Is there a spending loophole in the Fair Elections Act?

The implications of 376(3)

The Harper government’s proposed reforms to election law include the following exclusion to what is considered a campaign expense.

376(3) The commercial value of services provided to a registered party for the purpose of soliciting—by mail, telephone or other electronic means—monetary contributions is not an election expense under subsection (1), as long as the soliciting is directed only towards individuals who have made at least one monetary contribution of $20 or more to the registered party or to one of its registered associations, nomination contestants or candidates in the five years before polling day for the election period in which the services are provided.

In simpler terms: if a person has given more than $20 to a party in the previous five years, said party can call that individual to ask for more money during an election campaign without the expense of that call counting against that party’s expense limit.

Last week, the New Democrats raised two questions about this. First, Thomas Mulcair wondered how Elections Canada would be able to govern this. Second, during Pierre Poilievre’s appearance before the Procedure and House Affairs committee, Craig Scott wondered if the clause would ”allow a party to make calls where they simply add in and ask, where they say, ‘Oh, by the way, could you please donate,’ and at the same time the purpose of the call is getting out the vote, or asking to volunteer, or persuading somebody to vote?” (Former Conservative strategist Tom Flanagan also raises questions about the new rules in an interview with the Star.)

The Prime Minister didn’t address Mr. Mulcair’s question and Mr. Scott’s time expired before a full discussion could be had on his point, so I followed-up with Mr. Poilievre’s office about those two concerns. Here, via email over the weekend, is the minister’s response.

First, both the Liberals and NDP exempted fundraising expenses from spending limits in their leadership races. Fundraising expenses are already partly exempt from the spending limit (407(2)). It is not a foreign concept.

Second, the number of donors to a party is so small that calls directed to them would not substantially help “get-out-the-vote”, not to mention that donors are the most motivated to vote and least in need of a reminder call.

Third, the Fair Elections Act includes compliance measures that will make it harder to skirt these rules. Under the Voter Contact Registry rules, unsolicited phone calls to individuals to raise funds for a registered party, a registered association, a candidate or a nomination contestant are captured as voter contact calling services (new parag.(e) of the definition of “voter contact calling services” in the new section 348.01 in clause 75).

Fourth, all Election Period spending by registered parties is eligible for a 50% rebate from taxpayers. If fundraising calls are not exempt from election spending, taxpayers will be stuck paying half the cost of fundraising calls and letters. We judge that inappropriate.

According to the new sections 348.16 and 348.19 of the Canada Elections Act proposed in clause 77, political parties would be required to keep a copy of scripts or recordings used to make unsolicited voter contact calls for one year after the election in the following cases:

– where a calling service provider is used to make calls on its behalf using an automatic dialing-announcing device

– where a calling service provider is used to make live voice calls on its behalf and

– where the party uses its internal services to make calls using an automatic dialing-announcing device.

Finally, the Fair Elections Act will require tough new compliance audits of parties’ expenses that are not currently required. Auditors will have the power to ask for the copies of the lists of fundraising calls parties made to ensure that they were directed at people who have donated $20 or more in the last five years as the rules proscribe.

This didn’t quite address the question raised by Mr. Scott: could parties ring up their previous donors to ask for money, but then also inquire about volunteering or putting up a lawn sign or voting? I went back to the minister’s office on that specific point. Here is the response this morning.

The proposed subsection 376(3) contains a “purpose test” for the exclusion to what constitute an election expense to apply. The calls must be for the purpose of soliciting monetary contributions from past supporters.

The more a party relies on these calls to obtain other forms of support from a past supporter, the higher the risks that it will be investigated and potentially prosecuted for having failed to submit a complete election expenses return. As required by the proposed subsection 376(3), the calls must be made for the purpose of soliciting monetary contributions in order for their costs to be excluded from mandatory reporting as an election expense.

So there’s the minister’s explanation. I invite those familiar with election law and campaign tactics to speculate as to the ramifications.




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Is there a spending loophole in the Fair Elections Act?

