A Comparative Analysis of Political Finance Regulation in the Maritime Provinces

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2016 A Comparative Analysis of Political Finance Regulation in the Maritime Provinces

Johnson, Anna Elizabeth

Johnson, A. E. (2016). A Comparative Analysis of Political Finance Regulation in the Maritime Provinces (Unpublished master's thesis). University of Calgary, Calgary, AB. doi:10.11575/PRISM/24664 http://hdl.handle.net/11023/3482 master thesis

University of Calgary graduate students retain copyright ownership and moral rights for their thesis. You may use this material in any way that is permitted by the Copyright Act or through licensing that has been assigned to the document. For uses that are not allowable under copyright legislation or licensing, you are required to seek permission. Downloaded from PRISM: https://prism.ucalgary.ca UNIVERSITY OF CALGARY

A Comparative Analysis of Political Finance Regulation in the Maritime Provinces

Anna Elizabeth Johnson

A THESIS

SUBMITTED TO THE FACULTY OF GRADUATE STUDIES

IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE

DEGREE OF MASTER OF ARTS

GRADUATE PROGRAM IN POLITICAL SCIENCE

CALGARY, ALBERTA

DECEMBER, 2016

Money is crucial to the functioning of democracy and is often used as a tool to influence the political process. However, concerns about real or perceived corruption has led many jurisdictions to regulate political finances. Politics in the Maritime Provinces have long been notorious for corrupt practices. Yet, political finance regimes have existed in these provinces for several decades. Using historical and political contexts and three benchmarks for political finance regulation—equality of opportunity for political actors, equality of opportunity for private actors, and mitigation of corruption—the effectiveness of the regimes in the Maritime provinces is assessed. Differing experiences with internal and external pressures for reform have led to varying results. In Nova Scotia and New

Brunswick, internal pressures due to shifting attitudes toward equality led to more comprehensive and effective regimes than that of PEI, which was spurred by external forces through a contagion effect.

ii Acknowledgements

I would like to begin by thanking the Social Sciences and Humanities Research

Council and University of Calgary’s Department of Political Science for their generous financial support for this project. I would also like to thank the members of the faculty and staff who made this project and degree possible through their ongoing advice and support. I am particularly thankful to my supervisor, Dr. David Stewart, whose constant encouragement kept me writing. Thank you for your unwavering belief in my abilities and, most of all, for your patience.

To my colleagues and friends in political science, thank you for the laughs, distractions, and great memories. Thank you to the PhD students who acted as my mentors throughout this process and my MA cohort with whom I was able to share my stress and frustrations. A special thank you to my friends in Medical Physics, for pretending to care about politics and for teaching me about the fascinating world of radiation treatments.

To my parents, Bill and Dawn, I never would have made it this far without you.

Thank you for the support, both academic and emotional, the motivation, and the unconditional love. To my brother Billy, thanks for the mutual rants about grad school, and to my sister, Emma, thank you for reminding me that there is a light at the end of the tunnel—that a good thesis is a finished thesis! Thank you all from the bottom of my heart.

iii Table of Contents

Abstract ...... ii Acknowledgements ...... iii Table of Contents ...... iv List of Tables ...... vi

CHAPTER 1: INTRODUCTION ...... 1 The Development of Political Finance Regulation in Canada ...... 3 Why Regulate Political Finance? ...... 8 Why Parties Seek Regulation and Reform ...... 16 Political Finance in the Maritimes ...... 22

CHAPTER 2: NOVA SCOTIA ...... 30 Political and Social Context ...... 30 Early Political Finance Reform ...... 33 Current Political Finance Regime ...... 45 Expense Limits ...... 46 Contribution Limits ...... 47 Public Funding ...... 48 Transparency ...... 49 The Regime and Political Finance Benchmarks ...... 51 Equality of Opportunity for Political Actors ...... 52 Equality of Opportunity for Private Actors ...... 58 Openness and Mitigation of Corruption ...... 62 Conclusion ...... 65

CHAPTER 3: NEW BRUNSWICK ...... 68 Political and Social Context ...... 68 Early Political Finance Reform ...... 70 The Current Political Finance Regime ...... 82 Expense Limits ...... 83 Contribution Limits ...... 84 Public Funding ...... 85 Transparency ...... 87 The Regime and Political Finance Benchmarks ...... 88 Equality of Opportunity for Political Actors ...... 89 Equality of Opportunity for Private Actors ...... 97 Openness and Mitigation of Corruption ...... 102 Conclusion ...... 105

CHAPTER 4: PRINCE EDWARD ISLAND ...... 108 Political and Social Context ...... 108 Early Political Finance Reform ...... 114 Current Political Finance Regime ...... 121 Expense Limits ...... 121 Contribution Limits ...... 122

iv Public Funding ...... 123 Transparency ...... 124 The Regime and Political Finance Benchmarks ...... 126 Equality of Opportunity for Political Actors ...... 126 Equality of Opportunity for Private Actors ...... 137 Openness and Mitigation of Corruption ...... 141 Conclusion ...... 143

CHAPTER 5: CONCLUSION ...... 146 Equality of Opportunity for Political Actors ...... 149 Equality of Opportunity for Private Actors ...... 153 Openness and the Mitigation of Corruption ...... 154 Concluding Remarks ...... 155

REFERENCES ...... 157

APPENDIX A: SUMMARY FIGURES AND TABLES ...... 168

v List of Tables

Table 1: Corporate Donations to the Dominant Political Parties 2006-2012 ...... 99

Table 2: Initial Political Finance Regulations in the Maritime Provinces ...... 168

Table 3: Major Revisions to the Maritime Political Finance Regimes ...... 168

Table 4: Initial Characteristics of the Maritime Political Finance Regimes ...... 169

Table 5: Current Characteristics of the Maritime Political Finance Regimes ...... 170

vi List of Figures and Illustrations

Figure 1: Categories of Regulation and the Political Finance Benchmarks ...... 168

vii

CHAPTER 1: INTRODUCTION

Over the past decade, political finance has become a subject of paramount interest in Canada. Beginning in 2004, a series of reforms introduced by different Liberal and

Conservative governments at the federal level marked the first major changes to the

Canadian political finance regime since 1974. These reforms significantly altered the way in which federal parties and campaigns were funded. As such, these reforms sparked intense disputes between the federal political parties about how political financing should be approached. Rising costs associated with running efficient and strategic campaigns, establishing and sustaining central and local offices, and general party organization maintenance, have made a party’s ability to raise funds more crucial than ever. A party that is unable to keep up with the financial demands of an election will be less likely to remain competitive than counterparts able to meet financial targets. With the constant innovation in political campaigns and the imperative to establish permanent campaigns, while still carrying out everyday party activities, the pressure to raise more money increases with every election cycle. However, the rising cost of politics also brings with it mounting suspicion about the sources of party funds. On the one hand, there is the worry that parties might become indebted to the interests of large contributors, such as unions, corporations, wealthy individuals. On the other hand, there is the concern that in the absence of large contributions, parties would be unable to carry out their basic functions.

In the unique realm of politics where parties use the state to self-regulate, political finance reforms have important implications for the welfare of parties, as well as for legitimacy and transparency in the political process. Therefore, it is not surprising that when reforms occur, they lead to intense debate. 1

While federal reforms have dominated debates on Canadian political finance in recent years, every Canadian province has legislation regulating the financing of parties and campaigns and many have introduced reforms in recent years. While the federal regime—covering a greater constituency, with larger sums of money, and with greater perceived opportunity for corrupt practices—grabs the attention of the media, the public, and academics, the provincial regimes garner very little attention, even when significant reform packages are introduced. Though the parties in the provinces deal with a smaller populations and cover smaller geographic areas, the demands placed on them are essentially the same. Provincial parties are still expected to run high quality, professionalized campaigns, complete with television advertisements, striking signage, logos and images, and continuous face-to-face interactions. Provincial political parties must meet these demands with far fewer potential financial contributors than their federal counterparts. The interdependence of local industries, economies, and politics has led to real and perceived corruption, which plagues politics across the country.

The three Maritime Provinces—New Brunswick, Nova Scotia, and Prince Edward

Island—offer a particularly intriguing basis for comparison on these grounds.

Geographically small and largely rural with relatively small populations, these provinces have a notorious history of a propensity for patronage and illicit political practices. Yet, all three provinces have comprehensive political finance regimes. In 1969, Nova Scotia became the second province in Canada to introduce legislation regulating political finance. Ten years later, in 1978, New Brunswick followed suit with the introduction of an Act dedicated to the establishment of a political finance regime. PEI became one of the last provinces to introduce such legislation in 1985. Introduced over the course of two 2

decades, the political finance regimes of these three provinces have numerous similarities but also differ in many ways. Often viewed as a distinct region, where the provinces are politically and culturally comparable, if not uniform, the diverse approaches to political financing adopted by the three provinces raise a number of questions, the answers to which may inform the best legislative practices for political finance in Canada. Such questions include: 1) what were the problems and concerns that motivated the reforms in each province? 2) what legislative mechanisms did they choose to adopt to respond to these problems and concerns? 3) where the problems or concerns were similar, were different mechanisms adopted? and 4) if so, what lessons can be learned from a comparative analysis about policy outcomes in political party finance legislation in

Canada?

The Development of Political Finance Regulation in Canada

While the past decade has witnessed a notable proliferation of literature on political finance in Canada, the study of political finance is by no means a new field of interest. Even before Canada had a formal party finance regime, questions about the benefits of such a regime were being raised in the literature.1 In 1963, Quebec became the first jurisdiction in Canada, and one of the first in the world, to introduce legislation on the regulation of political financing. This bold move generated an increased interest in political financing across the country. In the two decades following the creation of the

Quebec political finance regime, the federal government and several provinces initiated

1 See, for example, Adamany & Agree (1975). 3

commissions on political financing and electoral reform, and by the mid-1980s, almost every jurisdiction had some form of regulation in this area. The spread of regulation also spurred a wave of academic literature on the subject. Questions were raised about how far regulation should go, what purpose regulations served, what forms of legislation would lead to the best outcomes, and, more fundamentally, whether or not the state should be involved in the regulation of political parties at all. Over time, a consensus grew, suggesting that some form of regulation was necessary to ensure transparency and accountability. Still, debates over what kinds of regulation should be implemented remain.

While there is currently a general consensus about the importance of political finance regulation, it should be noted that this has not always been the case. Today, many would echo Schattschneider’s (1942) claim that “modern democracy is unthinkable save in terms of political parties” (p. 1). However, it is important to note that political parties have not always been viewed in this sense. Political parties situated within Westminster parliamentary systems, such as those at the federal and provincial levels in Canada, are traditionally considered to be private organizations separate from the state (Young &

Jansen 2011). Van Biezen (2004) notes that parties were long “perceived as a threat to the general interest or overriding the interests of the individual, as their existence was fundamentally incompatible with the radical democratic tradition…and the liberal democratic tradition” (p. 704). As such, the activities of political parties were intentionally distanced from the state. Even as it became apparent that they played an important role in the effectual functioning of the political system through the linking of

civil society to the state, the selection of candidates and leaders, and the aggregation of interests, there remained a reluctance to formally recognize political parties.

In Canada, the need for some form of regulation of political finances was recognized early on. The very first regulations were introduced in the Dominion Elections

Act, 1874, in the wake of the Pacific Scandal in which it was discovered that the

Canadian Pacific Railway Company had contributed money to the governing party in return for contracts and political favours (Committee on Election Expenses [CEE], 1966).

The provisions in the Act required that each candidate acquire an official agent who would be responsible for reporting the inflow and outflow of the candidate’s money

(ibid.). Furthermore, bribery in any form was prohibited under this Act. Yet, by the turn of the 20th century, the federal political parties in Canada were receiving the bulk of their funds from corporate entities and the legislation appeared to have little effect on either real or perceived political corruption. It was not uncommon for a corporation to support the governing party if it was sympathetic to that corporation’s interests (Christian &

Campbell, 1990). After the First World War, the newly formed Progressive Party alleged that Parliament was an untrustworthy institution, as many of its members were

“susceptible to corruption by Eastern financiers and corporations” (Christian &

Campbell, 1990, p. 57). While potential corruption was viewed as problematic, many were still averse to the recognition of political parties in the law. In an attempt to appease critics, legislation was passed in 1920 prohibiting candidates from accepting donations from unions or corporations and forcing candidates to disclose the names of all contributors. While this legislation helped to ease tensions over potential or perceived corruption, the fact that it did not recognize the fundraising capacity of political parties 5

themselves, as distinct from the fundraising capacity of individual candidates, rendered the legislation ineffectual (Carty et al., 2000). By 1930, the legislation was repealed, leaving political financing in Canada virtually unregulated, save for the remnants of the provisions from the 1874 Dominion Elections Act.

It was not until 1974 that Canada became the first recognized political parties in the law with the introduction of rules regarding the registration of political parties

(Young & Jansen, 2011). At this time, the federal government also introduced political finance regulations and public funding for political parties. These significant reforms were largely the result of the 1966 Report of the Committee on Election Expenses, or the

Barbeau Report. This report emphasized the necessity of including political parties in political financing legislation, stating that “as in most other democracies, the Canadian legislator has, until now, refused to recognize the legal existence of political parties” and that “legislation which does not recognize parties is incomplete” (CEE, 1966, p. 28). The

Report recommended the introduction of political finance regulations for parties and greater regulations for candidates, as well as the consideration of public subsidies for both parties and candidates (ibid.). It was the better part of a decade before any of these recommendations were implemented.

While the creation of a true political finance regime at the federal level was a significant step in Canadian politics, it is important to note that it was a provincial government, not the federal government, that started the movement away from the traditional conception of political parties, toward one that realized their integral role in the functioning of the political system. As previously mentioned, the first jurisdiction to introduce a comprehensive political financing regime was the province of Quebec. 6

Indeed, the recommendations set forth in the Barbeau Report were greatly influenced by the political financing legislation introduced in Quebec in 1963 (CEE, 1966, p. 10).

Quebec’s legislation included provisions limiting the expenses of parties and candidates, requiring all candidates to have an official agent, and providing partial reimbursements to candidates meeting certain criteria (ibid.). Manitoba and Saskatchewan had also experimented with various forms of political financing regulation before the Barbeau

Committee released its findings but neither were as long-lasting or robust as the legislation introduced in Quebec (ibid.). Nova Scotia, however, introduced legislation similar to that of Quebec in 1969, and Manitoba followed in 1974.

By the mid-1970s, there was a growing consensus among the various jurisdictions in Canada that political finance laws had to take into account the prominence of political parties, as well as candidates. Additionally, the federal government and most provinces began to introduce some form of public subsidy for parties and candidates. In 1993, thirty years after Quebec introduced its pioneering political finance regime, Newfoundland became the last province to enact legislation on the issue. Before the end of the millennium, the newly formed territory of Nunavut became the final jurisdiction to do so.

Today, the federal government and all the provincial and territorial governments regulate political finance. However, none of these regimes are exactly the same. Before PEI or

Newfoundland had even discussed political financing, the regimes of Quebec and Nova

Scotia had been amended and aspects of the federal regime had been taken to the

Supreme Court. Over the years, each province has changed their approach to political financing in order to meet the unique needs of their political realities. Still there remain notable commonalities among the various regimes which shed light on the importance of 7

such legislation. In order to understand the variation among these regimes, it is first necessary to understand the arguments for the regulation of political financing.

Why Regulate Political Finance?

One of the common arguments for introducing legislation on political financing is the rising costs of running political campaigns. While campaigning has always been an expensive endeavor, the cost of running an effective campaign has risen exponentially in the past sixty years. The highly competitive nature of politics, coupled with advances in communication technologies, has placed increased pressure on political parties. Not only are parties expected to run professional campaigns with centralized messages and high quality advertisements during election periods, they also have to maintain their high-cost operations between election periods. Parties that are unable to keep up with these demands are liable to lose their competitive edge. With the increasing operating costs of modern political parties in terms of professionalization and cost-intensive campaign strategies, traditional fundraising sources have often proved inadequate to enable parties to remain competitive (Fisher, 2011). Indeed, even fundraising costs money and not all parties are equally well-positioned to update their fundraising strategies or to fundraise aggressively. This problem is exacerbated at the local level where constituency offices and candidates are charged with raising sufficient funds to run efficient ground campaigns during elections and, also, to act as effectual links between the party and citizens between elections. It is because parties, and, in particular, their local associations, act as a link between the state and civil society that their continued operational and financial health can be seen as being in the best interest of society as a whole (ibid.).

Given the integral role political parties play in society, the argument is made that that all political parties and candidates should be given equal opportunity to influence politics through regulation.

This notion, of course, is premised on the idea that money translates directly into political influence (Ewing, 1992). If money can buy political influence, then parties and candidates with larger purses have an immediate advantage over less affluent actors.

Smaller or poorer parties that are incapable of appropriating the funds necessary to become or remain competitive do not have the same opportunity as larger, well- established parties to influence politics. As a result, their supporters also have less political influence (Fisher, 2011). As Ewing (1992) argues, political equality requires that one be granted “the right to participate in government on equal terms with one’s fellow citizens” (p. 14). Here, participation in government means not only granting citizens the right to vote, but also entails the rights of equal opportunity to stand for election and of equal opportunity to secure election (ibid.). While formal barriers to stand for or to secure election may not exist today, there remain social and economic barriers that prevent certain people or groups from having an equal opportunity to influence politics in these ways. Not unlike entities in other spheres of a market economy, political parties must compete for limited resources and with limited time. However, in order to maintain the democratic integrity of political institutions it is essential that one political entity does not have a monopoly over economic resources or the political process (ibid.). In the absence of regulation, this is difficult to ensure. Just as not all individuals have an equal opportunity to stand for or to win an election, similarly, not all political parties have an equal opportunity to compete or win. Thus informal economic barriers can prevent 9

certain individuals, groups, or ideologies from participating in the political process on equal terms. Certain forms of political financing regulations aim to remedy this disparity by lessening the financial burden on political actors and leveling the playing field for those less able to raise funds.

Reforms associated with mitigating the effects of the rising costs of politics and the creation of equal opportunity among parties and candidates include various forms of spending limits and public funding. Spending limits, or expense limits, are usually restrictions on the amount of money that parties or candidates can spend during campaigns. The goal of spending limits is to ensure that parties are able to compete on equal terms. Limiting the amount of money one can spend reduces the potential disparity between poor parties/candidates and wealthy parties/candidates (Seidle 2011). A particularly wealthy candidate, who might be able to spend more money than other candidates, is now restricted by the spending cap, thus leveling the playing field. In this way, spending limits also help to mitigate the pressures of the rising costs of politics and forces actors to spend strategically. All political actors know that both they and their competitors must abide by a financial ceiling which constrains the political influence of money. This prevents actors from becoming overwhelmed by the ever-increasing costs of campaigning.

Public funding is also aimed at leveling the playing field and mitigating the costs of politics. Public funding can take many forms and can range from very small individual reimbursements to large, wide-ranging subventions. Here, the focus is on two forms of public funding, namely, the reimbursement of election expenses and publically-funded subsidies. Reimbursements of election expenses were included in some of the earliest 10

political finance regimes. Arguably, reimbursements create equal opportunity for individuals and parties with fewer resources to stay in the game and lessen the financial burden associated with operating a political party and running in an election (Seidle,

2011). Public funding alone helps to ensure competition begins on equal terms. When used along with spending limits, this form of public funding further reduces the disparity between political actors by creating a situation where, economically, competition can begin and end on more or less equal terms. Furthermore, reimbursements can allay the debts that candidates and parties incur during election periods.

Similarly, state subsidies for political parties help to alleviate the strain of long and costly election campaigns. While often determined by the results of the previous election (i.e. per-vote subsidies), state subventions can still provide parties with a fairly stable source of income that would not be otherwise guaranteed. This guaranteed income can help smaller or new parties to break into the political arena. It has been further argued that such a stable source of income can also improve a party’s capacity to reach out to members and to develop policy, strengthening democracy and increasing political participation (Seidle, 2011). Introducing public funding also decreases the reliance of parties on contributions from private sources, which are often viewed as unreliable or suspicious.

The question of unreliable and suspicious contributions precipitates another argument in favour of regulation; that is, to reduce corruption and the undue influence of private individuals, corporations, and unions (Clift & Fisher, 2004; Seidle, 2011). The pervasive fear of corrupt political practices involving the questionable exchange of goods or services for government contracts or favours has plagued Canadian politics. While it is 11

understandable that citizens are concerned about the source of political money, it should also be noted that the appearance of corruption can sometimes be as disruptive to the political process as actual corruption. In other words, even though individuals, corporations, or unions might be donating money with the best of intentions, the perception that contributions might be made in return for some service or good from the political actor to whom the contribution was made can lead to distrust of the political system among the citizenry. Thus, knowing the source and amounts of donations has serious consequences for the legitimacy of the political process. Among other things, the electorate fears that not all votes carry the same weight. Just as political actors should compete on an equal footing, so too should the electorate compete on equal terms by ensuring that all votes have equal value (Ewing, 1992; Fisher, 2011). Assuming that money can translate into political influence, in an unregulated system, not all votes necessarily translate into the same level of political influence.

The three forms of regulation associated with these issues are transparency (i.e. reporting mechanisms and penalties), contribution limits, and tax credits for contributions. The purposes served by contribution limits are twofold. First, as mentioned above, just as parties and candidates should be afforded an equal opportunity to compete, so too should individuals have an equal opportunity to influence politics. Related to this idea is the second goal of contribution limits: to reduce the undue influence of wealthy private entities and to reduce the appearance of corruption. Money is considered by many to be a way to buy political influence. When no limit is placed on private contributions, notably large donations can give rise to a concern about corruption. This is particularly true of corporations and unions. These entities already have substantial influence in 12

government as they are entities that can either boost or stall the economy, but they are not granted the right to vote. Exceptionally large donations by these entities are often viewed with suspicion as possible attempts to buy influence in order to further private interests.

In many cases, the fear with large contributions is that there is an unseemly exchange between the private entity and the political actor (i.e. patronage, kickbacks, contracts, etc.). Because of this, some believe that limiting or eliminating union and corporate contributions and limiting individual donations is the best way to reduce both the chances of real and perceived corruption. The difficulty is that corporations and unions have a vested interest in elections, but, apart from making contributions, they may have little say in who gets elected. For this reason, the total prohibition of corporate and union contributions is highly contested and, as a result, contribution limits vary drastically across jurisdictions.

Tax credits for political contributions can also be included under this category of political finance regulation. Much as expense reimbursements for candidates and parties are intended to level the playing field for political actors, tax credits are intended to create equal opportunity for private entities to influence politics. In the past, some governments, particularly in the United States, also experimented with tax deductions for political contributions in attempts to achieve similar ends (Adamany & Agree, 1975). Tax credits, however, have been shown to be more successful at levelling the playing field than deductions (ibid., p. 125). Tax deductions only have a notable impact on tax returns when the deduction is of a substantial value. Furthermore, the benefit from a tax deduction depends on the individual’s tax bracket. As a result, tax deductions tend to benefit

wealthier individuals who are able to make larger political donations, while tax credits, tend to benefit donors on more equal terms because they reduce the total amount owed.

All jurisdictions in Canada that incorporate tax incentives in their political finance regimes use tax credits rather than deductions (Elections Canada, 2014). Most of these incentive plans have mechanisms to ensure that tax credits are relatively proportional to the amount donated. In other words, they make certain that there is as much incentive for smaller donations as there is for larger donations. In addition, many regimes have a maximum credit that can be claimed. For example, the federal regime has a maximum tax credit of the lesser of $650 or $475 plus 33.33% of the amount that the individual contributed over $750. While such tax incentives serve to give individuals equal opportunity to contribute to and influence political actors, they also serve as indirect subsidies to political actors. Tax incentives encourage contributions and, thus, should increase the number of donations made to political entities. In this way, tax incentives also confer a certain degree of legitimacy on political donations.

The legitimacy of political money, or, at least, the perception that political money has been obtained through legitimate means is integral to any political financing regime.

One way to establish the legitimacy of political contributions and to diminish the chances of corruption is to require more transparency in the political process. Reforms that deal with transparency usually require candidates and parties to report expenses and contributions. Reports can include financial transactions during an election period, annual financial transactions, or both. Some jurisdictions may only require a report after elections, while others require them more frequently. Essentially, these reports ensure that the party and its candidates have followed the rules concerning political financing. 14

Most political finance regimes require that parties and/or local associations appoint a financial officer who assembles these reports. Furthermore, some jurisdictions have specific bodies, independent from the parties, whose sole purpose is to collect and review these reports, and to ensure compliance (Elections Canada 2010). Each jurisdiction has penalties for general and specific infractions of electoral laws. Some jurisdictions have penalties and procedures specific to election finance laws. The public availability of the financial return reports, while not always covered in political finance laws, is also a form of transparency. If reducing real and perceived corruption is the goal of transparency laws, then public scrutiny can be crucial. In these ways, political finance regulation can ensure transparency and accountability.

As the above discussion demonstrates, there are three reasons for introducing political finance regulation that are often cited in the literature: 1) the mitigation of corruption, 2) equality of opportunity for political actors, and 3) equality of opportunity for private entities to influence politics. Four categories of regulation arose from this discussion. These broad categories, which include: 1) expense limits, 2) contribution limits, 3) public funding, and 4) transparency mechanisms, incorporate the various forms of regulation outlined above. Regulatory policy outcomes should correspond to the reasons given for their introduction. In other words, if the goal is to mitigate corruption or the perception of corruption, then the regulations that are introduced should come in the form of transparency mechanisms, contribution limits, or public funding, while if the goal is equal opportunity for political actors, then it is likely that the policies fall into the categories of expense limits or public funding. Over time, in any one jurisdiction, new

challenges arise and priorities change. These diverging experiences lead to variation among political finance regimes.

Why Parties Seek Regulation and Reform

While the discussion has touched on the desirability of political finance regulation and the reasons for adopting certain policies, it does not explain why political parties in power seek such state intervention in their financial affairs. At first, the idea that a party would introduce legislation that places constraints and conditions on its fundraising and spending might seem peculiar. This is especially true when parties introduce reforms that appear to go against their best interests. A notable example of this occurred in 2004 when the federal Liberal government placed limits on political contributions made by corporations, unions, and individuals. The Liberals, whose major contributors had traditionally been corporations and large individual donors, were hit hard by these reforms even though they had, at the same time, introduced per-vote subsidies to offset the effects of the contribution limits (Jansen & Young, 2011; Colletto & Eagles, 2011).

Indeed, some within the party were wary of the reforms from the outset. The Liberal

Party president, stated that the person who came up with the idea to ban corporate and union contributions was “as dumb as a bag of hammers” (Clark, 2003). This might appear to be an extreme example, and of course, not all parties introduce reforms that affect them negatively, but it does raise the question of why parties adopt political financing policies at all. The broad discussion of political finance regulations outlined above cannot, on its own, explain this.

