is pure proportional representation. Other countries have different systems of proportional representation. What would you favour?

Mr. McClelland: Senator, on proportional representation or first past the post, I would favour a run-off election.

Senator Prud'homme: Like they have, for instance, in France.

Mr. McClelland: Yes. The reason for this is that governments are required to make decisions which require the will of the people to have legitimacy.

If a government is governing with a majority of seats, having received only a minority of the votes cast, which is likely to be the situation our country faces for the foreseeable future, then that government does not have either the plurality of the votes cast to give its decisions legitimacy, nor does the country benefit from having the strongest possible opposition. In my opinion, good government is made better through a strong opposition. I think an opposition is more important to good governance than a good government.

Senator Prud'homme: As guardian of the Canadian purse, you seem to believe everyone should be treated on an equal footing. You seem to favour a cap on expenses and a cap on reimbursement. Is that fair?

Mr. McClelland: Yes.

Senator Prud'homme: As you know, I worked for probably 20 years on the Canada Elections Act and everything pertaining to that. I am a strong defender of that. I never understood why people allowed the Americanization of our system by allowing outside intervention and spending.

I know it is a sensitive subject in your party. However, you seem to be someone who may have a different point of view from that of your own party on this subject. For instance, some people would be ready to disqualify Senator Milne, if she were a candidate, for spending $700 more than she was allowed. I consider it extremely unfair that this is a package deal. There was a vitriolic debate in your province regarding political action committees and whether they should have any limits on their spending. I do not want to start a debate on politics.

Mr. McClelland: I was once told by someone who should know that depending on the fate of a particular government, the number of votes that are accorded the party is in inverse proportion to the amount of money it spends. When the worm turns, it does not matter how much money is spent; it will not do any good.

I know this is a little off topic, but I was reading a book that has to do with the British system. It dealt with the way Members of Parliament work outside government and hold various jobs. In reading that, I look at our system and perhaps we have one of the best in the world.

I personally think that political parties and individuals should not receive reimbursement or credits any more than does the Salvation Army or any other organization. If the most that the Salvation Army is able to do is provide a tax deduction based on income, then perhaps political parties should be doing the same. However, that is another story for another day. I do not want to muddy the issue. This is a very narrow bill which speaks to making one specific issue work better.

Senator Prud'homme: Let us use as an example a cap for parties of $10 million. In order to get some of that, a party must get 2 per cent of the vote nationally. If they get 2 per cent or more, they receive 22.5 per cent of what they spend up to $10 million. If they spend $10 million, they will get $2.2 million, even if they have only 2 per cent. Am I clear on that?

Mr. McClelland: Yes.

Senator Prud'homme: Second, if a party does not run candidates everywhere but runs only 55 candidates where they have a good chance of winning and they decide to spend the $10 million they are allowed to spend, they may not get 2 per cent of the vote nationally but may get 6 per cent of the vote in those 55 constituencies. If that is the case, will they be reimbursed 22.5 per cent of what they spent?

Mr. McClelland: We will have to check with Elections Canada, but I believe that the allowable expense is relative to the number of candidates that run. It would not necessarily be a $10 million maximum. The $10 million maximum would apply if the party were represented in every constituency.

Senator Prud'homme: That is what I wanted to have on the record.

Mr. McClelland: Another suggestion which has been made is that if we have a maximum of $6 million which would be returned to the individual parties, and if we had a total of 6 million voters, then the reimbursement to the party should be based on the number of votes cast. That is a very interesting idea for a party on the way up with little money, but an idea which would bring chills to the spine of a party on its way down.

It is an interesting idea. The money that we are talking about as a pool does not belong to the political parties. That money comes from the taxpayers of Canada; it is found money. If you accept the notion that we should not be rewarding political parties solely on the ability to spend, that the reimbursement should be based on the resonance that the political party's message has in the country, then that would be an appropriate way to do it.

