FOR THE SAKE OF ARGUMENT

POLITICAL SLUSH FUNDS CORRUPT ALL PARTIES

JAMES SCOTT September 9 1961
FOR THE SAKE OF ARGUMENT

POLITICAL SLUSH FUNDS CORRUPT ALL PARTIES

JAMES SCOTT September 9 1961

POLITICAL SLUSH FUNDS CORRUPT ALL PARTIES

FOR THE SAKE OF ARGUMENT

JAMES SCOTT

until recently the national organizer of the Liberals, says

A SLUSH FUND, in the lexicon of the practical politician, is made up of contributions to a political party to help it win an election. These contributions usually come from corporations, organizations and individuals. Remembering there are many forms in which a contribution can be made, it is fair to say that this is the method whereby all the major political parties in Canada are financed. The system should be abolished now because it is destructive to our concept of democracy and to our free parliamentary system.

Only a lew months ago 1 calculated that the Liberal party would need at least five million dollars to fight the next federal general election effectively. Parties in power traditionally spend even more than the opposition, and if the New Party makes its proposed system of party financing work it will have, according to various estimates, a revenue of from $700,000 to a million dollars not just for elections but every year.

Those in charge of raising these vast sums for the various parties are appalled by such figures, but they accept them as necessary to success. They assume, of course, that in future elections the parties will have to continue to spend their money for the same things as in the past.

When a man considers accepting the nomination of a political party, almost invariably the first question he asks is: “Flow much money will the party spend in my riding?” He w'ill say he needs anything from $5,000 (very few of these) to $50,000. Costs vary, but assuming that the average riding has 130 polls and that each poll needs an electionday minimum of four workers (scrutineer, car-driver, baby-sitter and poll captain) at ten dollars per person (at least), the total is $5,200 for election-day workers alone. In addition he must rent committee rooms for the campaign period, pay stenographic help, hydro and telephone bills, for incidental refreshments and so on. This calls for a minimum of another $1,000. For efficiency, a full-time, paid campaign manager is almost essential, and any man worth his salt will expect at least $500 a month. There goes another thousand.

The candidate also has to meet the high costs of publicity. This means newspaper advertising, posters, billboards, radio and TV time, and direct mail. In most ridings, one publicity piece sent to each voter by direct mail costs no less than $1,500. If other items can be covered by as little the candidate is lucky.

We have reached already an absolute minimum of $10,000 for an average Canadian riding. Multiplied by 265, this means roughly tw'o and a half million dollars that a party has to find to help candidates defray their campaign costs.

On top of this, every candidate expects his party to advertise not only in every major daily paper in the country but also in every weekly in his riding. This cannot be done properly in Canada for less than a million dollars. A candidate also expects vast quantities of throwaways from national headquarters. To supply the whole country, $850,000 is the minimum cost. He expects to see and hear party leaders on TV and radio. There is almost no limit to what this can cost, but for the next election let's start at another million. The candidate always wants his party leader and other bigwigs to visit his constituency. To put these people on tour across Canada on special trains or chartered llights, always accompanied by hungry, thirsty reporters, will cost another quarter-million.

Already this is well over my $5.()()(),000 estimate. Must the cost of fighting an election stay this high? Not really. A hard look should be taken at paying election-day workers. Flections can be fought and won without spending a cent on these people, but most candidates are afraid to break with traditional procedure. All advertising should be reassessed. Some newspapers, for example, will not cover a candidate's meetings unless he inserts paid advertising in the paper. The same often applies to local radio and TV stations. Throwaway propaganda has a highly questionable value and it may be that there is a national radio anil TV saturation point well below that set by advertising and publicity experts.

With these changes there is no reason why a national party could not finance a good campaign for about two million dollars, or a little less, and still keep national political figures on the road and present national election issues clearly to every Canadian voter. But party strategists, much as they may wish for sane election expenditures, are too frightened to risk trying them. There is a sort of defeatist feeling of inevitability about party financing. A top-ranking Democrat told me, shortly after the U. S. presidential campaign last fall, that his party came out of the election three and a half million dollars in debt. Replying to my horrified reaction, he said. “Better to be three and a half million in the hole and win than a million in the hole and lose.”

CONTINUE» ON PAGE 67

Ralph Allen's reconstruction of the classic Canadian political scandal begins overleaf

FOR THE SAKE OF ARGUMENT continued from page 13

“Nobody in Canada who holds a political office or hopes to hold an office can ignore his benefactors“

Yet there is no conclusive evidence that money alone can win elections. (Even if it can, spending certainly should be controlled to safeguard the democratic process.) In 1957, the Liberal party spent more than any Canadian party had ever spent on a general election; that was the first election the Liberals lost in twentytwo years. There is no good reason to assume that the same thing won’t happen to the Conservatives who, it is alleged, spent eleven million dollars in 1958 and will probably spend more this time.

When one talks in terms of this kind of money, all the conventional gimmicks for publicly raising political dollars look picayune. Five, ten, fifty, or hundred-dollar-a-plate dinners bring only a drop in the bucket. So do voluntary memberships. And so do voluntary donations. In Ontario, the Liberal party has a Liberal Union to which individuals are asked to contribute a hundred dollars a year. The other national parties have similar groups.

