Yes Virginia, Santa Claus Should Stop Funding Political Parties

-- (historic), Commentary, Role of Government, Taxation, Uncategorized

In its fiscal update this week, the federal government managed to turn what is normally a boring, spreadsheet yawner into a potential political crisis. Ostensibly, that’s because the Conservatives did not offer some massive “stimulus” package.

The opposition parties are mad and not because the government didn’t throw $50 billion or some other grand figure at the economic crisis. That’s only the public reason. Just weeks ago, they claimed to be in favour of balanced budgets and prudence. They were slashing the Tories – as was this author – for talking about possible deficits.

The Liberals, New Democrats and Bloc are upset because their taxpayer-funded gravy train will end if so-called “public” financing for political parties goes the way of the dodo bird.

The gravy train should stop. Since 2000, parties have raked in $313 million from the public treasury. What’s noteworthy is how the cost has jumped dramatically over the past four years: $290 million was handed over to parties since just 2004.

That’s because in addition to election spending reimbursements for parties and candidates (and we’ve now had three elections since 2004), an additional honey pot of money was created for political parties in 2004– annual allowances.

For every vote a party receives in the most recent election, that party gets $1.95 every year. Since 2004 and to the end of this year, those new annual allowances padded political party coffers by $131 million. It is that amount which the Conservative propose to cut, thus saving taxpayers an equivalent amount over the next four years (higher actually, as it is indexed for inflation).

So what would a loss of this subsidy mean for individual parties? From 2004 to the end of 2008, the Conservatives will have taken in almost $42 million. The Liberals would clock in at $44 million (because some payments in 2006 were still based on pre-2006 vote totals); the NDP take is $24.8 million and the Greens will have received $5.4 million.

But here’s a useful number to chew on: Since 2004, the Bloc Quebecois received $14.7 million from those annual allowances (never mind other public funding which boosts their total public take to almost $32 million). And what did the kill-Canada-up party receive from individual donors since 2004?

As of the third quarter of this year, the Bloc took in just over $3 million from individual doors since 2004. Do the math and the Bloc would have had a tough time fighting the 2004, 2006, and 2008 elections without the $14.7 million in public allowances (even with some taxpayer-subsidized transfers from its local riding associations which are included in these figures). In addition, election reimbursements after the fact, a separate figure, would have been less lucrative if the Bloc didn’t have public money to robustly fight the elections in the first place.

In straight monetary terms, the Conservatives will lose the most money if annual allowances end. As a percentage of their political party budget, the Bloc Quebecois stand to get hit the hardest. But unless one is a separatist, that’s entirely desirable.

If political parties lose their annual taxpayer-funded subsidies, some of them will hurt in the short-term. Too bad. Many Canadians will hurt during the recession and it would be appropriate if political parties feel our pain.

But subsidies are a lousy idea in good or bad economic times. All they do is insulate a party from having to actually craft policies that might attract Canadians willing to donate to their parties.

In the long-term, most of the parties might gain in Quebec and at the expense of a weakened Bloc Quebecois, including even the minor parties such as the New Democrats and Greens. The NDP has always had a strong individual donor base; the Greens are growing. And of course, the Liberals and Tories, the dominant federalist parties in Quebec, might gain the most in Quebec from a weakened Bloc.

Regardless of any individual gain or loss for a political party, ending an annual subsidy that allows a separatist party to thrive would be a positive action to take for Canada.

So the opposition parties, mad about their own cash flow cut-off, have a choice: they can do the statesmanlike thing and give up public subsidies, or they can get into bed with the Bloc Quebecois.

Link to Charts on Political Party Funding