Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs
Issue 6 - Evidence, September 8, 2006
OTTAWA, Friday, September 8, 2006
The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill C-2, providing for
conflict of interest rules, restrictions on election financing and measures respecting administrative transparency,
oversight and accountability, met this day at 9:05 a.m. to give consideration to the bill.
Senator Donald H. Oliver (Chairman) in the chair.
The Chairman: Honourable senators, I call this meeting of the Standing Senate Committee on Legal and
Constitutional Affairs to order. I would like now to turn to Senator Stratton, who yesterday had a motion that he
wanted to make and follow up on today.
Senator Stratton: Forgive me for digressing here. This should hopefully just take a couple of minutes. I wish to
correct the record with respect to comments made by Mr. MacKinnon yesterday morning.
Just for the record, he quoted the Chief Electoral Officer, Mr. Kingsley, in a way that perhaps was not clear and I
think we need to, if I may read into the record what Mr. Kingsley did say to the House of Commons committee.
Mr. MacKinnon essentially said that having the bill come into force in the middle of the year was against the wishes
of the Chief Electoral Officer. Mr. MacKinnon stated:
I did hear Mr. Donison's presentation and I want to underline one thing that would contradict the philosophy
that underlies having this bill come into the force in the middle of year, against the wishes of both the Chief
Electoral Officer and most political parties.
Mr. Kingsley apparently never said such a thing. What he suggested is that there is a traditional six months coming-
into-force delay for provisions surrounding returning officers. He stated:
Bill C-2 will transfer the authority for the appointment and termination of the returning officers from the
Governor in Council to the Chief Electoral Officer. This is consistent with recommendations I had been making
since I had become Chief Electoral Officer. The bill provides that this transfer will take place after royal assent on
a day specified by the Governor in Council.
As I will be ready to implement this new authority well within the six-month period following royal assent, the
committee may wish to consider the appropriateness of providing for the traditional Canada Elections Act
formula for the coming into effect of these provisions; that is to say, six months after royal assent, unless the
Chief Electoral Officer announces he is ready to implement them earlier, which I will.
The key phrase here is ``which I will.'' Mr. MacKinnon also said this yesterday morning when he was referring to
I refer specifically — and that brings me to my first recommendation on the bill — to the coming into force of
this bill. We support Mr. Kingsley's intervention before the House committee; we support the Bloc Québécois in
their recommendation that the coming into force of this bill not occur until January 1 of the year following Royal
We have a problem with this. By suggesting that Mr. Kingsley's remark in regard to the returning officer was also
linked to election financing, that is what he was trying to link here, Mr. Kingsley was quite clear at Bill C-2 that
nothing remarkable had to be changed over changes to election financing; in other words, it could come into effect
much earlier, as he stated.
With that, Mr. Chairman, I have read that into the record and would have that accepted by the committee as having
corrected the statement made by Mr. MacKinnon so that the case is quite clear that, in effect, the change to election
financing does not take place six months after Royal Assent, but can take place immediately. With regard to returning
officers, that would take place six months after.
Senator Day: Our chief critic on this particular subject matter has a comment and I may follow up after him.
Senator Zimmer: I just want to put on the record what I believe Mr. MacKinnon was saying, that being, that the
bill's provision respecting contributions would come into effect on Royal Assent, which presupposes that there is no
need or opportunity for Elections Canada to inform the public of the change. I believe he was also supporting the Bloc
Québécois intervention when he stated:
We think that if you exclude partisan reasons in the tradition of the implementation of this type of measure the
calendar year is normally the reference year.
I believe that is what he was trying to say.
Senator Day: The only other point that I might be able to add is that it is not nearly as clear as my colleague Senator
Stratton has indicated. I do believe that Mr. MacKinnon was talking generally about all of the provisions of the
proposed accountability act that relate to political parties and not just the financing aspect in that quote.
He starts that paragraph by saying:
We believe the accountability act, as it impacts on political parties and the political process, will not achieve
He is talking about the global picture and not just, as was indicated earlier by Senator Stratton, the financing aspect of
The Chairman: Was that the Chief Electoral Officer or Mr. MacKinnon?
Senator Day: That is Mr. MacKinnon.
The Chairman: Senator Stratton was talking about what the Chief Electoral Officer stated and whether there were
limits to what he indicated with respect to the timing.
Senator Day: The Chief Electoral Officer's quote was just read to you by Senator Zimmer. He is talking about
political process and the importance of communication. His comments can be interpreted as saying that there should
be time to communicate this after the act is passed.
The Chairman: I, for one, did not know that Senator Zimmer was giving a quote from the Chief Electoral Officer. If
that is the case, would you mind reading that quote again, because I thought you were quoting Mr. MacKinnon? I
thought you had said what I interpreted Mr. MacKinnon to be saying; I did not know you were quoting the Chief
Electoral Officer, and that is important to understand.
Senator Stratton: Could you also state where the quote comes from, because we do not know where he was when he
made this statement.
Senator Zimmer: I am not sure of that.
Senator Day: It comes from his appearance before the House of Commons.
Senator Zimmer: Mr. Chairman, when I say ``interpretation,'' those are actually Mr. Kingsley's words he was
quoting. I just repeated it through his words. I will repeat it again, which is really his quote of Mr. Kingsley:
The bill's provisions respecting contributions would come into effect on royal assent, which presupposes that
there is no need or opportunity for Elections Canada to inform the public of the change.
Those are really Mr. Kingsley's words, which Mr. MacKinnon repeated. Then he goes on to say, from the Bloc
Québécois, again what Mr. Kingsley said:
We think that if you exclude partisan reasons, in the tradition of the implementation of this type of measure,
the calendar year is normally the reference year.
The Chairman: Honourable senators, I thank you all for your clarification on that point.
I will now move to the order of business for today. We are meeting to continue our study of Bill C-2, providing for
conflict of interest rules, restrictions on election financing and measures respecting administrative transparency,
oversight and accountability.
This bill is more commonly known as the federal accountability bill. As senators, our witnesses and members of the
public both here in this room and across Canada on television know, this bill reflects a central portion of the new
government's agenda and is one of the most significant pieces of legislation brought before Parliament in recent years. I
know that the committee will give the bill the extensive, careful and detailed study that it deserves.
The hearings commenced in June and this week the committee has been focusing on more precise aspects of the bill.
Subjects that we will have covered this week include accountability generally, ethics and conflict of interest and
political financing. Our hearings will continue in a few weeks on other important aspects of the bill.
Today we have with us two very distinguished experts on the issue of political financing.
Mr. Pierre F. Côté has vast public-sector experience in Quebec. He has worked in several departments and at the
municipal level in the province. He has received several prestigious honorary distinctions and is active in his
community. He was Quebec chief electoral officer from 1978 to 1997, and has almost 20 years of experience in that
position. I know that his views and experience will be very useful to the committee.
We are also joined today by Mr. Aaron Freeman. Mr. Freeman has considerable experience as an observer of the
parliamentary process and currently teaches law at the University of Ottawa. He has also been active in Democracy
Watch. He has frequently written for publications such as The Hill Times and is the author of a book titled The Law of
Government: The Legal Foundations of Canadian Democracy.
The committee would like to thank you for being here. I now give you the floor and then we will move on to a
question and discussion period which will be, I know, very useful for committee members. You now have the floor, Mr.
Pierre F. Côté, former Chief Electoral Officer of Québec, as an individual: Thank you, Mr. Chairman. There are two
main topics that I would like to address with you this morning about Bill C-2. First of all, I want to express my
disagreement with Section 43 of the bill which repeals Section 404.1 of the Canada Elections Act, which allow
corporations and unions to make financial contributions to one or several political parties.
I was the Chief Electoral Office of Quebec for 19 years; I retired in 1997. That did not prevent me from publicly
stating that we should allow corporations, as opposed to individuals, to make financial contributions to the election
process in Canada. I believe, in fact, that we would be fooling ourselves to think that one way or another people will
not sidestep the prohibition in the bill. That is inevitable.
On November 25, 1999, during a symposium on ethics and conflicts of interests, under the auspices of the Centre
d'étude Noël Mailloux en éthique et psychologie, I said that:
Financing by the public is no longer enough to meet the needs of political parties.
On April 9, 2005, in La Presse, I reiterated this opinion, which appeared to me to be even more relevant, given the
experience gained in this area. In fact, financing by the public, or going door to door, is no longer enough to cover the
increasingly high cost of election campaigns, especially the ever increasing cost of TV advertising.
Despite the scandals that have surfaced in this area, it is still today relatively simple to get around the Quebec
Election Act. All that the head of a corporation, a lawyer's office or an engineering firm has to do, for example, is ask
members of the board or senior managers to make the maximum contribution that a voter can make using his or her
own means under Quebec legislation to the political party management supports, in other words $3,000. All
management has to do after that is to reimburse these donations to all individuals who complied, willingly or even by
force, with the request, by thinking of various accounting methods, such as creating fictitious defense accounts.
