Allowance Commissioner’s report on Annual Allowances for Manitoba’s Registered Political Parties

7/28/2019 Allowance Commissioners report on Annual Allowances for Manitobas Registered Political Parties

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Manitoba Allowance Commissioners Report Summary

PaulG.Thomas,Ph.D.,O.M.

ProfessorEmeritus,PoliticalStudies

St.JohnsCollege

92DysartRoad Winnipeg,ManitobaR3T2N2

TheHonourableDarylReid

SpeakeroftheLegislativeAssembly

Room244LegislativeBuilding

450Broadway

Winnipeg,ManitobaR3C0V8

February19,2013

DearMr.Speaker:

IhavethehonorofsubmittingtoyoutheReportonAllowancesforManitobasRegistered

Political Parties. This report is submitted pursuant to subsection 81(4) of The Election

FinancingAct.

The applicable legislation states that the Speaker must table a copy of the allowance

commissionersreportonanyofthefirst15daysonwhichtheAssemblyissittingafter the

Speakerreceivesthereport.

Pursuanttosubsection81(5)ofTheElectionFinancingAct,withoutdelayaftersubmitting

thisreporttotheSpeaker,theallowancecommissionermustmakeregulationstoimplement

hisdecisions.

Respectfullyyours,

PaulG.Thomas,Ph.D.,O.M.

Commissioner


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Table of Contents

ExecutiveSummary 5

PoliticalPartiesandDemocracy 9

TheManitobaContext 13

TheAppointmentandMandateoftheAllowanceCommissioner 19

TheApproachFollowedbytheAllowanceCommissioner 23

ThePrinciplesandCriteriaUnderlyingAllowances 27

OptionsforDeterminingtheTotalAmountofAllowanceSpending 31

andAllocatingMoneyAmongRegisteredPoliticalParties

CostsofanAllowanceProgramtothePublicTreasury 41

Regulation,EnforcementandCompliance 55

DecisionsandRecommendations 57

SummaryofRecommendations 77

SummaryofDecisions 77

NextSteps 81

Conclusions 83

Appendices 85


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Executive Summary

ThisreportarisesoutofTheElectionFinancingAct(EFA)whichwaspassedbytheManitoba

LegislativeAssemblyinJune2012.TheActeliminatedanexistingprogramforthepayment

ofannualallowancestoregisteredpoliticalparties.Italsoprovidedfortheappointmentofan

independentallowancecommissionertodecide,takingintoaccountcertainconsiderations

statedin theAct, the design ofa new allowanceprogram. The commissionerwas to be

appointedbythegovernmentonlyafterconsultationwithotherregisteredparties.

OnNovember15,2012,ProfessorPaulThomaswasappointedascommissionerandgivena

three-monthdeadlinetotablehisreportcontainingdecisionsonthecomponentsofthenew

partyallowanceprogram.

The first section of this report describes the critical role that political parties play in the

Manitoba political system. Once seen as solely private associations, political partiesgraduallycame tobe seenalsoasimportantpublic institutions.A briefhistoricaloverview

showshow this shiftin perspectiveis reflected inthegradualadoptionof laws respecting

partyoperationsandfinancing.

Tworecentchangestopartyfinancelawsprovokedcontroversy.Thefirstwasabanin2001

oncontributionstopoliticalpartiesbyorganizationssuchascorporations,tradeunionsand

non-profit associations. The second was the introduction in 2008 of annual per-vote

allowancespaidtopoliticalpartiesaspartialcompensationfortherevenuelostasresultof

thebanonorganizational donations. Thecontroversy ledManitobas two largestpoliticalpartiestodeclinetheallowancepayments.Allowancepaymentsweremadetothethree

smallerpartiesfrom2008to2011.

Under the EFA, the commissioner was not authorized to resolve the controversy over

whetherthereshouldbeanallowanceprogram.TheActrequiresthatallowancesbepaid.

Norwasthecommissionerauthorizedtomakechangestootherlegislationandregulations

thatgovernthefinancingofpoliticalparties.However,hewasgivenwidelatitudetoidentify

considerationsrelevanttothedesignofanewallowanceprogram.

A second section describes how the commissioner approached his task. The process

involvedpublicconsultationthroughtheuseofawebsite,whichincludedanonlinesurvey

and the useof newspaper notices across the provincewhich askedManitobans for their

opinions.

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In addition, a series of confidential meetings were held with representatives of political

partiesandotherindividualswithknowledgeofthetopic.Finally,researchwasconducted

on the arrangements for financing political parties in other jurisdictions, including a

comparativeanalysisoftheallowanceprogramsinfourotherprovincesandatthenational

levelinCanada.

Thereportdescribesthefollowingprinciplesandcriteriawhichshouldguidethedesignofa

newallowanceprogram:

clarity targeted affordability predictability fairness enforceability accountability

Basedontheseprinciples/criteria,thereportidentifiesanumberofoptionsfordetermining

the totalamountofallowancemoney tobepaid to registeredparties, aswell asseveral

optionsforitsallocation.

Usingthe latitude thathewasgrantedunder theEFA,thecommissioneridentifiedbotha

seriesofbindingdecisionswhichwillserveasthebasisforthenewallowanceprogramand

a smallernumber of recommendations for theManitoba Governmentand theManitoba

LegislativeAssembly to consider for the future.The reportprovides reasons forboth the

decisionsandtherecommendations.

Thekeydecisionsforthenewallowanceprogramwere:

Therewillbeanannualcapof$600,000placedonthetotalamountofallowancefundsavailable.

Allowancespendingwillnotbeindexedtoinflation,butwillbesubjecttoadjustmentbythenextallowancecommissionerappointedafterthenext

provincialelection.

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Inaconditionofseverefinancialstress,allowancespendingcanbesuspendedorreducedbythegovernmentthroughabudgetarybill

passedbytheLegislature.

Allowancefundsaretobeusedtodefraytheadministrative,operatingandcompliancecostsofpoliticalpartiesandnotforpartisanpurposesof

politicaladvertisingandpolling.

Thetotalamountofallowancespendingwillbedividedamongtheregisteredpoliticalpartiesbasedontwocalculations:a)acandidate-

basedpaymentof$100percandidateendorsedbythepartyinthemost

recentprovincialelection;andb)afterdeductingall-candidate-based

paymentsfromthetotalfundsavailable,dividingtheremainingfunds

amongthepartiesbasedontheaverageofthetotalvalidvoteseach

obtainedinthetwopreviousgeneralprovincialelections. Forapartycompetingforthefirsttimeinageneralelection,thevote

portionoftheallowancewillbebasedontheportionofvalidvotes

obtainedinthatelection.

Theactualallowancepaymenttoeachpartywillbethelesseroftheincurredadministrative,operatingandcomplianceexpensesoftheparty

andtheallowanceentitlementgeneratedbythetwo-partformula.

ElectionsManitobawillcontinuetooverseetheoperationoftheallowanceprogram.Existingrulesandguidelineswillbeusedtodefinecoreadministrative,operatingandcomplianceexpenses.

AllowancepaymentswillbemadetoregisteredpoliticalpartiesforagivenyearfollowingthefilingofanAnnualFinancialStatementwith

ElectionsManitoba.PartieswillberequiredtoassertintheirStatement

thatallowancefundshavebeenusedonlyforintendedpurposes.

Ifapartywishestodeclinetheirallowance,itcannotifyElectionsManitobainadvanceorreturnthepaymentafterithasbeenissued.

Partiescannotsubsequentlyrequestthatsuchpaymentsbemade.

UndertheEFAthedecisionsmadeinthereportaretobereflectedinregulationsestablished

bythecommissionerandtheprogramwillbemaderetroactivetoJanuary,2012.

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Inthecategoryofrecommendations forfutureconsideration thecommissionermade the

followingtwopoints:

Thereshouldbefurtherstudyoftheoptionofaddingengagementofpartymembersandpolicydevelopmenttotheallowablecategoriesof

spendingundertheallowanceprogram;

IftheaimoftheEFAistocompletelyeliminatetheuseofallowancemoneyforcampaigntypesofexpenses,considerationshouldbegivento

amendingtheActtostatethatallowanceswillnotbeusedtosupport

electionexpenses,aphraseforwhichacomprehensivedefinitionexists.

Thenextstepinimplementingthedecisionsinthisreportisforthecommissionertooversee

thepromulgationofbindingregulationswhichwillbepublishedintheManitobaGazette.

Based on those regulations, Elections Manitoba will make the two-part calculations to

determine the payments to which registered parties are entitled under the new rules.

Paymentswillbemaderetroactiveto2012.

The commissioner hopes that this report will be of educational value in informing

Manitobans about an important topic and that his decisions on the design of the new

allowanceprogramaresoundandfair.Finally,itishopethatthenewallowanceprogram

will help to sustain and enhance the role of political parties as crucial institutions of

democracyinManitoba.

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Political Parties and Democracy

Nearlyeveryoneagreesthatahealthyandvibrantdemocracycannotoperateinterritorially

large,economically specializedand socially diversesocietieswithout organized, cohesive,

responsible and effective political parties that are able to provide linkages and active

representationbetweencitizensandgovernments.Mostpeoplealsoagreethatpartiesneed

money and other resources in order to perform various important functions within the

electoralandthegoverningprocesses.Therealissuesthatariseperiodicallyarerelatedto

howpartiesobtainandspendthemoneytheyneedtobeeffective.