At this time, that suggestion could be perceived as self-serving, because of my situation. If the occasion does present itself, as remote a chance as that might be, that the party I represent is in a decline, that would be the time for me to bring that notion forward. It would be unseemly at this time.

Senator Nolin: Mr. McClelland, why do you think we reimburse parties for their expenses?

Mr. McClelland: The rationale for reimbursing parties is that the party forms the structure upon which the candidates hang, and that the party structure serves our country well. That was a decision made long before my time.

I have often wondered why we reimburse individuals and parties. We reimburse individuals because many people go into debt in order to run and, as it is the political party that forms the skeleton upon which we all run, it is important that the skeleton be strong enough to survive.

That, of course, begs the question: If the people who support that party are not prepared to invest in it, why should it be supported by the tax base? The answer that I have been given is that the political party system in Canada serves us well and that is our tradition. That is the only answer I can give you.

Senator Nolin: Why does this reasoning apply only to bigger parties and not to fringe parties?

Mr. McClelland: The public purse does finance so-called fringe parties through the tax receipts they are able to give to their supporters. Those parties can legitimately generate a good deal of money through tax receipts. The so-called fringe parties have every right in the world to exist in our country. Whether we think they are good or bad is not the point. The point is that, in our democracy, we do not pick and choose; we give the opportunity to grow to whichever flower wishes it.

My point is, however, that the same hurdle that is before individual candidates should also be before the political parties and that political parties should not be rewarded on the sole basis of their ability to spend money. As other senators have indicated earlier, some political organizations have far more money to spend than others. It is the resonance in the body politic that should be considered.

That is the point that I was making. In order to have the right to money from the federal coffer, the organization which purports to have a cause or a purpose should at least demonstrate that it does. That is the reason.

Senator Nolin: The Charter of Rights does not ask for that kind of test when referring to freedom of assembly. Are you not giving a special status to bigger parties, parties which are more able to express their views, with the cap that you wish to impose?

Mr. McClelland: No. I think we are being responsible in the husbandry of the nation's resources.

The Chair: I have one final question. I happen to think that the 15 per cent level is very high for an individual candidate. In the Manitoba Elections Act it is 10 per cent, but it is also 10 per cent for the political party.

I have never quite understood why the two levels have been different. If it is 15 per cent for the candidate, why is it not 15 per cent for the party?

Senator Nolin: We will receive a good answer from Mr. Kingsley concerning this matter. This is the whole debate. It involves not only that question but also the challenge regarding those caps and the question of freedom of assembly. For example, will we invest in and give special status to those special groups or not? That is the whole debate, namely, what is reasonable?

Mr. McClelland: When we are speaking about elections, there are so many different rules across the country, federally and provincially - not only electorally but also in everything that we do - that I cannot answer that question.

Senator Nolin: That is the best answer.

Senator Beaudoin: At first you may decide either not to reimburse anyone or to reimburse people. I am in favour of reimbursement, but the basis for that action worries me. I turn again to the principle of equality before the law. You cannot reimburse a party that obtains only 10 votes in the whole of Canada; I understand that. However, you must draw the line somewhere. The only test that I find involves "reasonableness". That is the end of the debate, in my opinion. Who will have the last word? The courts will have the last word.

There was a case in Alberta - and Mr. Kingsley may talk about it - that dealt with the question of the amount of money that we spend. It is always based on the prevailing philosophy at the time the decision is made. There is nothing wrong with that, because we have not found a better test.

Mr. McClelland: I agree, the test must be one of fairness and reasonableness. People will look at the situation and ask, "Is this fair and reasonable?" If people feel that it is, then there will be no problem, but if people feel that it is not, then it must be changed.

The Chair: Thank you, Mr. McClelland.

I should like to ask Mr. Jean-Pierre Kingsley, the Chief Electoral Officer, and Ms Janice Vézina, Director, Elections Financing, to join us at the table now.

Mr. Kingsley, I am sure you have some notes that you want to share with us, but perhaps you can also address some of the questions that have already been asked so that we will not have to repeat them.