None of them comes even close to paying party maintenance costs.

There are only two major sources of campaign money in this country. These sources are (a) big business and (b) big unions.

In neither case is philanthropy the motive for a contribution to a political party. I have never heard of a benefactor setting up a trust fund or foundation for the nostrings-attached support of all the political parties in Canada. The nearest thing to it that 1 can recall was the gesture of a group who bought a house in Ottawa for the leader of the opposition when he was George Drew, and furnished it when he was Lester B. Pearson. That is quite a long way from the real problem.

However, the biggest corporate donors for the most part do not attempt to intervene directly in party policy. Generally speaking, they contribute to both the Conservative and the Liberal parties. The traditional split is usually sixty percent to the party in power and forty percent to the party in opposition, but this is subject to many variations.

These contributors will say—and they

mean it—that they do not give their money to get contracts or special favors. They will contend that they support the two old parties because they believe the two-party system works best in a democracy such as ours. They will also frankly admit that they support parties that endorse the free enterprise system because they honestly believe (and have good ar-

guments to back their belief) that Canadians as a whole are happier, more vigorous and more prosperous under free enterprise than they would be under any system of socialism or state control.

Nevertheless, nobody who holds office or hopes to hold office can ignore his benefactors. Any citizen of Canada can lay his views before the prime minister or

the leader of the opposition but, human nature being what it is (and these men arc human), a man whose firm donates $25,000 or $50,000 to a political party every election is likely to get through to the party leader a lot faster than somebody the party never heard of.

Before the Liberal rally last January, a rumor was circulated widely that the party

The tycoon was in a rage. He claimed the Liberals were “toadying to organized labor in the Commons”

was going to suggest curbs on the inflow of U. S. funds to Canada. Many strong representations were sent in from leading Canadian financiers whose business interests depended on a steady influx of U. S. investment dollars. There was no suggestion of intimidation but. coming from the people it did. the message was clear and a special section was inserted into the leader's first major statement to reassure this group. There was no change in party

policy on this matter, but it was thought worthwhile to underline and explain the policy to set uneasy minds at rest.

Occasionally, contributors are more aggressive. On one occasion I was asked to see the top executive of a corporation who not only could withhold a large donation from his own firm but also could influence other major donating corporations. My task was to convince him that our party was going to win the election, that we

had a common interest in the development of Canada and that the party had the right men and the right policies to do the job properly. It must have been all right because at the end of two hours he said, "Tell Mr.(our collector in that prov-

ince) to drop in to see me next week.” But two days later he called me in a rage because in the interval our party had taken a stand in the House of Commons on a problem which, he said, showed w'e

were “toadying to organized labor.” “There

will be no need for Mr. - to call on

me,” he concluded.

In that instance, the party did not change its stand and the tycoon simmered down, but not before he had tried his best to change our policy.

All the political parties get this sort of thing from time to time from their contributors and rarely, if ever, do they make drastic changes of policy as a result. Actually, the contributors do not expect it, but they are good enough psychologists to know that if they keep bombarding the parties they support with their views on all political questions, the parties’ attitudes cannot help but be colored and influenced by them.

This is equally true for the socialists who are supported by the big unions. Because no political party in Canada has to disclose its source of funds there is no way of telling how much unions have contributed-—directly or indirectly—to the CCF in the past. The New Party, in its draft constitution, has introduced a new fund-raising gimmick which it hopes will make it appear that individual union members are supporting it. The bulk of the New Party membership wilj come from the trade unions that affiliate with the party. Each affiliated union will annually collect from its membership sixty cents per head, and turn it over to the New Party. To answer a possible charge of coercion the draft constitution provides that. "Any member of an affiliated organization may at any time officially notify his organization that he does not wish a per capita payment to be made to the party on his behalf, and the organization shall forthwith cease to do so.”

Many political analysts have already pointed out the fallacy in this approach. To “contract out" is for the individual member to call attention to himself, reveal that he does not support the New Party, and leave himself open to all the usual group pressures to conform.

The only democratic basis on which a union could collect dues for political purposes would be for it to act as a collecting agent for all pqrties. This, of course, the unions will never do. Like the supporters of free enterprise, they too hope to color and influence the policies of the party they support—the New Party. There are many areas such as labor law. social and welfare legislation, where the views of organized labor can be expected to dominate the New Party.

In British Columbia, business has already assumed that the CCF is dominated by labor unions. This is why Social Credit in B. C. draws almost 100 percent support from local business. The B. C. tycoons believe Premier Bennett is the only man who can beat the CCF. The result is that both the Liberal and Conservative parties in B. C get only token financial support from west coast business. In the B. C. provincial election last summer most of the financial support for the old parties had to come from eastern Canada.

In short,, no matter how the money is collected or from whom, as long as our parties are dependent on big business or big unions some peopleware going to have more influence than the rest of us on whatever party forms the government.

There is another level of party fundraising where great damage is done.