Inmostwesterndemocraciesoverthepreviouscenturypoliticalpartiesreliedexclusivelyor

mainly on private sources of funding. There was only limited state regulation of their

activities.Underthesearrangementstherewererealandperceivedrisksthatmajorfinancial

contributors would gain unfair access to public officials, both elected politicians and

appointedpublicservants,andwouldtherebyachievedisproportionate,undueinfluencein

theelectoralandthegoverningprocesses.Inallwesternpoliticalsystems,thisconcernled

graduallytomorelegislationandrelatedregulationswhichsoughttocontroltheraisingand

spending of money by political parties, as well as to the introduction of various forms of

public funding tosupportcertainof theiractivities. Italso led to the insistenceongreater

transparencyabouthowpartiesraisedandspentthemoneytheyobtainedfromprivateand

publicsources.

InCanada,thereformprocess,whichwasintendedtoensureintegrityintheelectoraland

governingprocesses,gainedmomentum from themid 1960sonward. Thenew laws and

regulations sought tobalance the freedomof individualsandorganizations toengage in

variousformsofpoliticalactivitywiththeneedtopromotefairnessintermsofrelativelyequal

accesstotheelectoralandgoverningprocessesfordifferentorganizationsandindividuals,

aswellashonestyandaccountabilityinthoseprocesses.

Topreserve theprinciples ofpoliticalequalitypresumed by the representationandvoting

systems, gradually the national government andmost provincial governments introduced

legal limits on how muchmoney could be donated by organizations and individuals to

partiesandtocandidates.Therewerealsorequirementsforthedisclosureofcontributionsabove a certain amount so that citizens could be aware of which organizations and

individualswereseekingtoinfluencetheelectoralandthegoverningprocesses.

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Alsointroducedweretaxcreditsforcontributionstopartiesandcandidatesasameansto

promotecitizeninvolvement,toprovidethepartieswithabroaderbaseoffinancialsupport

andtoreducetheirdependenceonmajorcontributorslikewealthyindividuals,corporations

andtradeunions.

Thereformstotheelectionfinancinglaws,whichbeganinQuebecinthe1960s,werealso

theresultofagrowinginsistenceonmoredirectcitizeninvolvementinthepoliticalprocess.

Atthetimetherewasearlyevidenceofdecliningpublictrustandconfidenceinpoliticians

andpoliticalinstitutionslikepoliticalparties.Withsomenotableexceptions,thisdownward

spiralof trusthascontinuedtothepresentday.Thecausesof thepublicsdisillusionment

with the political process are too numerous to be analyzed here. However, scandals

involving politics and money were one factor that contributed to the rise of a more

suspicious, even cynical, climate inwhich politicians and political parties were seen by

manycitizenstobeself-interestedandself-servingintheirbehaviour.

Rightlyorwrongly,Canadiansdonotholdpartiesandpoliticiansinashighpublicesteemas

theydidinthefirsthalfofthe20thcentury.Somewhatparadoxically,opinionpollsindicate

thatmost Canadians still accept that responsibleandresponsive politiciansandpolitical

partiesare essential to a healthydemocracy. They also accept that parties and elected

representativesneedmoneyandotherresourcestodotheirwork.However,thequestions

ofhowmuchmoneypartiesneed,howtheyobtainitandhowtheyspendithavebecome

contentioustopicsinCanadaandinmanyotherwesterndemocracies.

Another trend which provides the wider context for this report involves the state ofgovernmentfinances.Comparedtoearlierdecadesthereisstrongerperceptionofscarcity

in the publicsectorand thereseems tobemore resistance topayinghigher taxes.As a

result, governments everywhere are facing serious financial challenges in terms of

balancingtheirbudgetswhilestilltryingtoaccommodatenumerousdemandsonthepublic

purse.Inthesecircumstances,criticshavecometoquestiontheneedforpublicfundingof

parties.

Thereisalsotheconcernthatwehaveenteredaneraofthepermanentelectioncampaign

in which the activities and techniques used to win elections are being applied to theprocessesofgoverningandofoppositionwithinlegislatures.Opinionpollsindicatethatthe

publicresentsseeingtheirscarcetaxdollarsspentonsuchcampaignrelatedactivitiesas

pollingandnegativeadvertising,especiallyoutsideoftheofficialcampaignperiod.

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Inshort,publicdisillusionmentwithaspectsofthepoliticalprocesscombinedwiththeneed

for financial prudence in the public sector have provoked debates inCanada and other

countriesovertheappropriatebalancebetweenprivateandpublicsourcesof fundingfor

political parties. The Manitoba political system has not escaped these controversies. In

saying this, one must quickly note that the problems and scandals involving money inManitobapoliticallifehaveneverbeenasseriousasinsomeotherCanadianjurisdictions,in

theUnitedKingdomandespeciallyintheU.S.A.

ThenextsectionexaminesbrieflythehistoricalandrecentdevelopmentsinManitobawhich

provides the context for the passage by the Manitoba Legislative Assembly of a statute

providingfor theappointmentofanallowancecommissionerwho istodecidehowmuch

public money will be spent on allowances, which activities will be supported by the

allowances,howthemoneywill beallocated among thepartiesandwhat accountability

requirements will be attached to the receipt of such financial support from the public

treasury.

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The Manitoba Context

UndermodernconditionsManitobassystemofcabinet -parliamentarygovernmenthasbecome

inmany respects party government. The system presumes strong and responsible political

partiesandhelpstopromotetheirexistence.Partiesperformanumberofessentialfunctionsin

the system. In the most general terms, parties help to link society to government, provide

alternative ideas forpublicpolicy, help to informand shapepublic opinion, act to represent

different values/interests within the policy process, provide a vehicle for citizens to become

involvedinthepoliticalprocess,andhelptorecruitandelectleaderstopublicoffices.

Inmoreconcreteterms,partiesarecentraltotheperformanceoftherolesofgovernment

and opposition. It is the governing party which takes most of the initiative in terms of

legislation and spending. Normally governments are not forced to compromise with the

opposition parties in order to have their legislation and spending approved by the

Legislature. However,with that authority andcontrolcomes accountability in the form ofpoliticalcreditorblameforboththeactionsandinactionsofgovernment.

Meanwhile, other political parties perform the crucial role of responsible opposition,

challengingthegovernment,bothin thelegislatureandoutside,on anongoingbasis. For

thispurposethereisseparaterecognitionandsupportinstatutes,parliamentaryrulesand

thebudgetsoftheLegislativeAssemblyfortheroleofanOfficialOppositionandoftenfor

other opposition parties. In their challenge role, opposition parties help to inform, shape,

reflect and mobilize critical opinions and alternative ideas about the substance and the

processes of policy formulation. In this way, opposition parties represent an alternativegovernment in waiting and thereby allow, after fair and free elections, for the peaceful

transitioninpoweramongrivalpoliticalorganizationsseekingamandatefromthepublic.

Like other Canadian jurisdictions, Manitoba gradually came to recognize the central

importanceofpoliticalpartiestoahealthydemocracythroughthepassageofvariouslaws

andtheprovisionof different formsofdirectandindirectstate financialsupporttoparties.

This report is concerned principally with the implementation of the concept of annual

allowancestoeligibleregisteredpoliticalparties.Itisnotnecessary,therefore,topresenta

detailed history of the legal and financial components of Manitobas system for the

regulation of and support for parties, including the legal and administrative provisions

governingtheirfinancialaffairs.However,abriefoverviewofthatsystemisneededinorder

toplaceinanhistoricalcontexttheestablishmentofthepositionofallowancecommissioner

andtheissueswhichhewasaskedtodecide.

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From1870whentheprovincewascreatedtothepresent,Manitobaselectorallawreflected

thematuringoftheprovincesdemocracy.Onlythehighlightsofthehistoricalevolutionof

provincialelectorallawswillbepresentedhereinordertodemonstratethepointthatour

understandingofthelegalandfinancialrequirementsforanopen,accessible,fair,honest

andhealthydemocraticprocesshavechangedovertime.

Originally, under theManitobaElection Act, onlymales owning propertywereeligible to

vote.In1888thepropertyqualificationwaseliminatedandthesecretballotwasintroduced

forthefirst time.Anothermilestonewasreachedin1916whenManitobabecamethefirst

provincetoallowwomentovote.

Over the years there were changes to the lawsestablishing the number of seats in the

Legislative Assembly and the type of ballots (simple plurality versus proportional

representation)usedtoelectMembersoftheLegislativeAssembly(MLA).In1957Manitoba

wasthe first province toestablish an independentboundariescommission to review the

boundaries of constituencies based onpopulation changes. In 1969 the votingagewas

loweredto18from21.

Amajorsetofchangestoelectorallawweremadein1980.Anindependentofficeofthe

LegislativeAssembly,theOfficeoftheChiefElectoralOfficer,wasestablishedtoensurefair

and free elections. The Elections Finances Act was brought into force. It introduced

advertising spending limits for parties and candidates, an income tax credit system for

politicalcontributionstoregisteredpoliticalpartiesandarequirementforthedisclosureof

thenamesof contributorsandtheamountsof contributionsabovea specifiedamount. In1985,spendinglimitsexpandedtoincludeallexpenses,notjustadvertisingandthepartial

reimbursementofdocumentedexpensesofpartiesandcandidatesbegantotakeplace.