Mr. Jean-Pierre Kingsley, Chief Electoral Officer, Elections Canada: With me today is Ms Janice Vézina, who has primary responsibility in the processing of the reimbursements to candidates and to parties. Today we are talking about reimbursements to parties, as Senator Prud'homme has clearly indicated.

I should like to thank the committee for allowing me this opportunity to share with you our thoughts on Bill C-243, which proposes to amend the Canada Elections Act with respect to the reimbursement of election expenses to registered political parties.

I appeared before the House of Commons Standing Committee on Procedure and House Affairs in October of 1995 during its consideration of Bill C-319, the precursor to this bill. At that time, various options were being examined for the reimbursement of election expenses to registered political parties.

For our appearance before that committee, my colleagues and I prepared a series of documents to demonstrate the potential consequences of each option. Those very same documents are being provided to you today. They have been revised to reflect the new provisions of the current bill. They are hot off the press, literally, because we have been caught in a move from one building to another and we are very fortunate to have been able to find our own documents.

The new provisions of the current bill include: First, provisions that would allow a reimbursement to a registered political party that has received at least 2 per cent of the valid votes cast at the election or 5 per cent of the valid votes cast in the electoral districts in which the party endorsed candidates; second, the elimination of the requirement that a political party spend at least 10 per cent of its allowable election expenses to be eligible for a reimbursement of those expenses; and, third, clarification that the reimbursement would be based on valid votes cast rather than the total number of votes cast.

In addition, among the documents provided is an analysis of the proposals relating to the public funding of political parties and candidates contained in the annex to the Chief Electoral Officer's report on the thirty-fifth general election, entitled "Strengthening the Foundation", which was tabled in the House of Commons on February 29 of this year.

[Translation]

The objectives of Bill C-243 are clear. As is stated in its accompanying summary, the bill would effectively

...allow only those registered parties that have received 2 per cent or more of the valid votes cast in an election or five per cent of the valid votes cast in an election in an electoral district in which those parties endorsed a candidate to be eligible for a 22.5 per cent reimbursement of those expenses as provided for in the Canada Elections Act.

As mentioned previously, Bill C-243 removes the requirement currently in the Act that a political party spend at least 10 per cent of its allowable election expenses to be eligible for a reimbursement of those expenses. In fact, the validity of this requirement has been challenged in the past by both the Royal Commission on Electoral Reform and Party Financing and a number of academics.

The main effect of the bill would be to limit reimbursements of election expenses to those registered political parties that receive a minimum level of electoral support. Rather than continue to reimburse parties based on their ability to spend money, a more equitable system would base the reimbursement on the number of votes received.

These are the key points I wish to raise today. I now invite you to review the documents that are before you. You will notice that we have taken the various options for the reimbursement of election expenses to registered political parties that I spoke of earlier and applied them to the results of the 1988 and 1993 general elections.

I trust that the data provided will be useful to you, and that they will assist you in your consideration of Bill C-243.

I wish to thank the committee for the opportunity to appear today. Ms Vézina and I remain at your disposal for any questions you might wish to put to us.

May I point out that the key table in connection with this bill is under tab 1. These are the major amendments that came forward between the previous bill and this one. The others were options that we developed with the House of Commons committee, and which looked at other alternatives.

So it is really what is under tab 1 that is of direct interest to you today.

Allow me to draw your attention to tab 13. You will see there the amount of public funding through tax credits. This is a silent source of funding to political parties, which is nevertheless very important and is behind the arguments that there are two important facets to the funding of parties in Canada. There is, on the one hand, the facet we are examining today, and there is the one linked to tax credits, which attracts less attention.

That is, for every dollar that is spent there is a tax credit. It is in fact a tax credit and not a tax deduction. A tax credit is a very strong incentive for Canadians.

The provisions underlying that might be reviewed. This bill does not affect that. Which is to say that this form of mass funding has a direct impact on tax funds. It is therefore a form of subsidy by the Receiver General of Canada which is silent but just as important as the measure being examined today.

