Justin Trudeau’s government is set to introduce changes to the rules governing political fundraising activities. The prime minister has faced heat for the so-called “cash-for-access” fundraisers it has held featuring the prime minister and cabinet ministers. A news report suggested the new legislation will require fundraising events to take place at public locations, rather than private homes or clubs; be announced ahead of time and summarized in reports following the events; and be open to the media. Democratic Institutions Minister Karina Gould has said any changes will revolve around making the fundraisers more transparent.

So, what is the likely impact of these reforms, what do they accomplish, and what else could be done?

Reducing the perception of behind-closed-door deal making

Although there is little evidence that anything particularly nefarious goes on at the events, the fact that they have been held in private venues closed to the media adds to the perception of corruption and behind-closed-door deal making.

The rules surrounding the events are already clear. Lobbying shouldn’t be taking place. Rather, the fundraising events offer opportunities for major donors to meet and shake hands with politicians they support. Lobbying, when it occurs, is typically reserved for phone calls and official face-to-face meetings with the politicians and their staff, separate from the fundraising events.

The proposed reforms, particularly opening the events to the media, will do a lot to improve transparency. The changes may reduce the public perception that the fundraising events themselves are in some way scandalous.

However, the fact remains that fundraisers offer a chance to mingle with politicians in exchange for a hefty contribution. Even if the events don’t involve outright corrupt behaviour, increased transparency, including media access, will call further attention to a system in which politicians spend their time interacting with the wealthy.

Will the reforms end cash for access?

The initial news report said that the reforms “will end the controversial practice of cash-for-access fundraising.” This is unlikely. In part because the fundraising events will continue, albeit with more transparency. And, in part because the fundraising events that the reforms address are just one piece of a system in which big donors have greater access to politicians than others.

Big donors don’t only have the opportunity to shake the hands of politicians during $1,500-per-plate fundraisers. They are also more likely to have their phone calls returned by politicians or their staff, and more likely to get a personal meeting to discuss policy. The wealthy can also spend more on lobbyists in their efforts to secure access to and persuade politicians.

It’s through these phone calls, personal meetings and lobbyist interactions, more than the fundraising events themselves, that big donors get more access and influence than others. This means that the fundraising events are largely a strawman in the debate over money in politics and campaign finance reform. Improving the transparency surrounding the fundraising events or even getting rid of them altogether will do little to reduce the outsized influence of big donors, or the fact that they have greater access to politicians than others.

As long as politicians rely on private donations to fund their parties and campaigns, those who can afford to contribute will find it easier to bend the ear of policy-makers.

A concern the reforms don’t address

Federal campaign finance regulations limit individual contributions to $1,500 and ban contributions from corporations and unions. These restrictions, in place since 2004, go a long way toward reducing the influence of money in politics. Perhaps the most troubling aspect of the cash fundraisers is that they weaken these contribution limits and corporate bans.

An individual may be able to contribute only $1,500 to a party or a campaign. But that same person can host a fundraiser, bringing together friends, colleagues and business partners, with each of them providing a contribution. The aggregate impact that the fundraiser organizer has on party or campaign finances is much larger than $1,500, and it is limited only by the number of people the organizer can convince to attend the fundraiser.

Therefore, the fundraising events make it easy for organizers to bundle contributions, greatly influencing their potential monetary impact on a campaign’s finances. The proposed changes to the rules for fundraising events do little to reduce this concern.

Do we need other reforms?

In Canada, at the federal level, contributions from corporations and unions are banned. Individual contributions, as noted, are limited to $1,500. Meetings between lobbyists and politicians or high-level bureaucrats must be documented. Campaigns face spending limits. Together, these rules and others make up a federal campaign finance system that is regarded as one of the best in the world.

In contrast, some of the provinces, including British Columbia and Saskatchewan, put no real restrictions on campaign contributions and party donations. But Quebec has a stricter regime than Ottawa. There, a major scandal led to sweeping reforms to the campaign finance rules in 2013. Corporate and union contributions are banned, individual contributions are limited to $100, and parties receive some government funding per a formula.

Should the federal government follow in Quebec’s footsteps and implement broader campaign finance reforms? Reducing the contribution limit to $100, to focus on just one of Quebec’s reforms, would come with both benefits and costs.

A low contribution limit has some clear benefits. It would mean that a middle-class donor and a wealthy donor may both be able to afford the maximum contribution. It may lead politicians to ask “How many of my constituents would benefit from such a policy?” rather than “How many of my constituents who can donate $1,500 would benefit from such a policy?” It would reduce the perception that the wealthy curry more favour with policy-makers. These are all good things.

But running parties and campaigns requires money, and slashing the donation limits either would lead to large cuts in party and campaign funding or would require taxpayers to foot a larger portion of the bill. So lowering the federal donation limit would have either direct or indirect costs costs to taxpayers, because campaigns would spend less in communities and voters would have less opportunity to see the candidates during an election.

Some costs are more nuanced than others. Lower contribution limits would make it harder for those who care passionately about a policy to stand out by providing disproportionately large contributions. And because people are more inclined to donate to incumbents, lowering contribution limits can make it more difficult for challengers to run. Higher limits make it more likely that a challenger who is not yet well known but is highly appealing to those who know him can mount a viable campaign. (This is probably less of an issue when it comes to party contributions.)

Another potential impact would be good or bad depending on your perspective and your political leanings. Lowering the contribution limit would favour some parties more than others. This is because some parties are better at attracting larger donations, at least in part because their policies are preferred by wealthier donors. For example, the contribution bans and limits introduced in 2004 are thought to have hurt the Liberals more than other parties. Cutting the federal contribution limit to $100 could have a significant impact on the relative fundraising potential of the various parties, changing the political landscape accordingly.

Trudeau’s reforms will certainly improve the transparency surrounding major fundraising events. However, there is little reason to believe that the reforms will do much to decrease the relatively large influence of big donors, or the fact that those with more cash tend to have greater access to politicians. Decreasing the outsized influence of the wealthy requires other reforms. These other reforms need to be thought about carefully, as they involve significant costs and potential unanticipated side effects.

Photo: Shutterstock.com

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Christopher Cotton
Christopher Cotton is the director of the John Deutsch Institute for the Study of Economic Policy and holds the Jarislowsky-Deutsch Chair in Economic and Financial Policy at Queen’s University. He has spent more than a decade researching campaign finance reform and cash-for-access politics.

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