Publication, Public Sector, Frontier Centre

(What is the difference between an independent think tank and those groups whose existence depends on handouts from politicians? By special permission from the author, the Frontier Centre excerpts the following chapter from his recent book, A Nation of Serfs? How Canada’s Political Culture Corrupts Canadian Values, because it provides a clear explanation of that difference. We thank Mark Milke and the book’s publisher, John Wiley & Sons, for extending this courtesy. No further reproduction, transmission, or downloading is permitted.)

“Toronto feminist Beth Symes received a [government] grant to challenge the limit on tax-deductible child-care expenses. At the time her case was heard by the Supreme Court, Syme’s annual family income was $200,000.” — Ted Morton and Rainier Knopf in The Charter Revolution and the Court Party

Everyone into the pool!

Most Canadians might think that government policy is at least partially determined by interest groups and lobbyists who fight it out in the public square mano a mano. A tax-and-spend group saddles up against a limited government lobby and duals it out in front of politicians in scenes reminiscent of Gladiator. In other policy areas, a pro-choice group may cross swords with pro-lifers, business groups hash it out with labour, gay liberation groups with Baptists. In this view of politics, such groups pick up their rhetorical weapons, studies, soundbites and whatever else is within reach, and after they fight it out for a season, politicians and bureaucrats wisely decide on the policies and legislation for the next year, or 20.

Truth is, Canada’s governments long ago stopped being neutral in public policy fights. To extend the Gladiator example, many politicians and the multi-billion-dollar departments they control are more likely to load up their favourite “non-governmental” organization with taxpayer cash and other weapons of choice such as access to themselves, influential bureaucrats and political staff who write the regulations and laws. Meanwhile, groups not in political favour might as well wrap a ball-and-chain around their ankles.

That this is a distortion of the democratic process is obvious to any honest observer who has had the misfortune to closely observe it. (It is also why German chancellor Otto von Bismarck said laws are likes sausages; it is better not to see them being made.) Sure, politicians and bureaucrats will have their biases and some will make up their minds long before cross-country hearings are held on an issue. But when governments use tax dollars to fund advocacy groups, government is no longer on the receiving end of various pleas and demands from the public. Instead, the government as an institution becomes a megaphone-amplified voice, a major player in the public square — one that carries with it all the resources, funding and power that a state possesses, which is substantial. With such power, most other voices — the ones not favoured by government — are shunted to the side.

Any attempt to provide a complete breakdown of government funding for special interests is destined for an exercise in frustration. When it comes to interest groups at the public trough, a comprehensive list of subsidy-seeking (and receiving) groups would fill several telephone books. Every government–federal, provincial, and municipal, and government-owned businesses–dishes out cash to non-profits, registered charities, labour unions and chambers of commerce. Social, political and legal advocacy groups are all funded to wage public campaigns on behalf of their favourite cause.

Often, many groups have a vested interest in government intervention because they are dependent on government (taxpayer) money for their budgets. And the fact that such groups rely so heavily on government funds reveals that their public base of support is indeed narrow. Were it not so thin, they would raise money directly from the public. From environmental groups to teachers’ unions to lobby groups that want government to be more involved in various aspects of Canadians’ lives, many special interests have a vested interest in high taxes precisely because government revenues flow directly to their bottom line.

The battle in Seattle and the granola gang in Genoa

One illustration of how taxpayers fund advocacy against their own best interests and that of the poorest citizens on the planet, is when governments fund anti-globalization groups, their protests, and others associated with such events.

The anti-globalization protesters who travel the world from Seattle to Genoa to Caracas are sincere — and misinformed; they would cut Third World countries off at the economic knees and limit the ability of the poor to improve their lot. The anti-free-trade movement — now dressed up in “fair trade” drag — is another version of provincial-minded protectionism. With apologies to Churchill, never have so many protested so often for so wrong a method to relieve poverty around the world. Access to rich countries’ markets will lift developing nations into better conditions; in contrast, an expansion of protectionist policy under any guise will only guarantee more misery.