Obviously, proceeding that way is illegal. It is blatantly unethical. Nevertheless, it remains very difficult, even
impossible in many circumstances, for the chief electoral officer to establish proof and subsequently obtain a court
conviction. For legislation to be effective, we must be able to enforce it, otherwise it is meaningless. And it cannot
simply just be an expression of good intentions. Bill C-2, which is based on the provisions of 1977 Quebec Elections
Act, seems to want to repeat the same mistakes. I do not think it would be desirable to increase this financial
contribution from the state to political parties — which is already rather high — without running the risk of affecting
political parties' independence.
How, therefore, can we enable corporations and unions to make financial contributions to political parties without
that being perceived as an attempt to buy influence?
In my view, the solution means considering these corporations and unions as corporate citizens, who have an
interest in participating in the development of democracy.
In this regard, I see two ways of resolving this dilemma. The first would allow them to contribute a maximum
amount that could, for example, be a multiple of the maximum amount allowed for individuals. That amount could be
put into the Chief Electoral Officer's trust fund. It would then be his duty to distribute the amounts to the political
parties on a prorated basis based on the number of votes obtained by them in the last general election.
The other way would be to allow them to freely contribute to the political parties of their choice, up to an authorized
In both cases, the contributions would be made public. That would eliminate any pressure that could be brought to
bear on these corporations to encourage them to contribute more secretly. They will be able to say: ``No thank you, I
have already contributed.''
Second, I would like to bring to your attention a section of the Canada Elections Act that was ignored in Bill C-2. I
am referring to section 24 which deals with the appointment of returning officers for each electoral district. A bill like
Bill C-2, with the stated objective of restoring some transparency to the Canadian electoral system, should put an end
to this highly partisan exercise that might tarnish the credibility, even the objectiveness of local election administrators.
In that regard, the bill should follow Quebec's example and proceed by way of public competitions rather than by
cabinet decisions. The aqct should also include provisions to mandate a jury selected by the Chief Electoral Officer to
assess, among other things, how much good judgment the candidates who received the best marks on the written exam
have. The person selected by the jury for the position in each of the 308 electoral districts in Canada should then be
appointed for a ten-year term to ensure this person has the independence he or she needs to carry out the required
The Chairman: Mr. Freeman, please proceed.
Aaron Freeman, Professor, University of Ottawa, Faculty of Law, as an individual: Honourable senators, I have been
asked to focus my remarks on the electoral finance provisions in Bill C-2, which I am happy to address. I am also quite
familiar with other parts of the bill, as well as important aspects that are absent from the bill which I think are
With regard to election finance, Bill C-2 contains some important elements. First, the bill would reduce the
individual donation limit from $5,000 to $1,000. Individuals would be allowed to donate $1,000 per year to a registered
party and an additional $1,000 combined total to riding associations, nomination contestants and candidates in an
election. Individuals may also donate an additional $1,000 to party leadership contestants.
Second, candidates and leadership and nomination contestants will only be able to self-finance their campaigns up
to $2,000, down from the current $10,000.
Third, there will be a total ban on donations from corporations, unions and other associations rather than the
current partial ban, which allows donations up to $1,000 to candidates and riding associations.
Fourth, the long-standing trust fund loophole will be tightened significantly. This is a major loophole in the current
system that allows secret and unlimited donations that can cover a wide range of activities that can benefit candidates.
Fifth, instead of being named by the Governor-in-Council, chief returning officers will be named by an independent
process established by the Chief Electoral Officer. I should note that this issue has long been a recommendation of the
Chief Electoral Officer, all parties in opposition in the last Parliament and virtually every independent commentator.
Few advanced democracies would allow those who administer elections to be named by the government of the day.
Other provisions include a ban on cash donations of more than $20, the extension of gift-giving rules to candidates
and an increase in the statute of limitations on prosecuting election offences.
I will confine the remainder of my remarks to the first three provisions mentioned above on significantly reduced
donation limits. We have already seen the democratizing effect of reducing the size of political donations. Before the
2003 reforms were brought in, there were no limits on the amount that could be given to parties and candidates. We
had a situation where, according to the Chief Electoral Officer, 45 per cent of party revenues came from only 3 per cent
of the donors.
A small number of wealthy donors creates a situation whereby parties and candidates have a dangerous level of
reliance on those with the greatest stake in the political process. Research I conducted in 2002 showed that of the top
25 government contractors, two thirds were major donors to the governing party and the ratio of donations to that
party versus all other parties combined was six to one. At the local riding level that ratio was actually thirty to one.
There are similar patterns with regulated industries, such as banks and telecommunications, and research also shows a
strong correlation between donors and companies that maintain a significant lobbying presence in Ottawa.
While none of this is direct proof of corruption in the political process, it is a strong indicator that when major
donors give it is not simply out of a sense of civic duty, but with the expectation that they will get something in return.
At the very least, we can safely say that donations buy access. One indicator of this is that most politicians readily
admit that they will place a priority on returning calls from their major supporters. This is particularly a problem with
ministers who wield the power of the executive in our system of government.
Reducing the limit to $1,000 liberates MPs from the pressures of giving high-end donors preferential treatment.
Certainly $1,000 is a far cry from the six-figure sums that until just three years ago were routinely donated to political
parties. Consider that we still have a situation where less than 1 per cent of Canadians are donating to political parties.
There is ample room for parties to expand their fund-raising efforts that I think will be more successful as parties earn
the trust of Canadians more generally.
I will touch on two areas where Bill C-2 can be improved, the first being to increase the free broadcast time allocated
to parties. The cost of running for office has been rising for at least three decades and the largest component of that
cost for parties is broadcast advertising, by far. With the reduction in the donation limits, political parties may simply
have to learn how to do more with less, but measures can be put in place to help parties with that effort. The free
broadcast time currently given to parties can be greatly increased, in terms of both the number of broadcast minutes
provided and the number of broadcast outlets included in the regime.
The number one election expense, as I mentioned, is broadcast advertising. Requiring broadcasters to give parties
space on the airwaves to air their election messages can greatly reduce party election expenditures. The second measure
is to reduce disclosure delays. Bill C-2 does not address the lengthy periods between when donations are made and
when they are disclosed. While the 2003 reforms went some distance in reducing these lag times, parties and candidates
still do not have to report their donations before the vote takes place. With standardized computer software that can be
supplied by the Chief Electoral Officer and that uploads automatically onto the Elections Canada website, there would
no longer be a technical reason for not having pre-vote donations disclosed. A ban on donations in the last week of the
campaign would give parties and candidates the time needed to get this information to Elections Canada and up on the
website within two days before the vote.
I know that this session deals specifically with electoral finance, but some of the most serious weaknesses in Bill C- 2
involve what it does not deal with. The most significant of these is access to information. Perhaps there is no other area
of democratic reform in Canada where there is more of a consensus on both the need for reform and the areas that
reform should focus on. I would urge the committee to look closely at the recommendations of the Gomery
commission, as well as academics such as Alasdair Roberts and successive reports going back two decades from the
Information Commissioner of Canada.
Mr. Chairman and members of the committee, I hope you find these reflections useful. I would be happy to address
your questions and otherwise help in any way I can.
The Chairman: Thank you both for two very excellent presentations. Your final remarks were about access to
information. You probably do not know this, but when this committee meets again, it will be devoting a substantial
period of time to that subject matter, along with issues of lobbying, whistle-blowing and so on. We are just getting into
our hearings now and we have much further to go. Today we are dealing more with the matters discussed in your first
three points and as discussed by Mr. Côté. Thank you for raising your concerns.
Senator Zimmer: Thank you for your appearance today, and the history and wisdom that you bring here with you.
For corporate donations, the limit currently is $1,000. You have gone the other way. You recommend $15,000. How
did you arrive at that figure? There has been talk about going back to $5,000 but you have gone beyond that, up to
$15,000. How did you come up with that recommendation?
Mr. Côté: An individual can currently contribute $1,000. But for a corporation, a business, a lawyer's office or an
engineering firm, it would be, in my opinion, a multiple amount, which could be $5,000, $10,000 or $15,000 as a
maximum that a business could contribute.
Senator Zimmer: You talked about ways of raising it. One was through a trust fund system and the second was
through direct donations. I missed part of that process. On your second method, could you clarify the process of
raising the funds and what process you are using to donate directly?
Mr. Côté: If it is put into a trust account held by the Chief Electoral Officer, the trust account has the advantage for
a corporation of contributing to all political parties indifferently, because these amounts would be distributed on a
prorated basis according to the votes received by each of the political parties.
If one does not agree with the first solution, the other option would be to enable a corporation, or a union, to
contribute directly to a political party, but there again, up to a clearly fixed maximum amount.
In either case, what is important is that these contributions would have to be made public. That way, it would
prevent attempts to obtain additional money from corporations indirectly. What is unfortunate in Quebec is that
companies, corporations, easily sidestep the act. As I mentioned earlier, if you take 10 members of a board for example
and ask them each to contribute $3,000 of their own money, but you are unable to prove it. We have already seen
companies reimburse donors for their contributions.
Mr. Freeman: I am sorry to take up your time on the question, Senator Zimmer.
There are several elements of corporate, union and other organizations when they donate that should be explored.
While corporations are legal persons, they are not human beings. This is the same for other organizations. There are
two important elements of that. The first is that they are spending other peoples' money, in most cases. In the case of
corporations, they are spending their shareholders' money, usually without their permission. In the case of unions, they
are sharing their members' money. This is evidenced by the unions who donate to the New Democratic Party while
their members tend to vote for other parties, and similarly with other organizations.