Thenextmajorroundofelectionlawreformoccurredin1988.Intermsofthethemesofthis

report,theimportantchangestoTheElectionsActwereastrengtheningoftheinvestigative

powersoftheChiefElectoralOfficerandanincreaseinthepenaltiesforelectionoffences.

With respect to The Elections FinancesAct, therewas a clarification of the definition of

election expenses, aneliminationof thespending limitson advertising, stronger rules on

disclosureforcontributionstopartiesandcandidatesandgreatercompliance/enforcementpowersforElectionsManitoba.

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In 2000, The Elections Finances Act was amended to ban political donations from

corporations,tradeunions,non-profitorganizationsandindividualsnormallynotresidentin

the province. That is to say, contributions could only be made by individuals normally

resident in theprovince.Theamendmentsalso imposeda ceilingof $3,000 ondonations

annually from individuals, placed a limit of $5,000 on third party advertising during acampaignperiod(thisprovisionisyettobeproclaimedintolaw)andputaceilingof$50,000

peryearonpartyadvertisingduringnon-electionyears.Theseprovisionsweretotakeeffect

on January 1, 2001. Donations from organizations like corporations and unions were

previously eligible for political contribution tax credits so the ban on such contributions

representedasavingtothetreasuryintermsoftherevenuepreviouslydeductedfromtaxes

payablebythoseorganizations.

In2008,aseriesofamendmentsto TheElectionsActandtoTheElections FinancesAct

were passed by the Legislature. In summary terms, the amendments introduced the

followingchanges:

Theadoptionoffixeddateelections; Abanongovernmentadvertising90daysbeforethefixedelectiondate; Theintroductionofannualallowancestopoliticalpartiesbasedonvotes

obtainedinthepreviousgeneralelection(detailsbelow);

Theadoptionofannualadvertisinglimitsoutsideoftheelectionperiodintheyearofafixeddateelection.Limitsweresetat$250,000forparties

and$6,000forcandidates;

Theexistingannualadvertisinglimitforpartiesof$50,000waseliminated.Aspartofthelegislativedebateovertheabovechangesto TheElections

ActandTheElectionsFinancesAct,therewascontroversyandactionon

anumberofrelated,non-statutorymatters:

AnincreaseintheexistingceilingonpartycaucusandindividualMemberoftheLegislature(MLA)advertisinginnon-electionyears;

Arequirementthatpartycaucusesfileannualreportsforthefinancialallowancestheyreceiveforresearchandotheractivities;and

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Theadoptionofguidelines,approvedonaconsensusbasisintheLegislativeAssemblyManagementCommittee,respectingaprohibition

ontheuseofcaucusandMLAallowancesfornarrowlypartisan

communicationspurposes.

This historicaloverview of thechanges toManitobaselection laws hasnecessarily been

selective.MoredetailedinformationcanbefoundonthewebsiteforElectionsManitobaat

www.elections.mb.ca.WhileElectionsManitobaisthesourceformostoftheinformation

presented above, I hasten to add that it is not responsible for the selection of the

developments highlighted or for any interpretation of the significance of those

developments.

Insummary,between1870and2008,Manitobamoved towards recognitionof thepivotal

role ofpoliticalpartiesin the developmentandconsolidation ofdemocracy.Therewas a

cleartrendtowardrecognitionthatpartieswerebothprivate,voluntaryassociations,aswell

aspublicinstitutionsthatservedsociety.Inresponsetochangingconceptsofdemocratic

participationandto fearsof corruptiontherewasaslowbutsteadytrendtowardsgreater

regulationofcertainactivitiesofpoliticalparties.

Anothertrendwastheprovisionof variousformsof financialandnon-financialsupport to

politicalparties inboth theircampaignandnon-campaignactivities, includingsupportfor

theirrolesinthelegislativeprocessthroughmechanismssuchasacabinetlevelsalaryto

the leader of theofficial opposition, allowances toMLAs to runconstituency officesand

funds forcaucusresearch bureaus. The result today is thatManitoba, likemanywesterndemocracies,hasamixedpublicandprivatesystemforoperating,regulating,financingand

supportingpoliticalparties.

Among thedeclared aims of the reformsadoptedover theyearswere: increasedcitizen

participation,fairness,integrity,transparencyandaccountability.AttimesManitobaled,and

on other occasions followed, other Canadian and non-Canadian political systems in

adoptingreformsintendedtostrengthendemocracy.

By2008,Manitobassystemforregulatingandsupportingpoliticalpartieshadallormostof

thecomponentsfoundatthenationallevelandinmanyotherprovinces.Ingeneralterms

themaincomponentsare:

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Spendinglimitsforpartiesandcandidates,includinglimitsonadvertisingforpartiesandcandidates;

Annualcontributionlimitswhichplaceaceilingondonationstoparties,candidates,constituencyassociationsandleadershipcontestantsand

allowonlyindividualsresidentintheprovincetocontribute;

Transparencybasedonpublicreportingofthenamesofallcontributorsover$250.00,includingtoleadershipcontestants,andpublicreportingon

party,candidate,constituencyassociationsandleadershipcontestant

expenses;

Publicfundingintheformofapoliticalcontributiontaxcredit(onaslidingscalebasedontheamount),electionexpensereimbursementsforparties

andcandidates(basedonmeetingalowminimumthresholdofvotes

obtained),auditsubsidiesandannualallowancespaidtoregisteredpoliticalparties(detailstobefoundbelow).

Acommissionerofelectionsexiststoinvestigateoffencesunder TheElectionsActandTheElectionsFinancesAct.

TheregisteredpartieshavealsoagreedtoabidebyaSharedCodeofEthicalConduct,whichwasdevelopedonaconsensusbasiswiththe

assistanceofElectionsManitobaandinvolvesself-regulationbyeachparty.

In most instances, the components in this framework of laws, related regulations and

administrative policies have been developed and adopted on the basis of all-party

consultationsandthesearchforconsensus.Somechangeshavebeenmorecontroversial

than others and governments of different partisan backgrounds have at times found it

necessarytoactwithoutall-partyagreement.Thisbringsustooriginsofthecurrentprocess

to design and implement a new allowance program of financial support to Manitobas

registeredpoliticalparties.

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The Appointment and Mandate of the Allowance Commissioner

Thecurrentprocesstoestablishanewprogramofpartyallowancesaroseoutacontroversy

whichtookplaceinsidetheManitobaLegislatureandwithinManitobasocietyatlargeover

the2001banondonationstopoliticalpartiesandcandidatesbycorporations,tradeunions

andnon-profitorganizationsandthesubsequentintroductionin2008ofannualallowances

tobepaidtoregisteredparties.

This is not the place to review that controversy in detail. In this instance, there was a

principledpublicpolicydisagreement betweenthe governingpartyandofficial opposition

thatcouldnotberesolvedthroughlegislativedebateandinter-partynegotiations.Thebills

creating thebanonorganizationalcontributions topartiesandsubstitutingallowancesas

partial compensation for money lost by the parties as a result of the ban were both

introducedbyNewDemocraticPartygovernments.Astheofficialopposition,theProgressive

Conservatives voted against the bills andrefused toaccept the allowances.After internal

debate the New Democratic Party also declined the allowances. The result was that

between2009and2011,theonlyeligiblepartiestoaccepttheallowancesweretheLiberal

Party of Manitoba, the Green Party of Manitoba and the Communist Party of Canada -

Manitoba.

Underthepreviousprogram,theamountoftheallowancepayabletoaparticularpartywas

basedonthenumberofvotesobtainedbythatpartyinthemostrecentgeneralelection,up

to an annual ceiling of $250,000.00 or the total annual administrative expenses incurred,

whicheverwasthe smalleramount. Therewasalso provision foraminimumpaymentof

$10,000whenapartyelectedatleastonemembertotheLegislature.Finally,apartythat

failedtoelectamember,regardlessofhowfewvotesitobtained,wasentitledtoaminimum

paymentof$600.Table1presentstheallowanceentitlementsunderthepreviousallowance

programwhichwerebasedontheresultsofthe2007generalelection.

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Table 1:

Annual Allowance Payments Based on Valid Votes Received in the 2007 General Election

Political

Party

Total Valid

Votes Cast

Valid Votes

Received

by Party

Percent of

Total Valid

Votes

Rate Amount per

Valid Vote

Allowance

Amount

NDP 418,390 200,834 48.00% $1.25 $251,042.50 $250,000.00

PC 418,390 158,511 37.89% $1.25 $198,138.75 $198,138.75

Liberal 418,390 51,857 12.39% $1.25 $64,821.25 $64,821.25

Green 418,390 5,586 1.34% $1.25 $6,982.50 $6,982.50

CPC 418,390 367 0.09% $1.25 $458.75 $600.00

Total 418,390 417,155 $521,443.75 $520,542.50

Becausethegoverningpartyandofficialoppositionpartyrefused allowances, thecostto

thepublictreasuryofthepreviousprogramwasmuchlessthanoriginallyforecast.Thecost

ofthatprogramwasdeterminedbyanumberoffactors:thetotalnumberofvotesthatwere

cast,thedocumentedadministrativeexpensesthatwereincurredbytheparties,thenumber

ofpartieswhichelectedoneormoreMLAsandqualifiedforupto$10,000,andthenumber

of parties which elected no members but qualified for a minimum allowance of $600.Furthercommentsonthepreviousallowanceprogramarepresentedlaterinthisreport.