Three theories as to why parties seek reform commonly appear in the literature on political financing. The first theory is that of “constitutional engineering,” which argues that institutional change is the result of intentional design by strategic agents (Clift &

Fisher, 2004). This theory suggests that reforms are most likely to occur when the institutional rules no longer benefit the dominant actors. It further posits that changes can occur when dominant actors “seek to improve their own interests, possibly at the expense of political rivals” (ibid., p. 6-7). While this approach is applied more often to electoral reforms, one of the most influential theories about political finance in the last 20 years, the so-called “cartel theory” (Katz & Mair, 1995), falls into the category of constitutional engineering. The basis of the cartel thesis is that, at a certain point in the development of a party system, major parties in the system will begin to collude in order to ensure their survival and to block out any new competition.

Increased state funding plays a crucial role in this petrification of the party system. As the dominant political parties and the state grow closer, the dominant parties essentially “invade” the state (ibid., p. 16). These parties, then, play a dual role: they are both the distributors and the recipients of state resources. As a result, dominant parties begin to receive subsidies from the state. This creates barriers for new parties trying to gain power, giving the dominant parties incentive to share resources in order to survive together and to wipe out competition. This theory, then, asserts that “the state…becomes an institutionalised structure of support, sustaining insiders and excluding outsiders”

(ibid., p.16). In turn, the major parties gain monopolies over the distribution of state subsidies and the means of communication, making them “semi-state agencies” rather than popular policy-making engines (ibid., p. 16). 17

The account of state funding provided by the cartel theory is sobering, to say the least. According to Katz and Mair (1995), the cartelization of political parties leads to intense centralization of political parties, with very little emphasis placed on party membership. As parties rely increasingly on resources from the state, then, logically, they rely less on voluntary donations or membership dues. As a result, funds flow directly to the party centre and are distributed for use in highly centralized, professionalized, modernized campaigns (ibid.). Thus, political parties strategically use the state and political finance regulation to block out competition and ensure their own long-term political and financial stability. While this might come across as an undesirable progression, it has also been argued that the cartelization of political parties can be viewed as a positive development in that political parties become “public utilities” (van

Beizen, 2004; 2008). In this sense, parties can be considered public utilities because they are agencies that perform such vital services for the public that they warrant some degree of state control and regulation, while also being granted certain legal privileges and remaining as private institutions (ibid.).

The cartel party model is a convenient explanation for the introduction of political finance regulation, and public subsidies, in particular; however, it does encounter issues depending on the electoral system in place. For example, in a winner-takes-all system, coupled with a Westminster parliamentary democracy, state funding, in certain forms, tends to encourage rather than discourage competition among parties (Young, 1998; van

Beizen, 2004; Katz, 2011). One reason for this is that, when public funding is based on performance in an election (e.g. a certain amount of money for a certain number of votes), it acts as an incentive for political actors to improve their electoral outcomes 18

through increased competition. Furthermore, in a winner-takes-all situation, state subsidies can function as financial proportional representation, thereby allowing smaller or regional political parties greater opportunity to compete with larger, more established parties. The increased competition in Canadian federal politics and the financial success of the Green Party of Canada and the Bloc Québécois, between 2004 and 2011 have been used as evidence of this in the Canadian context (Jansen & Young, 2011; Katz, 2011).

The effects of public funding, of course, depend on the form of funding and the rules surrounding who can receive the funding. It is not so obvious, for instance, that competition will be increased in a winner-takes-all system when state subsidies are not based on prior electoral performance.

The cartel theory is further problematized by Scarrow’s (2004) findings that political actors tend to sacrifice political payoffs before economic gains. Scarrow does not deny collusion as a possibility altogether, but does suggest that when collusion occurs, it does so for different reasons. Using the cases of Germany and Britain, Scarrow finds that the strategic positions taken by political actors depend on the actor’s priorities—either revenue maximization, or the political bottom line—and whether or not external actors (i.e. the courts or independent commissions) become invested in the issue of political finance regulation (p. 669). Thus, collusion for political gain is possible, but not inevitable. Notably, this study focuses on the impact of political scandals on the development of political finance policies. Scarrow concludes that public outrage over political scandal on its own has little effect on regulatory outcomes. However, when outside forces, such as the courts or independent commissions make recommendations or

demands in response to scandal,2 parties are more likely to enact reforms, even if they run contrary to the parties’ financial interests.

The discussion of political scandal leads to the next theory of why political parties might seek to regulate their finances. That theory is that parties will introduce reforms when existing “rules no longer confer legitimacy” (Clift & Fisher, 2004, p. 7). This theory would suggest that if an institution is discredited in some way, then changes are likely to occur. For example, if an institution were to act contrary to its values, or the values of society, then it is likely to lose legitimacy. Institutional change will likely occur to regain the legitimacy that was lost. While this might seem strikingly similar to the theory proposed by Scarrow, the theories are fundamentally different. Scarrow’s theory is still one of constitutional engineering in that it suggests changes occur when strategic agents seek to maximize the utility of the institution for their own interests, in one way or another.

The theory at hand, however, is founded on a normative institutionalist perspective wherein political institutions shape “values, norms, interests, identities and beliefs” in order to influence behaviour (March and Olsen, 1989, p. 17). Patterns of particular behaviours become established dominant institutional values that determine what is and is not appropriate behaviour (Fisher, 2011). Normative institutions use this

“logic of appropriateness” to enforce particular values and norms (ibid., p. 29). Actions taken by agents working within political institutions are therefore constrained and shaped by these values and norms. When an institution strays from behavior that has been

2 Scandal, however, is not a necessary precursor to such demands or suggestions by outside forces. 20

deemed appropriate by society or by the institution itself, then the actions might be deemed a scandal. In order to regain legitimacy, the actors might call for institutional reform. With regards to party financing, appropriate behavior depends on the values of the particular political party attempting to enact reforms, as well as societal standards concerning inappropriate financial behavior. For instance, society might accept political contributions from corporations or unions as acceptable at a certain point in time, but these views might change over time and such contributions might come to be seen as questionable, unfair, or corrupt. If existing practices lack legitimacy, governing parties might seek reform in order to regain legitimacy.

The final theory that arises in the literature is evolutionary. According to this theory, institutional rules will change along with the environment (Clift & Fisher, 2004, p. 7). External pressures will make change necessary for the survival of the institutions.

In other words, changes to the political financing regime, or even the initial introduction of a regime, might have more to do with the external environment in which political parties operate than they do with the actual party financing regime itself. In a similar vein, some reforms might occur through a “contagion effect,” wherein actors introduce reforms after a trend has formed across other jurisdictions. Here, the adoption of particular legislation is seen as a natural progression, or, in other words, the next evolutionary step in the political system. Barrie (1989) noted this phenomenon in regards to political finance regulation in Alberta, noting that “the question ceased to be whether or not there should be legislation, but rather what form it should take” (p. 172). In a federal state such as Canada, a contagion effect is likely to take place when the federal government and/or a number of provinces adopt a similar form of legislation, in this case, 21

some form of political finance regulation. It becomes natural that other jurisdictions follow suit, even if the changes do not immediately appear to serve the best interests of the political actors.

Political Finance in the Maritimes

An understanding of these broader theories coupled with a more specific understanding of political finance regulations is useful in exploring why different jurisdictions end up with such varied policy outcomes. The Canadian provinces offer a unique opportunity for a comparative study of the development of political finance legislation. Although each province has its own political and social contexts, the political institutions and basic processes are quite similar, as they are all situated within

Westminster-style systems. The Maritime Provinces, in particular, provide an intriguing basis for comparison. Situated on Canada’s geopolitical periphery, the Maritime

Provinces share not only similar political systems, but also certain economic and social experiences that make them the ideal “most-similar” case studies for policy development in Canada. While Nova Scotia, New Brunswick, and Prince Edward Island are comparable in many ways, the provinces have adopted very different approaches to the regulation of political financing. It is the distinct differences in the experiences of each of these provinces has led them to develop dissimilar political finance regimes over the last

40 years.

The first province examined, Nova Scotia, was also the first Maritime Province to adopt a political finance regime. Until recently, the party system in Nova Scotia was described as a two-party system marked by periods of one-party rule. Indeed, of the 22

general elections between 1867 and 1955, the Liberals won all but three, and of the 12 elections held between 1956 and 1998, the Progressive Conservatives won 8 (Carbert,

2016). The stability of the party system in Nova Scotia supported the long held assertion that the province is a bastion of traditionalism and conservatism. Traditionalist systems tend to be relatively stable, dominated by a political elite who operate within oligarchical parties that offer very little ideological variation while divided along cleavages such as religion and ethnicity. Patronage is also a defining feature of a traditionalist party system

(Adamson & Stewart, 1996). For many years the literature on the political culture of

Nova Scotia—and the Maritimes—suggested that these ‘traditional’ characteristics have pervaded politics in the region for over a century.3

With this view in mind, it has been argued that the two dominant parties in the province are virtually indistinguishable in terms of ideology and policy and, as Ian

Stewart (1994) notes, the political elites “are not regarded as innovators” (p.4). Moreover, patronage, wherein public officials and government contracts would turn over with every change in government, was not only common in the province, but was expected and largely accepted (ibid.). One would not expect to see a province so heavily reliant on tradition and patronage leading the charge for innovative policies, particularly political finance. Yet, it appears that Nova Scotia, following the initial lead of Quebec, did just this. The chapter on Nova Scotia attempts to reconcile this apparent paradox by suggesting that, on the one hand, the development of the political finance regime has been in line with the province’s social, political, and economic development, and, on the

3 For select overviews, see Beck (1957), Bellamy (1976), Simeon & Elkins (1980), and Carbert (2016). 23

other, that politics in the province are not as traditional and conservative as they first appear.

New Brunswick is the second province examined in this study. New Brunswick introduced its first political finance legislation nearly ten years after Nova Scotia’s regime was created. This legislation was the most progressive and comprehensive of its kind and remained so for the better part of two decades. However, at first glance, this legislation appears to be an anomaly in a province known for its conservative policy- making. As Fitzpatrick (1978) described it, “provincial politics in New Brunswick might best be described as parochial, stagnant, and anachronistic—reminiscent in some ways, of politics in nineteenth century Britain before the reform movement” (p. 120). Indeed, the province’s two-party dominant system and deeply ingrained patronage system have only added to this conception of the province. However, later literature has suggested that such an understanding of New Brunswick’s politics misses the mark by focusing too heavily on continuity and not enough on change.

It has been argued that studies of the province must consider how the socioeconomic situation in the province and the province’s relationship with the federal government are connected to New Brunswick’s politics.4 The political situation that New

Brunswick finds itself in today is tied to the economic and social circumstances in the province. The province is marked by a clear geopolitical divide consisting of the poor, largely rural north and east, and the wealthier and more urban south and west. The linguistic divide in the province follows almost identical lines, with the French-speaking

4 See, for example, Ornstein et al. (1980) and Mellon (1992). 24

Acadians residing predominantly in the north and east and Anglophones in the south and west. For much of the province’s history, this division meant that the economic and political advantages enjoyed by the Anglophone majority evaded the Acadian population, including patronage appointments and government contracts.

Thorburn (1961) wrote that “politics at the provincial level is largely a battle of the ins versus the outs for patronage plums” (p. 163). It is fair to say that the

Francophones have almost always been the “outs” and that the battle has mainly occurred amongst the Anglophones themselves. Before the 1960s, formal and informal barriers prevented the French-speaking population from benefitting from patronage and from breaking into the elite ranks of party politics. The fact that the province’s capital,

Fredericton, functioned almost entirely in English made it difficult for Acadians to enter politics and the civil service. By some accounts, patronage was considered to be the government’s response to unemployment in a province where economic opportunities were scarce. However, the system of patronage that existed, whether intentional or not, essentially excluded a considerable portion of society. It was not until the government began to erode formal and informal barriers between the north and south and the French and English that the patronage system began to break down. Inherently connected to the patronage system, the development of the province’s political finance regime has also relied heavily on these socioeconomic realities over the past four decades. This chapter, then, examines how these factors have come to shape the province’s approach to political financing and how they have influenced the development of legislation in this area.

PEI is the final province examined. Introduced in 1983 and proclaimed in 1985, the political finance regime in PEI is young compared to its counterparts across the 25

country. The regime also continues to be one of the least comprehensive in the country, incorporating fewer regulations than many other regimes. At the same time, of the three

Maritime Provinces, PEI is arguably the most notorious for its history of patronage and conservative politics. As Canada’s smallest province, with a land area of just 5,660km2 and a population just under 150,000, politics in PEI are inherently local and personal

(Desserud, 2016). The provincial constituencies are geographically smaller and have lower populations than those of other provinces. The province is primarily rural, excepting the provincial capital, Charlottetown, and the surrounding area. The province is largely ethnically, religiously, and linguistically homogenous. While religious divides between the Catholics and the Protestants were evident, dual-member constituencies abated the political divide by giving both groups the opportunity to run a candidate.

Furthermore, the political divide between Catholics and Protestants was not as sharply defined as in other jurisdictions—both the Liberals and the PCs have enjoyed support from both groups (McKinnon, 1978). Thus, the cleavages that often divide political parties in traditional party systems have been virtually non-existent in PEI. These geographical and social characteristics of PEI politics have had a definite influence on the development a policy within the province, but have also created enduring stereotypes of quaint, conservative, and patronage-ridden politics.

Of the Maritime Provinces, this trend has been most noticeable in PEI. Accounts of the province are often infused with literary references or descriptive phrases drawing attention to its charming landscape, such as “the home of Anne of Green Gables,” “the

Gentle Island,” or “the Garden of the Gulf.” Such illustrations of the province perpetuate the image of a quaint, rural society, making it difficult to take seriously an analysis of PEI 26

politics. Yet, when compared to scholarly analyses of politics in other Canadian provinces, many scholars are quick to point to the continued practice of patronage and petty corruption, such as bribery and vote-buying, in PEI.5 However, as Stewart (1994) argues in his study of petty corruption in the province:

It may be that modern-day Island elections have not been dramatically

transformed, that money and liquor are still exchanged as freely on election day as

in the past. Political scientists, however, should not continue both to accept and to

perpetuate this understanding on faith alone. (p. 71)

Most accounts of petty corruption in PEI are anecdotal and extremely difficult to prove.

When combined with the vision of a small, pastoral Island, transgressions appear endearing rather than worrying. Such approaches to studying PEI can be problematic.

However, anecdotal evidence, while limited in its explanatory power, should not be entirely discounted, nor should the influence of the provincial stereotypes, whether real or perceived, be ignored.

The party system in PEI has long been dominated by two parties, the Liberals and the Progressive Conservatives. Over the years, other parties have come into play, such as the NDP, the Green Party, and the Island Party, but none have posed a serious threat to the two dominant parties. Only three representatives from minor parties have been elected in the past century (Desserud, 2016). During this same time span, the Liberals and the PCs have rotated in and out of power. For many years, this traditional two-party brokerage system and the personal nature of politics on the Island opened the way to

5 For further examples, see Milne (1992), Dyck (1996) and McKenna (2015). 27

petty corruption, such as vote buying and clientelism. It has been argued that PEI lacked strong ideological foundations for partisan support and, instead, politics was long viewed in light of the favours and benefits that came along with giving support to a particular political party (Dyck, 1996).

The nature of the party system also influenced the development of policy in the province. The province has never been a leader in innovative or progressive policy making. Instead, the status quo, particularly with regards to the protection of the land, has always been a hallmark of provincial policy. As a province that was, and remains, predominantly rural and heavily dependent on agriculture, the preservation of the rural way of life has been one of the foremost policies in the province for over a century. This aspect of political culture in PEI is what Milne (1992) called “the Garden Myth” (p. 31).

As the name suggests the Garden Myth envisions the Island as a single garden, an independent agricultural setting, where the central goal is to maintain the beauty and order of the garden. It must be tended in order to prevent it from falling into disarray, but, at the same time change must be adequately planned so as to preserve its pastoral nature.

Put simply, the Garden Myth alludes to the conservatism of PEI politics. As Desserud

(2016) argues, the myth demonstrates the larger problem of traditionalism in the province. Change for the sake of change threatens the “Island way of life.” Progress, then requires foresight and consideration and must occur gradually. As the chapter on PEI demonstrates, the government’s reluctance to introduce and reform the province’s political finance regime stems largely from this dedication to the status quo. Instead, external pressures from the federal government and other provinces have been the leading stimulus for change. 28

Each province encompasses its own chapter that examines the development of the political finance regime in the province and analyzes the effectiveness of the regime based on its intended purposes. The case studies begin by examining the political and historical contexts leading up to the introduction of political finance legislation. This is followed by a consideration of the development of the political finance regime, incorporating a discussion of the intentions of the creators and reformers of the legislation, as well as the political contexts that led to reform. Next the current political finance regime is broken down into the four categories of regulation: expense limits, contribution limits, public funding, and transparency mechanisms. Finally, the regime is analysed based on the three central goals of regulation: equal opportunity for political actors, equal opportunity for private actors, and transparency.

CHAPTER 2: NOVA SCOTIA

In 1969, Nova Scotia became the second province in Canada to adopt political financing legislation. The province’s first political finance legislation was minimal, incorporating few of the regulations seen in contemporary schemes. Today, however,

Nova Scotia has one of the most comprehensive political finance regimes in the country.

Provisions in the Elections Act prohibit corporate and union contributions and limit individual contributions to $5000 per annum. Public funding is also a prominent feature of this regime, with expense reimbursements for candidates, an annual allowance for political parties, and a tax credit for political contributions over $100. Election expenses are limited for political parties and candidates, as well as for registered third parties.

While still criticized for its lack of enforcement measures, or rather, the inefficacy of enforcement measures (Carbert, 2016), in many respects this regulatory regime appears to have gone further than either of its Maritime counterparts to ensure the mitigation of corruption and equal opportunity for both political actors and citizens. To understand why Nova Scotia has arrived at such policy outcomes and to analyse the efficacy of these outcomes, it is necessary to first examine the political and social contexts which gave rise to these policies.

Political and Social Context

Critical to understanding why political financing laws developed as they did in

Nova Scotia is the social and economic context at the time of their introduction. More than the other Maritime Provinces, Nova Scotia’s economy was heavily reliant upon the extraction of natural resources and, to some degree, manufacturing, in the post-industrial

age. This was especially true in rural areas on the mainland and in the Sydney-Glace Bay region of Cape Breton, where the majority of coal mines, steel mills and heavy water plants were located. This was contrasted by the urban service industries of the Halifax-

Dartmouth region. The first political financing legislation was introduced in the wake of a period of economic uncertainty in the province. In Halifax, the government was focused on urban renewal, the upgrading of public transit, and beautification. Meanwhile, the rural regions of the province and urban Cape Breton appeared to be in turmoil (Sheppard,

1970). In 1967, the Dominion Steel and Coal Corporation, a major employer in Cape

Breton, had announced its plans to shut down its Sydney steel mill by April 1968 (Fraser,

1968). The Progressive Conservative government of G.I. Smith took over operations of the mill and, over the next two years, the steel industry experienced unexpected success.

While the province rescued the steel industry from certain demise, allegations of mismanagement in government dealings with the Clairtone Sound Corporation and the

Deuterium of Canada heavy water plant, as well as in the housing and agricultural industries, brought heavy criticism from Opposition Leader, Gerald Regan (Sheppard,

1970). It was also during this period that the New Democrats, supported by strong labour and socialist movements, began to experience unprecedented success. With the constant threat of unemployment, mine and plant workers, particularly in Cape Breton, became vocal critics of the Conservative government.

Exacerbating the problems of regional and economic inequality within the province were tense race relations and issues of political corruption in the 1967 general election. Along with the plans for urban renewal in Halifax came an often overlooked period in the history of Nova Scotia, that is, the destruction of the Black Nova Scotian 31

settlement of Africville. The 1960s saw the majority of the relocations of Africville residents and the razing of the settlement.6 While the destruction of Africville was accepted, and even extolled, by many of the white residents of Halifax, the matter heightened the already tense race relations in the capital (Nelson, 2008). During this time, the Black United Front, a black civil rights group inspired by the Black Panthers became a powerful voice for black communities across the province. The group lobbied the government for equality and greater protection for human rights. By 1969, the group had become a notable force for change and was an outspoken advocate against systemised oppression and targeted government corruption (Sheppard, 1970).

Indeed, during the 1960s, political impropriety and illicit practices by political officials were also issues of increased importance. Vote buying, kickbacks, patronage appointments, and other such activities were certainly not new in Nova Scotian politics; instead, these practices were viewed as petty corruption or simply par for the course

(Beck, 1978). However, during the 1967 provincial election, a PC candidate openly admitted to a reporter from the Toronto Star that “votes are bought for a few dollars or a jug of rum, particularly among Negros, Indians, and Irish waterfront workers”

(Mortimore, 1967). The story quickly spread to other provincial and national newspapers, which expressed disbelief in the fact that not only did the corruption in Nova Scotia appear to be racially and ethnically targeted, but also that any politician would so openly acknowledge the commonality of the practice. Remarkably, papers within the province

6 The razing of the community was sanctioned by the provincial government and began in 1947 and the final building was destroyed in 1970 (Nelson, 2008). 32

only picked up on the story after an election-eve pamphlet campaign exposed the story within the province and after the president of the Nova Scotia Association for the

Advancement of Coloured People spoke out publically on the issue (“Negro leader asks apology,” 1967). By this time, the story had spread to the national media and the lack of coverage within the province drew additional criticism of politics in Nova Scotia

(Mortimore, 1967). While accusations of bribery were brought against both the

Conservatives and the Liberals after the 1967 election, Regan used these allegations as a major critique of the PC government in the following years.

Early Political Finance Reform

It was in the midst of these accusations of economic mismanagement, racial discrimination, and electoral impropriety that the government initiated the Royal

Commission on Election Expenses and Associated Matters (hereafter, the Green

Commission) in 1969. The Green Commission consisted of five members representing various interests within the province, including those of the two major parties, the business community, and the “labour” and “socialist elements,” as PC Richard A.

Donahoe described them (NS Leg. Ass., 22 April, 1969). Notably, it included Lloyd R.

Shaw, a prominent New Democrat, and the father of the future provincial and federal

NDP leader Alexa McDonough. Given the heavy criticism that socialists and labour had levelled at the series of Progressive Conservative governments, it came as no surprise that two members of those movements were included in the Commission. Now, the government might avoid complaints that it was ignoring the interests of unions and individuals working in mineral extraction and manufacturing, and in turn, of the larger

communities that relied on these industries. To be sure, the recommendations set out in the Green Commission’s final report reflected the Commission’s dynamic composition.

In many respects, the Green Commission’s recommendations were far more conservative than the earlier recommendations made by counterparts in Quebec and at the federal level. While both the federal and Quebec commissions had attempted to address broader problems within the political financing scheme, such as issues with the media, the main concern of the Commission in Nova Scotia was election expenses. On this issue, the Green Commission’s recommendations did, in fact, go further and was, in some respects, more progressive than the legislation implemented in Quebec. Like the other commissions the Green Commission recommended the legal recognition of political parties by suggesting that parties be required to register with the Chief Electoral Officer.

The registration of political parties, the report argued, would allow for the centralization of “the responsibility for proper election campaigning” and would save candidates

“needless expense in trying to identify the candidate, in the public mind, with his leader and party” (Green Commission 1969, s.III.9).

However, whereas the federal and Quebec commissions had recommended a threshold for qualifying as an official party (i.e. fielding an official candidate in a certain number of ridings), the Green Commission made no such recommendation. Here, is perhaps the first concrete evidence of the socialist and labour influence in the

Commission. The Commission was concerned that a threshold could block out new competition, to the benefit of the dominant parties. During this time in Nova Scotia, thresholds would likely have made the achievement of official party status increasingly difficult for the New Democrats, who were just beginning to gain momentum. Without 34

the influence of the labour and socialist commissioners, it is unclear whether the report would have been similarly concerned with the welfare of new parties. A modest threshold of fielding 10 candidates to qualify for official party status was eventually introduced into the final legislation. However, this was not a heavily debated issue in the Legislative

Assembly—likely due to the fact that the NDP held no seats in the Assembly.

In fact, many of the Commission’s recommendations on election expenses went largely unchallenged in the House of Assembly. When commenting on the Bill in its second reading, Donahoe noted the need for the legislation, acknowledging the reality of corrupt political practices in the province (NS Leg. Ass. 22 April, 1969). Donahoe also remarked on the accusations of corruption and mismanagement leveled against his party by the Regan Liberals. In an attempt to get ahead of inevitable criticisms, Donahoe stated: “I think that the Party - to which I have the honour to belong - very long ago, very resolutely set its mind and its hand against this type of practice…Yet, notwithstanding that, there are continued assertions that this Government is, in some sense, a patronage ridden Government. We hear this argument advanced ad nauseam by the Leader of the

Opposition” (ibid.). Donahoe went on to suggest that, though he believed Regan’s claims to be unfounded, the existence of these accusations and their perceived truth among political opponents and members of the public were detrimental to electoral integrity

(ibid.). This was an argument that even the Liberals would be hard-pressed to oppose—to argue against the Tories on this issue would make the Liberals appear “anti-transparency” or even “pro-corruption.” Thus, while the Liberals might have taken the opportunity to further chastise the government for improprieties, they, instead, chose to support the Bill.

While the provisions of the Bill might appear to be relatively modest today, they were innovative and ground breaking at the time. From the initial recommendations to the final Bill, the concern expressed by the Green Commission, the PCs, and the Liberals was the same: equality. On the one hand, the rising cost of elections was making it increasingly difficult for candidates and parties to compete on an equal footing. This problem was exacerbated for poorer individuals and newer parties. This concern was voiced by Regan, who commended the new legislation, declaring that “a poor man should have the same opportunity as a rich man to run for office…and, so, this legislation is basically a blow for a better form of democracy” (NS Leg. Ass., 24 April, 1969). On the other hand, the growing feelings of racial, regional, and economic disparities within the province, coupled with accounts of patronage and vote buying led to widespread concerns about inequality and corruption. The Green Commission acknowledged the reality of these inequalities in passing, while the Legislative Assembly refused to acknowledge their actual existence, only concerning themselves with perceived inequalities and corruption. Both the Green Commission and the Legislative Assembly sought to level the playing field for political actors and increase public trust in the political system (Green Commission, 1969, s.III.30-31; NS Leg. Ass., 22 April, 1969).

In order to achieve these goals, the Tory government introduced modest spending limits, public funding, and transparency mechanisms. Also significant was the requirement that each candidate and party appoint an official agent through whom all financial transactions had to occur. Under this legislation, a party could only spend up to

40 cents per elector in the ridings in which it fielded an official candidate. The expense limits of candidates were calculated using three thresholds: 1 dollar for each elector 36

where there were 5000 or fewer, 85 cents per elector where there were between 5000 and

10,000 electors, and 75 cents per elector where there were more than 10,000 electors.7

The public funding provision of the legislation came in the form of a partial reimbursement of a candidate’s expenses. Candidates who received at least 15 percent of the votes in their riding would be eligible to receive a rebate of 25 cents per elector in their riding. In order to ensure transparency and compliance, the legislation also required that candidates and parties report their expenses to the Chief Electoral Officer. Failure to do so would result in a fine or suspension from the Assembly. These measures were intended to allay the public’s fears of corruption and to ensure equality of opportunity for candidates and parties.