The sensational revelations of the current enquiry in Quebec into how the Union Nationale party raised funds focuses attention on the fact that, from time to time, money is paid either directly or indirectly to a political party in order to get special government favors, contracts,

rights or legislation. It is often assumed in the rest of Canada that this occurs only in the province of Quebec, but this is far from the truth.

A year or two ago. during a provincial election campaign in another province 1 received a call from a small contractor of my acquaintance. He told me he had been telephoned by an official of the government party of the province who instructed him to have $2,000 ready in cash by the following week. It would be picked up by a party legman and would be the contractor’s contribution to the party’s campaign funds. This man’s entire business had been built up on government contracts and he asked me what to do. I told him to give the man the money and me an affidavit stating how and why he had made the contribution. We could have broken the whole thing w'ide open; my informant told me other contractors had received similar instructions. But they were all frightened. They all paid up and kept quiet about it.

For smaller contributors the procedure is somewhat different. I was once shown two cancelled cheques issued to the fed-

eral and provincial candidates of the party in power provincially. The provincial government awards the man who wrote the cheques a regular maintenance contract. He had been told, not by the department for which he worked, but by the candidates themselves, that his contract would not be renewed unless both of them indicated their approval to the party. To this day he has not found out if this is true or not: he just pays up every election.

Sometimes, where big money is involved, the plot becomes very complicated. Recently a very valuable government servicing franchise was due to expire. The owner of the company was informed, by the government department concerned, that his franchise would not be renewed and he was advised to sell his business. He put it up for sale and was promptly made an offer which was $200,000 more than his asking price. He was told not to put the deal through his own lawyer but to hire a prominent supporter of the government party. The deal was closed but the seller did not receive the extra $200,000 paid by the purchaser. The purchaser was awarded the franchise for a ten-year period—twice as long as it had ever been

granted before. The lawyer who handled the transaction has since become a provincial cabinet minister and the man who sold the business was recently mentioned in a newspaper story as likely to be the next senator for his area.

Another favorite dodge is to have a man on the payroll who does no work for his employer but spends all his time working for a political party. All the parties at one time or another have used this one but it is most widespread among unions, who almost invariably send trained organizers from their staffs to help CCF

candidates. Last fall, when the New Party was going all out to win the Peterborough and Niagara Falls by-elections, full-time, paid organizers w'ere working for the New Party in both ridings long before either the PCs or Liberals had started to set up their campaigns. This kind of help was not mentioned by the New Party candidates in their statements of election expenses and apparently, under the New Party definition, is not a campaign contribution.

In the past few months representatives of all the major parties have discussed

the problem of campaign funds publicly and put forward ideas as to how' it might be solved. By far the most extensive are the proposals of the new Liberal government of Quebec, which hopes to pass the most stringent and confining Flection Act to be found anywhere in Canada—an act that would limit both the sources of funds and the amount any party could spend in an election.

In its draft program, the New Party states it "will pass legislation requiring full publicity for political contributions and a reasonable and effective limitation

of campaign expenditures.” As it stands, this is much too general to mean anything except that the New Party is not satisfied with the present system.

J. W. Pickersgill, the Liberal frontbencher, has recently suggested several times that a limit should be set on the amounts each party and each candidate can spend for publicity and advertising during an election campaign. This would reduce election costs but it does not get to the roots of the matter.

Only a month or so ago, a Conservative backbencher, Frank McGee, introduced an idea that would encourage individuals to make small contributions to political parties. He got his plan from the American Heritage Foundation, which organizes a campaign in the United States to encourage private citizens to donate anonymously through its facilities to the U. S. political parties. Donations are made directly to the foundation, which distributes them to the parties as the donors designate. Such contributions are incometax exempt and the parties do not know the names of the donors. This system raises more money and creates more interest in politics but it does not replace the big contributors.

So far, the Quebec proposals are much the best. For federal purposes, the New Party’s proposal for a reasonable and effective limitation on campaign expenditures is sound if it is spelled out in

detail in legislation and stiff and enforceable penalties are incorporated into the act. But along with this must go an equally effective control of contributors. The amount that any corporation, organization or union can donate shotlld be defined and all such donations made public. At the same time, the definition of a contribution should include service as well as money.

Similarly, no organization (such as a union) should be allowed to collect money in any way from its members or employees for a political purpose. Here, Frank McGee’s proposals fit in. Proper legislation to encourage individual giving should be passed and a neutral foundation, such as the American Heritage, set up to administer it.

This kind of action would cut waste in election costs, make for a more equitable financial position among all candidates, and create a properly democratic atmosphere where a vote is more important than a dollar. At the same time, it would reduce the danger of political influence from large contributors and encourage the financial participation in politics of every citizen.

This would be a start anyway. But the legislation must have teeth in it—strong penalties—or it will be a farce. Particularly stiff punishment should be provided to prevent tollgating, kickbacks and other devices whereby a party receives money for favors granted. For twenty-five years, the statute books of Ontario contained a law that made any kind of contribution to any political party illegal. No one paid any attention to it; contributions continued to be made as if the law did not exist and nobody was ever prosecuted for breaking it. ★