How to Improve Municipal Campaign Financing

There is much cynicism about politics and politicians these days. Some of it is deserved, some of it is misplaced. But the consequence is that voter participation has been trending down and confidence in our democratic institutions is low. Changing our approach to campaign financing in municipal elections provides an opportunity to increase civic engagement and trust.

Businesses large and small are important players in the affairs of the city. They provide jobs, goods and services, develop our homes and places of work, build our infrastructure, pay taxes and have a vital stake and interest in the future of the city. Unions too perform an important role in the affairs of the city and, like businesses, are affected by the city’s governance.

However, when businesses, unions and other associations (“institutions”) contribute to municipal electoral campaigns, it can raise the perception — fair or unfair — that those contributions create an implicit debt. This is particularly true of institutions with a financial stake in council decisions, or numbered and holding companies, whose interests and involvement with the city are more difficult to decipher.

Of course, individuals who contribute may also have a financial interest in city affairs as sole proprietors, employees, union members or business owners. Yet individual contributors are potential voters and identifiable members of the community. As such, an individual who contributes financially is a name and a face, accountable for the money given and — one might say — invested in the democratic process. It is therefore in the interest of strong, transparent municipal government to encourage personal donations while discouraging institutional financing of elections.

The good news is that, from 2003 to 2010, individual campaign contributions to municipal candidates in Ottawa increased relative to corporations and unions (during this period, union donations were much lower). This was almost certainly due to an election rebate program initiated in 2003, which aimed to address what had been deemed a form of political inequity. Specifically, individual contributions to provincial and federal political parties have long received a significant tax credit (75 per cent for donations up to $350) to encourage political participation whereas individual contributors to candidates for municipal office had historically enjoyed no such benefit. The 2003 municipal rebate program matched the provincial and federal credit levels for personal donations up to $150, with a declining sliding scale thereafter.

The impact of the municipal rebate program was significant. In 2000, the last election before the rebate was instituted, more than 65 per cent of campaign contributions came from corporations and unions. By the 2010 election, with the growth in personal donations, the institutional share was down to 24 per cent.

The bad news is that, despite the gains made, incumbent candidates overall continue to rely disproportionately on institutional contributions. In 2003, with the rebate program in place, less than 17 per cent of challengers’ contributions were funded by corporations and unions. For incumbents, the average was more than 43 per cent. In the last election, that difference narrowed but was still substantial at 20 per cent for challengers and 34 per cent for incumbents. The gap creates a perception that by being more reliant on those institutional donations (which are typically larger than individual ones), incumbents are also more susceptible to their influence.

The solution to this quandary is clear. Council needs to do more to address both sides of the campaign contribution equation while enhancing the transparency of campaign financing. It can start by taking the following steps:

1. Remove the role of corporations and unions in campaign financing (just as was done at the federal level in 2006). To do so, council should request the provincial government to make the legislative changes required. The province acted on the same request made by Toronto Council in 2009.

2. Restore incentives for individual contributions to election financing by reinstating the municipal rebate program that was in place from 2003 to 2013. Despite the program’s success in increasing the share of donations made by individuals, council recently cut it. For the average-sized donation, the rebate has been halved, providing less incentive for citizens to contribute municipally when they can direct the same donation to the provincial or federal level and receive twice the amount “back.”

3. Facilitate greater election transparency by providing electronic, searchable records related to all municipal campaign contributions. It took the recent initiative of an individual citizen, Kevin O’Donnell of ottwatch.ca, to do so for the 2010 election by spearheading a crowdsourcing open data process. Future election information should be similarly accessible on the City of Ottawa website.

Council has the power to increase citizen engagement and campaign finance transparency while reducing the perception of undue influence. Implementing the steps outlined above would help increase trust and integrity in municipal government.

Source: Ottawa Citizen