Another Election isn’t Much More Costly than Continued Party Subsidies

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

Between 2004 and 2008, Canadians will have spent $290 million on subsidies to federal political parties. If subsidies continue, either because of Prime Minister Stephen Harper’s reversal on the matter, or if a Liberal-NDP-Bloc Quebecois coalition takes power, Canadians will pay out another $260 million to parties between 2009 and 2013. That’s almost the price tag on another federal election fight between Ottawa’s warring forces.

Before breaking apart the $260 million subsidy, it is useful to at least dissect the official line from the opposition parties as to why they plan to take down the government: because the Conservatives did not offer a massive “stimulus” package in last week’s fiscal update.

In the recent election campaign and after, as the Tories hinted at a possible deficit, the opposition accused the government of imprudent fiscal management and of over-spending. The Liberal party website highlights a recent television clip from Finance critic John McCallum who, in reference to the assumed deficit next year, said, “It’s the wild and reckless spending by this government which now has nowhere to hide.”

The Conservatives have spent too much. But if that was the criticism pre-and post-election, and it was from the opposition parties, then it’s more than a slight contradiction to expel the existing overspending government and replace it with a coalition which makes no secret of their desire for a huge “stimulus,” and which the opposition parties have said must include more corporate welfare in the automobile, aerospace and forestry sectors.

The stimulus idea, a concept endlessly parroted by too many people who ape stock market fear and now want the federal government to similarly panic, is a lousy response to a softening economy. Insofar as the stimulus means more money on public infrastructure, it’s impossible to hurry up such projects. It can and should take multiple months and even years to design bridges and buildings. Shovels will start to go into the ground just about the time the recession ends, if not long after.

Insofar as the “stimulus” is about more business subsidies, that won’t soften the blow of the recession. It will put tax money into failing companies and keep them alive, temporarily, at the expense of their competitors. Automobile Company “X” will keep a few sales and employees but at the cost of sales and jobs at Automobile Company “Y”.

Back to the subsidy issue: The headlines might give Canadians the impression the only subsidy parties receive is the $28 million annual allowance. Actually, on its own, that’s not inconsequential. Since 2004, the cost has grown from $23 million to $28.5 million annually and will total $131 million once the dole for political parties is sent out this year.

In addition, parties take public money to run their election campaigns. Party expenses from the 2004, 2006 and 2008 elections were partly billed to the public purse, and at a cost of $74 million for candidate reimbursements and another $85 million for party reimbursements. Thus, the 2004-2008 take by parties for annual allowances and the two reimbursements amounts to $290 million.

Now look ahead. Over the next five years, my estimate based on the 2004-2008 data from Elections Canada, is that political parties will receive $140 million in annual allowances alone. Assume two elections and add expense reimbursements of $50 million for the candidates and $70 million for the parties. That totals $260 million.

It is impossible to forecast how the Ottawa stand-off will end. Some argue that one option, an election, should be forsworn because of the $300 million cost. But should the Tories win an election with a majority, and if they did away with all the party subsidies and not just the annual allowances, the savings would be $260-million.

There are plenty of reasons one may object to another federal election. But the $40-million difference between the cost of an election (if that occurs), and cost of political party subsidies (if it doesn’t), should not be one of them.

Link to Charts on Political Party Financing