The experience since 2008 with the previous allowance program led the current

GovernmentofManitobatoincludeinBill33,introducedintheLegislatureonMay17,2012,

asectiondealingwiththeappointmentofanindependentallowancecommissionerwhois

grantedtheauthoritytodesignanewprogramofpartyallowances.TheBillreceivedRoyal

AssentonJune14,2012.

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However,notallsectionsoftheBillwereproclaimedatthetime.Part11,dealingwiththe

appointmentandworkof theallowancecommissioner,came into forceonJune14,2012.

AppendixAcontainsacopyofPart11ofthenewElectionFinancingAct.(Boththeformer

ElectionsFinancesActandPart11ofTheElectionFinancingActarecurrentlyinforceand

referencestothetwodifferentpiecesoflegislation,whileconfusing,isintentional).AccordingtoSection80(2)ofTheElectionFinancingActthegovernmentistoappointanindividualto

serveasallowancecommissioneronlyafterconsultationwiththeleadersoftheregistered

politicalparties.

On September 14, 2012 the Government of Manitoba announced that it had selected

Professor William Neville as the provinces first allowance commissioner. Subsequently

ProfessorNevillewasforcedtowithdrawfromtheroleforpersonalreasons.OnNovember

15,2012ProfessorPaulThomaswasappointedashisreplacement.

The Act provides that the commissioner must submit his report to the Speaker of the

LegislativeAssemblywithinthreemonthsofthedateofhisappointment,whichmeansthatit

isdueon February15,2013. There isprovision intheAct thattheSpeakermaygrant an

extensionifthecommissionerrequestsextratimetocompletehiswork.TheSpeakermust

tablethereportintheManitobaLegislativeAssemblyonanyofthefirst15daysonwhichthe

AssemblyissittingaftertheSpeakerreceivesthereport.

Without delay after submitting his report, the commissioner must make regulations to

implementhisreport.Theregulationsofthecommissionercomeintoeffectretroactivelyto

January1,2012.

Itiscriticaltonotethatthedecisionsoftheallowancecommissionerarefinal.Theyarenot

subjecttoreviewandmodificationbythegovernmentortheLegislativeAssembly.

AccordingtoSection81oftheAct,thecommissionerisgivenauthoritytodecideanumber

ofmattersrelatedtothedesignofareplacementprogramofpartyallowances.Itisimportant

to note, however, that the Commissioner is not free to settle the policy disagreement

between the governingpartyandthe official oppositionpartyover whetheror not annual

allowancesshouldbepaid.Theprinciplethattherewillbeallowanceshasbeenestablished

intheAct.Thismeansthatthecommissionerisrestrictedonlytosuchissuesasthetotal

amounttobepaid,whattypesofpartyactivitieswillbesupportedbytheallowanceprogram,

how the available funds will be divided among the eligible political parties and what

accountabilityrequirementswillbeattachedtothereceiptofallowances

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InmorespecifictermsSection81(1) statesthat:Theallowancecommissionermustdecide

thefollowing:

theamountstobepaidtoregisteredpartiesasanallowance,orhowthoseamountsaretobedetermined,

whentheallowanceistobepaid,andwhetheritistobepaidonceeachyearorininstallments,

whethertheallowanceistobeadjustedforchangesinthecostoflivingorforanyotherreasonand,ifso,whenandhow,

anyrelatedmattertheallowancecommissionerconsidersnecessaryordesirable.

Thelastclausegrantsthecommissionerconsiderablelatitudeanddiscretionindetermining

arangeofpotentialcomponentsofanewallowanceprogram.

Section 81(2) states that: In deciding the amounts of an allowance, the allowance

commissionermayconsideranyfactorsthecommissionerconsidersrelevant ,includingthe

following:

theexpensesthatpartiesincurforadministrativeandoperatingcosts(otherthanforadvertisingandpolling),includingthecostsofcomplying

withthisAct,

howmuchpublicsupportaregisteredpartyhas,asdeterminedbythenumberofvotesthepartyreceivedinthelastgeneralelection,the

numberofseatsheld,thenumberofcandidatesendorsedinthelast

generalelection,oranyotherfactororcombinationoffactorsthe

commissionerconsidersappropriate.

The clause is clearly permissive and grants the commissioner significant flexibility in

determining the factors to be considered when designing the allowance program. The

clausereadsthathemay-notshall-considerthetwofactorsmentionedexplicitlyandmay

consideranyotherfactororcombinationoffactorsthathedeemstoberelevant.

Similarly,Section81(3)oftheActispermissive(ratherthanprescriptive)inallowing,butnot

requiring, the Commissioner to consult with interested individuals and groups before

makinghisdecision.

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The Approach Followed by the Allowance Commissioner

AsManitobasfirstallowancecommissioner-andthefirstsuchpositiontobecreatedinthe

country - Iwas conscious of theneed toadopt anapproach that was clear, transparent,

principled, based on evidence and open to participation by interested individuals and

organizations.Thefactthatthecommissionerisgrantedauthoritytomakeactualdecisions

as opposed to simply presenting recommendations for action reinforces the need for a

sound, fair,open andaccountable process. Thecommissionersdecisionswillinvolvethe

expenditureofpublicfundsandtheregulationofthebehaviourofpoliticalparties,matters

which have already proven to be contentious. This is another reason for a careful and

balancedapproach.

Whileacceptingthatthereareboundtobecriticismsofmyfinaldecisions,Ihavesoughtto

obtainasmuchrelevantinformation,knowledgeandopinionthatitwaspossibletogather

over the course of a relatively short three month assignment. The Act provides for the

appointmentofanothercommissionerafterthenextgeneralelection(whichwilltakeplace

inOctober2015orApril2016)andthatindividualwillhavetheopportunitytoreviewboththe

processandtheproductofmywork.

MyfirststepwastoenlistthesupportofMr.LorneGibson,formerChiefElectoralOfficerin

AlbertaandbeforethatDeputyChiefElectoralOfficerinManitoba.Mr.Gibsonbringsbotha

strongacademicbackgroundaswellasdetailedknowledgeofthepracticalitiesofelectoral

lawbasedupondecadesofworkinginthefield.HiringMr.Gibsontoassistmeintermsof

logisticsandresearchdidnot addsignificantly to thecostof thestudybecause itmeant

fewerpaidhoursforthecommissioner.Moreimportantlyheaddeddepthofknowledgeand

contactsinthefieldthatprovedtobeinvaluableinhelpingthecommissionertounderstand

theissues,thepotentialoptionsavailableandthechallengesofimplementingthedecisions

containedinthisreport.

ThesecondstepwastomeetwithFredBryans,theExecutiveDirectorofAdministrationof

theManitoba Legislative Assembly, and Deborah Campbell, the Director of Finance and

AdministrationoftheManitobaLegislativeAssembly,todiscussaworkplanandbudgetfor

theallowancecommissioner,aswellasthelogisticsforcreatingadvertisingandawebsitefor the process of consulting Manitobans. The office of the Executive Director had the

experience of assisting on several occasions the work of the independent commissioner

whosetsalaries,benefitsandretirementbenefitsforMLAs,sotheadviceprovidedwasvery

practicalandhelpful.

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Thethirdstepwastoconductanhour-longinterviewwithMr.MichaelD.Werierwhohad

served on two occasions as the commissioner on salaries, allowances and retirement

benefits forMLAs, a task somewhat similar to thepresentassignment. BothMr.Weriers

report(September,2012)andhisadviceprovidedintheinterviewwasthoughtfulandvery

helpfulintermsofthelogisticsofconductingsuchastudyandidentifyingfactorswhichmight be relevant to determining the amounts ofpublic money to be spentonpolitical

parties.

ThefourthstepwastomeetwithElectionsManitobainthepersonsofShipraVerma,Deputy

ChiefElectoralOfficerandTracyNylen,ManagerofElectionsFinances. These individuals

offeredprofessionalsupportforthisstudybasedonyearsofexperienceadministering The

ElectionsActandTheElectionsFinancesAct.Theyprovidedthecommissionerwithfactual

backgroundinformationontheelectionlawpracticeswithinManitobaandotherCanadian

jurisdictions. The commissioner also made extensive use of the data on party financing,

including data on the previous allowance program, which can be found on Elections

Manitobaswebsite.Thisdataiscitedatseveralpointsthroughoutthereport.Theaccuracy

and interpretationof the material obtained throughElections Manitoba is, of course, the

responsibilityofthecommissioner.

Thefifthstepwastodesignanewspaperadvertisementinvitinginterestedindividualsand

organizations to submit their views on the design of a new party allowance program.

BeginningDecember 8,2012advertisements appeared in the followingdaily andweekly

newspapersandpublications:

WinnipegFreePress BrandonSun WinnipegSun MetroNews FirstPerspectiveWebsite PortageDailyGraphic SwanRiverStar&Times LaLiberte

CanstarWeeklies ThompsonCitizen FlinFlonReminder ThePasOpasquiaTimes SteinbachCarillonNews ThompsonNickelBeltNews GrassrootsNews SnowLakeUndergroundPress

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The advertisement drew to the attention of readers a website for the allowance

commissioner (www.allowancecommissionermb.ca) where thelegislation establishing the

positionandtheroleofthecommissionerwerepresented.

Thewebsitealsosolicited inputfromManitobans.Tofocusandguidesuchsubmissionsa

series of questions were posed, including an open ended invitation to provide any

informationandopinionsthatindividualsandorganizationsdeemedrelevanttotheworkof

thecommissioner. Thewebsiteoffered theopportunity for visitors to complete an online

survey.ResultsofthatsurveycanbefoundinAppendixBofthisreport.