Initial reactions to the legislation were positive. The Chronicle Herald ran two articles that praised the legislation as “far-reaching” and reported it as one of the year’s

“top-performers” (“Premier says session productive,” 1969; “Ministers judge,” 1969).

Both articles suggested the legislation would increase transparency and give individuals equal opportunity to participate in politics. It was not suggested, however, that the legislation would cut down on corruption or patronage. Certainly, patronage and petty corruption were concerns of both the Green Commission and the Assembly—the Green

Commission mentions patronage and vote buying among the major concerns of Nova

Scotians and Donahoe began his introduction of the legislation by discussing patronage and bribery—yet it is not entirely clear how the legislation, as it stood, intended to

7 At the time, certain ridings in Nova Scotia were dual ridings. If a party ran two candidates in these ridings, then the expense limit would be divided between the two candidates. 37

address these practices. Requiring parties and candidates to report their election expenses was a step in this direction, as, in theory, a political actor could not claim the illegal practices of vote buying and bribery as election expenses. However, the lack of clarity in the Act and the absence of effective enforcement measures meant that these illicit practices, such as the use of party coffers or unrecorded funds, could continue.

The legislation did nothing to address the issues of questionable contributions or patronage appointments in return for financial support. It is unlikely that the politicians who crafted the legislation, and their political opponents for that matter, were unaware that the legislation would be unable to bring an end to dubious patronage appointments or the undue political influence of wealthy individuals, corporations, or unions. The Barbeau

Report, referenced in the Green Report, made clear recommendations concerning these issues, such as suggesting that political actors to record and report contributions. Yet, all participants in the framing of the legislation, including the Opposition, chose to conveniently ignore those recommendations relating to undue political influence.

Moreover, these controversial practices continued even after the Tories’ harshest critic,

Regan, became premier in 1970. In fact, it was during Regan’s tenure that the Nova

Scotia Liberals opened a trust, funded by kickbacks from liquor companies in order to secure the placement of their products in the government-run liquor stores. This trust continued to be a matter of general concern until 2009 (“N.S. to ban,” 2009).

Over the next decade, the Nova Scotia political finance regime remained unchanged. The Liberal government made a minor change in 1977 wherein spending limits were adjusted for inflation using the consumer price index. However, it was not until 1981 that any major changes were made to the regime. In that year, John 38

Buchanan’s PC government introduced a tax credit for political donations. Similar tax credits had already been introduced in Alberta, British Columbia, Manitoba, New

Brunswick, and Ontario, as well as in the federal regime. The tax credit was supported by both sides of the Assembly and there was little debate over its introduction. The tax credit was offered to individual and corporate donors, suggesting that the amendment was intended to encourage political contributions generally rather than encouraging smaller individual donations as had been the intention of the credit in other jurisdictions.

These tax credits came at a tumultuous time in Nova Scotia. First, there was the issue of the RCMP investigation into former PC Chair of the Treasury Board, Roland

Thornhill, for allegedly using his position to ask several banks to forgive his personal financial woes. The investigation was dropped in 1981 and Thornhill went on to be re- elected in the 1981 general election, even though talk of his improprieties plagued his campaign in the early stages (Landes, 1984). Second, in a controversial decision, the last of the province’s dual ridings, Yarmouth and Inverness, were eliminated due to the exorbitant costs of running election campaigns in these ridings (ibid.). At the same time, three of the Liberal Party’s top fundraisers under Regan in the 1970s were charged with

“acting together and with others to seek or accept something in return for exerting their influence on government business” (ibid., p.385). The lack of debate surrounding the introduction of the tax credit indicates that members on both sides of the floor were eager to bring some semblance of legitimacy to political contributions without limiting them or making them totally transparent, while, at the same time encouraging more contributions to pay for the rising costs of campaigning.

In 1981, NDP leader Alexa McDonough was elected to the Legislative Assembly.

On the one hand, this was significant because she was the first female party leader in

Canada and because she was the only New Democrat to be elected in the province in

1981. On the other hand, McDonough’s election marked an historic milestone for NDP, as she was the first of the Party’s representatives from Nova Scotia’s mainland to be elected. While it was not until the 1990s that the NDP saw substantial electoral success in the province, the continued presence of NDP members from the mainland marked a noteworthy change in Nova Scotia politics. Furthermore, throughout her tenure as party leader, McDonough was a harsh critic of the government, calling for increased transparency, particularly with regards to the sources of political contributions.

Notably, in 1987, McDonough put forward a private member’s bill that would limit political contributions and require parties and candidates to disclose the sources and amounts of any political contributions. McDonough suggested that the PCs and the

Liberals had, since the introduction of the legislation in 1969, blatantly ignored the most important aspect of any “anti-patronage package”: the disclosure of political donations

(NS Leg. Ass., 8 April, 1987). According to McDonough, “unless you also require disclosures of the amounts and sources of individual contributions, then what you have is a political system that is wide open to undue influence and favouritism” (ibid.).8 While the Liberals appeared to support the McDonough’s bill, the Tories, and one former NDP

8 McDonough specifically accused the Liberals and PCs of being in the pockets of “big banks” (NS Leg. Ass., 8 April, 1987). According to her calculations, the PCs had received donations from 2,200 individuals in 1986, but somehow managed to raise $160,000, while the Liberals had just under 3,400 individual donors and had raised $250,000. She blamed the discrepancies on contributions from Banks and other corporations for which information was not made readily available (ibid.). 40

MLA argued against it. While, the PCs lauded the Bill as progressive, they questioned its sincerity, suggesting that McDonough was an opportunist—the Bill was introduced on the same day that the government was to announce the results of an inquiry into its dealings with certain oil companies (ibid.). In the end, the Bill failed to pass and contributions continued to go unreported.

In 1991, however, the PCs, led by Donald Cameron, introduced regulations that would require parties and candidates to disclose the sources of their political contributions. Cameron had been elected to replace Buchanan as leader of the PCs and premier earlier that year and had campaigned on ending patronage and corruption

(Finbow, 1998). Cameron’s succession came after former premier, Buchanan, came under investigation for receiving supplementary income from a controversial party trust fund in order to save himself from personal bankruptcy (“Nova Scotia has late start,”

1991; Finbow, 1998). At the same time, Roland Thornhill, who had also run in the leadership race, was facing 17 new criminal charges relating to the aforementioned charges which had been dropped in 1981 (ibid.). As the Tories fell behind the other parties in the polls, Cameron promised to introduce reforms that would prevent future scandals. When the legislature opened in May, the disclosure of contributions was one of the first issues dealt with. While the Bill received the support of the Opposition, it did not come without criticism. McDonough, in particular, criticised the government for introducing “popular legislation” to boost the party’s ratings, similar to the Tories’ criticisms of her bill just four years earlier (Cox, 1991). Under the legislation, parties were required to disclose the sources of any donation over $50 and elected officials and

public servants had to disclose the sources of their income. This remained the sole regulation of contributions until 2009.

Between 1991 and 2006 very little changed in the political finance regime, though major changes did occur in the Nova Scotia party system during this period. The PC government was defeated in 1993 and the Liberals, under the leadership of John Savage became the governing party. However, in March 1997, Savage was forced to resign as premier and party leader, largely due to his staunch opposition to patronage and his refusal to hand out patronage appointments (“Savage Failed to Win Hearts,” 1997).

Almost a year to the day later, a provincial election was held. Although the Liberals formed government, they actually tied in seat count with the NDP. For the first time in history, the PCs were reduced to third party status. Thus, the 1998 election marked the end of two-party dominance in Nova Scotia as the NDP became a truly competitive party, ushering in a three-party system (Carbert, 2016).

Minor changes were made to the political finance regime in the early 2000s, but these were mainly small details or provisions that required technical updating. The next major changes were introduced in 2006 by the Progressive Conservatives under Premier

Rodney MacDonald. Following the lead of the federal government, and the governments of Alberta, Manitoba, New Brunswick, and Ontario, the Tories introduced legislation that would limit the amount of money that individuals, corporations, and unions could donate to any one political entity in a year. These changes also came after MacDonald was criticised for the secrecy surrounding the financing of his leadership campaign and after the minister of economic development resigned from cabinet twice—once due to accusations concerning a questionable loan, and again, after he was charged for leaving 42

the scene of an accident, resulting in the use of $3,282.66 of tax-payer dollars to fix the victim’s car (Finbow, 2013; 2014, p. 232). Furthermore, in the spring of 2006, former party leader and premier John Hamm was questioned by a legislative committee about a

$350,000 government loan that was given to an amusement park owned by a friend of

Hamm (“Hamm denies role,” 2006). Hamm denied allegations of impropriety, but the issue only served to mount criticisms of the Tory government’s actions. In the fall of that year, the government introduced the first notable reforms to the political finance regime in over a decade. According to the minister of finance, the proposed legislation was intended to “increase the transparency and accountability of [the] electoral system” and to

“eliminate the appearance of undue influence by any person or organization with financial means, over [the] electoral system” (NS Leg. Ass., 22 November, 2006). The minister noted that at the heart of the proposed legislation were the principles that all parties be treated equally, that parties should not be entirely state-funded, and that the public has the right to know the sources and destinations of political funds (ibid.). The

Bill passed with little debate and with the support of both sides of the Assembly.

The next major changes were introduced by the province’s first NDP government.

In fact, under Premier Darrell Dexter, the NDP introduced the most sweeping changes to the political finance laws since 1969. First, in 2009, the government introduced legislation which banned political contributions from corporations and unions. The legislation also banned the use of parties’ “held assets” (i.e. trust funds) for political purposes by parties and candidates. The explicit reasoning for this change, as stated by the minister of justice, was that it would “level the playing field by having one set of rules for everyone” (NS Leg. Ass., 22 October, 2009). However, as in other instances in 43

Nova Scotia, the legislation followed the realisation that the NDP had received $45,000 in “questionable donations” from a “group of unions” during the general election campaign just a few months earlier (“N.S. voters pick NDP,” 2009). The NDP did return the money, and still managed to win the election amid Liberal and Tory criticisms of the

NDP’s actions. At the same time, the “held assets” aspect of the legislation was viewed by some as a direct attack on the Liberals, whose trust fund, created under Regan, remained a point of contention in the province (“N.S. to ban,” 20 October, 2009). The legislation restricted the Party’s use of the money by preventing it from using the funds on the party itself, on candidates, or on electoral district associations. The minister of justice openly stated, that this was the goal of the legislation. It was also not the last shot that the NDP would take at the Liberal trust fund.

In May 2011, the government again made sweeping changes to the political financing regime when it replaced the former Elections Act with the Act respecting the election of members to the House of Assembly and Electoral Finance, or the Elections

Act, 2011. This Act introduced limits on third party advertising and a per-vote subsidy for parties. It also called for the dissolution of party trust funds, and increased public funding and spending limits for candidates. While the 2007 reforms had led to an uproar among

Liberals, the 2011 changes were accepted more willingly. It had been decided that the

Liberal trust fund money would go toward the creation of a public policy institute. Later, it was decided that the entirety of the money would go to an institute at Dalhousie

University in Halifax. Launched in 2016 as the MacEachen Institute, the Liberals claimed that the institute would be non-partisan, but as one reporter noted, “the launch was very

much a Liberal event, in more ways than one,” referring to the name of the think tank and the overwhelming presence of notable provincial and federal Liberals (Withers, 2016).

Apart from the trust fund issue, the proposed legislation received mixed reactions in the Legislative Assembly. One Liberal MLA criticised the legislation and the NDP, stating that “the minute [the NDP] got a taste of a majority all the ideals, all the goals of how they would do things differently, went out the door” and by arguing that the NDP had “an unhealthy obsession with the finances of the Nova Scotia Liberal Party” (NS

Leg. Ass., 29 November, 2011). In a lengthy and heated speech, he accused the government of ignoring important issues, such as violent crimes and job losses, in favour of legislation that lacked the support of all parties. After the Liberal MLA concluded his speech, however, a PC representative stood up to simply state that the Party supported the

Bill with one friendly amendment that did not regard political financing. The legislation passed without much media or public fanfare in the media, as it occurred in the midst of the highly publicised federal election of 2011. This is particularly interesting because the very changes that the NDP introduced, such as a per-vote subsidy and amendments to spending limits, echoed the highly contested political financing issues debated by the federal parties for almost a decade. Nevertheless, the amendments that came with the

2011 Elections Act, remained largely intact through to 2014, and the core of the political finance regime endures.

Current Political Finance Regime

As the above discussion reveals, the political finance regime in Nova Scotia has come a long way since the 1969 reforms initiated by Smith’s Progressive Conservatives.

The current political finance regime is more comprehensive and far-reaching than the early regime. Provisions now exist in each of the major categories of political finance regulations: expense limits, contribution limits, public funding, and transparency. This section outlines, in greater detail, the provisions of the current legislation.

Expense Limits

The Nova Scotia Elections Act limits election expenses for political parties, candidates, and registered third parties. For the purposes of the Act, “election expenses” refers to “all expenses incurred during an election for the purpose of promoting or opposing, directly or indirectly, the election of a candidate or the program or policy of a registered party or candidate” (Elections Act, 2011, s.166.i). Election expenses include costs related to advertising activities, candidates’ travel expenses outside of their electoral district for an event put on by their party, and for expenses incurred to shut down an electoral district association [EDA].

A candidate’s expense limit is based upon the number of electors in the candidate’s riding. There are three thresholds for candidates’ expense limits in Nova

Scotia. A candidate can spend $5.72 per elector for the first 5000 electors, $4.86 per elector for the next 5000 electors, and $4.29 per elector for any remaining electors. The maximum amount that any one candidate can spend is the aggregate of these amounts.

Expense limits for political parties, on the other hand, are calculated based on the electoral districts in which the party is running candidates. A political party can spend the aggregate of $2.29 per elector in each district in which the party runs an official candidate.

Registered third parties are also limited in how much they can spend during an election period. The Elections Act simply defines a “third party” as “a person or a group, other than a candidate, registered party or electoral district association” (s.166.u). A third party can only spend $10,000 during an election period relating to a general election.

Only $2000 of that $10,000 can be spent promoting or opposing a candidate in any one riding.

Contribution Limits

Nova Scotia has particularly stringent rules regarding political contributions.

According to the Elections Act, “contributions” are “services, money or other property donated to a registered party, electoral district association, candidate or registered third party or an individual acting on behalf of a registered party, electoral district association, candidate or registered third party to support the political purposes of a registered party, electoral district association, candidate or registered third party” (s.166.d). Donations “in kind” (i.e. goods, services, or property) are also included in the definition of contributions if the market value of the donation exceeds $50 or if it is not the first donation in kind that the individual has given in the year. Anonymous contributions cannot be accepted by a registered political entity.

Corporate and union contributions are prohibited altogether, while individual contributions are limited to a maximum annual donation. Individuals can donate a maximum of $5000 each to a single political party, candidate, electoral district association, and third party, per year. In other words, an individual could donate $5000 to multiple political parties, candidates, EDAs, or third parties. They cannot, however, donate more than $5000 to any one entity. 47

Public Funding

The political financing regime in Nova Scotia provides for three forms of public funding: election expense reimbursements for candidates, an annual allowance for registered political parties, and tax credits for individuals. Much like the expense limits for a candidate, election expense reimbursements are based on the number of electors within the candidate’s riding. A candidate can be reimbursed an amount not exceeding

$1.43 per elector on the final list of electors. A candidate is only eligible to receive this reimbursement of he or she garners at least 10% of the valid votes cast in the riding. A candidate may also have his or her nomination deposit reimbursed if they win their seat or receive at least 10% of the votes cast in their riding.

Like annual allowances in many other jurisdictions, the annual allowance for political parties in Nova Scotia is based on performance in the last general election. A registered party is eligible to receive $1.539 per valid vote cast for an official candidate for that party in the previous general election. In other words, the annual allowance is a simple per-vote subsidy. Notably, there is no vote percentage threshold that a party must meet in order to receive the annual allowance, rather any party registered with the Chief

Electoral Officer may receive funding. The annual allowance is paid out in two equal installments each year.

Individuals can also receive public funding in the form of tax credits for political contributions. The size of the tax credit is dependent on the size of the contribution. For donations up to and including $100, an individual can receive a 75% return.

9 Adjusted for inflation at the beginning of each fiscal year. 48

Contributions over $100 and up to $550 are eligible for a credit of $75 plus 50% of the amount by which the contribution exceeds $100. For donations over $550, an individual is qualified to receive the lesser of $500, or $300 plus 33.33% of the amount by which the donation exceeds $550.

Transparency

The transparency mechanisms in the Nova Scotia political finance regime are a combination of penalties and incentives. Political parties, official candidates, and ridung associations are all required to submit financial reports to the Chief Electoral Officer. The reports must be submitted by an official agent of the entity in question. Third parties are also required to file reports of advertising expenses within four months after the day of the election. Electoral district associations are only required to submit one annual financial report by March 30 of each year. Political parties must submit annual financial reports and tax receipt reports by April 30 of each year. Election expense reports for political parties are due within 120 days of the return of the writ. Parties are also required to disclose contributions annually by April 30. A detailed report, including the contributor’s name and address, must be made for donations over $200.

Candidates are also required to submit annual financial reports. However, given the nature of the position, these reports are only “annual” in name. The deadline for the submission of a candidate’s annual report depends on the timing of an election period, or by-election, in relation to the end of the fiscal year. Candidates’ election expense reports, tax receipt reports, and disclosures of contributions are due within 80 days of the return of the writ. Individuals who maintain their position as a candidate in years when an

election is not held are required to disclose contributions by March 31 of each year. In addition to these reports, a candidate must also submit a report on the disposal of excess contributions. This report is only due one month after the candidate receives their reimbursement of election expenses, or, if they are not entitled to a reimbursement, two months after the candidate’s official agent submits their expense report. Elections Nova

Scotia is required to make these reports public and publish them online.

While these reports are critical, the enforcement of transparency is also important.

As mentioned above, Nova Scotia uses both incentives and penalties to enforce these rules. In order to encourage candidates to comply with political finance laws, the

Elections Act includes a provision stating that a candidate’s nomination deposit will only be reimbursed if they submit their reports on time and in the correct fashion. This is the only real incentive for compliance; the remaining enforcement mechanisms are penalties for failing to comply with the provisions in the Act. If the official agent of a candidate fails to submit the required forms, then that candidate will be barred from sitting in legislature until the reports are submitted. Similarly, if the official agent of a party fails to submit the party’s expense reports, then the leader of the party is disqualified from sitting in legislature until the reports are submitted. Failure to comply with this provision results in a fine of $500 for each day the candidate or the party leader sits in legislature before the reports are presented. Noncompliance with provisions relating to political contributions (s.234) and election expense limits (s.259 and s.260) can result in a fine of up to $50,000 for a political party and up to $5000 for a candidate. A conviction for a general offence under the Act can carry a penalty of up to $5000. This includes the failure to submit reports for third parties and electoral district associations. Corrupt practices, 50

including the intentional failure to comply with expense limits and contribution limits, and the acceptance of illicit contributions, can carry heavier penalties of a fine not exceeding $10,000, one year in prison, or both, as well as a ban on being elected, sitting as a member of the Legislative Assembly, or being appointed to office.

Only the Chief Electoral Officer [CEO] can initiate an investigation into violations of political finance laws. An investigation can, however, be initiated by the

CEO on the request of an individual. Offences must be prosecuted within one year of the date on which the CEO becomes aware of an offence and no later than five years after the date of the offence. For less serious offences, the CEO can enter into a compliance agreement with individuals who have failed to comply with the Act. These agreements are made public and summaries can be found in the CEO’s annual report. Transparency, rather than punishment, is the critical goal of the Act. As long as all entities file their reports properly within the allotted amount of time, discrepancies can be made public and dealt with without serious penalty.

The Regime and Political Finance Benchmarks

Nova Scotia’s political finance regime has a history of almost fifty years and it has changed substantially over the years. The regime, as it now stands, would be barely recognizable to its original framers. However, rather than saying that the current regime is entirely new, one could argue that the regime has evolved and become more encompassing and comprehensive. Indeed, the core of the regime remains intact. Equality of opportunity for parties, candidates, and voters, has been a pervading theme throughout the years. The mitigation of corruption has also been an implied, and often explicit, goal

of the regime from its earliest days. As the above discussions reveal, the nature of Nova

Scotia’s political and socioeconomic environments, as well as the changing circumstances in the province’s party system, at first led the province to introduce innovative legislation, but later created a difficult road to reform. Nevertheless, reform, when introduced, often enjoyed near-unanimous or unanimous support. This section will analyse the current legislation, given the historical development of the political finance regime, using the aforementioned goals, or benchmarks of political finance regulations: equality of opportunity for political entities, equality of opportunity for private actors to influence politics, and openness and the mitigation of corruption.

Equality of Opportunity for Political Actors

For much of its history, Nova Scotia was known for its strong two-party system in which the Liberals and the PCs were dominant. Even by the 1960s, however, this two- party system was eroding. The growing support for the NDP during this period was not yet an electoral threat, but accusations of exclusion and discrimination made by NDP elites and supporters alike led to their inclusion in the Green Commission, which was seminal in the creation of Nova Scotia’s political finance regime. Their inclusion in this process meant that the final legislation was far more inclusive than it would have been under the sole direction of the dominant parties. Instead of leveling the playing field for just the Liberals and Tories, the first political finance legislation in the province also began to level the playing field for the NDP. By all accounts, this small, young, party, on the brink of electoral success, should have been seen as a threat by the dominant parties.

If parties are out to seek the maximization of electoral gains, then the dominant parties should have taken a path that would exclude the NDP from competition.

Yet, this is not how the situation played out in Nova Scotia. While the Green

Commission recommended there not be a threshold for official party status, the

Legislative Assembly decided to set a modest threshold of fielding 10 candidates in a general election in order to be a recognized party. Such a threshold would not be impossible for the NDP to surpass, but would also prevent new fringe parties from reaping the benefits of official party status. The equality of opportunity for political parties was further ensured by the creation of spending limits. These limits prevented parties from overspending, both stopping them from spending to the point of zero-returns and creating a situation wherein smaller parties, such as the NDP had the ability to become and remain competitive with the dominant parties. Reimbursements and spending limits for political candidates had a similar goal. By limiting expenses and by giving candidates the opportunity to recover at least some of the funds they had expended during their campaign, these provisions opened up the political process to individuals who could not to afford to run in the past. As candidates were now officially associated with political parties, rebates also had the dual advantage of acting as an indirect subsidy for political parties. Thus, it is clear that the foundation of the Nova Scotia political finance regime was the equality of opportunity for political actors and that this direction was heavily influenced by the inclusion of the NDP in the process. This initial decision proved to be a guiding light for future legislation in this area.

To be sure, the current legislation is similarly concerned with the equality of opportunity for political actors. Spending limits for both parties and candidates continue 53

to be enforced today. As outlined in the previous section, expense limits for a party depends on how many electors there are in the ridings in which the party fields candidates. This means that, if an official party is unable to run candidates in every riding, then it is better off running its candidates in more populous constituencies. For example, in 2013, if a party were to run a candidate in each of the 10 least populous ridings, then it would have a spending limit of just over $240,000.10 At the same time, if a party were to run candidates in just the 10 most populous ridings, then it would have an expense limit of just over $408,500. This is a substantial difference simply based on a party fielding 10 candidates. If a party were to run a candidate in each of the province’s

51 ridings, then it would have an expense limit of $1,730,949.39, seven times the limit for a party running candidates in the 10 least populous ridings. In this way, the limits create an equal playing field for parties that field candidates in every riding. Parties that are unable to do so, however, are not given the same advantage.

This of course, assumes that parties desire a higher spending limit in order to stay competitive with a centralized campaign. This might not be the case for every party. A party might want to focus on local campaigns rather than a centralized campaign and, consequently only run candidates in the ridings most likely to yield electoral gains.

Nevertheless, the central idea of this provision is not simply that all parties should have the same spending limit, but rather that every party should be able to spend the same amount per elector in the ridings in which they field candidates. Furthermore, in 2013,

10 Calculations are based on figures provided in the Chief Electoral Officer’s report on Financial Information and Statistics (2014). 54

there was not a single party that came anywhere close to their spending limits. In fact, the net total expenditures for the four official parties only totaled $951,975.03, $778,974.36 short of the spending limit for a party with 51 candidates.11

In addition, parties in Nova Scotia now receive an annual per-vote subsidy in an attempt to give all official parties an equal footing. As mentioned earlier, the notable aspect of this provision is that there is no vote threshold for receiving this allowance. At

$1.53 per valid vote cast for a party, this allowance is quite generous when compared to how much each party spends in an election. In 2013, the PCs received enough votes to receive an annual allowance of $177,531.14, while their total expenditures for the election only totalled $179,075.07 (Elections NS, 2014a, p. 12-13). This is an incredibly low expense deficit of only $1543.93 in the first year, before private contributions. In the first year the other recognized parties did not have similarly low expense deficits—the

Greens came out with a $3,436 deficit, the Liberals with $154,009.51, and the NDP with

$120,319.12. Still, considering that this is an annual allowance, and that contributions have not been included in the calculations, public funding makes up for a large proportion of each party’s election expenses. The returns would not be so great, on the other hand, if each party actually spent to its maximum limit.

The situation for candidates is not so clear cut. With the thresholds outlined above, the disparity between spending limits in the most and the least populous ridings should be less. This is important because candidates’ campaigns are focused in their own

11 The Green party only ran 16 candidates and had a spending limit of $570,504, however, it only spent a little under $10,000. The three major parties all ran 51 candidates and had the maximum spending limit. 55

constituencies and in order for candidates to have an equal opportunity to inform voters of their messages, they should have similar spending limits. The riding with the greatest number of electors in 2013 had 18,086 electors. The spending limit for candidates in this riding was $92,003.38. The riding with lowest number of electors had 10,386 electors and a spending limit of $57,093.01. This means that the disparity between these spending limits is almost $40,000. However, when one looks at these figures based on the number of electors, it works out to $5.09 per elector in the most populous riding and $5.50 per elector in the least populous, a difference of 41 cents per elector. Interestingly, both of these ridings are largely rural. Geographically, the least populous riding is the largest constituency in the province with a total area of 5,267km2, while most populous riding has a respectable area of 1,805 km2 (Elections NS, 2013). This suggests that geography is a factor that should be taken into account when calculating expense limits.