The second element to that is, because they are not human beings, they do not have the right to vote and should not
have the right to vote. An extension of that, certainly not legally but philosophically, is that they should not have the
right to try to influence the democratic process in other ways.
I understand the practical reason why some argue that corporations and unions should be allowed to donate, but I
am not convinced that the practical reasons address a meaningful problem. I think there is some level of abuse in the
Quebec and Manitoba systems, but I am not convinced that that level of abuse happens on a scale that is corrupting
the political process to any significant degree.
With the donation limit low enough, I do not think that will happen. Again, from a practical and business
perspective, it is just not worth the trouble. With the anti-avoidance provisions in place, I just do not think the abuse is
significant. I have seen no evidence in the 25-year history of the Quebec law that this is happening on a scale that we
need to really worry about.
The Chairman: In fairness, Mr. Côté should have an opportunity to respond to that because he raised the very
interesting concept of corporate citizenship for trade unions. Mr. Côté, I would like to hear from you in response to
Mr. Côté: You must make a distinction between two things: contributions from an individual and contributions
from a corporation, a business, or a union. In law, if I am not mistaken, at least in Quebec, when we talk about
corporations, it is as opposed to an individual, and it refers to a company, a law or engineering firm, or anything that is
not an individual and which acts as a group or an organization. Of course, the difficulty lies in the fact that
contributions from individuals, are no longer enough to offset the rising costs of election campaigns, especially costs
that always continue to go up, such as TV advertising, or the involvement of TV. The implication, as was suggested,
that the public broadcaster provides more air time does not prevent political parties, in other areas of the country, from
turning to private broadcasters to advertise their messages. But the cost of these messages is constantly rising. That is
the main reason why people in Quebec have attempted to get around the act in the way I mentioned.
Of course, proceeding that way is neither ethical nor legal, but one must be practical and see that that is the way it is
happening. We must try to find some solutions, and that is why I have made suggestions.
Senator Zimmer: If I could add to that, you hit on the point that I was going to raise with my second question, and
that was what Mr. Côté said. That is the first time I have heard it in this way, and that is that they are corporate
citizens. They are citizens. Mr. Freeman, to respond to your comment, I have had many companies right across the
country email and write me and say, ``We do vote. We vote through the process of making a democratic contribution
to the democratic process of this country through our company as a corporate citizen. By taking that away from us, we
are not able or allowed to express that democratic right.'' There could be a certain government here in Ottawa whose
ideas of fiscal responsibility they like, or another issue. Taking away that right takes away the democratic right of
making a contribution to a government they want to run this country.
Though the two of you are sitting close together, there is quite a gap in the amounts of $15,000 versus $1,000.
Based on those comments, could you expand a little further on your rationale with the comments I just made as to
why you would eliminate the $1,000 corporation donation?
Mr. Freeman: I should preface my answer by saying that I have tremendous respect for Mr. Côté, and I suspect we
agree on a range of issues in the area of electoral financing as I have read all of his reports.
We do disagree on this issue, and we can speculate on where the roots of that disagreement come from. I think there
must be a distinction drawn between a vote and an exercise of influence.
In the democratic process, we have certain rights that are inalienable human rights. One of them is the right to vote.
That is the right that attaches only to human beings, philosophically and legally. There is nothing inherent in a
business organization or another kind of incorporated or association entity that inherently attracts the important
expressive and democratic participation elements of the right to vote. To try to extract what is a fundamental human
right and apply it to an entity that does not contain the characteristics that attract that right is inappropriate.
Why is the figure of $1,000 suggested? There is no question that $1,000 and $15,000 are arbitrary figures in terms of
an individual donation. I think the limit must be low enough such that it is affordable for a Canadian on an average
household income. However, $1,000 is actually higher than that, but we must be practical. I also think it must be low
enough to discourage the type of abuse that we have talked about in this committee and that Mr. Côté has referred to.
I believe we have to accept, and maybe this is where we diverge, that some level of abuse will take place. The key
question for me is whether that level of abuse is at such a significant amount that we have to worry about it having a
significant corrupting effect on Canadian democracy.
If the level is low enough, it is simply not worth it for companies to try to hide their donations through employees,
members or executives. It may happen at a small level, but I am not convinced that it will happen at a significant level.
Senator Zimmer: Mr. Freeman, you made a comment that refers to a company or corporation, and there is the
perception of influence. However, a voter can also influence. A voter can use the same analogy and say, ``I voted for
you.'' Most times people do not relate to that. When they hear the word ``influence'' they think ``company.'' Voters can
also use that parameter and say, ``I voted for your government, now here is what I want.''
We should always remember the fact that it can go both ways and not just one way.
Senator Stratton: This is an interesting discussion with two diverse opinions that seem to be taking place.
When we look at this aspect of electoral financing, Mr. Freeman hit the nail on the head when he said that
democratization of the financing system is what is at the core of this bill. We must keep that in mind when we put
things to each other in discussing this entire issue. That is what this is all about.
Then there is the issue of what happens with companies. They are losing their right to vote by contributing. I
disagree with that.
I sat around the table as a partner in firms. Decisions would be made as to this guy would contribute to the New
Democratic Party, that guy to the Liberals and that guy to the Conservatives. It was always that kind of discussion.
That really has not changed. What has changed is the limit. For example, as a board we are sitting around a table
discussing the upcoming election. People around the table as members of the board will say, ``I do not know about you
guys, but I will contribute here.'' It may be a decision on the part of that group to say, ``We will make a collective
decision to contribute to this party individually.'' Then they do so, up to $3,000 each. You are limiting the impact of
that. They are still exercising the right as a corporate board or business to have that vote, but it is done through
I firmly believe that has not changed fundamentally. What we have done is put a limit on it, and that is appropriate.
We cannot forget that. That is the impact this change will have. Therefore, I do not see a problem with boards or
companies having the ability to make contributions.
With reference to the influence of getting around the electoral law by coercing employees to contribute, one can
keep that private to a degree, but it will inevitably be revealed. An individual will say, ``Do you know what they just did
to me?'' He will go to the media and say ``my board'' or ``my boss'' and you-know-what will hit the fan.
That will always happen. There will always be that cautionary note as to the influence that a boss can have on an
individual because that individual can complain, and rightfully so.
I do not really buy into that argument. As Mr. Freeman has said, if you have this influence, it will be minimal
because the contributions are lower. Therefore, the impact will be much less.
With the cost of running elections ever escalating, particularly in the media, we forget there is $1.79 per vote for each
party. We forget that is now a significant contribution to political parties, to look after the issue of corporate
donations, large donors or the ever-increasing costs of running an election. It is important to put that into perspective.
Fundamentally, it is the essence of democratization of this process.
I would appreciate Mr. Côté's response to what I have ranted about, and Mr. Freeman could come back at me on
Mr. Côté: No, except to reiterate that it is basically a matter of principle. Should be allow a corporation — let's call
it that — an organization, to contribute or not? The act stipulates that we must not allow that. However given our
experience in Quebec with contributions, what we talked about earlier, coming from law or engineering firms or
members of boards, we have heard evidence, but it has not been enough to enable us to take action because the money
contributed to the political parties came from their own funds. It is extremely difficult to prove that the amounts
contributed have be reimbursed.
That is what occurs in practice. I noted that in the evidence I heard doing the final years I was in my position. I
realized that the main difficulty with the situation was building a case. It would take an army of officials to audit the
accounts of all of those companies. That is practically impossible.
Given the principles and the reality of the situation, let us allow companies to contribute, but with very strict
oversight, and above all, that these contributions are made public. That way, a company that will contribute will think
twice. For example, if it contributes to one party rather than another, that will appear in the reports on funding as a
contribution to a specific political party. That is the downside of the second solution I am proposing. The first is to
contribute to everyone. No political party is targeted directly.
I know that what I am advocating runs counter to a very important principle. However, a bill cannot simply be a
statement of principle, it must also be enforceable. We realize that it is difficult to find the offenders.
Mr. Freeman: I do not have a difficulty with the idea of having a general fund that corporations and other
organizations would contribute into that would then be distributed on some kind of democratic formula to political
The Chairman: That could be through the CEO, perhaps.
Mr. Freeman: Yes, it could be through the CEO or some other mechanism. The CEO would be the logical
mechanism to do that.
However, I do not think that most corporations, unions and other organizations would donate to the fund. If you
were to ask the vast majority of donors why they donated, it would be because they were approached by a party or a
candidate. Many people in this room would have experience with that dynamic.
If I can illustrate some of the scenarios, let us take the first example, which was the old system before the 2003
reforms. No limits whatsoever were given. You had situations where multiple subsidiaries of companies were giving
six-figure donations to political parties. You had a situation that we could not imagine under even the current system,
let alone the system proposed by the federal accountability act. You would literally have to have 200 or 300 employees
donating $1,000 each to see the kinds of numbers that we saw in 2002 and 2003. That is the first scenario.
The second scenario is if you had a limit of $1,000, let us suppose that you do have some level of abuse. We are
sitting in that boardroom that Senator Stratton has described, and eight or 10 of us decide to make our donation. If
eight or 10 of us are sharing information about how we will make our donations, there is no problem with that. We
each donate $1,000, or $5,000 under the current situation, and there is no difficulty with that. We are donating as
individuals and that is not an issue.