Asa sixth step, on November24, 2012, the commissionerwrote to the leaders ofall the

registered political parties asking if they would like to meet with him to receive an

explanationofhowhewasapproachinghismandateandtoreceiveanyinput theywould

caretoprovide.

Theywerealsoaskedtodesignateanyotherpartyofficialsthatthecommissionershould

contacttoreceiveadditionalinformationandadvice.Thisinvitationresultedinface-to-face,

confidential meetings with representatives of three political parties - theGreen Party, the

LiberalPartyofManitobaandtheNewDemocraticParty -allofwhomalsomadewritten

submissionstothecommissioner.TheCommunistPartyofCanadaManitobaalsomadea

writtensubmission.

As a seventh step, the commissioner spoke with four individuals who had specialized

knowledgeofpartyfinancingissuesbasedonpastinvolvementwithaparty,havingmade

submissionsonthetopictoothercommitteesoracademicstudyoftheissues.

Aeighthstepwastoconductresearchon thearrangementsforpartyfinancinginCanada

andinothercountries,withaparticularfocusonthetypesofallowancesorsubsidiespaidto

politicalparties.Fortunatelythecommissionerhadconductedpreviousresearchonthetopic

sothatreducedtheamountofworkandtimeinvolved.Attherequestofthecommissioner,

Mr.LorneGibsonpreparedacomparativesummaryofthemainfeaturesoftheallowance

programs at the national level and in the five Canadian provinceswhere such programs

exist.ThiscomparativesummarycanbefoundinAppendixCofthereport.

Astheabovedescriptionoftheworkplanmakesclear,thecommissionerhadvaluablehelp

intermsofadviceandsupporttocompletehisreportwithinthethree-monthdeadlinehe

wasgiven.

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Hewishes to thank sincerely the interestedManitobans who replied to his invitation for

input.Hewantstothanktherepresentativesofthepoliticalpartieswhoagreedtomeetwith

himand toprovidecandidinsightsintothe operationsand financingoftheirpartyaffairs.

ThepublicofficialsworkingforElectionsManitoba,theManitobaLegislativeAssemblyand

in the election agencies in the other jurisdictionsapproachedby thecommissionerweremostresponsiveandhelpfultoourrequestsforinformationandsupport.Mr.LorneGibson

provided superb research and logistical support, and most importantly provided crucial

adviceandacriticalreviewofthereportasitwasbeingdrafted.Theaccuracyandqualityof

thereportwereenhancedbyalltheseformsofassistance.Ofcourse,anyerrors,omissions

ormisjudgmentsaretheresponsibilityofthecommissioner.

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The Principles and Criteria Underlying Allowances

A number of principles and criteria underlie and have shaped the design of the allowance

program.Thesedesignprinciplesandcriteriaaredescribedhereandlaterinthisreporttheyare

linkedtothemoreconcrete,detailedcomponentsofthenewallowanceprogram.Thefollowing

principlesandcriteriashouldbereflectedandreinforcedbythenewallowanceprogram:

Clarity-Therationaleforsettingthetotalcostoftheallowanceprogramandtheformulaforallocatingallowancesamongtheregisteredpolitical

partieswhichqualifyforfinancialsupportshouldbeasunambiguousand

easilyunderstoodaspossible.

Targeted-Allowancesshouldbetargetedtoprovidepublicfinancialsupportonlyfordesignatedactivitiesbyeligibleregisteredpoliticalparties.

Thefocusofpublicfundingshouldberestrictedtoactivitiesarisingoutof

statutoryobligationsimposedonpartiesand/ortoactivitieswhichare

strictlyoperationalandadministrativefunctionsinvolvedwithmaintaining

viablepartiesduringnon-electionyears.Activitiesdirectlyrelatedtoparty

competitionandcampaigningshouldnotbesupportedbytheallowances.

Affordability-Foranumberofreasonsallowancesshouldberelativelymodestinamount.First,governmentshavemorepressingfinancial

obligationsandthepublicinsistsonprudenceinpublicspending.Second,

modestallowanceswillreducethelikelihoodofdependencyonpublic

fundingandwillpreserveastrongincentiveforpartiestoraisemostoftheirrevenuesfromprivatesources.Third,modestallowancestargetedto

designatedadministrativepurposeswilllimittheriskofsuchfundsbeing

usedforpartisancampaign-typeactivities,suchaspollingandadvertising,

whicharespecificallyprohibitedbytheAct.Finally,limitedpublicfundingwill

havemoreacceptanceandlegitimacyintheeyesoftaxpayersandvoters.

Predictability-Anallowanceprogram,perhapswithaceilingonannualamountspayabletoeligibleregisteredparties,shouldinvolveameasure

ofbudgetarypredictabilityandsustainabilityoverthefour-yearperiod

betweenfixeddateelections.Inthiswaythegovernmentwillknowits

financialobligationswithsomecertaintyandpoliticalpartiescancounton

acertainleveloffundingtosupporttheircoreoperationaland

administrativeactivities.

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Fairness-Theallowanceprogramshouldbefairtoallregisteredpoliticalpartiesthatqualifytoreceiveallowances.Itshouldcontributetothe

capacityofallpartiestoperformeffectivelytheirfunctionsofshapingand

representingpublicopinion,aswellasperformingtheirlegislativerolesof

governmentandopposition.Fairnessinvolvesarequirementforclear,objectivecriteriatodeterminethetotalamountsspentunderthe

allowanceprogramandtodeterminetheallocationsamongtheparties.

Theformulausedtomakesuchcalculationsshouldbeflexibleenoughto

recognizethedifferenthistories,organizationalstructuresandfinancing

arrangementsforthedifferentparties.Forexample,theprincipleof

fairnessmightimplythataminimumorbaseamountofmoneyshouldbe

providedtonewerand/orsmallerpoliticalpartiessothattheallowance

systemdoesnotpreservethestatusquointermsofpartycompetitionin

theprovince.

Accountability-Politicalpartiesshouldbeheldstrictlyaccountableforthepublicmoneytheyreceiveintheformofpartyallowances.Theyshould

committobeingscrupulousandhonestintheuseofallowancesonlyfor

thedesignatedeligiblepurposes.Uptoapoint,reliancecanbeplacedon

thepartiestoexerciserestraintandself-regulationintheexpenditureof

publicmoney,butinthepresentpoliticalclimateofsuspicionthepublic

willinsistonmechanismsfortransparency,publicreportingandauditing

ofspendingundertheallowanceprogram.Also,insupportof

accountabilitytherecanbeaninsistencethatallowancesbepaidonlyfor

incurredanddemonstratedexpenses.

Enforceability-Theallowanceprogramshouldbesupportedbyclearregulationsand/oradministrativeprocedureswithidentifiedsanctionsfor

breachesofthoseaccountabilityrequirements.Theregulationsand

sanctionsshouldbeproportionatetotheabusestheyaremeantto

preventandshouldnotimposeanexcessiveregulatoryburdenon

politicalpartiesthatwouldaddtotheircompliancecosts.

Inmostinstancestheseprinciplesandvaluesarecomplementaryandmutuallyreinforcing,

butthereisthepotentialforconflictsandtheneedfortrade-offsbetweenandamongthem.

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For example, in the pursuit of fairness, an allowance program could use an allocation

formulabasedononefactor(forexample,votesobtainedatthelastgeneralelection)ora

combinationof factors (forexample,votes obtained, seats obtained, the number of party

members,theamountofmoneyraisedfromprivatesourcesetc.).Addingmorefactorsmay

increase thefairnessin termsofprovidingfinancialsupporttonew, fledglingpartiesbutacomplicated formula could reduce the clarity, understandability and predictability of the

allowanceprogram.

InmakingdecisionsonthedesignoftheallowanceprogramIhavesoughttobalanceallthe

aboveconsiderations,but there isadmittedlyan elementof subjective judgmentinvolved

with deciding how the principles/criteria will interact with one another in practice. The

fundamental challenge as I see it is how to achieve an appropriate balance between

providingessential fundingto sustainandenhancethe roleofpolitical partiesin fostering

political/policydebate, including theengagementof theirmembersand citizens in those

activities,togetherwiththeassurancethatpublicmoneyisusedforlegitimatepurposesina

transparent,accountablemanner,whilerespectingtheautonomyofthepartiesasprivate,

voluntaryassociationsoflike-mindedpeople.

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Options for Determining the Total Amount of Allowance Spending and

Allocating Money Among Registered Political Parties

Thissectionseekstoillustratethereasoningthatliesbehindthedecisionspresentedlaterin

this reportregarding thetotalspendingandthe allocationof funds thatwould take place

under the new allowance program. The list of options was generated from comparative

researchonthepartyfinancingarrangements thatexistelsewhereinCanadaandinother

westerndemocracies,onareviewofrecentdebatesoverpartyallowancesthathavetaken

placeinManitoba,ontheconfidentialadviceprovidedbyrepresentativesoftheregistered

parties in Manitoba and on input from interested organizations and individuals who

contactedthecommissioner.

Basedonthearrangementselsewhere,thereisawiderangeofpotentialoptionsforanew

allowanceprogram.Onecanlearnfromexampleselsewhere,butcaremustbetakennotto

import features from other political systems that do not fit with the size, economic and

financialrealities,historicaltraditionsandpoliticalcultureoftheprovinceofManitoba.The

commissionerisgrantedauthoritytomakefinaldecisionsand,inprinciple,doesnothaveto

considerthepoliticalacceptabilityofthenewprogram.Thatwouldbeamistake,however.