But if many Canadians assume as much about the protesters vis-à-vis free markets, they are likely unaware that much of the anti-globalization fervour is taxpayer-funded. When professional protesters show up at every trade summit, much of the ensuing circus is financed by tax dollars, either indirectly or directly.

Remember the 1999 “Battle in Seattle”? The British Columbia Teachers’ Federation sent 100 union activists to that melee. That union’s take from taxpayers was $4.6 million in grants and contributions from the British Columbia government between 1992 and 2001 and another $700,000 in contracts the then-New Democrat government arranged with the teachers’ union.

And then there was Quebec City in 2001. The Canadian Teachers’ Federation helped along anti-free-trade festivities there, and that union has received $579,000 from the federal department of Multiculturalism since 1996. Besides such indirect taxpayer funding for the anti-globalization crowd, politicians also feed them direct cash. Quebec City anti-free-trade activists were given $300,000 by the federal government and $200,000 from Quebec to hold their own so-called People’s Summit.

But if education unions are at the taxpayer trough and feed anti-free-trade sentiment, they are not alone, as sponsors of a 2002 anti-G8 gathering in Calgary illustrated. Participants at that anti-G8 fiesta included the Canadian Labour Congress, itself a recipient of $304,480 based on an analysis of just two federal departments, Canadian Heritage and Environment.

On the environment side, tracking taxpayer funding for every anti-globalization group is near impossible; there are multiple agencies from all governments that disburse grants to environmental lobbyists. But here are several examples from those present at the 2002 Calgary protests: the Canadian Environmental Network, whose website offered to help protesters deliver their message to the “corporate media,” took $481,250 in 2001 from the federal government, which takes taxes from, among others, corporations.

Environment Canada gave the Sierra Club more than $175,000 in grants and contributions to that lobby’s British Columbia and Alberta branches in 2000 and 2001. (The Sierra Club also received more than $213,000 from the B.C. government when the New Democrats were in charge.)

The unions, environmentalists and social activists will argue that no indirect taxpayer cash goes to their anti-globalization fiestas. At other times, chambers of commerce and business lobbies argue that some of the money they receive goes to conferences. Both are weak defences. Business groups ought to hold their conferences without government sponsorship on principle. On a practical level, many of those same groups call for lower taxes and then undercut their call by taking government cash.

Regardless of which favourite cause a lobby group spends money on — an anti-free-trade rally or a Kyoto newspaper ad — the tax dollars that flow from governments allow such groups to engage in more advocacy than they otherwise could if forced to rely only on the public or union dues.

How governments fund their very own lobby groups

To use an example from the environmental movement, while some money goes to environmental projects worth doing by someone, taxpayer cash also ends up funding day-to-day advocacy. There’s nothing wrong with advocacy, nor with a single-issue group or a single view. The group, issue or view may be the correct one to have in light of a particular problem — environmental, economic or otherwise.

But the problem arises when a group avails itself of taxpayer funding and promotes one side. For example, the Alberta-based Pembina Institute, critical of Alberta Premier Ralph Klein for his Kyoto protocol stance, received at least $291,371 in 2000 and 2001 from Ottawa to push what amounted to the federal government’s view on that treaty. How it received the money is no surprise; it was on friendly terms with former federal Environment minister David Anderson, with whom it once held a very public black-tie dinner. Anderson was a fan of the institute’s approach to global warming and vice-versa.

Over the next two years, Pembina received more than $1.4 million in fees for service contracts, of which government contracts constitute a chunk, though the institute’s annual report doesn’t list the breakdown. But some of it originates with government as Pembina lists the following as partners and clients: Alberta Environment, Alberta Municipal Affairs, BC Hydro, BC Ministry of Energy and Mines, Department of Foreign Affairs and Trade, Environment Canada, the National Energy Board and Natural Resources Canada.

Then there is the Sierra Club, which, according to its own financial statements, received $574,431 in 2003 and $758,608 in 2004 in what it labels government contracts.

When such cash arrives via a government contract and not a grant, the response will be that just as Staples isn’t subsidized when it provides paper clips to a federal department, neither is Pembina or Sierra when it provides consulting services. Fair enough, except that it’s one thing to receive taxpayer grants to plant trees, and quite another to get in on the government consulting bandwagon to help push an agenda. It’s also why government consulting by advocacy groups has such a tortured history. Such organizations lobby politicians with the very funds they receive from government; that allows for oversized influence. Such merry-go-round coziness between government and advocacy groups distorts public policy choices much in the same way corporate welfare distorts economic choices.