In 1969, the Green Commission recommended that geography not be taken into account, but since that time, the discrepancies between the urban and rural areas have increased substantially. When the electoral boundaries were redrawn in 2012, the main focus was giving every vote the same weight, and, thus, the urban ridings became geographically smaller, while rural ridings became larger (Carbert, 2016). For example, in 2013, the most densely populated riding had 3,224.2 electors per square kilometer, while the least populous riding had a population density of 1.92 electors per square kilometer. This is an incredible discrepancy given the distance one must travel and the time required to meet with constituents in an expansive rural riding as compared to a smaller urban riding. The issue, then, is that while the boundaries were redrawn to give

votes equal weight, expense rebates were not amended to take into account the vast differences in geographic size.

Here, however, is where public funding can play a role in remedying the situation.

If expense reimbursements for candidates are similarly based on the number of electors in a riding, then it may aid in closing the gap between spending limits in both more and less densely populated ridings. Nova Scotia does, indeed, have such a provision for expense reimbursements. Based on the 2013 figures, a candidate in the riding with the lowest population density would be eligible to receive a reimbursement of $15,542.66, and in the most densely populated riding a candidate could receive a reimbursement of $24,125.09

(Elections NS, 2014a, p. 21). Assuming that all candidates spend to their limit and all qualify for reimbursement, the former candidate would have an expense deficit of

$41,550.35 before private contributions and the latter candidate would have an expense deficit of $58,620.93 before private contributions. Due to the fact that the reimbursement has a flat per-elector rate, while the spending limit has three thresholds, the candidate in the more sparsely populated riding ends up with a greater proportion of his or her expenses reimbursed, thus remedying the disparity in a small way.

The problem, of course, is that not all candidates qualify for reimbursement because of the 10% threshold. This threshold means that any candidate who, regardless of other circumstances, fails to receive 10% or more of the popular vote in their riding is ineligible for reimbursement. The message being sent with such a threshold is that the province only supports equality of opportunity for candidates to a certain point. In practice, such a threshold is counterintuitive to the purpose of expense rebates. While reimbursements are supposed to encourage people of limited means to become 57

candidates, the threshold might discourage people from smaller or new parties from participating. It is for this reason that the Barbeau Report recommended a very low threshold for reimbursement. The inclusion of a high threshold may not only discourage candidates from running, but it may also indirectly undercut new parties by thwarting their chances of running a sufficient number of candidates to qualify as an official party.

A high threshold, then, can undermine the entire scheme for creating equality of opportunity for political actors.

It is important to note, however, that this threshold existed in the original 1969 legislation. While this analysis shows that there could be an issue with a 10% threshold, history has shown that even 15% did not stop the rise of the NDP in Nova Scotia or the transformation of the two-party system into a three-party system. With the addition of the

Greens as an official party, this may change. In 2013, 33 candidates were ineligible to receive reimbursement due to the 10% threshold, whereas in 2006, when the threshold was 15%, 74 of the 208 candidates failed to meet the threshold (Elections NS, 2014a, p.

1). This was certainly an improvement, but it fails to explain why there is a threshold for public finding for candidates, but not for political parties. More pointedly, it questions the purpose of having a threshold at all.

Equality of Opportunity for Private Actors

While political finance regulations are concerned with creating a level playing field for political actors, they are also concerned with the equality of opportunity for private actors (i.e. non-political actors) to influence politics. This has certainly been a feature of the Nova Scotia regime for quite some time. The first political finance

legislation in Nova Scotia purported to be concerned with giving individuals and different elements of society equal opportunity to influence politics—the Green Commission and politicians on both sides of the floor noted the importance of this goal. However, nothing in this legislation addressed this issue. The recognition of political parties, expense limits, and reimbursements are all provisions that attempt to level the playing field for political actors, not for private actors. Therefore, while claiming concern, the government took little action to right inequalities.

The explanation for this inconsistency is likely quite simple. Although both the government and the opposition were under criticism for their political and economic practices, which allegedly favoured particular regions, industries, and racial groups, they were also under pressure from those favoured groups to continue business as usual. The

Green Commission had suggested that creating a tax credit for political contributions was outside of the province’s jurisdiction, and, so, the government made no attempt to include a tax credit provision (Green Commission, 1969). Rather than introducing contribution limits or contribution disclosure laws, the government opted to re-establish some semblance of legitimacy to the political system by introducing legislation that gave political parties and candidates greater legal standing, and, thus the air of legitimacy.

This, they hoped would give Nova Scotians faith in the political process.

Evidently, this did not work. As the historical overview reveals, minor political scandals, patronage, and favorable treatment continued to plague politics in the province.

As a result, in 1981, the first steps toward creating equal opportunity for private actors to influence politics were made, when the tax credit for political donations was introduced.

Tax credits are intended to encourage political contributions by offering private actors 59

returns for their donations. Tax credits are usually capped to encourage small donations from many small actors, therefore giving those otherwise unable to “afford” influence in politics, the opportunity to contribute funds. Before delving into the intricacies of the current Nova Scotia political finance regime that deal with the issue of private actors, it is worth echoing that a private actor does not only mean an individual or a voter, but rather it can also include corporations and unions. This distinction is particularly important when looking at the early tax credits for political donations as well as the subsequent development of the political finance regulations in Nova Scotia.

Indeed, the tax credit introduced in 1981 did not differentiate between individuals and corporations in that it was available equally to each. It is clear that, at the time, corporations and unions were viewed as actors similarly deserving of equal opportunity to influence politics as were individuals. This is all the more interesting because many of the scandals that inundated governments in Nova Scotia over the years had to do with questions of preferential treatment by granting contracts to corporations with financial ties to the political party in power. On the other hand, the same could be said in terms of patronage appointments for individuals. Nevertheless, these tax credits would not be able to address such scandals and were only intended to encourage contributions from private actors, which were seen as having a vested interest in politics and, thus, had a right to influence politics.

In 2006, the government took another decisive step to level the playing field for private actors when it introduced contribution limits. Individuals, unions and corporations were still considered equal under this legislation and given the same $5000 contribution limit. This change only came after similar, highly publicized, reforms had been made to 60

the federal political finance regime in 2004. The contribution limit, like the expense limit for parties and candidates, was intended to prevent private actors from contributing to such an extent that they had an undue influence over a political actor or actors. By limiting contributions, less wealthy individuals, or smaller corporations and unions would have an equal opportunity to influence politics.

A change in attitude toward corporate and union influence in politics came in

2009, when political donations from these entities were banned. This echoed a similar change at the federal level. Although it is likely that the reforms in Nova Scotia were influenced by the federal reforms, the prohibition of corporate and union contributions in the province still marked a momentous shift in the government’s approach to political financing. This change suggests that the influence of individuals on the political process was now considered more important than that of corporations or unions. This reflects the idea that only private actors with votes should be able to influence politics through political contributions. It is not clear, however, that this sentiment is actually shared by the politicians in Nova Scotia. During the debates on the 2011 overhaul of the Elections

Act, one Liberal MLA noted that a number of the province’s corporations and unions had been involved in the consultation process for the legislation and argued that the Sobeys

Group should also have been included. It appears that even without the ability to contribute funds to political actors, corporations and unions continue to influence the direction of the political finance regime.

It is also worth noting that there are fewer individuals who can actually afford to spend the contribution limit of $5000 than those who can. An examination of the contribution disclosure reports for 2013 revealed that there were over 2000 individual 61

donations of over $200 between the NDP, Liberals and PCs (Elections NS, 2014b).12 Of these donations, only 22 were contributions of $5000. Of the hundreds of donations made to candidates, only seven were contributions of $5000 divided among just four candidates. Electoral districts were lucky to receive any contributions in 2013, receiving a mere 27 contributions over $200. It does not appear, then, that lowering the contribution limit further to create greater equality of opportunity for individuals would irreparably hurt any political actor.

Openness and Mitigation of Corruption

Tied closely to the question of giving private actors equal opportunity to influence politics is the issue of openness and the mitigation of corruption. Several aspects of the

Nova Scotia political finance regime are aimed at creating greater transparency. As discussed above, even Nova Scotia’s earliest reforms were intended to mitigate corruption. It could be argued that, by introducing public funding in the form of reimbursements, the early reforms brought some legitimacy to candidates’ income. This, however, is not a substantial argument, as the introduction of public funding alone does not necessarily mean that candidates will no longer be receiving money from questionable sources. The requirement that political parties and candidates report their expenses, on the other hand, did at least create some openness in the political process.

Nova Scotians could now see where political funds were going and could be sure that they were not being used for illicit activities, such as vote-buying or bribery. The problem

12 The Green Party’s Report was not made available in the Chief Electoral Officer’s Report, though the Party did submit its report by the deadline. 62

was that this provision could only go so far; it could not prevent the funneling of money through legal channels into the hands of people who could then use it for illicit practices.

The early legislation did, however, put in place penalties for failing to comply with political finance laws and for corrupt practices. That being said, the provisions in the

1969 legislation seemed to be more about allaying the appearance of corruption than mitigating real corruption. This was evident in the persistence of questionable practices after 1969.

Of great concern in the Nova Scotia political system over the years had been the granting of patronage appointments or of government contracts on the basis of financial political support. Until the contribution disclosure regulations were introduced in 1991, it was almost impossible for the public to hold the government accountable in this regard.

The disclosure requirements were a huge step toward transparency by allowing Nova

Scotians to see exactly where political actors were getting money. This made it easier to scrutinize government appointments and contracts tendering. In the same vein, the prohibition of corporate and union contributions in 2009 was also intended to reduce both corruption and the appearance of corruption. By getting rid of these contributions altogether, parties and candidates could no longer be accused of favouring certain entities over others because of contributions that had been made.

In 2011, the government went one step further and introduced spending limits and reporting requirements for registered third parties. Creating spending limits ensures that a third party cannot have undue influence over the political process and also ensures that any single third party cannot have considerably more influence than another.

Contributions to third parties are similarly regulated as they are for political parties. This 63

prevents individuals, corporations, or unions from circumventing the political contribution regulations by over-contributing to a political actor, thereby having unfair influence. Similar to political actors, third parties are also required to report their expenses and disclose contributions.

Requiring parties and candidates to report their expenses and to disclose their contributions is meaningless, however, unless there is a way to enforce the rules. Nova

Scotia’s enforcement mechanisms are not considerably different from those in other jurisdictions. There are penalties for noncompliance and mechanisms to remedy errors in reports. However, penalties for breaking political finance laws are relatively low—$500 and temporary prohibition form sitting in legislature for failing to submit an expense report, and $50,000 for a party and $5,000 for a candidate that fails to comply with contribution disclosure regulations. No penalties exist for third parties, other than general offenses under the Act. The fact that current legislation requires financial reports be made available online is likely one of the most valuable enforcement measures. When reports are made readily available to the public, it means that political actors and third parties are open to greater scrutiny. Elections Nova Scotia is efficient at keeping these reports and the reports of the Chief Electoral Officers up to date and easily accessible, barring technical glitches. The names and addresses of those who contribute over $200 are made available and the reports are user-friendly. Not all actors submit their reports on time for the publication of the summary reports, however, which can make it hard to find information.

Enforcement is the most problematic aspect of this regime. The fact that the Chief

Electoral Officer is the only person who can initiate an investigation puts a terrible onus 64

on the CEO. While the CEO’s staff reviews the financial reports, it is still only the CEO who can initiate investigations. Official investigations, however, are rare. In fact, it was not until the controversy over a contribution made to the NDP in 2009 that a party was actually made to answer for non-compliance, and it was for this reason that the noncompliance agreement was introduced into the regime. The hope was that non-compliant political actors and third parties would come forward and enter into an agreement. After the 2013 election, however, the CEO reported that, even though there were a few third parties that entered into such agreements, there were major concerns with this process and recommended that it should reassessed before the next election (Elections NS,

2014a). One could argue that the lack of investigations is a good sign—that it shows the rules are being followed. However, the concerns expressed by the CEO, suggests that this is not the case; rules are being broken, but Elections Nova Scotia simply lacks the power and resources to enforce them.

Conclusion

Nova Scotia’s political finance regime was slow to develop, but over the past five decades, it truly has become one of the most comprehensive regimes in the country.

Initiated on the recommendations of an independent commission in the wake of economic troubles, accusations of discrimination and improprieties, the development of the regime has been marked by countless scandals and heated controversies. Over the years several politicians and their political parties have taken advantage of political finance legislation to legitimize their authority and to restore the public’s faith in the political system.

However troublesome or long the road to the current legislation has been, it has not been for nothing. While the analysis in this chapter has pointed out flaws or potential problems 65

in the regime, it is undeniable that the regulation of political finance has had an impact on the political process.

The first legislation did come during a politically, economically, and socially tumultuous time, and, while it might have been a political manoeuver by the dominant parties to reduce the appearance of corruption, it was, nevertheless, innovative and has had a lasting impact on the political system in the province. The fact that the 1969 legislation allowed for the official recognition of political parties was, on its own, revolutionary, but the fact that the threshold for official party status was set low enough to allow for competition in the system set in motion the reshaping of the province’s party system. Public funding and expense limits opened the political process up to individuals and political parties previously unable to participate, thus, giving at least the appearance of a less elite political system. Contribution limits, bans and disclosure, and expense reports did, in fact, help reduce vote buying, improper tendering processes, patronage appointments, and other questionable activities. The regime has not been able to eradicate all these problems, but not all such activities can be fixed solely by political finance laws.

Many changes were made to the regime in a brief timespan between 2006 and

2011. In a regime where change has tended to evolve slowly—once or twice a decade— these rapid reforms may have been made in haste. This is not to say that the recent reforms should not have been instituted. Some of the provisions, such as the inclusion of third parties, are innovative and have potential to make an impact on the system.

However, the reforms have placed an unprecedented burden on Elections Nova Scotia that only time, consideration, and further innovation can reduce. Moreover, the new reforms must be reconciled with both the pre-existing provisions and changes to the 66

provincial electoral boundaries. Some of these have been put into consideration by the

CEO and the government since 2014; however, there is still a long road ahead.

CHAPTER 3: NEW BRUNSWICK

New Brunswick first adopted a political finance regime in 1978 with the introduction of the Political Process Financing Act, nearly a decade after the Nova

Scotian regime was created. One of the first provinces to introduce public funding for political parties, New Brunswick’s regime was long seen as innovative and progressive, causing it to be one of the most studied regimes in the country. Though the Act has been amended numerous times to meet the demands of the contemporary political world, its original foundation remains intact. Today, the New Brunswick regime includes expense limits for candidates and political parties, an annual allowance for political parties, expense reimbursements for candidates, and contribution limits for individuals, corporations, and unions. Parties, candidates and electoral district associations are required to disclose their contributions and expenses, while third parties are only required to report their expenses. The regime remains one of the most comprehensive in the country, but has recently come under fire for not keeping pace with the federal regime and those of other provinces. However, as this chapter demonstrates, the New Brunswick regime has been purposefully crafted to meet the needs of the province in terms of mitigating corruption and creating equal opportunity for political and private actors.

Political and Social Context

Certainly, for much of its history, New Brunswick was not known for innovative policy development. This changed in 1960 when Louis Robichaud, an Acadian Liberal, became premier. Robichaud’s Liberals took major steps to remedy regional and linguistic inequalities in the province. After various incidents of questionable electoral outcomes

and subsequent recounts, the Liberals commissioned J.E. Michaud to investigate electoral practices in New Brunswick (Mellon, 1991). Michaud’s 1966 report was primarily concerned with the absence of regulations requiring uniformity of ballots and confusion among election administrators due to insufficient information. Michaud recommended uniformity in election administration, the recognition of political parties, the redrawing of electoral boundaries, and the appointment of a permanent chief electoral officer

(Michaud, 1966). Although Robichaud’s government did not adopt all of Michaud’s recommendations, in 1967 it enacted legislation requiring uniform ballots, providing for a permanent chief electoral officer [CEO], and effecting redistricting (Mellon, 1991).

While these changes alleviated some of the problems of electoral administration, the

Liberals were accused of gerrymandering constituencies, exacerbating ethnic and regional divisions to meet their political needs (Stanley, 1984).

Strides were made, on the other hand, with the implementation of the Robichaud government’s “Equal Opportunities” program, which was set in motion after the Royal

Commission on Finance and Municipal Taxation released its report in 1963. The report suggested that the division of authority, among parishes, counties, villages, and cities, had been rendered obsolete by an increasingly mobile and urbanized population (Byrne

Commission, 1963). The resulting Equal Opportunities Program led to the centralization of authority and costs in the hands of the provincial government. County governments were abolished and the province took over the administration of education, health, and social welfare (Fitzpatrick, 1978). The program was intended to ensure that people in all regions benefitted from comparable services.

The program was not well received by everyone, however. In practice, equalization meant that the Anglophone Protestants in the wealthier regions in the south would subsidize services offered to residents of the more depressed regions in the north.

Anglophones, particularly in the Greater Saint John area, began to accuse the Acadian-led

Liberals of “rob[bing] Peter to pay Pierre” (ibid., p. 126). Notably, K.C. Irving, the head of the Irving Empire based out of Saint John, widely regarded as the province’s

“economic saviour,” was vehemently opposed to the Equal Opportunity Program and found support among Anglophones. Thus, a program intended to diminish inequality for the Acadian population unintentionally led to feelings of inequality among the English- speaking population (ibid., p. 128).

Early Political Finance Reform

When Richard Hatfield’s Progressive Conservatives formed government in 1970, they inherited the Equal Opportunity Program from Robichaud’s Liberals. The Tories could have scrapped the program, as many of their supporters opposed the initiative.

Instead, the new government enacted many of the program’s initiatives by proclamation during the early 1970s (Mellon, 1991). In fact, the program and the early changes made to the Elections Act by Robichaud’s Liberals became a motivation for further reforms, which were viewed as imperative by both the Tories and the Liberals, now led by Robert

Higgins. The main concern of both parties was the desire to abolish dual member ridings in favour of single member ridings. Both sides considered this change to be important.

However, they had been delaying reform due to the unique role dual member ridings played in the province. While some ridings were homogenous (i.e. entirely English or

entirely French), others were heterogeneous, such as those in the north with a majority of

Acadians and small enclaves of Irish Catholics, or those in Saint John with a small minority of Irish Catholics and a majority of English Protestants. Dual member ridings were seen by many as the only way an Irish Catholic could be elected in the province

(Fitzgerald, 1978). At the same time, rising costs, inefficiency, and difficulties with election administration led the party elites to consider redistricting so that there were only single member ridings. It was this issue that led Hatfield to establish both a select committee of MLAs and a commission to inquire into the administration and financing of provincial elections.

The Select Committee on the New Brunswick Elections Act, consisting of Liberal and Tory MLAs, was created in June 1973 to investigate financing and electoral administration more generally (NB Select Committee, 1974). The Committee consulted officials in Nova Scotia, British Columbia, and Maine, as well as the federal Chief

Electoral Officer. It made 29 recommendations on a variety of issues pertaining to election administration. Like the Michaud Commission before it, the Committee recommended the official recognition of political parties and that “provincial parties and constituency associations be required to become legal entities capable of suing and being sued in the Civil Courts, and of being held liable…for…violations of any regulatory legislation” (ibid., p. 12). This suggestion was made explicitly for the purpose of establishing the legitimacy of, and maintaining public confidence in, the political process.

The specific legislative regulations they referenced were expense limits.

However, the Select Committee suggested not only that parties’ and candidates’ election expenses be limited, but also that contributions over $100 be disclosed, that a tax credit 71

for contributions be introduced, and that candidates’ expenses be reimbursed (NB Select

Committee, 1974, p.13-6). The reporting of expenses and contributions, and the imposition of penalties for failing to comply were also recommended. These recommendations were made on the basis of suggestions made at public hearings and by select groups such as the New Brunswick Federation of Labour and various Liberal and

Tory political associations. The Committee found that many were becoming suspicious of patronage and government kickbacks, as manifested in the Legislative Assembly where allegations of corruption were exchanged between the dominant parties.

In May 1974, the Hatfield government made its first reforms to the Elections Act based on the recommendations of the Committee, though they did not go as far as the

Select Committee had proposed. The amendments required the registration of political parties and the reporting of election expenses, but set no limits on expenditures and failed to introduce any form of public funding. Liberal representatives criticized the legislation for its lack of adherence to the Committee’s recommendations. One Liberal argued that the government had “built a skeleton of intentions in order to make the people believe they [were] making fundamental reforms when, in reality, there [was] nothing of a substantive nature in this bill” (NB Leg. Ass., 31 May, 1974). Hatfield defended the government’s choices, citing the alleged administrative difficulties faced by jurisdictions such as the Federal government, Quebec, the United States, and Maine, all of which had introduced provisions regarding expenditure limits and public funding. Hatfield argued that these jurisdictions continued to face accusations of corruption and that they found the legislation difficult to enforce. This argument, however, was a hard sell—the Canadian federal legislation had only been passed earlier that year and had not yet been put to the 72

test. Similarly, the United States had only enforced full contribution disclosure early in

1974 and their midterm elections were not due to occur until November 1974.

Nevertheless, Hatfield stated that “the government’s position is that we will not make cosmetic changes in legislation just to react to a situation for the sake of appearance” (NB

Leg. Ass., 31 May, 1974).

Hatfield was a rather modest reformer in comparison to Robichaud. While

Hatfield had continued to support the Equal Opportunities program and made various changes to the civil service and government tendering process, he and his government were wary of making too many changes too quickly. Although the Select Committee’s report had revealed that some people New Brunswick had grown suspicious of patronage and kickbacks, there were still many in the province who expected rewards for their loyalty and who wished to see old practices continue (Simpson, 1988). The government was a major employer and economic stimulus in the province. Many people depended on patronage and favourable government contracts for their livelihood and a sudden halt to these practices could create unintended problems for the government and society.

Furthermore, Hatfield had stated that he saw contribution disclosures and expense limits as important steps, but that the province was not administratively ready for such reforms.

Indeed, he even went as far as to say that complete public funding for political parties was the “ultimate answer” to political corruption and patronage in the province (NB Leg.

Ass., 31 May, 1974). Thus, while the conservative reforms of 1974 might be interpreted as a savvy political move on the part of the Hatfield Tories, it is also arguable that the

Tories were sincerely opting for a phasing out of corrupt practices with the gradual introduction of reforms. 73

Despite the Liberals’ criticisms of the Tories, the PCs managed to increase its majority by one seat after the November 1974 election. Over the next four years,

Hatfield’s support for expense limits and public funding became increasingly resolute.

Nevertheless, in the aftermath of the 1974 provincial election, Liberal MLAs began to accuse the government of corruption and patronage (Starr, 1987). These accusations were ironic, as the previous Liberal government had been tainted by a scandal with the New

Brunswick Liquor Commission (ibid.). Nevertheless, it would be difficult to argue that the PCs were free of political improprieties and illicit practices in the mid-1970s, though it was not until 1980 that most of these practices came to light, supported by concrete evidence (Simpson, 1988). Further accusations were made concerning the government’s handling of the Bricklin sports car enterprise which had resulted in the company’s bankruptcy. With each accusation, Hatfield’s stance on political finance regulation grew stronger and he spoke out on many occasions against the patronage and kickbacks that were prevalent in the province. He also expressed his dismay at the fact that the lack of spending limits for candidates made politics “a wealthy man’s game” (Starr, 1987).

Eventually, Liberal leader Higgins called for an independent inquiry into the PCs’ alleged interference with an RCMP investigation of their finances and promised to resign if he was wrong about these allegations (Mellon, 1991). When the Chief Justice’s January

1978 report found no proof of interference, Higgins resigned as Liberal leader and as an

MLA. The same day the report was released, Hatfield announced his plan to introduce political finance legislation and, in the spring of 1978, he introduced the Political Process

Financing Act (ibid.). This Act was one of the most advanced pieces of political finance introduced anywhere in Canada up to that time. As Hatfield had long promised, the Act 74

included spending limits, expense rebates for candidates, and contribution disclosures.

Expenditures for both parties and candidates were limited based on the number of voters in the ridings where candidates ran. These limits were adjusted based on population thresholds to account for the varying populations in the province’s ridings. Expense rebates were contingent on a candidate receiving 20% of the votes in their riding. The contribution disclosure provision required that any donation over $100 be reported, including the name and address of the donor, and that a receipt be issued.

Unexpectedly, the legislation also introduced contribution limits and annual allowances for political parties, provisions not introduced in many Canadian jurisdictions until two decades later. Contributions from individuals, corporations, and unions were limited to $3,000 in non-election years and to $6,000 in election years. The annual allowance was a per-vote subsidy of $1 per vote. Additional provisions were included to ensure that parties and candidates could not maintain any secret stockpiles of assets. The legislation also created a new position, the Supervisor of Political Financing, whose responsibility it was to review reports to ensure compliance with the Act, and to take appropriate steps to penalize intentional non-compliance (Political Process, 1978).

When Hatfield spoke about the legislation during its second reading in June 1978, he stated that it was one of many reforms his government had introduced “to make the political system in New Brunswick more democratic, more responsible, more rational, and less susceptible to undue influence than it was in the past” (NB Leg. Ass., 6 June,

1978). Hatfield also reiterated the concerns he had about the state of politics in New

Brunswick, namely, its elite nature and the declining public confidence in the political process. The debates demonstrated that the Opposition shared these concerns (ibid.). 75

Instead of engaging in partisan antics as in previous debates, the Opposition supported the bill, but offered a few suggestions. The Liberals noted that the provision for parties’ annual allowance was worded in such a way as to exclude new parties (ibid.). They argued that, if public confidence in the system was to be regained, the legislation must not appear to benefit only the two dominant parties, and that funding also had to be offered to the NDP which was receiving moderate electoral support (NB Leg. Ass., 27

June, 1978). The PCs agreed to amend the provision to include parties that won seats and any party that had run at least 10 candidates in the previous election.

The Tories were not so easily swayed on the issue of tax credits. At the time, most existing political finance regimes offered tax credits for political contributions, while steering clear of direct public funding for political parties. The Liberals argued, first, that tax credits encouraged small to moderate donations from individuals, corporations and unions who might not otherwise be able to afford to donate and, second, that they provided an indirect source of public funding to political parties (NB Leg. Ass., 27 June,

1978). Furthermore, tax credits allowed individuals to give to the party of their choice, whereas, direct public funding, such as a per vote allowance, drained funds from the public purse and forced taxpayers to give money to a party they might not support.

Hatfield refused to entertain the idea of tax credits, arguing that they benefitted the rich, while per-vote subsidies were a more effective way to reflect the wishes of the majority

(i.e. as a form of financial proportional representation) and easier to administer (ibid.). In the end, tax credits were not included in the legislation. Nevertheless, the Political

Process Financing Act passed with little opposition.