If we are actually donating on behalf of the firm, or if the firm is reimbursing us, that is where we get into difficulty
under the act. That is what we are concerned about. The question is: Will that happen? I agree that unless we hire an
army of bureaucrats we will not be able to nail all of the offenders who try to do this. How much money are we talking
about here? If we manage to do that with 10 or 20 people, we are talking about $10,000 or $20,000. It is a significant
sum, and I am not trying to exaggerate, but that is if the limit is $1,000. However, if the limit is $15,000, then you are
now moving towards $300,000; that is significant. That is getting into the kind of environment we had back before the
previous round of reforms. That takes us back through two rounds of reforms.
You have to look at the reality and what is likely to happen as a result of where you set the limit.
Senator Joyal: Mr. Côté, in your presentation, based on your more-than-20 years of experience enforcing the Act to
govern the financing of political parties, you reached some conclusions. The retired judge, Jean Moisan, who last
spring investigated allegations similar to the ones we are talking about here this morning — the participation of
companies in financing political parties — reached conclusions similar to yours. Could you indicate, for the benefit of
committee members, which conclusions from the report by Justice Moisan, tabled in June, appear to corroborate your
understanding of how the Act to govern the financing of political parties has been used in Quebec for 20 years?
Mr. Côté: I must say that judge Moisan reached those conclusions after a meeting with me where I shared my point
of view with him. He simply said that he agreed. In short, he basically took what I am proposing and above all he took
note of the situation where people are rather happily and easily getting around the Elections Act and the Act to govern
the financing of political parties in Quebec. What is somewhat discouraging in this situation is that it appears to be
increasing rather than decreasing. So what can we do? What is the solution? It is not simple.
Senator Joyal: As you know, the previous bill which amended the Elections Act with regard to financing, Bill C-24,
is very recent. In fact, it was only implemented during the last election campaign. Might I remind you that in essence
this bill limited individual donations to $5,000 at the federal level and corporate donations to $1,000.
Since we have not yet learned everything that we might from this bill, would it not be better to focus on these
reforms and to wait a few years to see, in practice, how it is enforced and whether or not it meets the objectives for
which it was implemented? After that, we could make adjustments if necessary. It seems to me that we are currently
accumulating all kinds of reforms for financing political parties without basing them on a practical assessment of what
these still very recent changes might produced or aimed to achieve.
Mr. Côté: When the federal Elections Act was amended under the Chrétien government, it was basically to replicate
the provincial act, and generally, to adopt the same provisions.
I am telling you about the problems we encounter. The Quebec aqct to govern the financing of political parties has
existed for at least 30 years. It seems to me that it would be a shame for the federal government to repeat the same
unfortunate mistakes. The Quebec act is not enforced properly. We should look at whether that is likely to occur in
other provinces. That could extent throughout Canada. As you say, it might be better to experience it and see, over
time, what kind of remedies would be required.
Senator Joyal: Mr. Freeman, you have studied electoral financing quite closely. Could you give us an outline of
what other countries in the Western world — to circumscribe the reference — would have proposals as close as the
ones we are contemplating now? Are there any democratic countries that have limits as stringent as those we are
Mr. Freeman: Are you asking specifically in relation to the donation limits and no other element of electoral
Senator Joyal: Yes.
Mr. Freeman: Probably the closest country to ours on the issue of limits — and this may surprise some people
around the table — is the United States. There are very strict limitations comparable to ours on individual limits and
corporate donation limits as well.
Senator Joyal: Can you give the amounts?
Mr. Freeman: I will get the actual amounts wrong. I believe they are in our book, but this is my nightmare scenario
where someone asks me a question that is in the book and I cannot repeat it off the top of my head.
Depending on the donor and depending on who they are donating to, the amounts range between US$1,000 and
Senator Joyal: The way they are bypassing the limit is with so-called soft money, whereby a volunteer organization
passes on the money through the candidates, which has been denounced overwhelmingly in a lot of studies.
I am looking at my friend Senator Segal, who has probably gone through all those books. I am especially thinking of
one I read last summer whereby there is a parallel system of financing soft money that totally countervails the objective
of the legislation.
Mr. Freeman: Soft money was essentially banned in the United States about two years ago in the latest round of
federal reforms. There are other similar loopholes in place at the state level where money can be routed into the
political system. There are also PACs, political action committees, of which we have all heard. This is something that is
not nefarious in the United States. It is actually envisioned under the law and it is the mechanism for pooling
donations. That is the main reason why we see the multi-billion dollar figures now for U.S. elections.
Incidentally, some of those mechanisms would be legal in Canada. We just have the good fortune not to have had
inflicted upon us these strategies and tactics that parties and candidates use in the United States, so we should not be
too high on our horse.
Senator Joyal: You mentioned that the limits are $5,000 and $1,000, which is similar to what Bill C-24 has
established as limits. We in fact have corroboration for what Mr. Côté has mentioned, which is that when limits are
established that are too stringent, the system reacts in one way or another to find a parallel way of financing the
parties. The Americans have been inventive in trying to find all kinds of systems to bypass those objectives.
I do not mean that the law should not exist, per se. I am just saying that the law should be realistic in terms of what
it can achieve. Only so much good can be achieved through legislation if there is not a common perception that at some
point the law must take reality into account. A system whereby there are limits and a system whereby there is a
reasonable way to approach corporate financing, such as the one Bill C-24 put in place, leads me to conclude that such
a system maintains equilibrium. If we try to be ``over-virtuous,'' we would definitely have a reaction somewhere in the
system. There could be one of two reactions at that time: We could conclude, as Mr. Côté has, that it is parallel, it is
multiplying, but we do not intervene or we intervene only when there is a major scandal, and then we entertain the
cynicism of voters, as Senator Stratton has mentioned; or we establish an army of civil servants to look after all the
donations and scrutinize if the candidate is a board member of a big company, if this is his money, and scrutinize all
the donations that come from influential people. We take the Canadian Who's Who and check where the money comes
In those two ways we do not meet the objectives. We create the worst of two evils.
It is a matter of balance. The Quebec aqct to govern the financing of political parties was adopted in a context
similar to that one. You will recall that at the time, there were criticisms, scandals and accusations. The act went a long
way to completely eliminating donations from organizations and corporations. As a result, it was through practice that
the balance was reached. Other countries' experience corroborates what Mr. Côté is saying.
We should have a system that takes into account the political reality, which does not mean that we should not
enforce the act as it currently exists in the context of Bill C-24. We should learn lessons from Bill C-24 before going any
farther, because we risk creating a situation that is worse than what we currently have.
Mr. Freeman: I think that the United States is a horror show on election financing. It is nice to be working on these
issues in Canada and not in the United States in that sense. However, it is impossible to draw a comparison and
conclusions based on the American system, and there are a number of reasons. The amounts of money are of an order
of magnitude that we do not experience in Canada. The stakes are not as high. More important, since 1974, we have
very effectively reined in the costs of running for office through expense limits at the party level, the candidate level
and, as of the last round of reforms, even at the nomination race level. I think that has had a significant effect in
Canada in reducing the need to raise the huge amounts of money that have to be raised to run for politics south of the
That is probably the biggest element, but there are also specific legal differences. What I did not get to in my earlier
remarks is that the limits in the United States are not per donor. They are per donor, but they are also per recipient, so
you can donate to multiple recipients. That is where the amounts start ratcheting up. Most of the money in the U.S.
system is legal money. Most of the money is not because people are breaching the limits. Since the closing of the soft
money loophole, even the remaining loopholes at the state level do not compare to the amount of legal money that
flows into the system. By placing the limit on the donor, which is far more appropriate, we are effectively reining in the
costs of running for office.
The costs of running for office are high in Canada, nonetheless, particularly for a party. As I mentioned earlier, the
major cost, by far, is broadcast advertising. If you are concerned with bringing that cost down, the way to do that is to
provide much higher free broadcast time to parties. That would effectively bring the costs down further and justify
further limitation of the expense limits of parties and assist the parties with any transition.
The parties, which complained loudly about the 2003 Bill C-24 reforms to which you referred, also complained that
they would experience a revenue shortfall. Since then, what has happened is that all of the parties are in fact better off
because of the public financing provisions, the annual subsidy that Senator Stratton mentioned, as well as the expense
reimbursement and the tax credit that are applied to political donations and political expenses.
Senator Joyal: Might I have the reaction of Mr. Côté, Mr. Chairman?
Mr. Côté: Unless it was changed a few years ago, you must bear in mind that the United States has an absolutely
incredible system. It is the system of the PACS (Political action committees). It is a rather incredible way of
contributing indirectly. It is beyond understanding. As for the soft money that was referred to, it was in response to the
limits imposed on presidential election campaigns in the United States. It is a very simple trick. Instead of giving to a
candidate, a person gives to a political party in the United States. There are always a thousand ways to get around the
law, and that is highly regrettable.
Admittedly, election campaigns are expensive. Even with sizable government contributions to assist political parties,
they are expensive. Enough is enough. They have hit the ceiling with respect to what they can collect for a Canada-wide
election campaign. The demand, the need will always be there on the part of the political parties. They need more
money for their election campaigns. Virtue suggests going door to door. That is a good basic principle, and it has been
used in Quebec, but we must acknowledge that the situation is different now.