While such lobby groups receive government funds, it is easier to take positions that may kill off development. That’s not bad if a company might poison the water; it’s not so positive if the group has its facts wrong or has debatable solutions to a problem, which almost every organization does. When governments fund non-governmental organizations that also do advocacy work, it allows them to publish, lobby and agitate for policies regardless of whether enough people would actually support the efforts of such a group. It’s a perfect way to insulate the organization from real-world effects and inculcate radicalism.

How the BC and Manitoba NDP governments funded the CCPA

A provincial example of this occurred in British Columbia. Throughout the 1990s, the New Democratic government funded the Canadian Centre for Policy Alternatives (CCPA), an organization (with offices across the country) that, not coincidentally, constantly presses for higher taxes and more spending.

To say that a fair majority of Canadians would disagree with the Centre’s policies is an understatement. The CCPA, which has tax-deductible status, is solidly in favour of higher taxes and more government intervention in the economy including, oddly, corporate welfare. (Curiously, its call for higher taxes, if implemented, would negatively affect high-income workers on the auto assembly line who are probably unaware their labour bosses at the Canadian Auto Workers Union also fund the group.)

In British Columbia, the New Democratic government in power between 1991 and 2001 gave the CCPA at least $610,231 over a decade. And $400,000 of that was doled out in the last three months of the NDP’s mandate in 2001. Access to Information requests to government reveal that in some cases the CCPA gave 50 copies of each study they produced to government ministries or Crowns. That enabled the Centre to pretend it performed contract work or sold goods and services to the government. What it did was charge several hundred dollars per report for 20-page opinion pieces produced by the Centre that were available free on its website and that other organizations regularly give to governments for free; i.e., their advice in the form of studies and pre-budget submissions. It was a covert and dishonest way for the then-NDP government to subsidize a lobby group that would routinely call for higher taxes and more spending — a lobby group that was then a convenient and well-funded ally.

And by granting $400,000 in the last three months of office in 2001, when it knew it faced certain defeat at the polls, New Democrats bought — at taxpayer expense — an ideologically similar lobby group that could be guaranteed to be critical of the expected (and eventual) new B.C. Liberal government. One “contract” given to the group by the NDP government was for studies to be conducted through to 2005 which, not coincidentally, was the time frame up to the next election. It was political advocacy bought and paid for by taxpayers who were unaware that their tax dollars were used to fund views and positions with which they might disagree.

Even after the B.C. NDP left office in 2001, governments elsewhere funded the CCPA: charity records show $600,208 in funding for 2002. Late that year, the organization received another pleasant announcement: the provincial NDP government [in Manitoba] announced the federal government would give the group a grant of $900,000, presumably so the think-tank could write glowing reports on what a swell job the Manitoba NDP and federal government were doing on public policy (or just to prop up the CCPA’s revenues).

Unsurprisingly, in 2005, the think-tank/advocacy group demanded higher wages for government workers, no tax relief for business and no tax cuts for the average worker; instead, the government-funded lobby recommended “alternative” tax cuts in the form of higher government spending, a rather Orwellian redefinition of “tax relief” and a transparent manipulation of language.

This lobby group brought to you courtesy of Ottawa

Many groups active politically and in the courts would likely disappear or be severely restricted in the activities they pursue were it not for their tax- deductible charitable numbers or their government funding. Canadians have wide and divergent views on a number of issues, especially those most controversial.

But it would not matter if Canadians were 100 per cent in favour or opposed on any particular issue. A healthy democracy needs dissent and must preserve room for the same. When governments fund one side of an issue in advocacy work or in the courts, they in effect stifle dissent by virtue of the “megaphone effect.” Groups with a funding pipeline from government hire a plethora of lobbyists, researchers and spokespeople to influence the public debate in a manner they could not if they were actually dependent on a membership base reflective of the public at large.