The initial response to the Act was largely positive with various media outlets lauding the legislation as the answer to the province’s political woes. The Telegraph-

Journal was cautious in its response, as it reported that the legislation “looks like a sincere attempt to correct some of the problems and to get the financing of political activity on a businesslike basis” (“Election Reform,” 1978). The Moncton Times was slightly more optimistic about the Act, stating: “It may well be that the greatest benefits to eventually emerge from the Political Process Financing Act will…be…the indirect encouragement to greater participation in the political process by the grassroots”

(“Putting Politics,” 1978). Though there was little in the Act to encourage such participation, the optimism it inspired was notable. Even the Halifax Chronical Herald reported positively on it, outlining the premier’s vision for the Act: “We did not want to restrict participation in the political process to lawyers, accountants, political scientists, and systems analysts” (“Political Financing Act,” 1978). There were no overtly negative responses to the Act.

Few substantial changes were made to the Act over the next two and a half decades. Small but important changes came in 1981 and 1982, however. First, in 1981, the Tories, still under the leadership of Hatfield, introduced a tax credit for individual donations and increased the per-vote subsidy for political parties from $1 to $1.30. This was not so much a change of heart on the part of the Conservatives, as it was an admission that they would eventually lose this battle anyway. The change came as a result of the multi-party Advisory Committee to the Supervisor of Political Financing, which had been created under the 1978 Act. Despite the fact that half of the members were Tories, the Committee’s reports reiterated the desirability of a tax credit, stating that 77

it would increase participation and confidence in the political system (Mellon, 1991). By early 1982, the government had also introduced the same tax credit for corporations for the sake of uniformity and ease of administration (ibid.).

After 1982, most of the changes made to the Political Process Financing Act were minor ones intended to adjust dollar amounts to account for inflation or to correct translation errors in the French version of the Act.13 There were, however, discussions about possible changes to the Act. Indeed, with the increasing electoral success of the

NDP in the 1980s and the Confederation of Regions Party [CoR] in the early 1990s, new perspectives were given voice in the Advisory Committee to the Supervisor of Political

Financing. In 1990, NDP leader Elizabeth Weir called for reforms to the definitions of

“corporation” and “trade union” under the Act. Weir felt the definitions disadvantaged her party and favoured the Liberals and PCs (Mellon, 1991). Under the Act, only trade unions with bargaining rights within the province were allowed to make political contributions, whereas corporations were only required to have an office or to do business within the province in order to contribute, thereby creating a loophole where corporations from outside of the province could make political donations. However,

Frank McKenna’s Liberal government, which held all 58 seats in the Legislature, refused to change the definitions.

Throughout the 1990s, the Liberals were accused of not taking Opposition views into account when making amendments to the Act. Even when changes were minor, the

PCs, NDP, and the CoR all accused the governing party of by-passing the Advisory

13 Such changes occurred in 1986, 1987, 1991, and 1994. 78

Committee to make unilateral decisions concerning the Act. Nevertheless, most of the amendments made in the 1990s, including one which cut parties’ annual allowances to match cuts to government departments, were passed with multi-party support. This period was relatively scandal-free, apart from occasional discussions of patronage, small controversies over government appointments, and allegations of government mismanagement of NB Power.

The only substantial changes to the Act were introduced by the Liberal government under Shawn Graham between 2007 and 2009. Although the Liberals introduced the reforms, it was actually Lord’s PC government that had set the changes in motion. As the first Tory government since the election of McKenna in 1987, Lord was concerned about the tendency for the electoral system to create discrepancies between a party’s popular vote and the number of seats they received in the Legislative Assembly.

As a result, he had promised to appoint an independent commission to inquire into the state of democracy in the province. In December 2003, the New Brunswick Commission on Legislative Democracy was created. The Commission’s report, released in January

2005, made recommendations on the best form of proportional representation and for amendments to the political finance regime, although the latter fell outside the intended scope of the Commission (Levesque, 2016). The government accepted the recommendations and published a report on the initiatives it intended to undertake by the end of 2008.

Included in these initiatives were several provisions pertaining to political finance. First, the government intended to merge the positions of Chief Electoral Officer and Supervisor of Political Financing and the office of the CEO would now be called 79

Elections New Brunswick. Next, limits on political contributions from individuals, corporations and unions were to be lowered. Individual donations would be decreased from $6,000 to $3,000 and corporate and union donations would be decreased from

$6,000 to $1,000. The report also called for a new formula for parties’ annual allowances and increased reimbursements for candidates. Finally, political finance regulations were to be extended to leadership contests, including spending and contribution limits, and reporting requirements (New Brunswick, 2006). Interestingly, the report referred to political parties as “public utilities” and cited the federal reforms as one of the greatest inspirations for the proposed changes (ibid., p. 12). However, the Lord government, was defeated in the October 2006 provincial election before it could make any of these changes. In 2007, the Graham government drafted its own report in response to the

Commission, abandoning many of the Commission’s suggestions, as well as most of the proposed Tory initiatives. They did, however, merge the positions of the CEO and the

Supervisor of Political Financing and created Elections New Brunswick, the independent commission of which the CEO was to be the head. While these changes were significant, they merely served as cost-cutting mechanisms modeled after election commissions in other jurisdictions (New Brunswick, 2007).

There were two reform packages presented by the Liberals between November

2008 and December 2009. The first set of reforms introduced substantial changes to the regulation of third party advertising, including spending limits and finance reporting mechanisms. The Liberals argued that these amendments would ensure that everyone had the same opportunity to influence politics. A Liberal MLA argued that “each of us should have the opportunity to campaign under the same rules with a level playing field, and that 80

playing field must include the same rules for the wealthy as it does for those with less means” (NB Leg. Ass., 2 December, 2008). The Opposition supported this notion (ibid.).

These views echoed the approaches taken by both dominant parties in their responses to the recent Commission, although neither had explicitly stated their intention to regulate third parties.

On the surface, the second set of reforms appeared to make substantial changes to the public funding of political parties. Instead of a simple per-vote subsidy, a new formula was created. However, in reality, the province had been using the same formula to calculate parties’ annual allowances for 18 years. In their 2006 report, the Tories had promised to create a formula for public funding, and in their 2007 report, the Liberals claimed that there was already a formula for calculating the annual allowances of political parties. It seems, however, that both parties were slightly off the mark. Thus the introduction of the formula in 2009 might simply have been an attempt by the Liberals to make up for their previous error—they knew a formula was used, but might have been unaware that it was not set out in the legislation. Interestingly, that same year, the Liberal government had been accused of corrupt practices in what has come to be known as the

“Atcon loan fiasco” (Poitras, 2015). Therefore, the decision to make an amendment to the

Political Process Financing Act at that precise time might also have been influenced by the potential impact of the Atcon scandal on the governing party. Not coincidentally, this change coincided with amendments being made to the Elections Act. During debates on those reforms and the amendments to the Political Process Financing Act, more than one

politician on both sides of the floor confused the two reform packages.14 In one of these debates, a PC MLA attacked the government for its recent record, stating:

They ran on a platform of being transparent, but they are not. Not once but twice,

they ran on a platform of not selling NB Power. Now, we have the Hydro-Québec

takeover fiasco. They gave a $60-million grant to a financial institution and a $50-

million bailout to Atcon. They go door-to-door saying one thing, and then, after the

election, they do the opposite. (NB Leg. Ass., 8 December, 2009)

While the government was not directly attacked in such a way in the debates on the set of amendments concerning political financing, the overlapping of the debates suggests that there was at least some connection between such criticisms and the decision to make changes to the Political Process Financing Act. Regardless of whether or not the amendments were being used as a political tool by the Liberals, they were accepted and remain unchanged. In fact, the New Brunswick political finance regime remained unchanged between 2009 and 2014.

The Current Political Finance Regime

Although the previous discussion reveals that the bulk of the Political Process

Financing Act has remained intact since it was introduced in 1978, the amendments that have occurred have had a distinct effect on the way elections are run in New Brunswick.

The legislation is more comprehensive today, including more provisions for expense

14 On more than one occasion, speakers confused the content of the bills. While introducing amendments to the Political Process Financing Act, a Liberal MLA became convinced he had the wrong bill, announcing that there was a “be a slight mix-up” and asking to discuss it on another day (NB Leg. Ass., 2 December, 2009). 82

limits, contribution limits, public funding, and transparency. This section outlines the current provisions, while the following section will provide greater insight into the changes that have occurred and how they have altered the administration of elections in the province.

Expense Limits

The Political Process Financing Act limits election spending for political parties, candidates, and registered third parties. The Act defines “election expenses” as “all expenditures incurred during an election period for the purpose of promoting or opposing directly or indirectly, the election of a candidate or that of the candidates of a party, including every person who subsequently becomes or who is likely to become a candidate” (Political Process, 1978, s.67(1)). Election expenses also include any expenses incurred before the election period on materials or services to be used for the aforementioned purpose during the election period.

Similar to the expense limit for candidates in other jurisdictions, the expense limit for candidates in New Brunswick is based on the number of voters in the riding in which the candidate is running. According to the Act, candidates are allowed to spend $1.75 per voter. However, the Act includes a minimum expense limit as well as a maximum expense limit. This is not to say that there is a minimum amount that a candidate must spend, but rather that there is a minimum limit in place so that candidates in a riding with a particularly low population do not have an extremely low spending limit. The Act currently stipulates that the minimum limit a candidate can have is $11,000 and the

maximum spending limit that a candidate can have is $22,000.15 The election expense limits for political parties are also calculated in much the same way as they are in other jurisdictions. A registered political party is eligible to spend a certain monetary amount per elector in the ridings in which it runs candidates. The Act currently states that a party can spend $1 per elector in the aggregate of the ridings where they run candidates.

Spending limits for registered third parties are calculated quite differently in New

Brunswick as compared to other jurisdictions. The Act defines third parties as “a person or group other than a registered political party, a registered district association or a candidate” (Political Process, 1978, s.84.1). In other words, a registered third party is any individual, corporation, union, or any other group, that, for the purposes of the Act, incurs expenses for the purpose of election advertising. A third party must register as soon as it spends at least $500 on election advertising. Instead of setting out flat amounts for the limits on third parties, the New Brunswick regulations allow third parties to spend a certain percentage of the amount that political parties are able to spend. Provincially, a third party can spend 1.3% of the limit for a political party running candidates in all 49 ridings. Third parties are limited to 10% of the overall limit if they are conducting business related to just one electoral district.

Contribution Limits

Individuals, corporations, and unions are all allowed to make contributions under the New Brunswick political financing regime. Contributions are defined as “services,

15 The figures in this section are taken from the Political Process Financing Act have not been adjusted using the Consumer Price Index [CPI], as they would be for the calculation of actual expense limits. 84

money or other property donated to a political party, an association or a person to support the political purposes of a political party, association, or candidate” (ibid., s. 1). The contribution limit for each of these entities is $6000 per annum to each political party or to a district association of one of those parties16 and $6000 to one registered candidate.

The Act stipulates that only corporations and unions operating within the province can make political contributions. In order to be eligible to make contributions, a trade union must hold bargaining rights for labourers in the province. Corporations must be incorporated in, have an office in, or do business in the province in order to be eligible to make a contribution. In other words, trade unions and corporations must have a vested interest in the province in order to make a contribution. Furthermore, corporations deemed to be “associated” under the Income Tax Act (Canada) are considered to be one corporation and cannot make separate donations. Contributions to registered third parties do not have a monetary limit but are restricted “election advertising contributions” (i.e. contributions made for the sole purpose of election advertising) from individuals, corporations, or unions. Contributions from political parties, electoral district associations, or candidates are banned.

Public Funding

The political financing regime in New Brunswick offers public funding to candidates and political parties. Candidates receive public funding through election expense reimbursements. The expense reimbursement is based on the lesser of two

16 The amount can be split between a party and a district association or made to just one of the entities. 85

options for a candidate receiving at least 15% of the vote in the riding in which he or she ran. The first option is the total election expenses claimed by the candidate. The second is

“an amount equal to the sum obtained by allowing thirty-five cents for each of the electors in the electoral district and adding thereto the cost of mailing a single one ounce first class letter to each elector in the electoral district” (Political Process 1978, s. 78.2b).

Political parties in New Brunswick do not receive election expense reimbursements. They do, however, receive an annual allowance. In order to be eligible to receive the allowance, a party must either be represented in the assembly that fiscal year or, alternatively, must have run candidates in at least 10 ridings in the previous provincial election. The annual allowance is determined by the following formula: (A-

B)*(C/D), where A = the amount of appropriation authorized, B = the amount to be paid to all parties during the fiscal year, C = the total number of valid votes cast for all candidates of that political party in the preceding general election, and D = the total number of votes cast for all official candidates of all qualifying political parties in preceding general election. Put more simply, the subsidy is heavily reliant on three factors: 1) the amount of money allocated to annual allowances in any one year, 2) the total number of votes cast in an election, and 3) the number of votes cast for the candidates of the party in question.

Individuals and corporations are eligible for political contribution tax credits under the Income Tax Act (New Brunswick). These entities can receive a tax credit of

75% for donations up to $200. Between $200 and $550, a tax payer can receive a credit of $150 plus 50% of the amount by which the contribution exceeds $200. For

contributions over $550, the credit is the lesser of $325 plus 33.33% of the amount by which the contribution exceeds $550, or $500.

Transparency

The Political Process Financing Act requires that candidates, registered political parties, party associations, and registered third parties submit financial returns to the

Supervisor of Political Financing. Returns are due between 60 and 120 days of the writ for election finances and within one fiscal year for annual returns. Candidates must submit reports on election expenses and contributions within 60 days of the return of the writ. Political parties must submit reports pertaining to an election period within 90 days of the return of the writ and semi-annual reports on or before October 1 and April 1.

Electoral district associations have to submit annual reports on or before April 1. No anonymous donations can be made under the Political Process Financing Act. However, the personal information of individual donors only needs to be included for contributions over $100. All entities are required to submit vouchers and receipts with their financial returns. Third parties need only submit expense reports with vouchers and receipts within

90 days after polling day.

The enforcement of these transparency mechanisms is the responsibility of the

Supervisor of Political Financing. Unlike most jurisdictions, New Brunswick does not have a standard penalty for offences. Instead, each offence under the Political Process

Financing Act carries its own penalty depending on how it is categorized under the

Provincial Offenses Procedure Act. Under this Act, violations of election finance laws can lead to a fine between $500 and $20,500, up to 180 days in prison, or payment of the

sum equal to $50 for each day the Chief Financial Officer is in default of filing the report.

These penalties can apply to registered political parties, electoral district associations, candidates, registered third parties, or their official agents. An investigation can be avoided if surpluses or expenses exceeding limits are reported and returned.

The Regime and Political Finance Benchmarks

When it was introduced in 1978, the political finance regime in New Brunswick was among the most comprehensive in Canada, encompassing aspects of political financing that other jurisdictions would not begin to consider for several years to come.

Since then, however, the Political Process Financing Act has fallen behind similar legislation in other jurisdictions. The main criticism of the legislation is that it treats entities without a vote, such as corporations and unions, in the same way that it treats voters. Many jurisdictions have either limited union and corporate donations to a greater degree than they have individual donations or prohibited these contributions altogether, as is the case in the political finance regimes of the federal government and Nova Scotia.

However, as this section demonstrates, when placed in New Brunswick’s contemporary and historical context, the province’s approach to the equality of opportunity for private actors makes sense. Indeed, the province’s economic and social circumstances have been formative in the development of its approaches to the mitigation of corruption and the equality of opportunity for political and private actors. All three of these benchmarks were core goals of the original legislation and have remained at the core of the regime as it has developed.

Equality of Opportunity for Political Actors

Equality of opportunity for political actors was one of the chief concerns expressed by Hatfield when he introduced the Political Process Financing Act in 1978.

Hatfield was concerned about the elite nature of politics and hoped the legislation would level the playing field in such a way that even those individuals with modest means would have equal opportunity to participate in politics. In order to achieve this, the PCs introduced spending limits and expense reimbursements for candidates. Similar provisions were introduced for political parties. Parties were limited in how much they could spend during an election and received an annual per-vote subsidy. Interestingly, when speaking about these reforms, the PCs were more explicitly worried about overspending and transparency than they were about leveling the playing field for political parties. This is evidenced by the fact that their original proposal only referred to parties with representation in the Legislative Assembly. It was the Liberals who suggested that the legislation should include parties which received at least 10% of the votes in the previous election, which would open up the process and give new parties an opportunity to succeed. The PCs were easily persuaded and this provision was included in the final legislation. Thus, it appears that, rather than attempting to block competition, as the literature suggests might be the intention of public funding in a two-party dominant system, the legislation was, indeed, aimed at giving political actors an equal opportunity to compete.

Hatfield viewed the annual allowance as a way for taxpayers to contribute to the parties on equitable terms. When the Liberals suggested opening up the allowance to other parties, Hatfield took this as a sincere concern not only for new parties, but also for 89

supporters of the dominant parties (NB Leg. Ass., 27 June, 1978). He decided that a threshold based on a vote percentage was too restrictive and suggested that the allowance should be made available to any registered political party. With this change, the NDP and the Parti Acadien were, at the time, eligible to receive the per-vote subsidy. Interestingly, however, the PCs did not take a similar stance on the threshold for the reimbursement of candidates’ expenses, which was still based on vote percentage. Nevertheless, the early debates do demonstrate that both of the dominant parties appeared to show a sincere concern for equality of opportunity for political actors.

The foundations of these provisions have changed very little since 1978. The same formulas are used for expense limits and reimbursements. Any registered party is still eligible to receive an annual allowance, and a candidate’s eligibility to receive an election expense rebate is still based on a vote percentage threshold. Over the years, the calculations for these provisions have been adjusted to meet the needs of the province.

When faced with an economic downturn in the 1990s, the government decided to re- examine the annual allowance for political parties and adjusted it to reflect budgetary cuts in other departments. This, the government claimed was to show that budget cuts were being taken seriously. Today, the Legislative Assembly decides at the beginning of each fiscal year how much money it will allocate to parties. This amount is then divided among the parties based on the number of votes they received in the previous election.

For a while in the 1980s, the contribution limit was increased to $9,000 and the per-voter expense limits were also increased. These changes were made in an attempt to account for the changing economy and the value of the Canadian dollar. Eventually, the

contribution was reduced again to $6,000, while the expense limits remained the same.

Today, calculations are instead adjusted annually using the Consumer Price Index.

The New Brunswick political finance regime, then, has remained committed to creating a level playing field for political actors. That being said, the regime is not entirely perfect in this respect. As in most other jurisdictions, the expense limits for political parties are based on the number of electors in the aggregate of all the ridings in which a party runs candidates. In 2014, parties were allowed to spend $1.8917 per elector.

This means that a party endorsing candidates in all 49 ridings would have a spending limit of $1,076,298.30. Three parties, the Liberals, PCs, and NDP, qualified for such a spending limit in 2014 while two, the Green Party and the People’s Alliance, did not.

While there is a clear upper limit that creates equality of opportunity for parties running candidates in all 49 ridings, not all parties are able to run candidates in every riding, so not all parties have the same spending limits. Due to the variance in the size of the population in different ridings, even two parties running the minimum number of candidates required to register as a political party might have different limits. A simple way to compare variances in spending limits, then, is to consider what the limits would be for a party running candidates in the 10 least populous ridings to what it would be for one running candidates in the 10 most populous ridings. In 2014, these limits would have been $207,283.86 and $233,407.44, respectively. This difference of $26,123.58 is

17 Values in this section are adjusted for CPI and are based on those reported in the Chief Electoral Officer’s report for the 2014 general election (Elections NB, 2015c) and the Supervisor of Political Financing’s summary of election expenses (Elections NB, 2015d). 91

relatively small compared to the difference between these spending limits and that of a party running a full slate of candidates.

While there can be substantial variances between spending limits, comparing limits in this way assumes that parties want to have higher spending limits in order to have competitive centralized campaigns, which might not be the case. New parties might, instead, run fewer candidates in order to focus on ridings where they stand a greater chance of being elected. Additionally, the concern of the legislation is not necessarily that all parties have the same overall spending limits, but, rather that they have the same per- elector limit. Parties are limited in such a way that gives them equal opportunity to influence individual electors in the ridings where they run candidates. Centralized campaigns that cater to the province writ large are not taken into account. Furthermore, it is worth noting that, in 2014, no party came close to reaching their expense limit.

Although they had the maximum spending limit, the Liberals only spent $793,742.59, the

PCs spent $859,901.50, and the NDP spent $33,723.31. The Greens had a spending limit of $1,010,660.49, yet spent only $33,324.68, while the expense limit for the People’s

Alliance was $401,394.42 and they spent only $1,518.72. If the 2014 election is indicative of a larger trend, then it appears that political parties in New Brunswick are not necessarily capable of spending up to their limits, regardless of how established they are or what their spending limit is. If this is the case, then it would call into question the reasoning behind setting the per-voter expense limit so high, as the limits serve little purpose as they stand.

The Political Process Financing Act further attempts to create equality of opportunity for political parties by offering all registered parties an annual allowance. For 92

the 2014-15 fiscal year, five parties were eligible for the subsidy. The party receiving the highest subsidy was the Progressive Conservative Party, with an allowance of $322,420.

Interestingly, the Liberals, who won the election with a majority government, only received an annual subsidy of $228,326. The party with the lowest subsidy was the

People’s Alliance with a subsidy of $7,896. If anything, these figures demonstrate how a per-vote allowance can serve as a kind of financial proportional representation in a system where the party with the most seats is not the party that received the most votes.

Nevertheless, what is notable about these subsidies is that they do not make up for the dominant parties’ election expenses. The subsidy made up for approximately one third of the Liberal’s expenses and one quarter of the Tories’ expenses. For the smaller parties, however, the subsidy more than made up for their election expenses. The Green Party’s subsidy of $30,268 almost entirely made up for its elections expenses, while he NDP’s subsidy of $69,090 was nearly three times its election expenses and the allowance for the

People’s Alliance was almost seven times its expenses. It appears that this public funding is helping, rather than hindering, newer parties. While the current electoral system might be benefitting the dominant parties, the subsidy does appear to be leveling the playing field for political actors.

Political candidates are also subject to expense limits under the New Brunswick political finance regime. Under the Political Process Financing Act, a candidate can spend a certain dollar amount per elector. The New Brunswick regime further attempts to level the playing field for candidates by setting a minimum and a maximum expense limit. This provision was included in an effort to limit the disparity between expense limits in less populated ridings and those in more populous ridings. Interestingly, in the 93

2014 election, these minimum and maximum limits were unnecessary. The per-elector limit was $3.30 for the election period. Therefore, the spending limit for candidates in the

2014 election ranged from $33,323.40 in the riding with the lowest number of voters up to $41,424.90 in the riding with the greatest number of voters, a difference of only

$8,101.50. The reason for the small difference is that the 2013 Boundary Commission was deeply concerned about making every vote carry the same weight (Boundaries

Commission, 2013). While it would be nearly impossible to ensure all ridings had populations of the same size, the Commission was rather successful, as it managed to establish a deviance of less than 2,500 electors between the smallest and largest ridings.

In creating ridings of similar approximate populations, the redistricting also created certain constituencies that are geographically large. The two largest constituencies are both over 7,000km2 (ibid). Many of these larger constituencies also consist of heterogeneous populations with varying proportions of English and Acadian voters. This is problematic as candidates in heterogeneous ridings have the added onus of providing information in both official languages, whereas those in homogenous ridings need only use one language. Thus, certain ridings have the dual burden of being both geographically large and linguistically heterogeneous. The current expense limits—and rebates, for that matter—do not take these differences into account.

Even with these inconsistencies across constituencies, it is arguable that all candidates’ expense limits are higher than they need to be. In 2014, 220 candidates ran in the provincial election. Of these, only 17 spent over $30,000, even though the lowest expense limit was over $33,000. Seven of those 17 won a seat (Elections NB, 2015d).

There are a few possible reasons for this. First, candidates may simply be unable to afford 94

to spend that much on a campaign. Without substantial political donations, it would be difficult for the average candidate to spend upwards of $30,000. The second, reason could be that people know they only have to spend more than the next person in order to have a more effective campaign. Thus, the answer is likely somewhere between these theories. Knowing that most candidates cannot spend that much money might have the effect of acting as a proxy spending limit—candidates need not spend between $30,000 and $40,000 if none of their competitors are capable of doing so anyway. Even if this were true, there are still candidates who spend over $30,000, suggesting that the proxy spending limit is not as effective as a real spending limit. Yet, the real spending limits that are in place are also ineffective as even those spending in the $30,000 range are well under the limit.

The final aspect of the regime that aims to give political actors equality of opportunity is expense reimbursements for candidates. In New Brunswick, a candidate must receive at least 15% of the votes in their riding in order to qualify for expense reimbursements. The calculation for candidates’ expense reimbursement, using the cost of sending a one ounce first-class piece of mail, might appear antiquated, but there is sound reasoning behind it. Because New Brunswick is largely rural, the door-to-door contact that occurs in urban areas is not as easy in many of the province’s ridings.

Therefore, a fair way to calculate a candidate’s expense reimbursement is to include the cost of sending an information packet to each of the electors in a candidate’s riding. This points to the main intention of this provision: giving each candidate equal opportunity to provide electors with information during an election campaign. In 2014, this latter amount was $1.31 per elector. This means that after the 2014 election, a candidate 95

receiving 15% of the vote in the least populous riding would be eligible to receive a maximum of $13,228.38, while a similar candidate in the most populous riding would be eligible to receive a maximum of $16,444.43. If these candidates were to spend up to their respective spending limits they would both be reimbursed for approximately 40% of their expenses. By limiting and reimbursing based on a flat per-voter rate, the New

Brunswick regime ensures that political actors have equal opportunity to make up for their expenses.

One might argue, however, that the threshold of 15% of the vote is too high a threshold. For much the same reason that Hatfield argued against such a threshold for the public funding of political parties, this threshold for candidates might discourage those of modest means from participating in the political process. Small or new parties, such as the NDP, the Green Party, or the People’s Alliance, might have a harder time finding candidates than the dominant parties. While the dominant parties might have the means to help reimburse their candidates who fail to meet the threshold, this is not necessarily the case for the minor parties. Furthermore, because of the strong two party system, candidates for these other parties are much less likely to meet the threshold. Indeed, after the 2014 election, 104 of the 220 candidates failed to meet the 15% threshold; none of these candidates were Liberal or PC. Thus, potential candidates might be scared off by the threshold, thereby limiting the effect the reimbursements have on the equality of opportunity for political actors, and indirectly, limiting the equalizing effect of all the other provisions discussed in the section.

Equality of Opportunity for Private Actors

Giving private actors equal opportunity to influence politics has been a central goal of the New Brunswick political finance regime since 1978. When the Political

Process Financing Act was introduced, it included contribution limits for individuals, corporations and trade unions. Under the Act, these three types of private actors were treated as entities each having a stake in political outcomes, and, therefore, equally deserving of the opportunity to influence politics. In order to level the playing field for individuals, corporations, and trade unions, the government limited contributions from these sources to $3,000 in a non-election year and $6,000 in an election year. Such a limitation, it was argued, would prevent wealthier actors from having an undue influence over the political process. Two years later, tax credits for individuals were also brought in, and soon after that, the same was done for corporations. These credits were intended to encourage more private actors to contribute to the political process. The inclusion of both contribution limits and tax credits in the early political finance legislation went a step further than similar legislation in other jurisdictions. The introduction of these reforms echoed the sentiment of Robichaud’s Equal Opportunity initiatives and were continued under Hatfield’s PCs. The reforms were intended to give everyone equal opportunity to fully participate in society. In the same vein, the inclusion of the provisions in the political finance regime were aimed at giving everyone equal opportunity to participate in the political process.