Senator Segal: My question is for Mr. Côté and deals with transparency.
Someone who is an insider to a corporation who buys or sells shares has to make that disclosure quickly. He does
not have 1.5 months or six months, he has to make his disclosure quickly.
If we had a more open system for transparency where a donation made or received were openly declared or posted
on the chief electoral officer site within 48 hours, could that reduce the problem that you mentioned regarding people
who in appearance give their own money but which is contributed another way. If, over a period of 48 hours, we see
that all of the members of a board have made a donation, that will indicate something. That information will be of
some value for voters before they vote. In your opinion, can that be of any assistance to us in this area of our work?
Mr. Côté: Possibly, but the consequence could be that people who would act that way on behalf of a corporation
would hesitate to do so. What would be made public is their donation during the election campaign. That might be a
problem for the election campaign.
Senator Segal: Your answer indicates that the problem is not the donation as such, but the fact that it is hidden for a
significant amount of time, during the election campaign, when all voters should know why someone has supported
one party or another. If we amend the act for greater clarity, would that reduce donations? Is the problem
Mr. Côté: You cannot have automatic transparency. As soon as a donation is made by an individual or a
corporation, I have trouble seeing that. For example, if an election campaign last 30 days and largest donations are
made on the 29th day, they will be made public 48 hours later. What good will that do? I do not think that is a good
solution. There is also the issue of control over expenses exercised by the chief electoral officer over contributions
received prior to been made public, before being published. I do not think that we can automatically make that public.
Senator Segal: Mr. Freeman, I wish to ask you about the issue of loans. So as to take it out of any contemporary
partisan debate in this country, let us talk about the difficulty that transpired in the United Kingdom with respect to
getting around certain requirements for disclosure by the Labour Party having had donations made to it, and I suppose
the other party as well, from private sources, not banks but private sources, which did not have to be disclosed for a
very long time, thereby keeping from the British elector any clear knowledge relative to from where those funds had
I know you have a view about some of the inadequacies of the legislation in the general regard of transparency. Do
you have a view on the issue of loans? If you could give this committee advice about what to do about loans to
strengthen this legislation, what would you recommend?
Mr. Freeman: First, I should say that in the debate around Bill C-24, one of the amendments that the House
committee made, which was passed, was to reveal the terms of any loans to candidates. I think that was an important
amendment that was made. We now do know the terms. If the terms are favourable beyond fair market value or fair
market rates, then we know that.
The issue of loans is an important one. You can loan huge amounts to a candidate or to a party and in theory that
loan must be paid back within a reporting period after the vote; that is problematic. However, what happens if it does
not get paid back even within that period? That is probably the problem to which you are referring. The only way
around it that I can see is to place a limit on loans. It is a loophole. It is something that the party should consider.
Senator Segal: I have one more question for both of our distinguished guests. It relates to the bureaucratization of
our political parties and the political process. Like others around the table I am sure, I am a believer in the political
party process. I do not always believe that my party is right all the time. Even when it is wrong, it is wrong for good
Having said that, I worry that while we are all around this table I think in the same spirit of trying to increase the
integrity of the process, the openness, the candour and the public awareness of what is going on so voters can be well-
informed. We are setting up a situation now where, within a reasonable period of time, some of our political parties
will be far more dependent upon the public purse than they are on private, legal, small donations.
Take the Green Party, which is having a resurgence based on the formula, to Mr. Chrétien's everlasting credit —
and I say this with great regard — that said you should get some public support based on how many votes you receive.
Therefore, people in subsequent elections after he made that change could vote for the Green Party, understanding
they might not win in their riding but that they were supporting that view in our political process by casting that ballot
and that would generate $1.75 or $1.79 per annum for that party going forward.
If we look at the ultimate in this process, I suspect the German tradition, where there was tithing of corporations
and where the parties are funded in a very direct way by the state, you can see that over a period of time the conditions
under which political parties received funds — always in good faith, and never in any fashion that was supposed to be
narrow, limited or unfair. We now have certain conditions that parties must meet to get public funding. It is only
appropriate over time.
For example, the Charter of Rights could produce questions about whether one should be funding a political party
that has no affirmative action problem so that women, people of colour or others can participate equally in their
process. It is public funds. It is no less public funds than a vote by Parliament with respect to a department. Do you
worry at any level that we will make our political parties into wholly owned subsidiaries of the Chief Electoral Officer
over time? One of the miracles of our democracy is that a political party can form in 3,000 basements, made up of
people who disapprove of everything the government of the day is doing and that the parties in Parliament are doing —
which set the rules, by the way. If they want to organize for the purpose of changing the system, which our democracy
is supposed to embrace, do you not worry that we are building a process, in the best of faith, that will make it
continuously more difficult for new organizations like that without the status of having a pre-ordained presence to
enter the system and fight for what they believe? At some level I worry about that and I would be interested in your
more learned perspective on that.
Mr. Freeman: There are ongoing Charter challenges to the current system. The Longley case is challenging the
system that excludes parties that receive less than 2 per cent of the vote nationally or 5 per cent of the vote in the ridings
in which they run candidates. That case is currently being heard.
Yes, I do think that public subsidies are too high. However, I do not foresee the state exercising control over
political parties. Your example of the Green Party is an important example. Sixty per cent of party revenues currently
come from public funds, but I have not crunched the numbers on each individual party. However, I strongly suspect
that no party takes in more than half of their revenues from donations. The annual subsidy that is based on the
proportion of the vote that the party received in the previous election is a huge component of party revenues. It dwarfs
the expense reimbursement and the tax credit that goes to donors. In my view it is too high and it is distributed on a
formula that I do not think is as democratic as it could be. There are other international models that we could look at.
Senator Segal: I would be interested in Mr. Côté's response to this last question as well.
You expressed quite eloquently in your presentation your concern about corporations that made donations without
the permission of their shareholders and trade unions that made donations in the previous regime without the
permission of their members. Are you at all concerned about governments that choose, by whatever rational formula
approved by the participant and recipient parties, to make donations to political parties without the express approval
of the people of Canada whose money it is?
Mr. Freeman: You said very quickly ``through a formula.'' I am not a big defender of the public subsidy system, but
to a certain extent I will defend it. The formula ensures that there is some notion of democracy in terms of how those
funds are distributed. Yes, public funds, government funds, are going to certain parties with which I may disagree as a
voter, but in essence my vote for a particular party directs the annual subsidy to that party equivalent to my vote. It
started off at $1.75. Therefore, I think that the argument that government money is being directed to parties with
which voters may disagree is a little bit of a subterfuge.
Mr. Côté: In our democratic system, we must absolutely preserve the independence of political parties. What I am
telling you is based on Quebec's experience. The government's contribution, according to the formula that has just
been mentioned by adding income tax returns, during certain periods of time, was close to 60 per cent.
If the solution is to ask the government to contribute more to funding political parties, the government will
undoubtedly react as it normally does. Since it provides funding, it will want to see how the money is administered, and
the government will want to stick its nose into the political parties. That must be avoided at all costs, because that
would be the death of our democratic system as we know it today. Political parties must preserve their independence.
That is why there must be a fair balance between what is provided by government and what comes from private or
other donations, otherwise we will be facing another problem.
The Chairman: Professor Freeman, in response to a question from Senator Segal about loans, you said that we are
probably going to have to move to a system of putting a limit on loans. Were you talking about the amount or the
number of loans?
Mr. Freeman: I believe that to a certain extent loans will have to be considered contributions. I do not see a way
around that. In devising the limit and the law, you must accept the possibility that those loans do not get paid back and
there may be no intention of paying them back. We recently had a situation in Canada with one of the smaller parties
where an enormous loan was simply written off by the donor. This is the kind of thing that we need to be aware of and
to guard against in the system.
Senator Milne: I always knew that Senator Segal was a red Tory, but I did not previously know that he was a closet
Senator Segal: There is a huge distinction between the two which we can discuss later.
Senator Day: I wonder if we could have a clarification on that last point, which may save us some time.
If a loan becomes part of what you are advocating of a $1,000 limit per year, you are in effect eliminating loans.
Mr. Freeman: If the loan comes from a corporation, that is correct. I think that you will need special provisions
dealing with loans. I may have misspoken when I said that they have to be considered as contributions. I do not mean
that legally in the statute you have to consider them contributions, which in essence would eliminate them if they came
from corporations. However, when thinking of loans you must think of them as contributions and think in terms of
regulating them, because currently they are, in essence, unregulated.
Senator Day: That clarification is helpful.
Senator Chaput: My question deals with the reduction in individual donations, as determined in the bill that our
committee is considering.
I believe that we must not only preserve the transparency and integrity of our democratic system, but that we must
continue and always work towards enhancing transparency.
We have been told that Canada, with this bill, is moving away from standards established in the main democracies
in the world. Will imposing reductions as radical as those, in your opinion, help improve the transparency and integrity
of our political parties?
Should we not instead work on improving the audit and control process in order to ensure compliance?
Mr. Côté: The issue of transparency for financing is obviously fundamental. I am going to go a step farther. The
suggestion to increase the number of officials, the number of comptrollers and the number of auditors appears to me to
be an unworkable solution.
