Political donations and democratic equality in Canada.

• Author: Carmichael, Brianna

Equality is a key tenet of democracy. With respect to the financing of federal political parties, one issue relevant to equality concerns has received surprisingly little attention: the phasing out of political parties' annual per-vote subsidy, set to occur in 2015. Donations from individuals will henceforth become the parties' primary source of funding; but not all Canadians donate equally. By examining a sample of disclosed donors from Elections Canada databases, combined with census data on neighbourhood income levels, this study establishes that donors are substantially more likely to come from wealthier sections of Canadian society. Despite a relatively low cap on donations--individuals can currently give no more than $1,200 annually--wealthier Canadians carry disproportionate weight in the total aggregate of donation dollars. The study concludes by briefly comparing federal rules to regulations at the provincial level and suggesting methods of mitigating inequalities in the political finance system.

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The very essence of democracy is equality. (1) Fairness in politics is undeniably something Canadians desire. Since the 2011 federal election, these principles have been front and centre, as a number of issues relating to the conduct of elections have been making headlines and have been actively debated by Canadians concerned about the quality of democracy in this country.

Through this period, one important issue has received surprisingly little attention: the phasing out of the per-vote annual subsidies for political parties. (2)

These subsidies were first introduced in 2004 as part of a larger package of reforms to party finance regulations, which included a ban on corporate and union donations and caps on political contributions by individuals. In part, the annual subsidies were designed to offset the revenue that would be lost from the new limits placed on donations. However, they also were seen by many as a means of creating a more egalitarian system of party finance, since each and every voter would have some control over the distribution of public funds to the various parties.

In 2015, these subsidies will be fully eliminated and political parties' main source of financing will be donations by individual Canadians (currently capped at $1,200 per year). (3) The parties will continue to benefit from very substantial public funding: not only are there generous tax credits for donations, but they are also reimbursed for a significant portion of their electoral expenses. Nevertheless, rather than public funds being partly directed by the voting preferences of all citizens, after 2015 they will be fully contingent on the support of individual donors.

One potential reason for the lack of debate on the changes may simply be that the prospective system based on donations is believed to have merit. Rather than parties receiving money automatically from the public purse, as occurs with per-vote subsidies, they will have to engage with their supporters to earn their money. The system also appears quite egalitarian since parties must rely on many small donations to secure substantial funds rather than a small number of large donations.

The presumption of equality, however, warrants closer investigation. While $1,200 can appear to be a relatively low cap, it does represent a substantial amount of money for many Canadians who might consider donating to a political party. It is reasonable to assume that contributions of this size are out of reach for many would-be donors in lower income groups. At the same time, larger donations have the potential to count for much more than smaller donations: receiving $1,000 from one person is the same as receiving $50 from 20 people. The concern, therefore, is that there may be significant inequalities in the system in the form of a general skew to donation patterns across income levels. This research seeks to assess whether these concerns about potential inequalities, in particular income inequalities, are merited.

Donations to Canadian Political Parties: What We Know

Prior research into political financing in Canada is quite limited. Despite substantial changes in political finance regulations over the past 15 years, including the banning of corporate and union donations, the introduction of caps on individual donations, as well as the introduction (and now elimination) of per-vote subsidies, there has not been much investigation of patterns of political giving.

The most relevant recent study, by political scientists Harold J. Jansen, Melanee Thomas, and Lisa Young, is entitled 'Who Donates to Canada's Political Parties?'. (4) Jansen and his colleagues do find that those with higher incomes are more likely to give to political parties, but this does not emerge as a dominant factor in their analysis. Age is a more powerful demographic...