Since the 1980s, these provisions have changed very little and the province’s approach to corporations and trade unions has remained the same. It is this aspect of the regime that has recently received the greatest criticism. Today, corporations and unions 97

continue to be given the same opportunity as individuals to influence politics with money. Political contributions from these actors are all capped at $6,000 per annum and both individuals and corporations continue to be eligible for tax credits for donations. The contentious issue with these provisions is that they do not necessarily allow all private actors equal opportunity to influence politics. In fact, the NDP have been arguing since the late 1980s that unions are not given the same opportunities as corporations and individuals. While the legislation attempts to limit the ability to give political contributions to those actors who have a stake in the province, it actually has the effect of allowing corporations from outside of the province to donate as long as they do business within the province, while placing greater restrictions on unions. The NDP claimed that this restriction prevented unions from becoming major donors in the province (Mellon,

1991). However, instead of extending the right to make contributions to unions without bargaining rights in the province, the best course of action might be to limit contributions from corporations that are not major stakeholders in the province in order to limit outside influence on the provincial political process.

Further issues arise when political contributions are considered. First, it is important to note that detailed contribution lists are not readily available to the public.18

While the Supervisor of Political Financing publishes an annual report with summaries of contributions, these reports do not break down exactly who made donations and the precise amounts that were donated. They do, however, break down the donations by party

18 The legislation only requires that the documents are made available in person at the office of the Supervisor of Political Financing in Fredericton. 98

and by the kind of entity (i.e. individual, corporation, trade union) that made contributions in a given calendar year. The reports also provide telling comparative data on these figures. For example, the annual report from 2013 reveals a notable trend with corporate contributions: corporations donate substantially more money to the political party in power than to the party in opposition. Table 1 reveals this trend. In 2006, the PCs were in power and received over a million dollars in corporate contributions. When the

Liberals took over in 2007, they consistently garnered greater corporate contributions than the PCs. In 2010 there was a volatile provincial election and the dominant parties received very similar totals in terms of corporate contributions. However, once the PCs regained power in 2011, the contributions they received from corporate entities increased.

What is noteworthy about this trend is that it points to a continuation of the old patronage approach to politics, wherein, if a business made a donation to a political party, it expected something in return.

Table 1: Corporate Donations to the Dominant Political Parties 2006-2012

2006 2007 2008 2009 2010 2011 2012 Liberals $712,474 $437,290 $491,680 $538,733 $1,069,566 $73,362 $53,986 Progressive Conservatives $1,020,472 $78,489 $86,621 $122,960 $1,065,445 $494,869 $616,552

Source: Elections NB (2012) and Elections NB (2015a)

In 2015, it was also revealed that the PCs had accepted donations from corporations that surpassed the contribution limit. In both 2010 and 2014, the PCs accepted three donations totalling $16,800 from companies owned by the same

individual, Majid Debly. They also received a total of $6,06619 from J.D. Irving Ltd. subsidiaries and two donations totalling $6,834 from Oxford Frozen Foods and Peninsula

Foods, both members of the Nova Scotia-based Bragg Group (Jones, 2015).

Contributions exceeding $6,000 in a year from “associated” corporations such as these are prohibited. Furthermore, it was largely left up to the parties to check over their contribution lists to make sure that no other mistakes like these were made and to determine whether or not contributions were illicit (ibid.). No penalty was given other than having to return the excess money to the respective corporations. Practices such as this, combined with the trend noted above leave parties open to the undue influence of corporations. Corporate influence is also evident given the vast differences between the totals of individual contributions over $100 and those of corporations in the same years.

For example, in 2010, an election year, the Liberals received $478,410 in donations over

$100 from individuals, while they received $1,069,566 from corporate donors. The same year, the PCs received $652,514 in individual donations of over $100 and $1,065,445 in corporate donations. Unfortunately, these figures are not broken down into the number of donations, which would reveal more about the nature of contributions in the province.

The financial returns of the Liberals and the PCs from 2014, however, show that of the thousands of individual contributions made, fewer than 10 individuals contributed

$6,000, while over 50 corporations made donations of this amount. The majority of

19 The PC’s reports show the contributions totalling $6,600, but J.D. Irving Ltd. claims the total for 2010 was $6,066. 100

individual donations to either of the dominant parties were under $1000 (Elections NB,

2015b).

When contribution limits are so high and are open to corporations, the greatest fear is not necessarily that private actors will intentionally surpass the limit, but rather that there is a greater chance for people to get two kicks at the can in that corporations and the people that run corporations are far more likely to be able to afford to donate up to $6,000 a year. There are no restrictions on CEOs of companies making an individual donation while their company also makes a donation. This gives corporations and the people who run them an undue influence over the political process. The financial returns for the dominant parties in 2014 reveal that the vast majority of individual contributions totalling more than $2,500 were made by individuals involved in or associated with the senior management of major corporations in the province. To use an obvious example, the select senior executives at J.D. Irving contributed a combined total of just over $6000.

Executives from the McCain Food Group, Delby Enterprise, Groupe Westco, and

Maricor, among many others, gave thousands in personal donations (Elections NB,

2015b). Many senior executives of corporations also use numbered business corporations or personal holding companies unassociated with their other corporations to make additional contributions. There is nothing illegal about these contributions. The prevalence of large donations coming from multiple connected sources is, nevertheless, questionable and demonstrates the realities of contributions when limits are so high. The average person in New Brunswick simply cannot afford to give thousands of dollars in contributions, whereas those involved in the management of multimillion dollar corporations are able to give using multiple sources. The legislation further equates 101

individuals, who have a vote, with corporations and unions, which do not have votes. The issue here is that the regime allows a voting individual to contribute once as an individual and again through a non-voting entity. This makes the expense limit an ineffective tool for leveling the playing field for private actors.

The final aspect of the regime that ensures equality of opportunity for private actors is the regulation of third party advertising. Under the Act third parties are essentially individuals, corporations, unions, or other groups that attempt to influence politics using independent third party advertising. The regulations that are in place prevent private actors with greater means from having an undue influence over the political process. Third party advertising expenses is limited to 1.3% of the potential expense limit for a party running candidates in every riding. In 2014, the amount equalled

$13,991.88. Therefore, third parties could spend up to $13,991.88 to directly oppose or support a political party or candidate. In 2014 there were seven registered third parties, only one of which came close to the expense limit. Even that third party was about

$2,000 below the limit. This provision helps ensure transparency and accountability for private actors who wish to influence politics using third party advertising. The provision is still relatively new and it has yet to be seen how effective it truly is.

Openness and Mitigation of Corruption

As noted above, when Hatfield proposed public funding for political parties, his concern was not so much for the creation of equal opportunity for political parties, but rather, it was to reinvigorate public confidence in the political process. In fact, the central purpose of the Political Process Financing Act was to create a more transparent political

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process that was less prone to corruption. The provisions that sought to create equal opportunity for political and private actors were also means to this end, mitigating both real and perceived corruption. Corruption and patronage were major concerns in the

1960s through to the 80s. Combined with the Equal Opportunities initiatives and reforms to the civil service, the Act was intended to bring an end to illicit practices and to restore faith in the political process.

The greatest issue facing any political finance regime is enforcement. The New

Brunswick regime does not lack mechanisms to carry out the enforcement of the Political

Process Financing Act, but there seems to be very little real interest in using these mechanisms. Instead of penalizing the PCs for accepting contributions totalling more than $6,000 from associated corporations, or penalizing the corporations for making those donations, the PCs were simply asked to give back the excess money to the corporations, five years after the contributions were made. When questioned about the issue, Elections NB spokesperson Paul Harpelle stated: “Our approach has been to work with the political parties… The belief is, that is taken into this, is that no one is intentionally going out to falsely make donations” (Jones, 2015). While this may be true, such a statement ignores one of the main purposes of regulating political financing, which is to give private actors equal opportunity to influence politics. To simply request that a party return excess funds nearly five years after the fact is either to rely on a naïve belief that the funds had no influence on the party during those five years, or to admit that such undue influence does not really matter. Furthermore, the trend of corporations giving substantially more money to the party in power suggests that corporate contributions are expected to carry influence. In order for political finance regulations to work, they must 103

be taken seriously by both private and political actors, as well as by the province’s election commission. The parties’ annual financial returns are an overwhelming responsibility, and while putting the responsibility of auditing returns on the parties themselves is not the most desirable solution, it is not clear that, with limited resources and staff, the office of the Elections NB would be able to carry out this responsibility in a timely manner.

On this point, it is also worth making a brief reference to the accessibility of financial reports in New Brunswick. In order for public inspection of financial returns to be effective, the returns must be easy to read, comprehensive, and detailed, as well as easily accessible to the average person in New Brunswick. None of this is true in New

Brunswick. As described in the previous section, the annual reports of the Supervisor of

Political Financing are insufficiently detailed and are not as comprehensive as the financial returns required from political actors. While not difficult to find on the Elections

New Brunswick website, most of the reports available are not reader friendly or accessible to the layperson. Furthermore, reports from recent years, as well as contribution lists are not readily available to the public. Contribution lists are only made available upon request in person at the office of the Supervisor of Political Financing.

Moreover, these reports are poorly organized and difficult to decipher. If enforcement of a political finance regime is to work, there must be a commitment to transparency and accountability. These remain impediments to the proper functioning of the New

Brunswick regime.

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Conclusion

When it was introduced in 1978, the Political Process Financing Act created one of the most advanced and comprehensive political finance regimes in the country. The legislation, with its provisions for spending limits, rebates for candidates, public funding for political parties, contribution limits, and disclosure and reporting requirements for donations and expenses, appeared to be a sincere effort to level the playing field for political actors and private actors and to mitigate corruption in a province plagued by self-serving and illicit practices. Born out of the Equal Opportunities era of Robichaud, the Act was both a response to ongoing scandals and independent inquiries into the state of the political process in the province. At the time, attitudes toward the old patronage system that had long been a major source of employment and economic opportunity in the province were changing as the centralization of administration and reforms to the civil service were beginning to break down traditional patronage networks. By the time political finance legislation was introduced, the old ways of operating within the political process were becoming unacceptable. The Political Process Financing Act was a radical response to changing attitudes toward politics, but since the amendments made in 1982, the political finance regime has stagnated and has fallen behind similar regimes in other jurisdictions.

The stagnation of the New Brunswick political finance regime since the 1980s was, in part, due to the breadth of the original legislation. In other jurisdictions where the original political finance legislation was less far-reaching, it left room for improvement and reform over the years. In contrast, the Political Process Financing Act introduced provisions that would not be seen elsewhere for decades. This left less room for 105

advancement or maneuvering. The Act did appear to bring an end to blatant patronage and petty corruption. The 1980s and 1990s were tame compared to earlier decades, with very few scandals relating to electoral activity or patronage. While the early reforms had been spurred by real or perceived corruption or scandal, the reforms that occurred after

1982 appeared to be largely in response to recommendations made by an independent commission. For example, the introduction of third party advertising regulation was not preceded by any sort of impropriety, or even faltering confidence in the government.

Instead, it seemed to be a sincere attempt to check the undue political influence of certain private actors. The same cannot be said of the trivial 2009 reforms, which coincided with the government being accused of questionable practices. The insignificance of the 2009 reforms also points to the fact that the government did not truly see room for improvement in the political finance regime.

The most likely reason for this is that, unlike other jurisdictions, the attitude toward the political influence of corporations had not changed since the 1970s. The attitude in New Brunswick has always been that, as the major employers in the province, corporations have a stake in political outcomes and, as they do not have votes, the financing of political activities is the appropriate way for them to influence the political process. However, the tendency for corporations to favour the party in government and the recent realization that corporations have skirted political financing laws without repercussions points to the necessity for reforms in the province. If contribution lists were made readily available for public inspection, this might not be as grave an issue.

However, Elections NB is reluctant to release contribution lists and the media in New

Brunswick is uninterested in investigating these issues. In recent years the only media 106

outlet in the province to report on election financing issues has been the CBC. The fact that J.D. Irving Ltd. owns all of the major and local newspapers in the province might account for the lack of interest the local media shows toward political finance issues.

It should be noted that there have been reforms and discussions of reforms since

2014. Significantly, the Liberal government under Brian Gallant made promises to reform the political finance regime by improving transparency and reporting as well as limiting state-funded partisan advertising (NB Liberals 2014). These reforms were suggested just as the Liberal Atcon scandal was resurfacing and the Liberals and PCs were embroiled in a controversy over the alleged PC patronage appointments and consequent Liberal dismissals of the heads of Efficiency New Brunswick and Investment

New Brunswick (Poitras 2014). Furthermore, in 2016, the federal government and

Canada’s former chief electoral officer put pressure on New Brunswick to ban corporate and union donations. The Liberal government later announced that they were looking into such a possibility, but were cautious, as they noted that corporate contributions make up a great portion of political donations each year and without them, it may be difficult for parties to raise as much money (Jones, 2016). While this move is clearly a response to pressure from the federal government, it also comes after the failure to penalize surplus contributions in 2015. Therefore, this change could be seen as easier than legally challenging the corporations upon which the province’s economy relies, as well as relief for Elections NB, which has limited staff and resources to decipher the complex corporate donations. None of these reforms, however, will be effective unless there is a commitment by all to ensure their enforcement. This is a problem that New Brunswick has yet to overcome. 107

CHAPTER 4: PRINCE EDWARD ISLAND

Prince Edward Island was the last of the Maritime Provinces and one of the last

Canadian provinces to adopt a political finance regime. In 1983, the Progressive

Conservative government of James Lee passed the Election Expenses Act. This Act has changed very little since then. The act includes provisions for spending limits, the disclosure of contributions, and reporting requirements for both expenses and contributions. The regime also includes provisions for the public funding of political parties and candidates in the form of expense reimbursements and annual allowances.

However, there are no limits on contributions from individuals, corporations or unions.

Because of this, political finance regulation in PEI lags behind other provinces. Despite this, the PEI regime appears to face less criticism, both internally and externally, than those of Nova Scotia and New Brunswick. A belief that petty corruption and patronage continue to be widespread and socially accepted play into the province’s “quaint” portrayal and might be viewed by onlookers as endearing or charming. As this chapter reveals, political folklore and the perception of politics in “the garden province” have had almost as much to do with the development of PEI’s political finance regime as have political realities.

Political and Social Context

By the late 1950s, the agricultural industry of PEI was in crisis. Small producers were struggling to stay afloat and the provincial economy was in decline. Yet, with the government dedicated to the maintenance of an economy based on family-run farms and fishing operations, little was done to remedy the situation. In the early 1960s, W.R.

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Shaw’s Tory government had attempted to grow the food processing and shipbuilding industries in Georgetown, but the endeavor failed and cost the province millions of dollars (MacKinnon, 1978). In 1969 Liberal premier, Alex Campbell, introduced his

Development Plan, which opened the doors to progress. The Development Plan was a joint project with the federal government which aimed to completely restructure PEI’s economy. With the province’s primary industries faltering, the Development Plan sought to re-train many farmers and fisherman for other fields of work. In essence, the Plan was a more aggressive take on the initiatives of the Shaw government. The project sought to move the Island labour force into new sectors, such as manufacturing in order to diversify the economy and lessen the burden on the agricultural sector. By 1979, more than 20 new companies had been established on the Island (Milne,1992). However, the plan was not well received by the Opposition or by many Islanders, especially farmers and the

National Farmers Union, who saw the plan as breaking down the Island way of life. The interference of the federal government in provincial affairs only added to the strife, and by 1979, discontented Islanders voted in a PC government under the leadership of Angus

McLean.

When the PCs took power in 1979 Island “sentimentality” was restored. The successive Tory governments of McLean and James Lee introduced legislation with a view to protecting the interests of family farmers and local businesses from the encroaching presence of corporate interests in the province. In 1979, the McLean government put a temporary ban on shopping malls in order to protect local country stores, and then again in 1981, they fought to limit the expansion of corporate chains and shopping malls. Furthermore, in 1981, Cavendish Farms, owned by the Irving Empire, 109

sought to triple their land holdings in PEI from 3000 acres to 9000 acres (Milne, 1992).

Rather than granting this request, Premier Lee, who had inherited the issue from his predecessor, introduced the Lands Protection Act in 1982. This Act limited corporate land holdings on the Island to 3000 acres and individual land holdings to 1000 acres. The

Lee government also passed measures to encourage and support small-scale and family farms with the introduction of the Small Farm Program. They further invested in a meat packing plant to encourage production. However, these incentives came at a cost. In return for financial investment in the industry, the government limited the power of unions and forced pay cuts for unionized workers at meat packing facilities (ibid.). Thus, the Tory programs of the late 1970s and early 1980s stemmed the influx of corporate interests that had been set in motion by the Liberals, but also placed constraints on labourers.

Situated in this economic climate, electoral reform was slow to take hold in PEI.

In 1961, the PC government appointed the Commission on Electoral Reform, or the

DesRoches Commission. The Commission was charged with examining the state of electoral administration in PEI. In 1963, the Commission released its report and made several recommendations. First, the members of the Committee recommended that the province adopt its own Elections Act. Prior to this, elections in PEI were governed by an act that replicated the federal Dominion Election Act. The Commission’s report argued that politics in PEI were fundamentally different from those of other provinces due to its geographic size and population. According to the report, it was “largely an accident of history” that the province had been allowed to develop a provincial government at all

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(DesRoches Commission, 1963, p. 7). The size of the government compared to the size of the province as a whole created a burden that was not seen in other provinces.

In order to maintain electoral districts of a reasonable size and population while also maintaining a functioning Legislative Assembly with an adequate number of representatives, PEI adopted dual-member ridings. At the time that the Commission was performing its enquiry the province had 15 ridings and 30 members in the Legislative

Assembly. One representative in each riding, the Assemblyman, was elected through the popular franchise, while the other, the Councillor, was elected through the property franchise. This meant that a person who owned property in a riding other than the one in which they resided had the right to vote for the Councillor in that riding, as well as for the

Assemblyman in the riding where they lived. These dual-member ridings were intended to ensure the interests of all those with a stake in a particular riding would be represented in the Assembly. In practice, however, this resulted in a kind of multiple voting wherein people with properties in multiple ridings would vote in each of the ridings, affording them greater opportunity to influence political outcomes. While the Commission recommended cracking down on multiple voting, they did not see a need to abolish the dual-member system (DesRoches, 1963). Indeed, apart from the aforementioned proposals and the first seat redistribution in 70 years, the Commission recommended little change.

As for electoral financing, for example, the Commission stated that they saw no need for reform. The Commission had considered issues such as including party affiliation on the ballot, the reduction of candidates’ deposits, limits on election advertising, and the mitigation of corruption. While the Commission admitted that 111

concerns about these issues had been raised in public hearings, it did not recommend any changes at the time, instead suggesting that the government wait until the recommendations that had been made were in effect and tested before making any further changes (DesRoches, 1963). As this Commission’s report was released before similar reports in other jurisdictions, it came as no surprise that it did not recommended drastic or innovative reforms. By the 1960s, PEI already had a reputation for lagging behind in electoral reform. PEI was one of the last provinces to grant women and indigenous people the franchise and the administration of elections on the Island had gone largely unchanged for the better part of a century (MacDonald, 2000). PEI had never been a fruitful laboratory for experimentation with electoral reform.

In 1965, the Shaw government did follow the recommendations of the DesRoches

Commission and introduced a new Elections Act. The Act established the post of Chief

Electoral Officer [CEO] and later the same year, the province’s first CEO was appointed.

The government also followed the Commission’s recommendation to redistribute seats.

The riding of Fifth Kings was eliminated and its seats were given to the growing urban centre of Charlottetown. However, before the 1966 election, Fifth Kings was restored, increasing the total seat count to 32 (MacDonald, 2000). Interestingly, the reforms introduced by Shaw’s Tories also went beyond the Commission’s recommendations.

While dual-member constituencies were retained, the property franchise was eliminated before the 1966 election and, with it, the Councillor position was also abolished.

Furthermore, the government introduced a voter’s list, a provision deemed unnecessary by the Commission, but viewed by the government as a means to put an end to certain illicit acts, such as multiple voting. 112

When the 1966 election was called, the political landscape had changed more than ever before in the Island’s history. Shaw’s electoral reforms, however, did little to mitigate corruption as his government and the DesRoches Commission had hoped. Set against the backdrop of Shaw’s failed economic plan and the progressive platform of

Campbell’s Liberals, the 1966 election was notorious for rampant corruption and frivolous spending by parties and candidates. Problems only increased after one of the

Liberal candidates in First Kings died unexpectedly five days before the general election and the election for both seats in the riding were deferred by a month and a half

(MacKinnon, 1967). In the meantime, the general election results, in the other 15 ridings and the subsequent recounts in two ridings, declared the election a 15-15 tie for the

Liberals and PCs (ibid.). As a result, the price per vote in the First Kings by-election reportedly skyrocketed to $100 (MacDonald, 2000, p. 284). Offers of pensions and paving projects in return for political support were also purportedly widespread throughout the constituency, resulting in the now infamous slogan “if it moves pension it; if it doesn’t pave it” (ibid.; Mackinnon, 1967, p. 151). The by-election was won by the

Liberals who formed the government. Even with the blatant petty corruption that was reported in 1966, the province went through five more general elections before election finance legislation and harsher penalties for illicit practices were introduced. Each of the elections had its own stories of patronage, vote-buying, and other illegal acts. However, as the executive assistant to the premier announced to the national media in 1979, such practices were considered “part of island politics” (quoted in MacKinnon, 1981, p. 353).

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Early Political Finance Reform

Unlike the other Maritime Provinces, the introduction of a political finance regime in PEI did not directly follow a commission report or recommendations from a select committee. While accounts of patronage and petty corruption were present in each of the elections after the previous electoral reforms, no major controversy or scandal preceded the introduction of political finance legislation. The election leading up to the return of Lee’s PCs to power in 1982 was, in fact, rather dull. Indeed, the election was so uneventful that one commenter quipped in a pre-election editorial in the provincial paper, the Guardian: “we will all have to set our alarms to get up on election day” (quoted in

MacKinnon, 1984, p. 276). Instead, when the government introduced its bill regarding election financing in the Assembly, the government’s representative simply stated: “this

Election Expenses Act is an act that is now in place in most, if not all, provinces…and it is very similar, Madam Speaker, to election acts in other provinces and it’s been worked on in the province for the past couple of years” (PEI Leg. Ass., 21 June, 1983). Likewise, the Leader of the Opposition, Joseph Ghiz, said of the proposed legislation: “I think election expenses should be upfront, there should be a ceiling on it, that there should be disclosure and that there should be reporting. I think that’s the sign of the times. It’s happening in jurisdictions all around us and all across Canada” (PEI Leg. Ass., 22 June,

1983). Thus, rather than the legislation being introduced as a reaction to internal pressures, it was intended to bring PEI’s election laws up to speed with those of other provinces.

The legislation, which gained support from both sides of the Assembly, was conservative compared to some of the more progressive laws being passed in other 114

provinces at the time. The provisions in the proposed Election Expenses Act did, indeed, replicate those present in other political finance regimes. The legislation included provisions for election expense limits, expense reimbursements for candidates, an annual allowance for political parties, contribution disclosure, reporting requirements, and tax credits for political contributions. Overall, the debates on the Election Expenses Act in the

Legislative Assembly were cordial—both sides wanted to see the legislation passed as quickly as possible (PEI Leg. Ass., 22 June, 1983). The expressed concern of both parties was that “all parties enter election campaigns more or less on an equal footing as to the amounts of dollars that can be spent during the election campaign” (ibid.). Expense limits took up much of the debates and, with the exception of a brief discussion of tax credits, little time was spent discussing other aspects of the legislation.

While both sides of the Assembly claimed that the original legislation was intended to create equal opportunity for “all” parties, the legislation did not expressly state such a goal. Furthermore, the legislation benefitted the two dominant parties and essentially excluded other parties from consideration. The main reason for this was that, under the Act, in order to become a “recognized party,” a party had to either be “the party of the Premier or of the Leader of the Opposition,” or, alternatively, a party that held two or more seats in the Legislative Assembly exactly one day before the issue of the writ of the election (Election Expenses, 1983, s. 1(h)). While this wording might appear to be inclusive of possible third parties, it is, in fact, significant. The legislation only provided public funding to “recognized parties” and, as no representative from a party other than the two dominant parties had held a seat in the Assembly since the 1919 election, it is fair

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to conclude that the legislation was agreed upon with the knowledge that any other parties were unlikely to qualify for funding.

Whether or not the parties did this intentionally to block competition is debatable.

Other provisions in the legislation suggest, instead, that they simply did not consider the existence of other parties. For example, while it was argued during debates that expense limits for parties should be based on the number of electors in ridings where a party ran candidates, the legislation read: “The election expenses of a registered party during a general election shall not exceed the aggregate of $2 multiplied by the total number of electors in the province” (ibid., s. 8(1)). Thus the election expense provisions in the legislation were premised on the past practice of the Liberals and PCs of fielding candidates in every riding in the province. The only party other than the two dominant parties to run candidates in the election immediately prior to the introduction of the legislation was the New Democratic Party, which had only run candidates in three ridings

(MacKinnon, 1984). Based on the reasoning for the calculation of election expenses and the fact that no party other than the Liberals and PCs had run candidates in all 16 ridings, the wording of this clause suggests that the dominant parties were not concerned about creating equality of opportunity for other parties.

Similarly, the high threshold put in place for the reimbursement of candidates’ election expenses signalled that the legislation was not concerned with candidates other than those affiliated with either the Liberals or the Tories. The spending limits for candidates were based on the number of electors in the riding where the candidate ran. A candidate could spend $1.25 per elector during an election period. However, to ensure greater equal opportunity across ridings, a minimum spending limit of $6,000 and a 116

maximum limit of $12,000 were also enforced. While the legislation provided for equality of opportunity for all parties in this sense, expense rebates were only available to candidates who were either elected or who received at least 15% of the vote in their riding. Such a threshold could be supported by the argument that it would not be feasible to directly fund all candidates who decided to run. The threshold also had the effect of reducing the chances of a new party receiving public funding indirectly through its candidates, thus, giving them less of a competitive edge. Again, it would be difficult to prove that this was an intended consequence of the legislation. Yet, considered alongside the annual allowance, this provision certainly raises doubt that the legislation gave “all” parties an equal footing.