The goal is to design an allowance program that is not only sound in terms of certain

principlesandcriteria,butalsoenjoysthemaximumpoliticalacceptancebythepublicand

the political parties. This includes the requirement that any new program bepractical in

termsofunderstanding,administrationandcompliancewiththe rulesandis affordablein

financialterms.

The discussion to follow considers a number of optional approaches toprogramdesign

basedontheprinciples/criteriasetforthintheprecedingsection.Thesectionisintendedto

allowcitizensandpoliticalpartiestoseethatthedecision-makingprocesswasbasedonthe

consideration of a range of options, as well as on evidence and careful and balanced

analysisoftheprosandconsofdifferentoptions.Myhopeisthatthisanalysisaddstopublic

understanding, confidence in the process and acceptance of the decisions which the

commissionerisrequiredtomake.

Option 1

Annual allowances based on votes obtained in the most recent provincial election in

combination with a minimum payment to all registered parties and a ceiling on total

spending.Annualreportsandauditedstatementswouldberequired.

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Thisoptioncomesclosestto thepreviousallowanceprogramwhichwaseliminatedwith

thepassageoftheActunderwhichthecurrentprocessoperates.

In terms of theprinciple of clarity, this option represents relativecontinuitywith thepast

program and therefore might imply relative ease of understanding. Party officials have

learned toworkwith the former allowance program so there would less adjustment for

them in complying with a new program along the same lines. In terms of public

understanding,mostcitizensareprobablynotawareofthetechnicalitiesofpartyfinancing

andtheirknowledgeoftheaimsandmethodologyofanewprogramwouldprobablynotbe

muchgreater.However,ifcitizenstookthetimetoconsiderthisoption,Ibelievethatmostof

themwouldfinditrelativelystraightforwardintermsoftheprinciplesandpracticesinvolved.

Intermsofbeingtargeted,thepreviousprogramwassomewhatvagueandopen-endedin

termsoftheaimsandtheeligibilityofdifferenttypesofactivities/spendingbytheparties.

The new Act governing party allowances ismore explicit in terms of its aim to support

administrativeandcompliancecostsandtoprohibitmorecampaign-typeactivitiessuchas

pollingandadvertising.Areplacementprogramdesignedalongsimilarlinestotheformer

program could be more restrictive and focused in regulating the activities to which

allowancemoneycouldbeapplied.

Intermsofaffordabilityandpredictability,thetotalcostoftheprogramandthebudgetary

certaintyinvolvedwithitsoperationwouldbeaffectedbyseveralvariables:thetotalvotes

cast,theceilingplacedonallowancestoindividualpartiesorthetotalpoolofmoneyfor

which parties might compete, the actual expenses incurred by the eligible parties, theminimumpaymenttosmaller,newpartiesandwhetheranyspecialpaymentisallowedfor

apartywhichelectsasingleMLA.

Intermsoffairness,theuseofanallocationformulabasedonthevotesobtainedinthe

mostrecentgeneralelectionisseenbymanyobserverstobethemoststraightforwardand

fairwaytoallocatemoneyamongtheparties.Thefactthatthisformulaisusedinfourother

Canadianprovinceswhichhaveallowancesprogramssupports thisviewpoint.Apervote

formulasupportstheprincipleofproportionalitywhereasaperseatformula(basedonthe

simplepluralityrepresentationsystemonwhichprovincialelectionsarefought)wouldoverrewardpartiesthatwinmoreseatsbasedonnarrowvictoriesratherthanalargershareof

thepopularvoteoverall.

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Invotingforaparticularparty,citizenscouldbeseentobedirectingtheirtaxdollarstothe

partyoftheirchoice(althoughthisisprobablyinthemindofonlyasmallnumberofvoters

whentheycasttheirballots)andtheamountofeachpartysallowanceisbasedonthelevel

ofvoter supportat the timeof the lastgeneral election. It is true that between fixed-date

elections held every fouryears,popular support forparty could drop significantly,but thepartywouldcontinuetoreceiveallowancesbasedonpastlevelsofsupport.

Providingpublicmoneyonlyforidentifiableadministrativeandstatutorycompliancecostsof

political parties might also be fairer to taxpayers because they are not being asked to

supportwith theirtaxdollarsthecostsofmorestrictlypartisanactivitiesof politicalparties

whichtheydonotsupport.

Intermsofenforceabilityandaccountability,anewprogramwhichwasmoretargetedinits

purposes anddesignated certain activitiesas ineligible for reimbursementwould present

fewerproblemsthanthepreviousprogramwhichwasgeneralinpurposeandminimalinits

reporting requirements. The newAct presupposes a distinction betweenparty expenses,

which arestrictly administrativeandstatutory in purpose,and those expenses which are

clearlypoliticalandcampaignrelatedinpurpose.Theprohibitionontheuseofallowances

forpollingandadvertisingsuggeststhatcampaignrelatedactivitiesshouldnotbefinanced

with taxpayer dollars. Regulations to implement the Act would have to make these

distinctionsasclearaspossible.Therewouldbea requirementtomakepubliclyavailable

(includingOnline)anannualreportdocumentingtheuseoftheallowancemoney,including

anauditedfinancialstatementinwhichtheauditorconfirmsthatpartyspendinghasbeenin

linewiththeobligationsofreceivingthemoney

Itshouldalsobenotedthattheuseofaper-voteformulacreatesanadditionalincentivefor

the political parties to connect with more voters and to gain their votes, which might

indirectlycontributetohigherturnoutsingeneralelections.

Option 2

Allowancesmight bepaidon the basis of the averageper-capita vote obtainedby each

political party over the two previous general elections (rather than just one election) in

combinationwithaceilingon totalpayments andaminimumpayment tosmallerand/or

newer parties. The allowances could be targeted to support only documented incurred

expenses by parties to support non-campaign activities. Annual reports and audited

statementswouldberequired.

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Intermsofclarityandtargetingthisoptionwouldbeclosetothefirst,withthedifferencethat

aformulabasedonanaveragevoteobtainedintheprevioustwogeneralelectionswould

probablybelesseasilyunderstoodbythegeneralpublic.Restrictinguseoftheallowances

to non-campaign periods and to non-campaign activities would help to promote public

understandingandacceptance.

Intermsoffairness,apervoteallowancebasedontwoelectionswouldrepresentabetter

indication of long-term voter support for a party than a single election whichmight be

dominatedbyasingleissueorothercircumstancesthatmightproducewidefluctuationsin

thehistoricalshareofthevotescapturedbydifferentparties.Undertherulesforfixeddate

elections,employingaslidingaverageofvotesobtainedoverthetwomostrecentgeneral

electionswouldpotentiallycreateaconcernthatapartymightfalloutoffavourwithvoters,

butitwouldcontinuetohaveitsallowancepaymentsbasedinpartonvotesobtainedgoing

as far backaseight years earlier. Aminimumallowance for new, smaller partieswould

allow them topresent their views and build theirmemberships, but the requirement for

multi-electionsuccesswouldencouragethemtobroadentheirappealtomorecitizens.

In terms of affordability and predictability, the combination of a ceiling with the use of

multiple election results would cap spending and smooth out the allowances paid to

differentpartiesprovided they remainedcompetitive.Since2008Manitobaelectionshave

been scheduled on fixed dates - once every four years unless there are exceptional

circumstances-whichwouldmeanthatallowanceswouldnormallyreflectpartyfortunes

overaneight-yearperiod. A two-electionaverageapproachwouldprotectparties froma

poorelectionshowingwhichsawtheirvotesharedropprecipitously.

In termsof enforceability and accountability, this programwould be targeted like the first

optiontosupportonlynon-campaignactivitiesandtheprohibitionon theuseofsuchfunds

forpollingandadvertisingwouldbeenforced.Similartothefirstoption,Onlineannualreports,

includingauditedfinancialstatements,ontheuseoftheallowanceswouldberequired.

Option 3

Anallowanceprogrammightbebasedonthenumberofvotesobtainedbyagivenpartyin

combinationwiththenumberofcandidatesthepartyelectstotheLegislativeAssemblyin

themostrecentgeneralelection.AminimumallowancetoanypartyelectingoneMLAand

aceilingon totalamountof allowancesto bepaidcouldbepart ofthe program. Annual

reportsandauditedstatementswouldberequired.

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In termsof clarity andtargeting, therewouldbe limited differencesbetween thisprogram

andthetwooptionsdescribedabove.Combiningvotesandseatstosetallowanceamounts

mightbesomewhatconfusingtovoterswhoareusedtoseeingtherolesofgovernmentand

opposition decided on the basis of seats won rather than share of the popular vote. Of

course,thepreviousallowanceprogramusedmainlyvotestodetermineallowances,withaspecial payment made to a party electing at least one candidate, so that a combined

allocationformulawouldnotbeunprecedented.

Dependingupontheweightassignedtothetwocomponentsofseatsandvotes,thisoption

mightproducegreateruncertaintyandmoredrasticfluctuations intheallowancespaidto

different parties. Conceivably, this might happen when a single election resulted in a

lopsidedvictoryforparticularpartyintermsofcandidateselectedbecausethepartyforming

governmentwonallormost of the close three or four-waycontests. In this instance, the

winningpartycouldtherebyobtainamuchlargerallowancethanthepartywhichmayhave

comeaclosesecondinthepopularvote.

