Annual Report on Election Finances January 1, 2014 to December 31, 2014 Office of the Chief Electoral Officer Annual Election Finances Report 2014 1 Introduction This report summarizes the financial activities of the Liberal Party, the Progressive Conservative Party and the New Democratic Party for the period January 1, 2014 to December 31, 2014. This report also summarizes the financial activity of candidates and political parties relating to the by- elections in the electoral districts of Virginia Waters (held on April 9, 2014), St. George’s – Stephenville East (held on August 26, 2014), Conception Bay South (held on November 5, 2014), and Humber East and Trinity – Bay de Verde (both held on November 25, 2014). The original of this report has been forwarded to the Queen’s Printer for reproduction purposes and availability to the public. A copy has been supplied to the Legislative Librarian for further reference by Members of the House of Assembly and summary information is also available for viewing on the Elections Newfoundland and Labrador webpage at www.elections.gov.nl.ca. Office of the Chief Electoral Officer 2 Annual Election Finances Report 2014 History of Election Finance Legislation The Elections Act, 1991 (“Act”), which was passed by the House of Assembly in June 1992, provided for the comprehensive regulation of financing by political parties, district associations and non-affiliated candidates in elections. Part III of the Act dealing with election finances was proclaimed into force on October 1, 1993, but pertained only to registered political parties and registered candidates in elections. Initially, it was intended that experience with election finance regulation of political parties would be evaluated before proclaiming Part III to pertain to district associations. This partial proclamation necessitated an amendment to Part III in December 1993 in the form of a transitional provision that treated all candidates in an election as if they were non-affiliated candidates. On January 26, 1996, the Government of Newfoundland and Labrador issued a policy statement, with the agreement of all political parties, which placed further restrictions on district association activities during the 1996 General Election campaign period. Significant amendments to the Act received Royal Assent on June 5, 1998, to take effect on September 3, 1998. The most significant of the new amendments from an election finance perspective was the removal of annual contribution limits for individuals and corporations who wish to donate to a political cause. Also, the amended Act is no longer applicable to the operation of local political district associations. The Act places the onus on the various political parties for controlling and reporting on the financial activity of their district associations with respect to political fundraising by requiring all such funds to be channelled through the political party accounts. Further amendments to the Act, which affected certain provisions of Part III dealing with election finances, received Royal Assent on June 14, 2007. These provisions changed the official length of time for a campaign period to end four months from polling day as opposed to the previous six month period, increased the candidate nomination fee deposit to $200 from $100, and made refund of the nomination fee contingent on timely filing of election finance reports as opposed to the previous process where refund of the nomination fee deposit was contingent on a candidate receiving at least 15 per cent of the popular vote in their district. Office of the Chief Electoral Officer Annual Election Finances Report 2014 3 Election Finance Compliance ANNUAL FINANCIAL STATEMENTS In accordance with Part III of the Act, registered political parties are subject to fund raising guidelines and to the public disclosure of their financial affairs in the form of an annual filing of audited financial statements. The deadline for filing of the annual Political Party statements is legislatively set at April 1 of the year following the year to which they relate. The three political parties registered with the Office of the Chief Electoral Officer at the beginning of the 2014 calendar year filed the required audited financial statements pertaining to 2014 and their financial statements have been certified by the Chief Electoral Officer as having met the requirements of the Act. The Progressive Conservative Party filed its statements by the April 1, 2015 deadline. The Liberal Party and the New Democratic Party were all granted an extension to the deadline for various reasons after the Office of the Chief Electoral Officer reviewed those reasons and determined that they did not involve willful intent or neglect on the part of their Chief Financial Officers. The Liberal Party and the New Democratic Party statements were received on May 1, 2015. During 2014, the Liberal Party renegotiated its credit facility. In accordance with the agreement with its lenders, the lenders will forgive interest