While the Assembly succeeded in passing the legislation quickly, it was decided that the Act should be proclaimed at a later date so as to provide parties and the CEO adequate time to prepare for the changes. As a result, there was little discussion of the

Act outside of government and even the media failed to report on it. It was not until the

Act was proclaimed in 1985, that it became a matter of public concern. The Election

Expenses Act, however, was amended before it was even proclaimed. Days before it was proclaimed, the government decided to increase the spending limits for political parties from roughly $150,000 to $350,000. The reason given for the amendment raises further doubts about the goals of the legislators. There was little discussion of the amendment in the Legislative Assembly. However, according to the Globe and Mail, Premier Lee defended the change suggesting that “each party spent more than the allowable amount in the last campaign and the change brings the amount closer to the reality of what is likely to be spent” (“PEI votes,” 1985). Since the expense limits were allegedly introduced in 117

order to create greater equality of opportunity for all political parties and to reduce frivolous spending, the increase in the limit to accommodate overspending by the dominant parties certainly appears to have undermined the purpose of the law.

In 1986 another small yet important amendment was made to the Election

Expenses Act. Unlike the previous amendment, this amendment acknowledged the existence of parties other than the Liberals and the PCs. Ghiz’s newly elected Liberal government changed the definition of a “recognized party” by repealing the second clause of the previous definition and adding a subsection that read “the New Democratic

Party” (Election Expenses, 1986, s.1(h)(ii)). Put simply, this amendment eliminated the requirement for a party to hold one or more seats in the Legislative Assembly in order to be considered a recognized party and acknowledged the New Democrats as a recognized party. The amendment was also given retroactive effect to a date before the previous election so as to allow the NDP to enjoy the benefits accorded by the Act to a recognized party during an election. This provision provided the NDP with more legitimacy and with greater advantages. However, there remained problems with the wording of this definition. While the NDP was the only other party competing in provincial elections at the time, by including its name in the definition of “recognized party” rather than lowering the threshold for recognition, the amended definition effectively excluded potential new parties. The definition also failed to concede that the NDP might one day form government or the Official Opposition, or that the Liberals or PCs might one day find themselves as the third party in the Assembly. Thus, while the definition at least recognized the NDP as a party, it also implied, in a legal document, that the party would never achieve electoral success. Although the provision itself could not prevent electoral 118

success, the wording of the definition demonstrated that the attitudes of the dominant parties had not changed entirely. By 1992, this issue was resolved as the definition for a recognized party was amended to mirror the definition of a “registered party” under the

Elections Act.20

The next major change to the PEI political finance regime was an unofficial change made in 1994. The early 1990s saw a major shift in attitudes toward big government in PEI. The Island was undergoing increased economic prosperity with the construction of the bridge to New Brunswick. With the prospect of a tangible link between PEI and the mainland, many of PEI’s sectors witnessed an economic boom

(Crossley, 2000). At the same time, like other provinces, the government was faced with the shifting dynamics of fiscal federalism, leading to serious budgetary constraints. In a province with a government that was much larger in proportion to its population and geography than other provinces, the Liberal government of Catherine Callbeck decided to roll back the incomes of those in the employ of the public service. The Liberal’s response to the Island’s fiscal difficulties was the Public Sector Pay Reduction Act, an act formally decreasing the income of all public sector employees—over 20% of the Island’s population (ibid.). Everyone who was directly or indirectly paid by the province had their income reduced indefinitely. The decision was met with controversy. This fiscal climate led to the informal amendment of the political finance regime. With public sector employees across the province taking reductions in pay, the Liberals and the PCs made

20 The minimum requirement for registration as a registered party was also changed to the signatures of eligible electors representing at least 0.35% of the island’s population. 119

an agreement not to accept an annual allowance. Thus, while the provision for annual allowances remained in the Election Expenses Act, no party has collected an annual allowance since 1993.

A new Election Expenses Act was introduced in 1996. The changes included in the Act were more about housekeeping and updating than they were about fundamental changes to the political finance regime. Many of the changes to both the Elections Act and the Election Expenses Act reflected the abolishment of dual-member constituencies which had occurred in 1994. The province was now made up of 27 electoral districts that provided for a fair population distribution between constituencies. This was a significant change that necessitated changes to election administration. Many of the changes provided in the new Act were made to reflect changes to electoral boundaries.

The new Election Expenses Act was essentially created by the Chief Electoral

Officer in consultation with the registered political parties. The CEO, rather than a government representative, answered questions about the Act. Some MLAs wished to see certain areas of the Act strengthened, while the CEO considered these suggested changes unenforceable. One example of this was third party advertising. While one Opposition member called for greater controls on third party advertising such as spending limits, the

CEO simply stated that “you can’t control third party advertising” (PEI Leg. Ass., 2 May,

1996). No more was said on the subject. The changes made to the Election Expenses Act were largely updates to bring the wording of certain provisions closer to similar provisions in other provinces and to clarify rules around reporting and penalties for violations under the Act. Penalties applicable to official agents of parties and candidates were strengthened, leading one unidentified MLA to quip: “You ought to think twice 120

before you become an official agent. You can go to jail for that. It’s hard to go to jail for being a candidate” (ibid.). The threshold for direct public funding for political parties was also reduced from two or more seats to one. This small change could have had the effect of opening the door slightly for parties other than the Liberals and Tories, especially as the first NDP candidate was elected later that year. However, because no party was collecting an annual allowance anyway, this change meant little. The spending limits for parties and candidates were also updated to reflect inflation and the elimination of dual- member constituencies. Altogether, these were minor changes that were passed without much debate in the Assembly and with little attention from anyone outside the Assembly.

Current Political Finance Regime

No significant changes were made to the Election Expenses Act between 1996 and

2014. Only minor changes occurred in 2010 and 2012 and both related to the title of the minister to whom the Chief Electoral Officer was to report any contravention of the Act.

Apart from this, the Act remains the same as it was in 1996. In fact, the political finance legislation in PEI has changed very little since its introduction in 1983. Although, some minor changes have been made over the years, the 1983 provisions remain essentially intact. This section examines in greater detail the provisions contained in the Act as of

2014.

Expense Limits

The current political financing regime in PEI regulates the election expenses of both political parties and candidates. The Election Expenses Act defines “election expenses” as “all expenses incurred during an election period for the purpose of

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promoting or opposing, directly or indirectly, the election of a candidate, or a person who becomes or is likely to become a candidate, or the program or policy of a candidate or party” (Election Expenses, 1988, s.1). Election expenses also include the value of goods in the possession of a party or candidate for use during an election period, as well as expenses incurred before an election period for literature, objects, or material intended for the aforementioned purpose during an election period.

The spending limit for candidates is set at $1.75 per elector in a candidate’s riding. The election expense limits of political parties are also based on the number of electors in the ridings where the party runs candidates. The Act currently sets this per- elector amount at $6.00.

While there are no limits on third party election advertising, specifically, the Act does limit how much an individual, corporation, or trade union can spend on advertising in connection with a party or candidate. A private actor can work with a political party and pay for political advertising, but these expenses are incorporated into the spending limits of the party or candidate with whom the private actor is working. There is no provision for the registration of private actors as third parties and no limits placed on private actors independently opposing or supporting a party or candidate (i.e. third party advertising).

Contribution Limits

PEI’s Election Expenses Act does not limit contributions from private actors.

However, political parties and candidates can only receive contributions from individuals, corporations, or trade unions. In order to be eligible to contribute, a trade union must hold

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bargaining rights for employees within the province. Individuals residing outside of the province can donate to a political party or candidate. The Act also does not restrict donations from corporations, meaning that a corporation operating outside the province can make political contributions. Anonymous contributions cannot be accepted and, if a party or candidate receives such contributions, they must be deposited into the province’s operating fund.

If a corporation, individual, or trade union spends more than $100 on advertising for a party or candidate with the consent of that party or candidate, then it is considered a contribution and must be reported. This includes any advertising, such as pamphlets, broadcasting, outdoor advertising, or newspaper ads that directly support or oppose a party or candidate. If a private actor spends $100 or more for a single advertisement or an aggregate of $100 or more on several advertisements within a year, then it is still considered a contribution. Political advertising carried out during an election period with the knowledge or consent of a particular party or candidate is considered both a political contribution and an election expense.

Public Funding

The Election Expenses Act provides for public funding for political parties and candidates. Like their expense limits, the rebate for election expenses for political candidates is based on the number of electors in their riding. A candidate will receive the lesser of $0.75 per elector on the official list, or the entirety of their election expenses.

There is also a minimum and a maximum amount for these rebates. An eligible candidate

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will receive no less than $1,500 and no more than $3,000. However, in order to qualify for a reimbursement, a candidate must receive at least 15% of the votes in their riding.

Public funding for political parties is allotted as an annual allowance. The amount that a party can receive from an annual allowance is primarily based on the number of votes that the party received the previous election. A party’s allowance is calculated by multiplying the number of votes it received in the last election by the amount fixed by the

Lieutenant Governor in Council. The fixed amount is set by the Lieutenant Governor in

Council after consulting with the Leader of the Opposition and can be no more than $2.00 per vote. A party must hold one or more seats in the Assembly to qualify for an annual allowance.

PEI also offers tax credits for political contributions. As in many other jurisdictions, the amount of the tax credit varies according to the amount of money donated. For contributions up to $100, the donor can receive a credit of 75% of their donation. For donations over $100 and up to $550, the donor can receive $75 plus 50% of amount by which the donation exceeds $100. If a contribution is over $550, the donor can receive the lesser of $300 plus 33.33% of amount by which the contribution exceeds

$550, or $500.

Transparency

PEI incorporates various transparency measures into its political finance regime.

Registered political parties and candidates must file reports under the Election Expenses

Act. Political parties are required to file financial returns annually on or before May 31, and file election expense returns within 120 days of the return of the writ. Candidates are

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only required to file election expense returns, due within 120 days after the return of the writ. Political parties and candidates must provide detailed disclosures, including the name and address of all who have contributed over $250, in the parties’ annual reports.

Both parties and candidates include the receipts for all donations over $25 in their expense returns.

The enforcement of the Election Expenses Act is the responsibility of the province’s chief electoral officer. Except for violations related to the filing of reports, most violations of electoral financing laws carry a penalty, a fine, or imprisonment. In order to receive their election expense rebate, a candidate must file the required reports and the chief electoral officer must be satisfied with the accuracy of the reports. Until the report is filed, candidates are ineligible to stand as a candidate in a by-election or general election. If a party fails to file an annual financial report or election expense report, it can face deregistration. As soon as the party files these reports, it can re-register. The penalties for intentionally failing to comply with the Election Expenses Act or the intentional falsification of reports can result in fines between $1,000 and $10,000. A party that violates the Act can receive a fine of between $5,000 and $10,000, whereas a candidate can receive a fine of no less than $2,000. A corporation or trade union that fails to comply with the Act can receive a fine up to $10,000. An individual, on the other hand, can only receive a fine of up to $1,000. The chief electoral officer must instigate an investigation within one year of the date on which he or she becomes aware of an offence.

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The Regime and Political Finance Benchmarks

PEI has never been a leader in the regulation of political financing. The Election

Expenses Act was enacted nearly 20 years after the first provincial political finance regime in Atlantic Canada made its debut in Nova Scotia. It was less comprehensive and effective than its counterparts in other jurisdictions. While the Act has always touched on the three benchmarks of political finance regulation—equality of opportunity for political actors, equality of opportunity for private actors, and the mitigation of corruption—it has never excelled in achieving any of these goals. Even though the original legislation was introduced in an effort to bring the province’s electoral laws closer to the national standard, after the 1996 reforms, the province disregarded pressures to enact further reforms when many other Canadian jurisdictions began strengthening their political finance regulations. This reluctance to reform the Election Expenses Act has resulted in

PEI’s failure to fully achieve the common goals of political finance regulation. Certain aspects of the regime were designed to meet the needs of the unique political situation in the province rather than conform to the standard of other jurisdictions. The province must strike a balance between its unique political needs and effective regulation.

Equality of Opportunity for Political Actors

The central goal of the PEI political finance regime has always been the equality of opportunity for political actors. The explicit purpose of the original legislation was to ensure that “all parties enter election campaigns more or less on an equal footing” (PEI

Leg. Ass., 22 June, 1983). The original legislation, introduced in 1983, included provisions for expense limits for parties and candidates, as well as public funding for

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political actors. On the surface, the legislation appeared to be a sincere attempt to level the playing field for political parties and candidates. As previously discussed the provisions of the Act ensured that only the Liberals and PCs were given an equal opportunity by requiring that a party had to hold two or more seats in the Legislative

Assembly to receive funding. No other political party had ever held more than one seat in the Assembly and only one other party had, to that point, ever held a single seat in the

Assembly. Considered in the light of these realities, the choice of a two seat threshold looks like a deliberate attempt to prevent new parties from benefitting from public funding. The two-seat threshold was likely based on the electoral system in the province at the time. Because of the dual-member system, two seats in the Assembly was equivalent to holding an entire constituency—even though the two seats did not have to be in the same riding in order to qualify for funding. Although the threshold may have been based on sound reasoning, it is unclear whether or not it was intended to hinder the development of new competition.

The original legislation did, on the other hand, provide for reasonable spending limits for both candidates and parties. By placing an upper limit on spending, these provisions made politics more accessible to those who might not be able to spend exorbitant amounts on campaigning. Spending limits prevent overspending by wealthier parties or candidates, thereby giving all political actors an equal opportunity to influence politics. However, before the Election Expenses Act was proclaimed, the expense limits were amended. This change would not have been questionable or objectionable had the reasoning been that a higher limit was needed in order for political actors to maintain effective campaign practices. Instead, it was argued that, because the dominant parties 127

had spent more than the limit in the previous election, the limit should be increased to reflect reality. This argument undermined the purpose of the provision. In order to serve their purpose expense limits cannot be increased to reflect the spending practices of the dominant parties. There was no indication that the previous spending had been so low that parties could not execute an effective campaign. Indeed, the legislation had not been tested before it was amended. It will never be entirely clear whether or not the lower spending limit would have been an issue. If, as the government claimed in 1983, the provisions in the legislation had been under consideration for “two or three years,” then one would expect the spending limit to have been thoroughly thought through (PEI Leg.

Ass., 22 June, 1983). The fact that the same government went back two years later and more than doubled the spending limit for political parties is highly suspect and calls into question the sincerity of proponents of the legislation.

These provisions have been improved slightly since 1983, but other aspects have been in decline. Today, the capability of the regime to create a level playing field for political actors is uncertain. The 1990s and 2000s saw a record number of registered parties in PEI. In 2011, there were five registered parties that competed in the general election. Yet, of these parties, only the Liberals and the PCs received more than 5% of the popular vote. Furthermore, between 1990 and 2012 three parties deregistered following a provincial election. However, the diversification of the party system may not the best measure for the success of political finance legislation. The effectiveness of these provisions is much more complicated than the ability of a party to form and stay active.

The effectiveness of each provision must be examined independently in order to

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understand the overall ability of the regime to ensure equal opportunity for political actors.

The expense limits for both parties and candidates have not changed substantially since 1996, when the Election Expenses Act was amended to allow for expense limits to be adjusted annually according to the Consumer Price Index. The current spending limit for political parties is based on a fixed amount per elector. In the 2015 provincial election, this amount was $9.00 per elector in the ridings where a party fielded candidates. This limit appears exceptionally high compared to the limits elsewhere, particularly when the entire population is less than 150,000—less than half the population of the Halifax Regional Municipality alone. However, while the province is also geographically smaller than any other province, the cost of running a modern centralized campaign remains high. The cost of advertising on television, in the newspaper, or through any other media, is still as high in PEI as it is elsewhere. Therefore, it might be argued that having such high spending limits is reasonable. In order to determine the validity of such reasoning, it is necessary to look at the actual spending habits of parties in the province.

Unlike the other Maritime Provinces, PEI does not require a party to run at least

10 candidates to become a registered political party. Instead, the minimum requirement for a party to become registered in PEI has been changed to provide parties with the option of either obtaining the signatures of eligible electors representing at least 0.35% of the Island’s population or running at least 10 candidates. Since a party might find the latter option an attractive one for registration purposes, it is worth considering the differences between the spending limits for a party running candidates in the 10 most 129

populous ridings compared to that of a party running candidates in the 10 least populous ridings. This comparison is also useful for understanding possible disparities in spending limits. In 2015, a party running candidates in the 10 least populous ridings would have a spending limit of $280,764, while one running candidates in the 10 most populous ridings would have a limit of $392,130.21 This is a difference of $111,366, not a negligible amount. A party running candidates in all 27 ridings, on the other hand, would have a spending limit of $903,087. The difference in the spending limit for a party running a full slate of candidates and a party running candidates in the 10 least populous ridings would be $622,323.

The differences among these spending limits are, perhaps, best demonstrated by reference to the actual expenditures of each party in the last provincial election. In 2015, both the Liberals and the PCs ran candidates in every riding and could spend up to the maximum spending limit of $903,087. During the election period, the Liberals spent

$766,320 and the PCs spent just $364,715, an incredible variance in spending between the dominant parties. Even so, the Liberals spent $136,767 less than the spending limit, while the PCs failed reach the limit for a party running candidates in the 10 most populous ridings. Even more notable is the fact that the NDP also ran a full slate of candidates and only spent $25,894. This was $877,193 below their spending limit and more than $250,000 below the limit for a party running candidates in the 10 least

21 Calculations are based on data provided in the Chief Electoral Officer’s report on the 2015 provincial election (Elections PEI, 2015) and the summary of candidate and party expenditures for 2015 (Elections PEI, 2016b). 130

populous ridings. The Greens, who won one seat in the election, had a spending limit of

$814,338, but had no expenditures. These disparities are extraordinary.

If the spending limits were truly based on giving parties an equal opportunity to get information out to electors in the ridings where they run candidates, then there would be no reason for the spending limits to be so high in such a small province. If the spending limits are aimed at facilitating a strong centralized campaign, as the high per- voter amount suggests, then it does not make sense to calculate the limits based solely on a per-elector amount. Regardless of the goal of the high spending limits, the spending practices of the parties in 2015 demonstrates that none of the parties are willing or able to spend up to their allotted limits. The disparity between the actual expenditures and the spending limits suggests that the limits are not leveling the playing field. The purpose of a “limit” is to actually limit expenditures. If a spending limit fails to limit the spending of any of the parties, then it is not fulfilling its purpose.

The expenditures of candidates are also limited based on the number of electors in the ridings in which they run. Before the redrawing of electoral districts in PEI in 1994, the populations across electoral districts varied significantly. Rural ridings were favoured at the expense of growing urban ridings. In the 1993 election a rural riding in Kings

County had 1,995 electors while one of the urban ridings in Charlottetown had 12,621

(Crossley, 2000, p. 200-1). The 1994 redistricting process attempted to remedy these disparities, and now by redistricting after every third election, the province tries to keep up to speed with changing population distributions. The current electoral ridings have much more even population distributions than those which existed before 1994. This is beneficial to electors in urban ridings as it gives their votes a weight equal to those in 131

rural ridings, but this also has an impact on election expenses for candidates. For example, in 2015 the per-elector expense limit was set at $2.63. Therefore, a candidate running in the least populous riding in the province had an expense limit of $6,980, while a candidate in the most populous riding had an expense limit of $13,889. Thus, a candidate in the latter riding is allowed to spend almost twice as much as a candidate in the former. These spending limits are, however, low compared to those in other provinces and, in comparison to the differences in spending limits between electoral districts in other provinces, a difference of just under $7000 is relatively low. Clearly, the differences in population across constituencies are not so substantial that they greatly effect expense limits for candidates.

The geographic size differences between the provincial ridings are, in some cases, substantial, but much like the differences in population, they are not so different that they warrant extensive consideration. The rural ridings across the province are much larger than the urban ridings of Charlottetown or Summerside. However, the area of the entire province is just marginally greater than that of Nova Scotia’s largest riding. The geographic burdens that exist in the largest of ridings in other provinces do not exist in

PEI. Rural ridings are larger but not so different as to put an immense burden of time or money on a candidate. While only two candidates spent over $10,00022 in the 2015 election, the reduction of the per-voter limit would disadvantage candidates in ridings with lower populations. The limits are effective in certain ridings, as there are several

22 Wade MacLauchlan, the Liberal leader and current premier spent $11,911 and his PC opponent in York- Oysterbed spent $10,074 (Elections PEI, 2015). 132

candidates who came close to their limits. They serve less of a purpose in ridings with particularly high limits, where candidates are unwilling or unable to spend to the limit.

Overall, the expense limits for candidates in PEI appear to be relatively effective in leveling the playing field.

The public funding of political actors is another way in which the PEI political finance regime attempts to level the playing field. In 1983, the public funding of political parties was one of the most advanced aspects of the PEI political finance regime. Annual allowances for political parties were a relatively new concept in Canadian jurisdictions at the time. Many jurisdictions would not introduce public funding until the 2000s, making it remarkable that PEI took such a leap when it did. Theoretically, such annual per-vote allowances provide parties with equal opportunity to remain competitive by supplementing the funds needed to carry out day-to-day party activities. However, the annual allowance for political parties has not been distributed in the province since 1993.

As noted previously, the Liberals and PCs agreed not to accept annual allowances due to fiscal constraints and budgetary cuts across government agencies. Nevertheless, since the provision for public funding remains in the legislation, it will be considered here in a hypothetical context.

Two years after the Liberals and Tories agreed to stop accepting an annual allowance, the threshold for receiving the allowance was reduced from two seats in the

Legislative Assembly to one. There was a plausible rationale for the two-seat threshold insofar as it required a party to represent at least the equivalent of one riding. When the electoral boundaries were redrawn and dual-member ridings were abolished in 1994, the rationale for a two-seat threshold was lost and the threshold was reduced to one seat in 133

1996. The existence of a threshold is practical since it might not be feasible to fund all registered parties, particularly in a province where a party need only collect the signatures of fewer than 500 electors to register as an official party. If the purpose of public funding for political parties is to create an equal opportunity to compete, it makes little sense to require a party to hold a seat in the Legislative Assembly before it can qualify for funding. This is why many jurisdictions with thresholds for public funding base them on a percentage of votes received rather than on a minimum number of seats held. These thresholds attempt to ensure that a party is a serious political party before it is provided with funding, while recognizing that funding, provided only to parties that hold seats, has the potential to block new competition and perpetuate the dominance of established parties. This was not a concern of the major parties when the legislation was introduced or when it was amended.

Any issues that exist regarding the threshold for the annual allowance, however, have been irrelevant for two decades, since the dominant parties agreed in 1994 to stop accepting the allowance. The reasons for doing so appeared to be sincere. At a time when budget cuts were being made across government agencies, it made sense for political parties to model constraint as well. Ironically, after the threshold for receiving the allowance was decreased to one seat in 1996, an NDP candidate was elected for the first time in the province’s history. Had the parties still been accepting an annual allowance, the NDP would have qualified for this funding. Instead, the NDP, like the other parties did not take an annual allowance. The NDP has not won a single seat since 1996.

Although the decision to cease distributing the annual allowance was an informal decision made that could be reversed at any time, it has now become an accepted 134

convention. As a result, the allotted allowance for the parties is no longer calculated.

Instead, the expense reimbursement for candidates is now seen as indirect funding for parties.23

The expense reimbursement for candidates is allotted on a per-voter basis.

Candidates who receive at least 15% of the popular vote are eligible to receive $0.75 per elector on the final list in their riding. PEI also has minimum and maximum reimbursements for those candidates who qualify. Such candidates receive no more than

$3,000 and no less than $1,500. These limits on reimbursement are intended to prevent candidates in low population ridings from receiving substantially less than candidates in highly populated ridings. The current population distribution in the province’s ridings is such that the potential reimbursement in the least populous riding is $1990, rendering the minimum limit irrelevant. Reimbursements in the seven most populous constituencies, however, would exceed the $3,000 limit. These limits help to ensure that the potential reimbursements cover approximately the same proportion of potential expenditures in each riding—no less than 20% of potential expenditures. Generally, reimbursements cover a greater proportion of qualifying candidates’ actual expenses than the hypothetical amounts (Elections PEI, 2015). Nevertheless, these limits do help level the playing field for candidates, by covering approximately the same portion of their potential expenses.

However, while certain aspects of the reimbursement are laudable, the high threshold for receiving funding means that many candidates fail to qualify. Indeed, in the

23 Depending on the year and the document, the candidate expense reimbursement may also be referred to as “public funding for parties.” See, for example, the summaries of election expenses and costs from 1996- 2011 (Elections PEI, 2012). 135

2011 election, while all the Liberal and PC candidates received rebates, none of the candidates from the three other registered parties, the NDP, Green Party, and Island

Party, qualified. This means that 47% of the candidates in the 2011 election failed to meet the 15% threshold (Elections PEI, 2012). Since 1996, every Liberal and PC candidate has qualified for reimbursement. The NDP has had one or two candidates qualify in 3 of the 5 elections between 1996 and 2011. The Green Party and the Island

Party did not have a single candidate qualify during the same period. In 2015, the Greens had 4 candidates qualify for reimbursement and the NDP had 5, while once again, all of the Liberal and PC candidates qualified. It may not be feasible to reimburse every candidate, but these numbers suggest that the threshold disproportionately favours the dominant parties. Rather than creating equal opportunity, the rebates are being treated as a proxy for party funding. In order to create equality of opportunity for candidates, the threshold would have to be lowered. With a high threshold, it may be difficult for emerging parties to recruit candidates knowing that they are unlikely to qualify for reimbursement. Instead, the threshold is being treated as an arbitrary candidate-by- candidate threshold for indirect party funding. The inaccessibility of public funding for minor parties and for their candidates is likely influencing the continued dominance of two parties in PEI.

At the same time, one cannot rely solely upon a political finance regime for the diversification of a party system. There are other factors which have a greater influence on the party system than the regulation of political financing. A political finance regime can give political actors an equal opportunity to participate in the political process and to provide electors with information, but cannot guarantee that a party or a candidate will 136

experience electoral success. Yet, a political finance regime that purports to level the playing field for political actors should have effective mechanisms in place to do so. The provisions in PEI aimed at achieving this goal are flawed and block, rather than facilitate, new competitors.

Equality of Opportunity for Private Actors

The creation of equal opportunity for private actors, such as individuals, corporations, and unions, has long been a secondary goal of PEI’s political finance regime. The 1983 legislation did introduce tax credits for political contributions, often considered a means to give private actors equal opportunity to influence politics. Tax credits tend to encourage small donations, thereby encouraging contributions from those who might not otherwise be able to donate. In this way, tax credits do often serve to level the playing field for private actors. The legislation in PEI contains such mechanisms and these tax credits remain one of the only provisions in the province’s political finance regime which provides private actors with equal opportunity to influence politics.

However, the central purpose of these tax credits was not to encourage broader participation by private actors in the political process, but rather to provide yet another form of indirect public funding for political actors. By offering incentives for political contributions, tax credits tend to lead to an increase in the number of donations. Thus, tax revenue destined for the public purse is sacrificed to increase funding to political actors.