Senator Beaudoin: I am tempted to ask you the same question I asked earlier. Is it your conclusion as well that these figures are not arbitrary, but that they are justified because they are reasonable and acceptable in a free and democratic society?

Mr. Kingsley: My answer is in part in the report I tabled, the famous appendix entitled "Strengthening the Foundation". The recommendation by the Chief Electoral Officer is fully consistent with the bill before you. That is, the dual thresholds of 2 per cent of the national vote or 5 per cent of the vote in the ridings in which a party ran candidates. There is therefore a complete concordance - as Mr. McClelland was saying - between what the bill proposes and what the Chief Electoral Officer's report recommends concerning the establishment of thresholds that trigger the reimbursement process.

In part, the answer is that there certainly was a judgment on my part that there was fairness in the percentages that are there. However, I would like to put an additional argument to you. There is some injustice in the present formula, if we are going to compare injustices.

Let's take the hypothetical example of a party that runs some very valid candidates in 150 or 200 ridings. We are talking here about a party that would have a lot fewer resources than others, but an expenses threshold determined by the number of candidates it is running, hence the number of voters in each riding in which it has endorsed candidates. Let us establish its threshold - for this example - at $6 million. If we take this example, this party, before being entitled to a reimbursement, will have to spend at least $600,000.

So if it is a party that does not have many resources, it will not reach this threshold. Which means that under the present formula, which is not based on popular support insofar as reimbursement of present expenses is concerned, a party could be discriminated against.

So there is already some unfairness. The present system is not watertight. A threshold has been established. What the bill says, reflecting the wishes of the members of the House of Commons, is that this threshold is not the right one and the one proposed by Bill C-243 is the right one.

However, I wanted to put this reasoning before you. The present situation is not immune from arbitrariness. It is even perceived as having greater arbitrariness, since it is based on spending capacity and on the reality of spending a certain amount of money.

Senator Beaudoin: Do you, as Chief Electoral Officer of Canada, have some discretion when you apply the party criterion? One could conceive of a party that bears the name of a political party, but is not really political and whose objectives might be debatable. Is there some discretion or are the criteria clear and precise?

Senator Prud'homme: Like what?

Senator Beaudoin: I don't want to give an example. There are some parties -

Senator Prud'homme: For example, someone who founded a party based on abortion.

Mr. Kingsley: With respect to the registration of parties, there is no discretion in the Chief Electoral Officer. The thresholds are stated very clearly in the act. It is necessary to obtain 100 signatures and you get the pre-registration. Then, in a general election, you have to run at least 50 candidates. After these stages, you obtain confirmation of party status from the Chief Electoral Officer, with all the tax benefits that entails, and the broadcasting benefits. Because there is also an allocation of air time that is involved when you have party status, providing access to broadcast time at peak listening periods. So there are all sorts of big and little advantages in obtaining party status.

These are thresholds that, once reached, are automatic. You have 49 candidates or you have 50, there is no discretion; once there are 50 candidates, it's a party.

An existing party must continue to run 50 candidates in each election. If it does not do so, the existing legislation requires that the Chief Electoral Officer strike the name of this party from the register of registered political parties. And I did that in 1993.

Senator Beaudoin: You struck out a party?

Mr. Kingsley: I struck out one or two parties, if I remember correctly; certainly one.

Senator Prud'homme: Two.

Mr. Kingsley: Two? Yes.

Senator Beaudoin: You apply specific criteria and there is no discretion?

Mr. Kingsley: There is no discretion. It is finished. It is so many signatures and once that is achieved, it is 50 candidates. If you don't have that, you strike it out, that's all.

I even recommended to the parliamentary committee, when they were reviewing the matter, that there not be any discretion granted to the Chief Electoral Officer, so it would be crystal clear and easy to interpret.

Senator Prud'homme: To clarify what you have just said, we are going to proceed by example.

