Political Party Greed and Taxpayer Rip-Off

The lead May 13th editorial in the National Post - Of Enron and Adscam - was "on the money" in more ways than one.

Canada's political parties, and I mean all of them, have been ripping off the taxpayer for years.

These rip-offs include their incompetent or dishonest wastage of taxpayers' money on ill-conceived, bungling projects and programs [Saskatchewan's potato warehousing project, B.C.'s ferries, and Ottawa's numerous boondoggles of the past 5 years, just to name a few]. They also include the wholesale stealing of taxpayers' money diverted to party and crony coffers revealed by the Gomery Inquiry.

And to make matters worse, most governing parties, with the collusion of opposition parties, have given themselves the key to the bank vault by enacting extremely generous legislated schemes to enrich themselves by means of election expense subsidies. As if it wasn't enough that they will garner many millions of dollars to pay for their elections campaigns and election apparatus, the parties and many candidates have often exaggerated their expense claims in order to maximize the rip-off.

One of the touted justifications for the federal subsidy system was to eliminate reliance on donations from corporations and unions. However, all that seems to have accomplished is to drive those donations underground, under the table, and out of sight.

Attempts have been made from time to time to make the donation and subsidy systems operating across Canada open and transparent, including the requirement that election expenses be audited. Obviously, there are some MP's that are not happy with the general skulduggery that seems to characterize election financing. Jack Mintz, president of the C.D. Howe Institute, suggests that party officials should be required to personally certify that their "financial statements are accurate and that internal controls are present to ensure the truthfulness of information". This sounds fine, but the experience of Saskatchewan casts some doubt on its effectiveness.

In Saskatchewan, each financial statement [a "return"] relating to election expenses, must include the support documentation behind the statement, must be audited by an auditor chosen by the party and/or candidate, and must be certified as accurate and in compliance by the party/candidate financial agent.

The statements are then sent to the Chief Electoral Officer who must immediately examine them and certify to the finance department, if it is the case, that the party or candidate is eligible for reimbursement [has the required percentage of the vote], that the statement has been audited by an auditor chosen by the party or candidate, and has been certified as accurate by the party's or candidate's financial agent, and state the total amount reported in the statement.

On this basis, relying solely on the party/candidate audit and the agent's certification of accuracy, 75% of the claimed reimbursement based on the statement is then paid out to the party or candidate. After that, the Chief Electoral Officer has 90 days to do an actual audit of the return.

What is wrong with this? Simply put, the party/candidate audits in Saskatchewan have been notoriously cursory, amounting to a virtual rubber stamp of the accuracy of the statement. In practise, many of the statements audited by the CEO after past elections have been found to be incomplete, with legally-required support documentation missing, or claims have been exaggerated or just plain improper.

The upshot of this is that party/candidate audits have often been useless and unreliable and the agent's certifications have been meaningless, if not dishonest. The 75% paid in advance of a real audit, based on the statements, have often exceeded the amounts the parties/candidates were truly entitled to receive as determined by an effective audit. Consequently, they have had little incentive to promptly, and some cases, ever, comply with requests for a return of over-payments.

Mr. Mintz also suggests that party finance committees should be peopled by persons who are financially literate - not party hacks distinguished solely by their loyalty.

In Saskatchewan, the latter is most often the case. As Chief Electoral Officer between 1992 and 1997 I found that New Democrat party and candidate agents responsible for overseeing the management of election financing were frequently ignorant or disdainful of the reporting requirements and unable or unwilling to distinguish between eligible and ineligible expenses and were also unwilling to make an effort to become financially knowlegable. Of course, their continual poor reporting habits convinced me that the party leadership was happy to see this condition continue.

These same comments apply, more or less, to the other parties, although the Liberal party made a token effort to learn about reporting requirements. However, it had little effect on subsequent reporting by their party and candidates.

During the last Saskatchewan election, some candidates, and I don't know how widespread it was, adopted "la methode in-out", that was outlawed by Parliament a few years ago, after its wide-spread adoption by the Bloc Quebecois, and by some other federal candidates.

This method enabled a candidate to make a phony payment for services rendered and donated to a campaign in exchange for an immediate donation of the same amount to the candidate, enabling the candidate to inflate his election expenses and claimed reimbursement. Contractual service providers were then entitled to claim an income tax deduction. It is doubtful that all of those service providers showed the "payments" as income in their income tax returns.

What is my point? The cavalier treatment of the public purse by the political parties is so widespread that I despair of hoping for or expecting honesty and integrity from politicians of any stripe.

Only strong legislation that creates election expense auditing bodies federally and provincially with not only the power and the resources to conduct independent forensic audits, but the right and duty to independently prosecute transgressors, has a hope of reversing current trends.

I am not holding my breath in anticipation of positive changes.