But by considerably reducing, as this bill does, the maximum amount of campaign contributions, will we not be
putting ourselves in a situation where people will say we have to find money somewhere? We need it; we will have to
find it somewhere —
With respect to financing for political parties, I have always thought that it is fine to have the most wonderful
provisions, the clearest wording, the most transparency possible, there will always be some brilliant lawyer who will
find a way to get around them, and above all some politicians. Because let us be realistic, politicians in an election
campaign need money for their campaign. If we put them in a situation saying that donations are limited to no more
than $1,000, if they need $3,000, what will the solution be? They will say ``figure it out, come up with the balance, find a
way of getting around the act.''
That is very worrisome, I think. Legislation must be complied with. An act that is simply a statement of
philosophical principles or guidelines will serve no purpose, except allow us to boast about having adopted such
exceptional legislation, that cannot be found anywhere else in the world, but that we are not equipped to enforce it.
Mr. Freeman: I think that transparency is fundamental. It is critically important. For that reason, it is very
important to have pre-vote donations disclosed through a reporting mechanism where you would disallow
contributions for the last week of the campaign. That would give the parties and candidates the time, let us say four
days, to turn in their donation lists to the Elections Canada website, which would be very simple if they simply kept,
through software provided by the Chief Electoral Officer, the donations limit lists, which they already have up-to-date.
We could then have that information two days before the vote.
Transparency alone does not address the other fundamental issue which enters into this debate, which is influence
and perceived influence of political donations. Before the Bill C-24 reforms in 2003 we had six-figure donations going
in to political parties. We had enormous donations going in to candidates. I would not say that that was a democratic
situation, even though we knew who the donors were. It is very important to address both democratic objectives when
you are engineering electoral law.
There is no question that parties will need to adjust to the new limits and they will need to adjust their fundraising
efforts to the new limits. We can assist that to the extent we can by providing more free broadcast time. That directly
impacts the parties' bottom line by reducing their need to spend money on their greatest expenditure, which is
broadcast advertising. Incidentally, broadcast advertising is also distributed on a much more democratic formula than
political donations tend to distribute themselves amongst the parties. That is an added benefit.
Senator Chaput: If that is the case, according to some research, we have been told that it is pointless to limit
contributions during an election if we do not also impose spending limits. What do you think about a proposal to
reduce election spending? If revenue is limited, should we not also limit spending?
Mr. Côté: In the Quebec act, there is a limit on election spending during an election campaign. I did not go through
Bill C-2, but it seems to me that there is also a limit on spending during a campaign.
Senator Chaput: But it has not been adjusted. If we limit revenues, we do not adjust the limit that we have for
spending, do we? Even if the act is amended to limit my donation, the person can still spend the same amount of
money, can they not?
Mr. Côté: Yes.
Mr. Freeman: I am not sure if I understood the question correctly. It is my understanding that currently there are
limits on expenditures for parties, candidates, nomination of contestants. The only thing we do not have limits on is
leadership candidates, which we should, absolutely.
Senator Chaput: But at present, we are talking about limiting revenue, donations, but not about reducing spending.
The bill does not deal with the issue of reducing expenditures.
Mr. Freeman: Reducing the limit?
Senator Chaput: Yes, the limits on expenditures.
Mr. Freeman: Are you are proposing that we reduce the expenditure limit of parties candidates?
Senator Chaput: What would you think of also doing that?
Mr. Freeman: Doing that simultaneously with the reduction in the donation limit on its own would probably be
difficult for candidates and parties. Bill C-24 addressed the problem by dramatically increasing the public subsidy to
the point where they were overcompensating for the donation limits and made the parties better off. There are other
ways to do that. For parties, the best way to do that is through increasing the free broadcast provisions.
Senator Milne: Mr. Côté, your remarks about corporate donations today were underlined in advance yesterday by
the small parties that appeared before us all day long, and they extended it to individual donations. Have you thought
about the hardship they were talking about all day yesterday, every one of them, that the $1,000 limit imposes on small
parties that do not meet the 2 per cent limits to receive a government grant?
Mr. Côté: That will always be a problem for small or newly created parties. It takes quite a few years for a new party
to make itself known to the electorate, and to become eligible for campaign subsidies. There is no doubt that the
current system favours well-established parties, parties that have been in existence for some time, but it will always be
harder and take longer for a new party to claim its rightful place on the political landscape.
Senator Milne: This ties in with third-party advertising during a writ period. Some of these smaller parties were
originally third parties but have reformed themselves to become registered political parties because of the problems
with third-party advertising. What do you feel about these restrictions on third-party advertising?
Mr. Côté: Do you mean, in the bill? Are you speaking about the restrictions in the bill? I am not sure that I have
understood your question.
Senator Milne: I am talking about restrictions on third-party advertising during writ periods. I am asking you for
your views, sir.
The Chairman: Mr. Freeman is ready to respond, are you, Mr. Freeman?
Mr. Freeman: I am happy to respond. I was an intervenor in the Harper case on behalf of Democracy Watch.
Democracy Watch was an intervenor in the Harper case. I should mention that I am not actually with Democracy
Watch; I have been away from the organization for several years. I am speaking here on my own behalf.
The issue of third-party spending is not in the bill, it is in the Elections Act. It has a long, litigious history in Canada.
I am not aware of any smaller parties that have become smaller parties because of the third party provisions, but I
do not intimately know all of the small parties. There are about a dozen of them.
Senator Milne: We had testimony yesterday from one group saying that this is why they had formed as a party.
Mr. Freeman: That is conceivable given the law around third parties and public subsidies, which is pushing them
away from being third parties and public subsidies, probably drawing them toward being political parties.
I think third party spending limits are vitally important for a number of reasons. I would encourage the committee
to look at the majority decision of the Supreme Court of Canada in the Harper decision. The fundamental issue is one
of fairness. There must be a balance between the right of freedom of expression, the right of someone to express
themselves in an election, and the right to express a point of view and have a meaningful outlet to express that point of
view. On the other hand, there is an electoral fairness issue, of which there are several components. One is that you may
have a situation, as is common in the United States, where multiple third parties run attack ads against parties or
candidates, particularly a candidate. A candidate would not have the ability to respond to those attacks. If a candidate
has any advertising budget at all, it is miniscule. The spending limit for most candidates is in the order of about $75,000
or $80,000, and most of that is taken up by other expenses.
You could easily have a situation where parties and candidates try to circumvent their expense limits by delivering
their message through third parties if you do not have limits on third parties.
Senator Milne: Mr. Freeman, I liked your suggestions about increasing the free broadcast time for political parties
because this is a major expense during an election. You also spoke about the weakness in this bill regarding the access
to information, but we will be covering that issue later in our hearings.
However, your idea of ending donations to candidates one week before the election, I believe you said, is interesting
but impractical. You say this would give plenty of time to campaigns so they can submit their records to Elections
Canada. I have to ask you, sir, have you ever been involved in a campaign? Have you managed a campaign? Have you
any idea of what it is like in the last week of an election campaign, either provincially or federally?
Mr. Freeman: I have a rough idea of what that is like, yes. I think it would definitely make a difference in how the
agent of the party keeps his or her books. You would have to keep an up-to-date list of money that comes into the
campaign, and it would have to be in a software system that would make it as easy as hitting the ``send'' button to send
that list on to Elections Canada.
It is an added burden. I know the last week of a campaign is not the time you want to be doing this sort of thing, but
they do it in the United States, interestingly enough, and in leadership campaigns.
There is not much hotter than a leadership campaign in terms of the pace of the campaign. In leadership campaigns
in this country now, under Bill C-24, for each week of the campaign they have to submit their donations. They do not
do the last week of the campaign, but they have to submit their list a week before the vote. We already do that in
leadership campaigns. I do not see a reason why parties cannot do that given the resources that parties tend to have. At
the candidate level, we would have to make it very easy because you are dealing with volunteers who are doing many
other things in that kind of situation.
Senator Milne: During that last week of the election campaign, there is absolutely no way that you would have any
time to do that sort of thing because you are trying to get people into the polls. This is very difficult in this day and age
when you cannot find scutineers because they are all too busy working.
Have you ever had any experience in fundraising for a recognized political party, either provincially or federally?
Mr. Freeman: No.
Senator Milne: Have you ever been an official agent for a party?
Mr. Freeman: No.
Senator Milne: It is the official agent whose neck is on the block. They go to jail if they do not do the job properly.
Mr. Freeman: First, we are talking about a week before the vote; we are not talking about election day, which I
understand is still a pretty hot time.
Senator Milne: It is the week before that is the hot time.
Mr. Freeman: The week before the vote the software would have to be as simple as hitting the ``send'' button which
would deliver the list to Elections Canada, and Elections Canada would have to worry about getting it up on the
Senator Milne: It may be as simple as hitting the ``send'' button to you, sir, but that all has to be input into the
computer in the first place.
Mr. Freeman: Yes, that is true.
Senator Cools: It is not that simple.
Senator Milne: To me, sir, your suggestion is ``pie in the sky.'' It is a lovely suggestion, but it is completely
impractical on the ground. I like your other suggestions.