  1. Seems like any concerns might be addressed by inserting the word ‘sole’.
    Also, the Minister’s response raises another issue – if it’s inappropriate for parties to get a refund of 50% of their fundraising expenses, then isn’t there a potential problem if parties do fundraising as part of other types of outreach (i.e. the ‘primary purpose’ of the communication is not fundraising, but it nonetheless requests a donation)?

    • Good luck with ECs running all that stuff down, even with a recording the conversation clause or two in place. And haven’t we already had a case of the dog ate my homework from the CPC when EC asked for party records pertaining to the robo call investigations?

  2. “Fourth, all Election Period spending by registered parties is eligible for a 50% rebate from taxpayers. If fundraising calls are not exempt from election spending, taxpayers will be stuck paying half the cost of fundraising calls and letters. We judge that inappropriate.”
    Hooboy, if he wants to have a discussion about what is appropriate and inappropriate for a 50% rebate at the taxpayers expense, I bet a lot of people would love to have that discussion. Let’s have at it.

  3. 376(3) It’s the hookers for the boys clause.[ sorry, stopped reading at soliciting. Anything beyond one sub section always gives me a gut ache]

    “Fourth, all Election Period spending by registered parties is
    eligible for a 50% rebate from taxpayers. If fundraising calls are not
    exempt from election spending, taxpayers will be stuck paying half the
    cost of fundraising calls and letters. We judge that inappropriate.”

    I find this interesting. As i read it, it pretty much implies that these donor solicitations will not longer be subject to this 50% rebate. Isn’t that a problem for parties with less means than the CPC? They give up the rebate at far less cost to themselves than other Parties.
    One way or the other this about finding a way to leverage that donations advantage the CPC have, while limiting the write offs of other parties that will find the hit tougher to take. Pretty much lose the per vote scenario all over again. Mayrand asserted this might mean an extra 20% beyond the elections spending cap already in place.
    There’s alot of crap to digest here so maybe i missed something. But that’s my first take.

  4. My question is what is the purpose of this Fair Elections Act. What is unfair currently that this act will make fair?

    • What’s unfair is that the cons can’t get to spend all their hard earned donor advantage.[sarc]

      • Oddly, I think the only difference between your answer and what Pierre Polliviere would answer were he being honest would be that he wouldn’t include the [sarc.] tag.

        Of course, “were he being honest” is a tough bar to reach, I realize.

        • I’m not convinced that he isn’t being honest. The truth and facts as he learned them at the U of Calgary, might just be what he really believes. He might just be authentic – a true believer.

  5. There is so much double speak from this minister that you can’t trust much of what he says. “As required by the proposed subsection 376(3), the calls must be made for the purpose of soliciting monetary contributions in order for their costs to be excluded from mandatory reporting as an election expense.” This doesn’t stop the solicitations from being made so long as they also ask for money.

    If ever the Senate wanted to justify it’s worth, defeating this Bill would go a long long way.

    • “This doesn’t stop the solicitations from being made so long as they also ask for money.”

      Hmmm this is reminiscent of their technique for CPC TV ads that they used to claim as riding association expenses that led to the In-and-Out scandal . . . they just took national ads and slapped a tiny indicator that the ad was from the riding association.

  6. Yes. Yes there is. there is a MASSIVE spending loophole. But it’s not in 376.

    It’s in 363(3) and 364(2)-(5), where basically they make it so that it is not considered any sort of contribution or riding expense if the party transfers goods or services to a riding or vice versa.

    So that massive advertising blitz in hotly contested Kitchener-Waterloo? That was simply a transfer of an advertisment service from Calgary-East. An expense to the party as a whole, and neither a contribution nor an expense in the Kitchener-Waterloo area.

  7. The License To Cheat Act. When the writing’s on the wall you do what you can to save your political skin.

    I would guess that there is a significant base of voters who have already made up their minds to vote for Trudeau and it won’t matter what anyone, including Trudeau, say or do they will vote for him.

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