When the legislation was debated in 1983, there was no discussion of giving private actors an equal opportunity to influence politics. Instead, the discussion of the tax credits centred on problems of openness and whether or not the credits would succeed in

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increasing political contributions. Much like the provisions examined above, the original purpose of the tax credits was party-centric. The fact that tax credits have the additional consequence of encouraging contributions and participation from those who may not otherwise make such donations is an ancillary benefit.

PEI does require contribution disclosure, which may also be seen as a means to create equal opportunity for private actors. The central aim of contribution disclosure is transparency, but transparency may cause self-imposed contribution limits. Wealthier individuals, corporations, or trade unions might limit their political donations to avoid appearing to influence politics in a manner which might attract public criticism. Without access to a party’s contribution records for the period prior to the introduction of disclosure requirements, it would be difficult to determine whether or not this has actually occurred. It is unlikely that such records exist. Regardless, opening contributions up to public scrutiny provides the opportunity to determine whether a particular private actor may have had undue influence on the government. It is for this reason that it is often argued that contribution limits are unnecessary as long as there is proper disclosure.

Contribution disclosure on its own, however, cannot ensure that private actors are given an equal opportunity to influence politics. Contribution lists can only reveal who donated and how much. They do not prevent wealthy actors from donating tens of thousands of dollars. This is only achieved through contribution limits.

While contribution limits would help to level the playing field, the reluctance to limit political contributions in such a small province is understandable. PEI’s small population means fewer potential donors. Yet political parties must deal with the growing demands and costs of modern political campaigns and placing limits on contributions 138

would further limit potential funds. Still, given the historical context discussed previously, it is surprising that corporate contributions, in particular, have never been limited. In the early 1980s, the PCs were wary of the increasing presence of corporate interests, accusing them of threatening the “Island way of life” and attempting to reduce their influence over the province. Yet the government’s concern did not extend to corporate donations. Corporate contributions were likely not limited for the same reason that other contributions were unrestricted—the parties relied on them.

Today, however, the restriction or banning of certain types of contributions is a growing trend. The real or perceived undue influence of corporations and unions has become a growing concern since the early 2000s. PEI has been no stranger to controversies over the undue influence of these entities. In 2015, while a company owned by the Irving Empire was lobbying the government to lift a moratorium on deep-water wells, it and another Irving subsidiary, Cavendish Farms, donated a combined total of

$15,000 to each of the two dominant parties (Wright, 2016). These donations were among the largest single donations that either political party had ever received. The leader of the NDP alleged that these corporate donations “scream[ed] of trying to buy influence with the two main political parties of P.E.I.” (quoted in Wright, 2016). Similar anecdotes about patronage appointments, favourable government contracts, and the use of business connections for political influence have been rampant throughout the province’s history. However, even without such blatant attempts to use money for direct political gains, the opportunity of certain private actors to exercise disproportionate influence over politics through political contributions is a legitimate concern.

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In 2015, over 1,000 individual contributions were made by private actors to the four political parties including 153 donations over $2,000 (Elections PEI, 2016b). All six of the donations received by the NDP over $2,000 were made by unions. Of the 42 donations over $2,000 given to the PCs, 37 were made by corporations or unions and of the 105 such donations given to the Liberals, 85 were corporate or union contributions.24

Many other large contributions were donated by affluent individuals associated with corporations, unions, or law firms. The largest single donations that year included:

$15,000 from Cavendish Farms; $10,000 from the Calgary-based president of Fortune

Industries; $10,000 from UFCW Canada; and $14,310 from Cox & Palmer. This is all the more striking when one considers that the vast majority of the donations in 2015 were under $2,000.

There is nothing illegal about these donations. There are no laws preventing individual corporations within an associated group of corporations or the executives, principal shareholders, leaders, or members of corporations and unions from making contributions in their own names. There are also no regulations concerning contributions made by private entities outside of the province. This means that wealthier actors are allowed to make unlimited contributions through multiple avenues. An average resident of PEI simply cannot compete with the political influence of wealthier actors. The difference is, however, that PEI residents have the right to vote, whereas a corporation, union, or non-resident does not. If money translates into political influence, then this lack

24 These donations are not differentiated from individual donations. For this reason, any contribution listed as a first and last name only are designated here as donations from individuals. 140

of regulation should be worrying to the average voter in PEI. While it is understandable that the government may be reluctant to make such changes, the creation of contribution limits and the banning of corporate and union donations would enhance equal opportunity for voters.

Openness and Mitigation of Corruption

In addition to the goal of creating equal opportunity for political actors, the intention of PEI’s political finance regime has always been to create a more open political process and to mitigate corruption, both real and perceived. As mentioned above, the introduction of contribution disclosure in 1983 was aimed at creating greater transparency regarding the sources of political funding. Likewise, expense reporting requirements were included in the original legislation to create transparency concerning how political actors spent their money. Furthermore, the partial public funding of political actors was intended to decrease the dependency of political actors on large private donations.

Contribution disclosure creates transparency, but cannot necessarily stop corruption. PEI requires receipts for all contributions over $25 and prohibits anonymous contributions. This, along with the detailed disclosure of donations over $250 ensures that there is a record of all political contributions. However, the absence of contribution limits in PEI means that contribution lists are not necessarily scrutinized as deeply as in other provinces where such limits exist. Thus, it is harder to detect discrepancies or instances of undue influence in PEI. Adding to this problem is the fact that corporate and union

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donations are not separated from individual contributions. Personal holdings companies and numbered businesses are also included in the mix.

Therefore, while these lists are made public, it is difficult to fully understand the source of donations or to identify connections among particular donors and between donors and political actors that might give cause for concern. This is why election expense reports are important in conjunction with contribution lists. Election expense reports help create an open political process and to mitigate corruption by requiring parties to account for the money spent during an election. When combined with the contribution disclosure lists, these expenditure reports have the potential to weed out questionable exchanges of money. Of course, these reports also make sure that political actors are not attempting to circumvent expenditure limits. However, since no party or candidate has recently come close to their spending limits, this is less of an issue. It is also important to note that PEI has had no significant investigations into violations of election finance laws. This is not surprising, since many such investigations tend to relate to violations of contribution limits and, as noted above there are no contribution limits in

PEI.

One of the best tools for the enforcement of political finance legislation is public scrutiny. Elections PEI does quite well at making election financing information easily accessible to the public. Information concerning contributions, election expenses, and reimbursements from 1996 to the present are made available on the Elections PEI website. The expense report summaries and the reports of the Chief Electoral Officer on the general elections are comprehensive and easy to read with the exception of the contribution lists. These lists, however, are compiled by the parties, rather than by 142

Elections PEI. Elections PEI appears to make a conscious effort to make documents accessible and readily available for public scrutiny.

Conclusion

PEI’s unique geographic, social, and economic characteristics have influenced the way in which the government develops policy, even if the impetus for reform has been largely external. No other provincial government operates within such a small geographic area with such a small population. As the 1961 Commission on Electoral Reform argued,

“because the machinery of government is enormous in relation to the size, population and resources of the Island, constitutional growth and political experience have resulted in certain unique legislative arrangements” (DesRoches, 1963, p. 7). As the foregoing discussion reveals, this observation rings as true today as it did in 1961. PEI’s government remains large relative to the size of the province. The unique legislative and electoral arrangements that exist in the province reflect attempts to address this reality.

This does not mean that PEI is exempt from the need to innovate or that the province could not benefit from election finance reforms that exist elsewhere.

The early reforms brought in by Lee’s PCs were an example of a contagion effect.

Representatives from both sides of the floor cited the existence of similar legislation in other Canadian jurisdictions as the main reason for introducing the Election Expenses

Act. While it included provisions for contribution disclosure, expense limits, and public funding, the 1983 legislation proved to be a less than sincere attempt to achieve the benchmarks of political finance legislation. Indeed, one might even cautiously argue that the early political finance regime in PEI closely resembles the cartel theory in which the

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dominant parties collude to ensure political and financial security using state mechanisms. It is more likely, however, that the government simply felt pressure to introduce reforms and at least appear to be concerned about election financing. Although the government claimed to have been working on the legislation for quite some time, its failure to establish an independent commission or to consult with individuals from political parties other than the dominant parties led to a less than satisfactory result.

Indeed, the lack of outside consultation is also a plausible explanation for the lack of development in political finance regime. Independent commissions tend to push government toward reform even when it may not be beneficial to the dominant parties.

PEI has had no such commission since 1963. The ongoing failure to communicate with other groups has resulted in legislation that ignores the political realities of the province.

Independent commissions require initiative and a desire to engage in a serious inquiry into the issues at hand. It may be that political finance reform has never been a priority in

PEI. Uproars about political scandals are scattered throughout PEI’s history, but few instances were ever prosecuted and many were passed off as myth that could never be proven. The Island media has, until recently, rarely taken an interest in political finance reform and there have been few outspoken advocates for change.

Today, there is little excuse for the lack of reform in PEI. The reluctance to enact electoral change of any sort appears to be deeply ingrained in the political psyche of the province and no government seems keen on making PEI a laboratory for innovation.

However, now that jurisdictions across Canada have begun to reform their political finance regimes, the government of PEI again feels the pressure to bring its legislation closer to the national standard. Indeed, the CEO made several recommendations 144

concerning the Election Expenses Act in his report on the 2015 election. Moreover,

Premier MacLauchlan has promised to ban corporate and union contributions and to adopt contribution limits for individual donations. There has even been talk of introducing a per-vote subsidy—many politicians appeared to be unaware that such a subsidy is already provided for in the legislation (Harding, 2016). No independent commission is planned. However, the legislation is being overhauled at a time when the

Green Party leader holds a seat in the 27-member Assembly. It remains to be seen whether this legislation, apparently brought on by a contagion effect, will result comprehensive reform that reconciles the needs of the province with the pressures from away.

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CHAPTER 5: CONCLUSION

Beyond geographic proximity, the Maritime Provinces have certain political similarities, including their size, population, economic status, two-party dominant systems and conservative politics. All three provinces have a history of questionable political practices, such as patronage, vote buying and bribery. While many accounts of such acts are unproven, even the perception that petty corruption could be so rampant in these provinces is concerning. Yet, these provinces have also had political finance regimes for many years. Adopted over the course of three decades, the political finance regimes of the Maritime Provinces feature similarities and differences that make them an interesting basis for comparison.

Nova Scotia became a pioneer in the regulation of political finance when it amended its Elections Act in 1969 to include provisions pertaining to political finance.

Spurred by political scandal, growing calls for equality, and recommendations by an independent commission, these reforms were both timely and progressive. Although these provisions were modest, the inclusion of the NDP their creation made the regime more progressive than it would have been had the dominant parties excluded them. After

1969, the legislation in Nova Scotia progressed slowly and few changes were made until the 2000s. Interestingly, most reforms have been preceded by an independent commission or select committee and publicized scandals.

The early reforms in New Brunswick were influenced by similar factors. The

Equal Opportunity program initiated by Robichaud’s Liberals and increasing concerns about discriminatory patronage appointments and contracts, along with highly publicized political scandals all led to inquiries into the administration of elections in the province. 146

These events prompted the creation of New Brunswick’s Political Process Financing

Act. This Act was more innovative and progressive than most, if not all, of the political finance regimes that existed in other jurisdictions. However, because the initial legislation was so comprehensive, the evolution of the political finance regime remained stagnant for many years. It was not until after the initiation of another independent commission and, later on, the eruption of political controversies in New Brunswick, that reform was seriously considered.

Both Nova Scotia and New Brunswick, then, fit rather closely Scarrow’s (2004) argument that scandal alone is not necessarily enough to spark political finance reform.

Instead, the advice or recommendations from independent bodies or commissions, combined with the existence, or perception of corruption in the political process, is more likely to stimulate change. While this might be true, the experience in these provinces also suggests that changing attitudes toward traditional politics in the 1960s-1970s was the critical turning point for the regulation of political finance in both Nova Scotia and

New Brunswick. Patronage politics and the old routine of bribery and vote-buying was becoming less and less acceptable. The political finance regimes of New Brunswick and

Nova Scotia were born out of a larger trend toward openness and greater political equality that permeated their politics. Even the later reforms in both provinces were initiated after it became clear that the old ways of running politics were no longer acceptable. This speaks to a normative institutional explanation for change, rather than the constitutional engineering proposed by Scarrow. As the attitudes of society change, what is considered appropriate behaviour will also change and, thus, actors might call for

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institutional reform. This more accurately explains the development of political finance regulation in these provinces.

The development of PEI’s political finance regime differed substantially. While the province was no stranger to petty political corruption, stories of scandal and controversy rarely caused a stir and were certainly not catalysts for a regime overhaul.

PEI’s political finance regime was not the result of recommendations from an independent body—the last notable commission had recommended against such legislation in the 1960s. It is also not clear that the dominant political parties were experiencing societal pressures to amend their ways when it came to political financing.

As a result, PEI’s reforms are likely the result of a contagion effect. By the end of the

1970s, PEI was one of the few remaining jurisdictions in Canada without a political finance regime.

When a political finance regime was introduced, its sincerity was suspect. While the government used key phrases, such as equal opportunity, the most common explanation for the legislation was that, because most other Canadian jurisdictions had already adopted similar legislation, PEI should follow suit. The resulting legislation benefitted the dominant parties significantly, but disadvantaged the few minor parties that arose in PEI. It also did little to level the playing field for private actors. Even with this less than effective legislation, the PEI political finance regime has changed little since

1986. Indeed, there were few calls for change until the issue of political financing resurfaced federally. It seems that the PEI regime is more responsive to exogenous shocks, or rather, pressures from the federal and other provincial governments, than to internal stimuli—likely because, unlike its neighbours, PEI was bereft of internal stimuli. 148

While there were many factors at play in each province, the significance of political parties in the development of political finance regimes cannot be understated.

Indeed, the common factor for these provinces is the influence of certain parties at particular points in time. In all three provinces, the Progressive Conservatives were the first party to introduce political finance legislation. This is particularly interesting given the large gap in time between the introduction of each province’s political finance regime. Furthermore, at the time of the introduction of the political finance regimes, the

PCs in each of the provinces were enjoying long mandates. This might suggest that the parties felt secure enough, financially and politically, to make a bold move in political finance, or that they were seeking to reinvigorate support by introducing progressive legislation. Later reforms in all three provinces were made by the PCs or the Liberals, or, in the case of Nova Scotia, the NDP. Many of these reforms occurred early in the parties’ mandates and also in the midst of scandal or economic uncertainty. A more focused study on the political parties is needed in order to fully understand the significance of these trends. However, it is also worth noting that even though reforms were introduced by the same parties in the Maritime Provinces, the political finance regimes are quite different.

The varying experiences of each of these provinces has led them to adopt different approaches toward political finance and the common benchmarks of political finance regimes.

Equality of Opportunity for Political Actors

The creation of equal opportunity for political actors is central to many political finance regimes. With the rising costs of campaigning and the maintenance of political

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party structures between elections, the financial burden placed on candidates and parties is becoming onerous. Furthermore, informal economic barriers limit the ability of poorer parties or candidates to stand for election, reinforcing the dominance of established parties and blocking out competition. Many political finance regimes, then, attempt to remedy these issues to ensure that all political actors have equal opportunity to stand for and secure election. In the Maritime Provinces, spending limits and public funding are the two categories of regulation commonly used to level the playing field for political actors.

All three provinces base expense limits for candidates on the number of electors in their riding and the limit for parties on the aggregate number of electors in the ridings where they run official candidates. Basing limits on such a calculation ensures that each party and candidate has equal opportunity to reach the voters in their ridings. Given the similarity in the calculations, one would expect the provisions in each province to be similarly successful. There are however, peculiarities that make expense limits in certain jurisdictions more successful than others. In terms of expense limits for candidates, Nova

Scotia runs into problems with population density and geography. The population disparity between the most populous and least populous ridings are such that a candidate in the most populous riding can spend about $40,000 more than a candidate in the least populous riding. The most recent boundary commissions in PEI and New Brunswick have focussed on giving votes equal weight, meaning that the populations of the ridings are not so different as to create a large disparity in spending limits.

The sizes of ridings in both New Brunswick and Nova Scotia differ significantly.

The smallest ridings in these provinces are urban and can be less than 10km2, while the 150

largest ridings are rural and can be more than 5,000km2 in Nova Scotia and over

7,000km2 in New Brunswick. The largest ridings also have the lowest population densities. This means that the costs per elector for candidates in these ridings are likely higher than in the smallest urban ridings. PEI, which only has a total area just over

5,000km2 does not contend with this issue. Additionally, in New Brunswick, some of the geographically larger ridings and some of the most populous urban ridings are linguistically heterogeneous. Candidates in those ridings are obliged to campaign in both

French and English, further increasing campaign costs. These differences show the unintentional influence that redistricting can have on political finance regulations and suggest that expense limits might need to be reconsidered in concert with electoral boundary changes. A simpler solution might be to enforce minimum and maximum expense limits, as New Brunswick’s legislation does. However, in order for such a provision to work, these limits must be reasonable and must actually limit expenses, which is not the case in New Brunswick.

Herein lies another conundrum with expense limits in all three Maritime

Provinces: they are not effective limits. With the exception of candidates in PEI, who necessarily have substantially lower spending limits, very few candidates or parties in any of the provinces are able or willing to spend up to their limits. Furthermore, the dominant parties in each of the provinces continue to outspend the smaller parties by tens of thousands, if not hundreds of thousands of dollars. This suggests that the spending limits are simply too high. If the goal of spending limits is to reduce the financial burden on political actors, to limit frivolous spending, and to level the playing field, then, in the

Maritimes, they are ineffective. 151

Public funding is an area in which the three provinces have differed greatly over the years. New Brunswick was one of the first jurisdictions in Canada to introduce direct public funding to both candidates and political parties when they created candidate expense rebates and annual allowances for political parties in 1978. While Nova Scotia introduced candidate reimbursements in 1969, it was not until 2011 that the province established a per-vote subsidy for parties. PEI, on the other hand, introduced funding for both parties and candidates in 1983, but discontinued the annual allowance for parties in the 1990s.

The greatest issue that each of the provinces has created with their public funding provisions are high thresholds for qualification. Candidates in Prince Edward Island and

New Brunswick are only eligible to receive an expense reimbursement if they garner at least 15% of the vote in their riding. This high threshold has meant that almost half of all candidates in these provinces fail to receive public funding. Disproportionately, candidates who fail to qualify for reimbursement are candidates for minor parties. Such a high threshold appears to benefit the dominant parties and contradicts the purpose of such provisions. Nova Scotia, on the other hand, has remedied the situation to some degree by decreasing the threshold to 10%. Although this lowered threshold is relatively new, it is already showing signs of success, as more candidates qualify for funding. While the costs of elections in the province have increased slightly with the new threshold, the cost does not appear to be burdensome.

The final aspect of the provinces’ political finance regimes that purport to create equal opportunity for political actors is public funding for political parties. All three provinces have provisions for annual allowances in their legislation, however, Prince 152

Edward Island has not distributed the allowance since 1994. Nova Scotia and New

Brunswick offer annual allowances to all registered political parties. This low threshold for qualification has meant that the playing field has been leveled for all parties. The high threshold attached to PEI’s existing provision, on the other hand, would disadvantage minor parties if the allowance was resurrected. While it is true that providing public funding to all political actors would be expensive and likely unfeasible, if a political finance regime is to truly level the playing field for all political actors, then funding must not be limited to the dominant actors.

Equality of Opportunity for Private Actors

The creation of equal opportunity for private actors to influence politics is one of the more controversial benchmarks associated with political finance regimes. Money, more so than other formal tools for influencing politics, is unevenly dispersed among citizens of the age of majority. Indeed, the unequal distribution of money can impact access to other means of influencing politics. Furthermore, money is a tool that is not only made available to citizens, but also to entities not granted other political rights, such as corporations and trade unions. On the one hand, it can be argued that these entities have a stake in political outcomes and, in the absence of the right to vote, that they should be able to use their money to influence politics. On the other hand, it is argued that only actors who hold the right to vote should be able to influence political outcomes and, therefore, contributions from entities other than private individuals should be limited or banned.

153

Today, the trend leans toward the latter approach to private actors, an approach that the Maritimes have not fully embraced. Unlike New Brunswick and PEI, Nova

Scotia has banned corporate and union contributions. New Brunswick does limit political contributions, while PEI has no limits. New Brunswick’s reluctance to ban corporate and union contributions is likely based more on the province’s economic dependence on prominent corporations, while the reluctance in PEI to limit contributions more likely stems from the fear that it would result in a lack of funds for political actors.

Notwithstanding the lack of reform to this point, with the growing trend toward a more individual-centred approach to political finance across Canada, it is likely that New

Brunswick and PEI will soon follow suit. Recent concerns in both provinces over the undue political influence of large corporations have only added to the pressures to conform to the federal model of contribution limits.

Openness and the Mitigation of Corruption

Openness and the mitigation of corruption are arguably the most important benchmarks for a political finance regime. In order to limit the dominance of certain political actors or the undue influence of private actors over the political process, the various aspects of a political finance regime must be enforced. A major issue faced by all of the Maritime Provinces is a lack of resources to fully enforce their political finance legislation. The effort put forth by Elections PEI, in particular, is laudable as the agency appears to go beyond its calling to make political finance documents available for public scrutiny. Attempts have also been made to improve the enforcement mechanisms in Nova

154

Scotia. New Brunswick lags behind the other provinces in this respect, with an apparent lack of effort made to enforce the political finance regime.

It should be noted that, thus far, little legal action has been taken in any of these provinces with regards to political finance laws. While this may signify that the regimes are effective, a lack of action does not always mean that no wrongdoing has occurred.

Making political finance documents readily available for public scrutiny can, in many ways, lessen the burden on a province’s election agency. Not only does this provide citizens with easy access to information, but it can also put political finance issues in the mind of the media, which, in turn, can increase citizens’ awareness and curiosity.

Investigations by the media can also spur investigations by a province’s elections agency.

In recent years the CBC has acted as a whistleblower for questionable actions relating to political financing in the Maritimes using these public documents. These reports have sparked further conversation and concern about the enforcement of political finance laws in both the public and political realms. Thus, the simple step of making documents more easily accessible might be crucial in increasing the efficacy of political finance regimes.

If a political finance regime is to work, it must be understood and respected by political actors, private actors, and the independent agencies administrating the law.

Concluding Remarks

The experience of the Maritime Provinces with political finance legislation provides intriguing insight into the reasons why jurisdictions take differing approaches to political finance and the effectiveness of the resulting legislation. Nova Scotia and New

Brunswick introduced reforms as a response to internal pressures, and appear to have

155

developed political finance regimes that are more comprehensive. Prince Edward Island, which appears to have adopted political finance reforms through a contagion effect, on the other hand, has legislation that is significantly less comprehensive. At the same time, the political and social contexts of each regime also reveal that there are various other factors at play in the development of political finance legislation, such as geography and demographics. Nevertheless, the comparative analysis of these three provinces does raise the question of whether or not provinces responding to external, rather than internal, pressures are less likely to have comprehensive and effective legislation that meets the goals of the common political finance benchmarks.

The analysis has also opened the doors to further inquiries into other aspects of comparative political finance regulation. Future lines of inquiry might include whether the Canadian provinces are moving toward a more standardized approach to political finance, the effects of changing electoral boundaries on political actors’ ability to finance their campaigns, and the basic effectuality provisions in various political finance regimes.

While the variation in availability and comprehensiveness of data across provinces makes quantitative comparison, and therefore, certain lines of inquiry, difficult to carry out, most jurisdictions do keep records of certain data that would be applicable to further study. Moreover, with recent calls for reform in some of Canada’s largest provinces, such as Ontario, Alberta, and British Columbia, further examination of Canada’s provincial political finance regimes is both timely and pertinent.

156

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APPENDIX A: SUMMARY FIGURES AND TABLES

Figure 1: Categories of Regulation and the Political Finance Benchmarks

Expense Limits Equal Opportunity for Political Actors

Contribution Limits

Equal Opportunity for Private Actors Public Funding

Openness and Mitigation of Transparency Corruption Mechanisms

Table 2: Initial Political Finance Regulations in the Maritime Provinces Province Year Party Reason Nova Scotia 1969 PCs Institutional New Brunswick 1978 PCs Institutional PEI 1983 PCs Contagion

Table 3: Major Revisions to the Maritime Political Finance Regimes Province Year Party Reform Reason 1981 PC Tax credit Institutional 1991 PC Contribution Disclosure Institutional Nova 2006 PC Contribution Limits Institutional Scotia 2009 NDP Ban on corporate and union contributions Institutional 2011 NDP Per-vote subsidy; third party advertising Institutional New 1981 PC Tax credit Institutional Brunswick 2008 PC Third party advertising Institutional PEI 1994 LIB End of annual allowance Institutional

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Table 4: Initial Characteristics of the Maritime Political Finance Regimes Contribution Province Expense Limits Public Funding Transparency Limits Nova Candidates: $1.00 x first 5000 Candidates: $0.25 per elector (15% Expense reports Scotia electors; $0.85 x next 5000 threshold) electors; $0.75 x number of Other: public disclosure, — remaining electors penalties, fines

Parties: $0.40 per elector New Candidates: $1.50 per elector; Individual, Candidates: $0.35 per elector + cost of Expense reports, contribution Brunswick minimum $7,500; maximum corporate & union: mailing 1 oz. first-class letter to each disclosure $22,000 $6,000 elector (20% threshold)

Parties: $0.85 per elector Parties: annual per-vote subsidy ($1.00) Other: public disclosure,

penalties, fines

PEI Candidates: $1.25 per elector; Candidates: $0.32 per elector; minimum Expense reports, contribution maximum $12,000; maximum $750; maximum $1,500 disclosure for under 300 electors $6,000 — Parties: annual per-vote subsidy ($1.00) Other: public disclosure, Parties: $4.25 per elector penalties, fines

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Table 5: Current Characteristics of the Maritime Political Finance Regimes Contribution Province Expense Limits Public Funding Transparency Limits Nova Candidates: $5.72 x first Individual: $5,000 Candidates: $1.43 per elector Expense reports, contribution Scotia 5000 electors; $4.86 x (10% threshold) disclosure next 5000 electors; $4.29 Corporate & union: x number of remaining prohibited Parties: annual per-vote subsidy Other: public disclosure, electors ($1.53/vote) penalties, fines

Parties: $2.29 per elector New Candidates: $1.75 per Individual, Candidates: $0.35 per elector + Expense reports, contribution Brunswick elector; minimum corporate & union: cost of mailing 1 oz. first-class disclosure $11,000; maximum $6,000 letter to each elector (15% $22,000 threshold) Other: public disclosure, Parties: $1.00 per elector Parties: annual per-vote subsidy (calculated annually) specific penalties and fines

PEI Candidates: $1.75 per Candidates: $0.75 per elector; Expense reports, contribution elector minimum $1,500; maximum disclosure $3,000 (15% threshold) — Other: online public scrutiny, Parties: $6.00 per elector Parties: annual allowance (has not penalties, fines been distributed since 1990s)

170