Why taxpayer funding is wrong and undemocratic

First, subsidies to special-interest lobbies take scarce tax dollars.

Every time governments write a cheque, they make a choice on behalf of those who pay the bill. Whether the citizen is an English-language teacher helping immigrant children or a blue-collar worker on the assembly line in southern Ontario, most taxes are paid by middle-income Canadians because that’s where most Canadians are: in the middle-income tax brackets. Yes, the poor and rich pay taxes as well, but the poor are largely (and properly) exempt from most taxes and the rich are few in Canada, so the tax burden falls on the middle-income earners.

Thus, when governments cut a cheque they do so largely at the expense of middle Canada. When governments give money to a lobby group, the pool of cash available for more worthy causes shrinks. And whether the tax rate is low, high, or whether a country is rich or poor, there will always and should always be a limit to the amount of money a government can spend. In addition, the impact of special-interest group funding on taxpayers is not limited only to the grants and contributions such organizations receive. Taxpayers are also affected by what those groups advocate for: in many cases, special interests put pressure on government for ever-higher per capita spending and its corollary: higher taxes.

Second, subsidies for political or legal advocacy distort the democratic process.

One core assumption of the Canadian Constitution and of our democratic tradition is the limitation of the power of the state to compel citizens to act in ways they do not wish to. We assume people are free to do whatever they wish unless actions are expressly and explicitly forbidden in law.

This assumption also implies that there are limits to the possibility of collective action by Parliament. For example, assume some people desire to restrict others’ freedom of speech or the right to vote; Parliament cannot simply and collectively remove such rights. There is the historical assumption, tradition, and — since 1982 — the Constitution, which limit the collective action of parliamentarians, or anyone else, to remove anyone’s rights or force one to do that which he or she does not wish to do. (There are exceptions to this; few rights are absolute. But the exception is not the rule.)

Within the context of taxpayer funding for special-interest groups, governments ought not only to respect the rights of individuals, but when it comes to collective action (which is what legislatures and parliaments are about), governments ought to, at the very least, listen first. None of this prevents politicians or parties from expressing views or even leading public opinion, but citizens deserve a government and civil service that, as an institution, is neutral. Without that, elected representatives interested in what a section of the public actually thinks cannot know if the views that a lobby groups trumpet are legitimately held by a wide swath of Canadians, or are simply a parroting back of what some politicians and mandarins wish to hear — and fund.

Third, government subsidies compel people to support groups and political positions they might disagree with.

Funds given by politicians to lobby groups do not originate magically within the public treasury; they are compelled by government and delivered to government coffers by taxation.

Citizens might be tempted to overlook their forced donation of funds to organizations because on occasion they may agree with some of the organizations that receive such funds; but that is shortsighted.

Government unions may like to receive taxpayer cash, but are they thrilled to know that chambers of commerce also receive money? Between 1989 and 1999, the federal Crown corporation Atlantic Canada Opportunities Agency (ACOA) gave $5,032,728 to chambers of commerce, boards of trade and business associations in Atlantic Canada. Included on the list were the St. John’s Board of Trade ($435,212), the Nova Scotia Chamber of Commerce, ($161,546), and the Atlantic Chamber of Commerce ($1,247,473), to name but a few. Environmentalists may love their time at the ministry of Environment, but do they also appreciate it when the Canadian Association of Petroleum Producers receives $427,837 of non-repayable contributions from a federal Crown corporation, Western Economic Diversification?

As an institution separate from politicians and political parties, politicians and bureaucrats should not use government and taxpayer dollars as their own personal fiefdom and slush fund and give tax dollars to groups they favour. To do so is a distortion of the political process; for those who do not agree with the agendas of the groups that receive their tax dollars, it is tantamount to theft. The entire process reeks of the Sponsorship Scandal: those with connections receive the cash.

(Excerpted from A Nation of Serfs? How Canada’s Political Culture Corrupts Canadian Values by Mark Milke, 272 pages, $26.99. Published by John Wiley & Sons, A Nation of Serfs? is copyrighted material. This excerpt courtesy of John Wiley & Sons. No further reproduction, transmission, or downloading permitted. Mark Milke © 2006)