Intermsoffairness,thisoptionwouldcombinethesimplepluralityprinciple(alsoknownas

thefirst-past-the-postprinciple)bywhichvotesaretransformedintoseatsintheLegislative

Assemblywith theproportionalityprinciple(used inelectoralsystemswhichare basedon

some form ofproportional representation)which allocates seats on thebasisof a partys

shareofthepopularvote.Usingthenumberofcandidateselectedtodetermineinpartthe

allowanceswould recognize that the roles of government and opposition are effectively

decidedbythenumberofseatspartiesobtainintheLegislativeAssembly.

However,thesimplepluralitysystemoftenexaggeratestheextentofthepopularsupportfor

thegoverningparty.Thereforeitmightbefairertoprovidethatapartysshareofthepopular

votewouldalsobeafactorinallocatingallowancemoney.Therelativeweightassignedto

seats versus votes in the calculation of allowances could be 50/50 or some other

combinationsuchas70%percentforvotesand30%forseats.

Somepeoplewouldarguethatoursystemallocatesauthorityandcontroloverresourceson

thebasisof election victoryand that partieswhich fail to elect at least fourMLAsdo not

qualify in the Legislative Assembly for recognition under the Standing Orders and forallowancesforcaucusresearchfunding.Theywouldarguethatsimilarlypartieswhichfailto

electasinglecandidateshouldnotqualifytoreceivepartyallowances.

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Ontheotherhand,basingallowancessolelyonseatsintheLegislativeAssemblycouldbe

seenasunfairbecauseitwouldreinforcethestatusquoofthepartysystembypresenting

anotherobstaclefornewparties,perhapsofferinginnovativepolicyideas,whoareseeking

todeveloptheirmembershipsandtoreachvoters.

In terms of affordability and enforceability, a combinedprogram could include a cap or

ceiling on total expenditures. There might be somewhat more confusing calculations

involvedwithdeterminingtheentitlementsofthevariousparties.Thedesignationofeligible

activities and the requirement for annual reports and audited financial statements of

expensesoneligibleactivitiescouldbepartoftheprogram.

Option 4

Allowances might be paid on the basis of party membership and activities related to

servicingmembersand developing party programs. To qualify for anallowance, a partywouldbe required tohaveaminimumnumberofmembersona referencedate (perhaps

January1 of a given year).Qualifyingmemberswould be those individualswho paida

membership fee and who are entitled to vote at party meetings, including leadership

contests andpolicyconventions.Allowancescouldbeusedonly fordesignatedactivities

relatedtostatutoryobligationsimposedonpartiesandtomaintenanceofcontactwithand

involvementofmembersbetweencampaignperiodswhentraditionallysuchactivitytends

todecline.Annualreportsandauditedstatementswouldberequired.

Intermsofclarity,thisoptionwouldbemorefocusedinitsaimsbymakingmembership

developmentandtheongoinginvolvementofmembersinpartyaffairstheprimarypurpose

oftheallowances.ThemembershipnumbersforManitobapartieshavefluctuatedovertime

inresponsetoshorttermevents.

However,atanypointintimeonlyarelativelysmallnumberofManitobans(probablyless

than5 %ofthe population) belong to a political party and anevensmallernumberare

actuallyactiveinthepartyonanongoingbasis,especiallybetweenelections.Membership

feeshavetraditionallybeenkeptlowsoastoencouragemembership.Thesefactsmean

that partieshave notbeen able to finance their activities innon-electionyearsbasedon

membershipfeesalone.

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The allowances would be targeted to such activities as the recruitment of members,

maintaining communication with members, providing support to constituency level

associations, involvingmembers in party activities such aspolicydevelopment, providing

supporttothepartypresidentandotherpartyexecutivesanddevelopingtheknowledgeand

skillsofmemberstosupporttheirroleinthepoliticalprocess.

An allowance program based on membership numbers might encourage parties to

experimentmoreoftenwithnewapproachestoengagingManitobans.Onepossibilitymight

beforthepartiestouse theInternettocreatea registeredsupportercategoryofmembers

whoforamodestfee(perhaps$10.00)couldsubscribeOnlinetobecomeasupporterofthe

party. Existing members could also register as online supporters. Money raised in this

mannercouldbematchedbyallowancemoney.

Thefairnessofamembership-basedallowanceprogramwoulddependonanacceptance

of the idea that parties aremeant tobemore than vote gathering, electionvehicles, but

should also be seen as one way, and perhaps themainway, that citizenscan become

directlyinvolvedinthepoliticalprocessonacontinuingbasis.Thisideaiswidelyacceptedin

Europe where the Netherlands pays public grants to parties to boost membership

involvementandseveral othercountriesprovidegrantsto sustainparty research institutes

and to support policy conventions. In the United Kingdom there is a pool of money

administeredby anelectoral commissionandparties canapply forgrants tobe used for

policydevelopment.InCanada,theRoyalCommissiononElectoralReform,whichreported

in1991,proposedsomethingsimilarfornationalpolitics,buttheconceptwasnotadopted

bygovernment.Amembership-basedapproachwouldrepresentafairlydrasticchangefor

Manitoba.

In terms of enforceability andaccountability basingallowance amounts onmembership/

supporternumberscouldcreateissuesofenforcementandcompliance.If thereis a rich

formulaformatchingallowancepayments tomembersandsupporters, politicalpartiesor

individual contestants in leadership campaigns within parties (a period when party

membershipcandoubleortripleinsizerapidly)mightbetemptedtobuymembershipsfor

individuals. It would be fairly easy to identify activities related to the recruitment and

engagementofmembersinnon-campaignactivities,sothiswouldnotposemajorproblems

forenforcement.Annualreportsandannualauditedfinancialstatementscouldensurethat

theallowancefundswerespenttosupporttheaimsoftheprogram.

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Option 5

Anallowanceprogramcouldbebasedonaprescribedsetofgoods,servicesandactivities

deemedtobecoreoperationalrequirementsformaintainingpartiesbetweenelections.The

allowanceswould be seenasa small sustaininggrant,not intended tocover anywhere

closetothefullcostsofannualpartyoperationsinnon-electionyears.Ifthepurposeofthe

allowance is to cover costs associated with statutory obligations and other essential

operatingexpenditures, the sameamountcouldbepaid toallregistered parties tocover

documentedincurredexpenses.

In terms of clarity, this option would target directly and explicitly the administrative and

compliancecoststhatarementionedinTheElectionFinancingAct.Therewouldbelimited

ornoopportunitytodivertallowancemoneytocampaignactivities.

Intermsofaffordabilityandpredictability,theamountsoftheallowanceswouldbebasedonacertainpercentageofabasketofgoodsandservices.Thecostofthebasketcouldbeindexed

toannualchangesintheConsumerPriceIndexoritcouldbeadjustedbythenewallowance

commissionerappointedfollowingeachgeneralelectionnormallyheldonafour-yearcycle.

Intermsoffairness,thefocusof theallowancesoncoreoperationalrequirements thatall

partiesmustmeettobeviableandthemodestamountoftheallowanceswouldmeanthat

nopartyisputatacompetitivedisadvantageintermsofthistypeofpublicfunding.Onthe

otherhand,thesmallsizeoftheallowancewouldpreserveanincentiveforpartiestoraise

moneyfromprivatesourcesinordertosustaintheiroperationsinnon-electionyears.

Intermsofenforceabilityandaccountability,thelistofeligibleitemsofexpenditurewouldbe

spelledoutintheregulationsusedtoimplementtheallowanceprogram.Thereisalreadya

precedentinthepracticesusedbyElectionsManitobatodistinguishbetweenelectionand

non-electionexpensesand,inrelationtothelatter;theexpenditurecategoriesforoperating

apermanentoffice.(Seeafurtherdiscussioninthenextsectionofthisreport.)

In termsof thewider concernto ensure themaximum possible acceptability of the new

allowanceprogram,thepoliticalpartiesmightregardthisoptionastoointrusiveintotheir

internalaffairsbecause itwouldprescribein somedetailhow theyorganize their internaloperationsandhowtheyspendtheirallowancemoney.Adetailedlistapproachmighthave

the additional drawback that the list of approved expenditure items might have to be

updatedregularly,especiallyintermsoftheacquisitionofnewtechnologytocarryoutparty

activities.

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A more flexible, less detailed regulatory approach would avoid the need to update

regulations frequently to take account of new technologies and practices. It would also

recognizethedifferencesamongthepartiesintermsoftheirsize,organizationalstructures,

degreeofprofessionalismandthecapacitytocomplywithregulatoryrequirements.

Alatersectionofthisreportendorsesaphilosophyofregulatoryreasonablenessbasedon

theprincipleof trust,butverify;inotherwordsavoidbeingoverlyprescriptiveanddetailed

andinsteadplacesomeconditionalfaithinthecommitmentofthepartiestocomplywiththe

law,inpartbecauseofthepotentialfordisclosureandsanctionsshouldtherulesbebroken.

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Costs of an Allowance Program to the Public Treasury

A keypointin theabovediscussionofoptionsis the principle that allowances shouldbe

modest and affordable. This principle is based on recognition of the current climate of

austerityingovernmentandonthedesirabilityofmaintaininganincentiveforpartiestoraise

fundsmainlyfromindividualManitobansasopposedtobecomingdependentonthepublic

treasuryastheprincipalsourceoftheirrevenues.Simplydeclaringthatallowancesshould

bemodestandaffordable,however,begsthequestionofwhatthismeansinpracticalterms.