[English]

I thought I heard Mr. McLelland say earlier that as soon as I go to see you and say, "Here is my party", I can start giving receipts for income tax purposes. That is not the case, if I understand what you just said. You are not allowed by law to give receipts, even if you are a newly recognized party, until the next election where you produce 50 candidates. Then, even if you are wiped out, you can still give receipts for the next four years. If suddenly I say, "Well, I do not have 50 candidates," you strike my party out without reimbursing all the money I received during those four years. Is that correct?

Mr. Kingsley: My colleague is whispering "yes", and I agree, but I was trying to think of your last few words to see if they still matched. I will accept it as being correct. You are right that a party does not exist under the Elections Act until so stated by the Chief Electoral Officer, and that can only occur at the first election where they field 50 candidates. If they are an existing party and they field 50 candidates at a general election, then they maintain their status. That is the key event for obtaining party status and for maintaining party status under the Canada Elections Act.

The Chair: Senator Prud'homme mentioned reimbursement, but there is not any reimbursement between elections unless you are covering the last election.

Mr. Kingsley: As I recollect, the issuance of tax receipts was the issue, and the issuance of tax receipts can only be done for tax credit once you have party status. You cannot do it even if you have applied, obtained the 100 signatures, and the Chief Electoral Officer has said, "I have received it, and you meet the first test." It is only when you pass the second test that you can start to issue tax receipts. That is how I understood the question.

Senator Prud'homme: It is after the election is called.

Mr. Kingsley: That is right.

Senator Prud'homme: There is no reason for anyone now to start a party, saying, "My God, there is an election coming. Let's start a party, because we are very popular at this time, and the government is unpopular." It is not a party that reflects the actual humour of the people. They could apply to you and pass the first test. In the minds of many people, they believe they can start after you say yes. Having met the first test, many people are still under the impression that they can start issuing tax receipts.

Mr. Kingsley: Not the people who apply, because I tell them that in my letter. I tell them clearly, "Do not start doing that."

Senator Prud'homme: To go back to Senator Beaudoin's question, is there not an element of unfairness for parties which are already recognized, which have passed the first test and passed the second test, and which have gone through the election with tax receipts, still giving out tax receipts all across the country, as unpopular as they may be, as compared to others who may like to apply but must wait, even though they pass the first test of 100 people, for an election? Is there not a double standard there?

Mr. Kingsley: The issue you are raising relates to other sections of the report which I have tabled, and I am looking forward to that fascinating debate when there is a bill introduced in the House dealing with all the other recommendations which I have made.

Senator Prud'homme: Do I understand from your wording - because you have been very careful, and rightly so - that the 10 per cent is something that should be removed? Let us say a party has candidates everywhere and the cap is 10 million. In order to even consider getting it, you must spend 10 per cent, which is $1 million. If you do not, you do not get anything; right?

Mr. Kingsley: Under the present scheme.

Senator Prud'homme: It is too complicated for a bill.

Mr. Kingsley: To be very honest about it, this is a very well-crafted bill which allows one change to be made to an incredibly complex statute which invariably obtains the interest of every parliamentarian.

[Translation]

Senator Prud'homme: In the best of worlds, where everything appears reasonable, would it not be preferable - Senator Beaudoin has alerted us to this - if we want to be fair, that the best system would be: there are elections and a $15-million fund; you will be reimbursed in proportion to the votes you receive. Even if you have 10 people who are more or less cranks, wouldn't it be the purest system you could have?

Mr. Kingsley: To some degree it comes down to the comments you were making about the electoral system in Israel, where, if I clearly understood your comments, whatever the percentage of the votes or more or less, there is a representative -

Senator Prud'homme: There must be about 55,000 votes.

Mr. Kingsley: That is the lowest I am aware of. Usually, in the other democracies with a proportional basis they set the threshold at 4 or 5 per cent. And the bickering between 4 and 5 is very extensive, in all the countries where this is discussed.