Senator Cools: I would like to thank the witnesses for appearing before us. I would also like to thank Mr. Côté for
his millennia of experience that he brings to the table.
I have a couple of questions more for Mr. Freeman than for Mr. Côté. Political parties and elections, by their
nature, are largely voluntary endeavours. My concern is that when people like yourself, and like Mr. Freeman or
certain government individuals, speak reform, what they really do at every stage of the game is to complicate the
process so much as to put it beyond the comprehension of many of the volunteers. This worries me because what you
describe as such worthy reforms quite often are driving individual, ordinary Canadians out of participating in the
political process. The day is long over when most candidates will just rely on volunteers to interpret all of these millions
of rules and procedures. You are talking about campaigns immediately having to retain highly specialized, professional
talent just to ensure that there are no mistakes in their interpretations.
One of the concerns I have is that the consequences of all of this activity, which is hashed up in the minds quite often
of individuals, is the precise opposite of what is intended. In actual fact it is depriving ordinary Canadians of the ability
to participate in process.
I am told that in the United States of America, for example, there is a situation where many candidates are having
difficulty getting volunteers to work and are resorting to paid workers. You can respond to that — and I wish you
would — but I have a couple of questions concerning what you said.
You use American language with ``inalienable rights.'' It is an American concept. Those words are not used in any
of our constitutional documents. You talked about the right to vote. You talked about a corporation not being a
human being with a right to vote, but corporations are legal persons. There is another inalienable right, in your
language, which is the right to free association. Human beings can come together and form associations and
incorporate them as a legal person. When you dismiss the notion of better treatment of corporations in law, I would
say that you dismiss it on a false basis. A corporation embodies the right of free association among the subjects of the
realm, so to speak.
I am working my way to my question. I do not accept what you have said about corporations, but you can respond
The real question that I want to put to you is that you invoke, as many do, tremendous moral ground on cleaning up
the elections process. There is no evidence, by the way, of widespread corruption in Canada in the electoral process.
However, when you speak of ``cleaning up,'' when whoever it is decided to limit these donations to the amount, can
you tell me what is the constitutional ground that the government stands on when it proceeds to limit, for example,
peoples' donations to $1,000 or $5,000 or whatever when another inalienable right is the right to be able to dispose of
your property as you see fit?
If I happen to like you, I can give you a lovely meal or a lovely gift. I am not talking here about limiting gifts for
MPs or anything like that; I am talking about infringing on the rights of individuals to spend their money as they see fit
in the causes that they hold dear.
I have heard a lot of discussion on the righteousness of the issues but very little on the constitutional basis on which
governments are growing and growing like Topsy. All the recommendations that I hear never have to do with limiting
government. They all have to do with limiting the rights of individuals — the same inalienable rights that you say you
hold so dearly.
I have not paid that much attention to some of these issues, but I have this nagging concern that in all of your
presentation, Mr. Freeman, I have not heard any limitations from you about governments and the limiting of
governments' consistent, persistent and incessant intrusion into every aspect of individual life.
There are many individuals who do not like the fact, for example, that the Bloc Québécois is subsidized by public
funds. You must admit that these provisions favour the larger established parties. What is your constitutional basis?
You call it democracy and democratization. By the way, I did not know that you used to be with Democracy Watch.
There is nothing democratic in the persistent and consistent infringement of the rights of individuals. Could you
respond to that, please? It is quite a bit, I understand.
Mr. Freeman: I do not know if I will be able to address every point, but I have a few comments.
Senator Cools: That is all right.
Mr. Freeman: To depart from the previous point, I do not think I would support this measure. Certainly, in terms of
assisting candidates at the local level to adhere to disclosure provisions, something that the committee could look at is
additional support to hire someone with expertise in managing and filing disclosure obligations with Elections Canada.
The Chairman: Is that person called an official agent?
Mr. Freeman: It would likely end up being the official agent of the candidate. That is certainly the person with the
legal obligation to do that.
To address the issue of the burden on candidates and parties, I would like to commend the job that the Chief
Electoral Officer, Mr. Kingsley, has done over many years. His agency has done an excellent job in making the
Elections Act understandable at the local level. The manuals and one-on-one assistance that his office provides is
incredibly useful to candidates and makes it much easier to comply with the statute. There are other things that he
could certainly do if you made those changes to the disclosure regime and I am sure he would be quite willing to do
It is true that the Elections Act has become much more complicated over the years since the first major reforms in
1974 to the electoral finances regime. Certainly, we have restricted peoples' freedoms. We have restricted the ability of
parties and candidates to spend whatever they want. More recently, we have restricted the amounts that can be
donated to parties and candidates.
Our voting system must be open and transparent, so there are all kinds of obligations on voters and on candidates.
There is an expense associated with the system that the public must pay for. Yet I would not advocate rolling too many
of those provisions back. They are all restrictions on individuals and they are all designed to make the system work
better and more fairly and transparently.
You say that I used American language. That actually was not the language that I was drawing on; I was drawing
on language of the UN Universal Declaration of Human Rights and other international provisions that spell out
inalienable rights that are universal, such as the right to vote. You are right; freedom of expression and freedom of
association are also inalienable human rights.
Senator Cools: Including use of your own personal property.
Mr. Freeman: That is a bit trickier. We do not have that one in the Charter and that one is actually up for much
Senator Cools: It does not mean that it is not a right.
Mr. Freeman: That said, when we consider constitutional rights, there is a balancing that takes place, particularly
under section 1 of the Constitution. There is no question, for example, that in the Harper case it was found that third
party spending limits were an infringement on the freedom of expression. However, the court balanced that with other
rights, such as electoral fairness and the right to vote.
The right to vote includes the right to an informed vote and the right to hear all points of view. If you have two
people and they are in a shouting match, and one of them has a bull horn and one of them has laryngitis, one of them
will be much more effective than the other.
Money plays the same role in an election. It allows you to speak more forcefully. We can get into the details of third
party spending limits, but the idea there was to help level the playing field by ensuring that wealth did not become the
primary determinant of which issues get play in an election and which voices get heard.
I think I am probably taking up a lot of time here.
The Chairman: Mr. Côté, did you wish to respond to the two questions?
Mr. Coté: No.
Senator Cools: I am not quarrelling with these sections, but the two fundamental questions remain: What is the
widespread corruption that these measures are trying to avoid or correct — because it is not there; and, what are the
limits to government? The Canada Elections Act is now, what, three inches thick? How many clauses, how many
Mr. Freeman: There are 500 or so sections; I do not know.
Senator Cools: What are the limits? How many more laws? How many more clauses? Few individuals in our
communities can understand the Canada Elections Act from beginning to end. For whose good, other than the
lawyers', is all of this being created? Bill C-2 is not just about elections and it is unmanageable. It is more than 200
I am trying to find the balance when I hear people suggesting to let government continue to expand. Ordinary
Canadians are simply little cogs in the wheels of government. When Mr. Trudeau set out to create the Elections
Expenses Act, he had no expectations that this thing would keep growing. In addition to that, one of the accountants
who worked on it were trying to keep a balance between the notion of charitable donations and political donations but
that balance is now gone. Many of the recommendations in Bill C-2 seem to be coming from your side of the issues. I
have run in elections and it was a difficult experience. The mischief is not there that these bills are trying to correct. The
evils are not there.
The Chairman: Mr. Freeman, do you have something further to add?
Mr. Freeman: No.
Senator Cools: Why are we doing all of this? This is one of my philosophical preoccupations. The lawyers get up
each morning and take a bottle of instant paper, instant ink and instant law and out pops 300-page bills. In the name of
the Lord, I receive many phone calls and the average Canadian cannot understand and interpret most of these
materials and, in today's community, they cannot afford lawyers to do it for them.
I ran into an ordinary person a couple of weeks ago who told me that her son was having a problem. The son earns
$15 per hour and the lawyer is charging $250 per hour. Democracy Watch could look into that because hiring a lawyer
is an expense that most Canadians can no longer afford. That is another thought. I am mixing the issues. The real point
is that at some point we must look at the constitutional bases for producing many of these documents.
The Chairman: Honourable senators, we will move to the second round of questions.
Senator Zimmer: Mr. Freeman, I would ask you to comment on the following statement in relation to the United
States and election spending. You stated in an article in The Globe and Mail on December 21, 2005, that spending in
the States topped $2 billion. You compared that figure to spending in Canada and broke it down almost to a
comparison of apples and oranges. If my grade 6 math is correct, if you would take the $18 million that the major
parties spend — and I realize that two of them are probably not quite that level — add the smaller parties and then add
in, you say, averaging $60,000 per candidate times 308 candidates, you arrive at a figure of $100 million. However, the
American population is ten times greater than our population. They spend $2 billion and ours, in the same proportion,
would be $1 billion. It gives an impression that they are way out of our league but when you do the math they spend
about double what we spend. Do you have a comment on that?
Mr. Freeman: Yes. I am reluctant to compare the math between Canada and the United States because the two
systems are totally different. Setting aside the exchange rate, I believe that your figures exceed the expense limits and
not the actual amounts spent, by and large. Most candidates do not spend their limit and that is the bulk of the figure
that you arrived at, not that I am criticizing your grade 6 math.