Anumberofpossibleanswerstothatquestionarediscussedinthissection.

I begin ananswer by observing that the cost of allowances should not beexamined in

isolation from the otherdirectand indirect formsoftaxpayer financial supportprovided to

Manitobaspoliticalparties.

Theotherformsincludepoliticalcontributiontaxcredits(whichdirectlybenefitdonorsintermsof reduced taxes payable and thereby result in a loss of revenue for government), the

reimbursementinpublicfundsof50%ofeligiblepartyandcandidateexpenses(iftheyreach

the threshold of10% of the vote), the provision ofa subsidy for the preparation ofaudited

financial statements and, outside of the election process, the expenditures made by the

LegislativeAssembly tosupportpartiesand individualMLAsin their roles as thegoverning

party,theofficialoppositionandasindividualrepresentativesofManitobas57constituencies.

Recognitionofthesedifferentformsoffinancialsupportraisesaseriesofphilosophicaland

practicalquestions concerninghowmuch in total taxpayersshouldbeasked to invest inpartieswiththeintentiontosupportandenhanceavibrantandhonestdemocraticprocess.

How much money do parties need to be effective in performing their campaign and

legislativeroles?What is the appropriate balancebetween private andpublic funding for

parties in electionandnon-electionyears?What is thepotential harm to the democratic

processifthereisreliancemainlyorexclusivelyonprivatemoney?Isthereadangerthat

parties can become so preoccupied with fund raising that other crucial activities, like

engaging their members and developing policy ideas, are neglected or receive limited

attention?Howdo weensure that theprohibitions imposed on the freedomofparties to

raisemoney from organizations and the limits on the right of individuals to contribute to

parties/candidatesisproportionatetotherisksandtheharmsthatmightresult?

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Iflawsrestrictwhocancontributetopartiesandtheamountsthatcanbecontributed,isit

necessaryandappropriateforthepublictreasurytomakeupanyshortfallinpartyrevenues

that might result? For the public money which flows to parties, how do we determine

whethertaxpayersarereceivingvaluefortheirscarcetaxdollars?

Thesearefundamental,philosophicalquestionsrelatedtothefinancingofpoliticalparties

aboutwhichthereareboundtobedisagreements.Also,unfortunately,empiricalevidence

to inform judgments about these issues is in short supply and is open to varying

interpretations.

Itisnotthemandateofthecommissionertomakedecisionsontheoverallsystemofparty

financing in Manitoba, including whether or not parties have enough money from all

sources to be effective in their roles within the democratic process. While I have the

discretion to consider a wide range of factors, my actual decision-making authority is

restrictedtotheissueofpartyallowances.

Theanalysis in this sectiondemonstrates the options, evidence and analysis that I have

usedtomakemydecisionsabouthowmuchmoneyintotalshouldbemadeavailableto

registeredpoliticalpartiesthroughthenewallowanceprogram.

Option One - Administrative and Compliance Costs

Themostobviousstartingpointforconsideringthetotalamounttobespentonallowances

aretheaimsstatedinTheElectionFinancingActwhichcreatedthepositionofallowance

commissioner.TheActstatesthattheallowancesaremeant toassistparties indefraying

theiradministrativeandcertainoperatingexpenses. TheElectionFinancingActdoesnot

state or imply that allowances should cover all such expenses, if anything the wording

indicatesthattheallowancesaremeanttoprovidepartialcompensationforadministrative

andoperating expenses, including the costs associatedwith compliance toTheElection

FinancingActandotherstatutes.

Itshouldalsobenotedthattheaimsoftheformerallowanceprogramwererathergeneral

innature, restrictedsimply to defraying expenses.There was no reference to the use of

allowancesforparticularpurposessuchasengagingpartymembersordevelopingpolicyideas.

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ThewordingofthenewElectionFinancingActraisesthequestionofwhatsortsofexpenses

qualifyasadministrativeandoperating.UndertheAct,pollingandadvertisingexpensesare

explicitly excluded as eligible expenses, presumably on the grounds that such spending

usuallyhasanexplicitlypartisanpoliticalpurpose.Asdiscussedbelow,theremaybeother

inherently partisan forms of spending that are not strictly related to the daily, coreadministrativeandoperationalactivitiesof thepartiesand thereforeshouldnot beeligible

undertheallowanceprogram.

Excluding such partisan activities still leaves gray areas and room for debate over what

constitutesadministrativeandoperatingactivitieswhichwouldqualifyforallowancemoney.A

pragmaticapproachtoresolvingpotentialdisagreementsoverthetypesofspendingallowed

wouldbe toworkfrompastpracticesdevelopedthroughcollaborationbetweentheOfficeof

ElectionsManitobaandrepresentativesofManitobasfiveregisteredpoliticalparties.

Foranumberofyearstherehasexistedunder TheElectionsFinancesActarequirementthat

thepartiessubmitanannualreporttoElectionsManitoba.Toassistpartiesinmeetingthis

requirement,ElectionsManitobapublishesaLegislativereferenceguideforChiefFinancial

Officersoftheparties.

Onepurpose of the guide is to distinguishbetween election andnon-election expenses,

Section A.6 of that guide states that election expenses do not include any reasonable

expenses incurred in theoperationofany permanent officeofa registeredpoliticalparty,

includinganysalariesandwages paid topermanent staffmembersworking in theoffice

duringtheelectionperiod. Thesectiongoeson tostate thatreasonableexpenseswouldinclude such items as office rent, utilities, telephones office equipment, and salaries for

employees.Theseexpensescanbeconsideredthebaseexpensesincurredinoperatinga

permanentofficeaccordingtotheguide.

Forpurposesofreportingonannualexpenses,ElectionsManitobaprovidesthepartieswith

Form920-AnnualFinancialStatementofaRegisteredPoliticalParty.Itliststhefollowing

reportingcategoriesofspending:

Depreciation Furnitureandequipmentrental Honorariaandsalaries Interestandbankcharges Legalandauditfees

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Meetingspace Officeoccupancy Officesuppliesandpostage Transportation,accommodationandfood TelephoneandInternet

These reportingcategoriesmightprovide thestartingpoint for the generationof a list of

core, infrastructure expenses for goods and services necessary to support routine

administrative and operational activities of the parties. Reasonable expenses for goods,

servicesandsalariescouldbebasedonprevailingmedianmarketprices.Toavoidcreating

anincentiveforthepartiestoincreasetheirexpensesasawaytogainlargerallowances,a

pre-determined pool of total allowance money to be spent could be established by

regulation.Theallowanceamountstransferredtoindividualpartieswouldthenbemadeonaproportionateformulabasedon eachpartysshareof the votesand theactualincurred

expenseswhichtheyreported.

Onefurtherfactorwouldhave tobe incorporated intosuchcalculations.This involvesthe

requirement in The Election Financing Act to include in the calculation of

administrative/operatingexpensesthecostsofcompliancewiththeActandotherstatutes.

Thefactthatsuchexpendituresarerequiredasamatterof lawandpublicpolicy,andare

not based on voluntary decisions made by particular party, appears to have been the

rationale for the direct mentionof such costsin The Election Financing Act. The phrasecompliance costs refer to the expenditures on such items as employees, equipment

(telephones,computers,software,etc.)professionalservices(forexample,accountingand

legalservices)andthecollectionandmanagementofinformation.

Identifying which expenditures are directly and exclusively related to compliance with

various statutory obligations might appear, at first glance, to be straightforward, but on

furtherinvestigationthecalculationsbecomemorecomplicated.Thosecomplicationsare

discussedinthelatersectionofthisreportthatdealswithmattersofregulation,compliance,

enforcementandaccountability.

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Table2 provides anhistoricalcomparisonofpoliticalpartyexpenses reported toElections

Manitobabyeachofthepoliticalpartiesfortheyearsfrom2003to2011.Theexpensesare

reportedintwocolumns.Thefirstcolumnshowsallreportedexpenses,whilethesecond

columnshowstotalexpensesexcludingspendingonadvertising,polling,publicity,posters

and other promotional material, including signs and billboards. Under the new ElectionFinancingAct,theexpendituresinthesecondcolumncouldnotbe fundedwithallowance

money.Inotherwords,removaloftheseitemsgivesusabettersenseoftheamountsthat

each of Manitobas five registered parties have been spending on core administrative

activitiesoverthepastnineyears.Forallthepartiesthespendingonadministrationhas

fluctuatedsomewhatbutingeneralithasrisenovertheyears.

Table 2:

Historical Comparison of Political Party Total and Net Annual Expenses

21

1 Total annual expenses reported on Schedule 1 of Form 920 Annual Financial Statement of a RegisteredPolitical Party.2 Annual expenses net of the following expense categories: a) Advertising Media; b) Posters, pamphlets,promotional; c) Polling; and d) Signs and structural support.

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Insummary,thisfirstoptionpotentiallyprovidesapragmaticanswertothequestionofwhat

anallowanceprogram could cost in total based on the use ofa series ofactivities and

designatedspendingcategorieswhicharefamiliartoElectionsManitobaandpartyofficials.

There would still be th

Allowance Commissioner’s report on Annual Allowances for Manitoba’s Registered Political Parties

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