So to some degree it comes down to that. And in your comments, you said they may go a bit far.

Senator Prud'homme: Yes.

Mr. Kingsley: Perhaps at some point, in the tendency toward what is reasonable, a limit is reached. Perfection, it must be recognized, is not for this world.

What the Election Act has attempted to do, since the introduction of the financial provisions in '74, is to introduce some basic fairness for the parties and for the candidates.

The 15 per cent for the candidates was upheld by the courts at both levels in Quebec. I don't think the judgment was appealed to the Supreme Court of Canada; so it is a threshold that has been recognized.

Since perfection is not for this lowly world, we have here what many consider to be a very reasonable provision.

[English]

Senator Prud'homme: Do I understand from Table 13 that all these parties that have received money are still recognized and can still issue tax receipts at the moment, even though they received only 0.6 per cent or 0.1 percent?

Mr. Kingsley: The answer is yes.

Senator Prud'homme: They can now issue as much as they want. That is very interesting.

[Translation]

Mr. Kingsley: In terms of what they get. This is another test of popular support. However, people still have to give before they can be issued a tax receipt.

[English]

Senator Prud'homme: You know where I am going, because some parties can issue receipts and then hire people and pay them with the money that was given to them tax-free. They lose only 25 per cent. However, that is probably part of another bill.

Mr. Kingsley: It is part of the annex, senator. I address that specifically.

Senator Milne: Mr. Kingsley, although this is not really to do with the bill before us, in a letter which was sent to the committee there is a rather intriguing statement. The letter is from the Marxist-Leninist Party of Canada. They claim that the Canada Elections Act, which this bill will amend, is in contempt of the Constitution of Canada and of general norms of legality.

What is your response to that?

Senator Beaudoin: Do they explain why?

Senator Milne: No.

Mr. Kingsley: Presumably the Marxist-Leninist Party has the right to pursue the matter before the courts of Canada. They can contest the entirety of the Canada Elections Act or any clause of it which they believe does not meet the test of the Charter, because the Canada Elections Act falls under the Charter. Many court judgments have said that particular articles or clauses were not in keeping with the Charter. This is a right which they enjoy, as does any Canadian.

Senator Milne: Do you believe that the Canada Elections Act, as it would be amended by this bill, would be completely legal and in complete agreement with the Charter?

Mr. Kingsley: In my view, this bill would meet the test of the Charter on reasonableness.

Senator Milne: Thank you.

Senator Lewis: Earlier Mr. McClelland said that the bill follows the recommendation in your report. Is that correct?

Mr. Kingsley: Yes, and I believe I have already addressed that. However, I think Mr. McClelland was talking about the thresholds of 2 per cent and 5 per cent. That is in perfect accord with the recommendations I made in the report.

Senator Lewis: Thank you.

The Chair: Thank you, Mr. Kingsley and Ms Vézina, for your appearance here.

Senators, the Natural Law Party of Canada responded to my request for a submission from them. They went on to say that they would like to appear before the committee. I have read their submission and find it difficult to believe that there is anything additional they could provide to us in an appearance before the committee. However, if committee members would like to invite them to appear, we certainly can do that.

Senator Beaudoin: It is always difficult to say that we will not hear a party. I have nothing against this bill. I am ready to accept it as it is. On the other hand, it is difficult not to hear a group that has asked to be heard.

The Chair: I believe that we really have heard them. Their four-page submission to us details all of their reasonable objections. That is why I asked them for written submissions, quite frankly.

Senator Beaudoin: They are heard in the sense that they have something before this committee.

The Chair: That is right. I want it to be very clear that all the political parties had the opportunity to do that.

Are we prepared for clause-by-clause study of this bill?

Senator Lewis: I move that we report the bill without amendment.

The Chair: Is that agreed?

Hon. Senators: Agreed.

monsieur le The Chair: Carried.

Mr. McClelland, the bill will be reported back to the Senate tomorrow.

Mr. McClelland: Thank you.

The committee adjourned.