The key is that it is difficult to compare the two systems. There are many more players in the United States, a
different set of stakes and, most importantly, a different regulatory regime. We limit expenses in Canada and by and
large they do not limit expenses in the United States. The exception would be certain presidential candidates. There are
matching funds for presidential candidates. The condition for receiving matching funds is that the candidates adhere to
expense limits, although some candidates do not bother with the matching funds. In many cases they self-finance their
campaigns and run on their own. Therefore it is difficult to compare the two systems. As well, American elections
occur more frequently than Canadian elections because of the mid-term elections in Congress.
Senator Zimmer: Sometimes the numbers appear overwhelming and people have the wrong impression. Your
comments are well taken, but the figures are not as far apart as they sometimes appear to be.
In concert with Senator Joyal's question, in politics as in law precedent is a good guide. I would refer to the
testimony yesterday on some of the limits around the world and in Canada. It provides us with a good perspective and
guide. Mr. MacKinnon testified before the Standing Senate Committee on Legal and Constitutional Affairs and said:
... western democracies and G8 countries...Australia...no contribution limits...New Zealand...no limits...Sweden
no limits. The U.K. has no limits. I am using approximate Canadian dollars in all cases. In Japan, it is $145,150;
Spain, $60,500; Italy, $14,600; Ireland $8,900; and the next lowest — the lowest other than Canada — is France
In Canada, the limit in Alberta is $15,000 with $30,000 in an election year. British Columbia has no limits. The
limits in other provinces are: Ontario, $14,000; Quebec, $3,000; and New Brunswick $6,000, for corporations and
individuals as per Richard Hatfield's legislation in 1982.
The limits given to the vast majority of those countries also permit business, corporations, associations and unions
to contribute to political parties.
I wanted to put that in perspective again through a relationship to what is done in other countries around the world
and across Canada. It could give us a better guide as to what we could do with Bill C-2. Do you have comments on
Mr. Freeman: It is instructive to look to other jurisdictions bearing in mind that the various jurisdictions are all over
the map on this. For each country that you mentioned, I could come back with France, the United States and one half
of Canadian jurisdictions that all have limits on donations. We could look at the Mexican system — a full system of
public financing is provided to parties on a ratio of seventy to thirty, such that 70 per cent of the public financing
mechanism is based on the proportion of the popular vote and 30 per cent is distributed equally amongst all of the
There are almost as many systems as there are advanced democracies in this world. Certainly, we can draw on other
countries' systems, but as well we must look at the Canadian situation, including some of the areas where we face
constraints and others do not, and vice versa. The obvious comparison between Canada and the United States is our
expense limits. The U.S. tried that but it was struck down by the U.S. Supreme Court. We do not have those
restrictions in Canada because of the balancing the courts do between freedom of association and freedom of
expression associated with the ability to spend lots of money on the causes you believe in. That is balanced with a right
to electoral fairness. We do not have the constraints that the Americans have with their legislation, and that is a good
Senator Zimmer: Mr. Côté, do you have any comments?
Mr. Côté: No, senator.
Senator Stratton: The Province of Manitoba has put severe limitations on contributions by corporations, et cetera,
and individuals. The provincial Progressive Conservative Party was hit hard because it was largely reliant on large
donors. However, since that change has taken place, the party has adjusted; it has changed its methods of fundraising
and is now in the black. That is just one small example of what is happening here in Canada with restrictions. I think
the same thing will happen with this bill, with the limitations put on individual contributions and the banning of unions
and corporations. It will have the same effect on political parties.
Mr. Freeman, I am not absolutely familiar with the situation in Manitoba. I do know there are limitations. Have
other provinces gone through that same experience?
Mr. Freeman: You may want to direct this question to Mr. Côté because the Manitoba system is similar to the
Quebec system. There is a $3,000 limit on individual donations and a ban on corporate donations.
What the Manitoba system does not have is a system of public financing akin to the federal system. The example
that you drew of the Conservative Party adjusting to the new regime — and it makes sense that parties will adjust to a
new financing regime — is all the more interesting in that they did it without the public financing provisions that exist
in the federal system.
Senator Joyal: Mr. Freeman, I am glad you raised the fact that in the American system the public matching
financing is voluntary. If a candidate decides to submit to the control, he then gets a matching grant from the
government. However, most of the candidates do not go that route; they go through the route of the free, open market.
In the last presidential election and the one that is upcoming, candidates have said they did not and will not submit
themselves to the system. The United States is probably one of the countries to which I would not look as a role model.
I believe your point in relation to better access to broadcasting was that considering the increasing costs of
broadcasting during an election campaign, and since this bill does not contain any change to the present legislation that
governs broadcasting, by reducing contributions during an election campaign we will exacerbate the pressure on
candidates and political parties to look to alternative or compensatory routes of financing to address that issue if we do
not amend the bill to include greater access to public broadcasting. Am I stating your view correctly?
Mr. Freeman: I am not sure what you mean by ``compensatory mechanisms.''
Senator Joyal: That is what Mr. Côté said. If the contribution is reduced to too low a degree, since there is a need to
get money, people will search for an alternative, for compensation, if you will, to get enough money to pay for the
increasing costs of an electoral campaign. That is what I mean by ``compensation.''
Mr. Freeman: If your suggestion is that parties and candidates will aim to circumvent the law and the legal
requirements, I do not think that that is a necessity. The public subsidies are currently very generous. I know there are
people who donate through businesses and organizations who would donate as individuals, so you must take some of
that into account.
There is the party level and there is the candidate level. At the party level, there will probably be some reduction of
revenues if they continue on their current fundraising strategies and completely fail to adjust to the new legislation.
Quite simply, there are many donations that a party receives above $1,000 and there are obviously corporate and union
donations as well.
While fundraising tends to be a little harder at the candidate level, I do not think the impact will be as severe.
Particularly outside of the Toronto area, candidates tend not to receive many four-figure donations. They will get a
few. Some of those will end up being — we do not like to use the terminology — split into multiple donations. That is
inevitable to a certain degree, where one person in a couple would give a contribution. You may see a husband and a
wife giving money.
The alternatives to illegal fundraising would be to do more with less or to change your fundraising strategies, absent,
as you say, other subsidies, such as increasing the free broadcast provisions, which do not actually impact the public
purse. These are public airwaves that we licence to broadcasters, and it would mean attaching a requirement to that
Senator Joyal: Mr. Côté, if I do understand the Quebec Election Act, the provincial statute provides for the payment
of expenses of party representatives who are at the polling stations on election day. Is that correct?
Mr. Côté: On election day, yes.
Senator Joyal: Obviously, one of the large election expenses for a candidate is the amount that must be paid to the
polling station representatives. Should one not take into account that by reducing contributions to $1,000 without
indexing them — which is not covered by the act either, but in practice — should there not be some type of
compensation for part of the candidates' campaign expenses so that there would be less pressure on them to seek
funding elsewhere within the system?
In Quebec, the costs of having party representatives are borne by the Chief Electoral Officer; how is that working
Mr. Côté: It has almost always worked that way. There was a time when it was challenged, when representatives
could no longer be paid. The act was amended by changing the designation, but the process remained the same. The
political party representatives seated at the table are paid. That is how it works in Quebec and if I understand correctly,
that is what you would like to see at the federal level as well.
Senator Joyal: It seems to me that if contributions are limited to $1,000, then it becomes harder to raise more money
and candidates will have to seek a larger number of individual contributions. Since a candidate needs to raise at least
enough money to cover allowable expenses, would it not be advisable to reduce some of the current expenditures, the
ones that the candidates must assume, so that the available funds might cover print or media advertising which, as you
have mentioned, becomes more expensive from one year to the next while the fundraising capacity and budget
restrictions make it ever more difficult to deal with these increases?
Mr. Côté: You are quite right, that would be a way to mitigate the effect of a drop in contributions. There is a belief
— and I do not know if it is limited to Quebec — that it is easier and more expedient to attract donations from
It is not all that easy and it does not serve all purposes. It is a tough job and it requires a great deal of work by all
political parties and all candidates. It is part of our system and there is nothing wrong with it, however, you can only
ask volunteers to do so much. We rely heavily on volunteers, but there are never enough of them for an incumbent's
fundraising campaign, for example. It is something that we cannot do without, but there are limits to what we can
expect to receive free of charge.
Any reduction in the contribution limits will have a direct effect on the total revenue of political parties and of the
There is something else to keep in mind with respect to the representatives. On Election Day, two officers are
important: the deputy returning officer and the clerk. However, political party representatives are also essential for
supervision and monitoring in order to avoid a repetition of some of the situations that were experienced a few years
Generally speaking, the representatives are conscientious and respect the Chief Electoral Officer's guidelines. They
are an important part of the process. Their role has to be well defined, and the government should compensate the
representatives who work on Election Day.
The Chairman: Honourable senators, there are no further questions to put to these two witnesses at this time.
On behalf of the committee, Mr. Freeman and Mr. Côté, I would like to thank you very much for coming and
sharing with us the benefit of your knowledge and experience over many years of studying these particular topics. It
has been very useful to us and we deeply appreciate it.
Honourable senators, that brings us to the end of our deliberations for this week. There will be no deliberations next
week, and so the matter will now be adjourned until Monday, September 18, at 9:00 in the morning.
The committee adjourned.