when the principal amount owing has been repaid. When the principal is repaid, the Liberal Party will recognize the interest forgiveness on its financial statements. If the principal is not repaid within the time frame stipulated in the agreement, the full amount of the interest owing will be payable and no amount will be forgiven. Appendix A to this report presents a summary of the annual financial statement information provided by the parties for 2014. The actual financial statements on which this summary is based may be viewed at the Office of the Chief Electoral Officer during normal business hours. BY-ELECTION FINANCIAL STATEMENTS Section 304 of the Act requires candidates in a by-election and political parties that received contributions or made expenditures in relation to the by-election to file with the Office of the Chief Electoral Officer a financial statement of income and expenses relating to the by-election within four months of polling day. There were three candidates for each of the five by-elections held during 2014 resulting in a total of 15 separate filings for the two by-elections. Appendix B to this report presents a summary of the information contained in the income and expenditure statements provided by the candidates relating to the five 2014 by-elections. The actual financial state- ments on which this summary is based may be viewed at the Office of the Chief Electoral Officer during normal business hours. Office of the Chief Electoral Officer 4 Annual Election Finances Report 2014 BY-ELECTION EXPENDITURE LIMITS Section 310 of the Act places a limitation on the amount of certain election expenses permitted by political parties and candidates in an election or by-election. These limits are established for each electoral district based on the greater of the number of registered voters on the official voter list used for the election multiplied by an annually adjusted factor per registered voter or the annually adjusted minimum limit. For the 2014 by-elections, the inflation adjusted factor was $4.304 per voter and the minimum limit was $16,564. Expenditure limits pertaining to the five by-elections reported here were as follows: District Registered Factor Calculated District Expenditure Voters Limit Minimum Limit Virginia Waters 9,823 $4.304 $42,278 $16,564 $42,278 St. George’s – 7,233 $4.304 $31,131 $16,564 $31,131 Stephenville East Conception Bay South 9,758 $4.304 $41,998 $16,564 $41,998 Humber East 7,869 $4.304 $33,868 $16,564 $33,868 Trinity – Bay de Verde 6,717 $4.304 $28,910 $16,564 $28,910 As the expenditure limit calculated for the five by-elections was greater than the minimum limit, the calculated limits were set for those districts. Election expenditure limits apply only to certain types of expenditures made by a campaign. These limits are not applicable to amounts spent by candidates on their own or their spouses’ travel or other personal living expenses; to amounts spent on wrap-up or election night thank-you parties; to amounts trans- ferred to candidates and from political parties under certain provisions of the Act or to other expenses that are not directly related to contesting of the election. The reason for excluding certain expenses from campaign expenditure limits is rooted in the principle of fairness and the goal to create as level a playing field as possible for all candidates. For example, a candidate who maintains a permanent residence in a particular district would likely incur less travel and living expenses than a candidate who does not live in the district. This would create or result in an obvious spending advantage if the travel expenses of the candidate who was required to travel further or more frequently were subject to the district election expenditure limit. All filings for the 2014 by-elections were within the expenditure limits established as outlined above. (See Appendix B). Office of the Chief Electoral Officer Annual Election Finances Report 2014 5 BY-ELECTION SUBSIDY If a candidate in an election receives at least 15 per cent of the popular vote cast in their district they are entitled to a subsidy calculated to be 1/3 of their eligible allowable campaign expenses up to a maximum of 1/3 of their district expenditure limit. For the five by-elections held during 2014, a total of $108,915 in campaign subsidies was paid out to 12 of the 15 campaigns as follows: District Campaign Subsidy Paid Cathy Bennett (Lib) $13,763 Virginia Waters Danny Breen (PC) $11,775 Sheilagh O’Leary (NDP) $10,253 Wally Childs (PC) $8,089 St. George’s – Stephenville East Bernice Hancock (NDP) $4,328 Scott Reid (Lib) $8,230 Rex Hillier (Lib) $8,007 Conception Bay South Barry Petten (PC) $10,923 Stelman Flynn (Lib) $10,468 Humber East Lary Wells (PC) $9,105 Steve Crocker (Lib) $8,574 Trinity – Bay de Verde Ronald Johnson (PC) $5,400 In addition to the campaign expense subsidy payable to candidates, the Chief Electoral Officer provides a subsidy for the cost of auditor services to candidates to a maximum amount of $500 per campaign.