5 ways campaign financing is costing taxpayers hundreds of millions

With the 2015 federal election just days away, many have been surprised by recent figures that suggest this year’s election could cost taxpayers as much as $500 million.

Early estimates by Elections Canada posted in January gauged approximated costs at $375 million. But the long campaign, the longest in over a century, might cost up to $500 million, according to Scott Hennig, the Canadian Taxpayers Federation’s Vice President of Communications.

Election Canada’s estimates were based on the typical 37-day campaign, but this year’s 78-day-long stretch will add more dollars to the federal bill.

With a longer campaign comes more political contributions to parties and candidates running in the election, more money spent on campaign necessities and more money spent on advertising.

Here are five things to know about campaign financing in Canada for this year’s 42nd General Election.

1. Political contribution subsidies: Costing taxpayers millions

Campaign financing in Canada works under two large subsidies: one to the individuals who contribute funds and one to the parties or candidates spending said funds. While corporations and trade unions are not allowed to raise money for any candidate or party, individuals may donate up to $1,500 this calendar year to:

• any registered electoral district association
• nomination contestant
• candidate of a registered party
• leadership contestant of a party
• candidate not endorsed by a registered party

But contributors don’t need to stretch their $1,500 across all the parties or candidates they wish to support. Someone could donate $1,500 to every registered party and $1,500 to the candidates, electoral district associations and nominations of every party.

For example a person could give $1,500 to a Liberal candidate, $1,500 to the Liberal Party, $1,500 to an NDP candidate and $1,500 to the NDP.

With that in mind, the first subsidy comes into play: the political contribution tax credit. Anyone who donates between $0.01 to $400 will received a 75 per cent tax credit, meaning that if they donate $100, they will receive $75 back.

If someone contributes between $400 and $750, they will receive back $300 plus 50 per cent of the amount by which the contribution exceeds $400.

For any donation over $750, the contributor receives either $475 plus 33.33 per cent of the amount by which the contribution exceeds $750, or $650 – whichever amount is less.

2. Campaign and Party reimbursement subsidies: Even more money

The next major subsidy occurs after political parties or candidates report their campaign spending totals. Any candidate either elected or receiving at least 10 per cent of votes in their electoral district will receive a 60 per cent reimbursement of their election and personal expenses. Any registered party elected or receiving at least two per cent of votes cast nationally or five per cent of votes cast in an electoral district will receive a 50 per cent reimbursement.

Once broken down, the amount of money spent by taxpayers for each donation is staggering.

For instance, if someone donated $100 to a party, the government would send that person a cheque for $75. When the party then spends that $100 and receives at least two per cent of votes, the government will send them a cheque for $50. In total, the government (i.e. taxpayers) spends $125 for one $100 political donation.

The Report of the Chief Electoral Officer of Canada on the 41st general election claims $60 million was spent on reimbursements of election expenses to candidates and political parties after the 2011 election. The report does not list the amount spent on individual tax credits.

3. How much each party is spending on what

If you were assuming the Conservative Party were the biggest spenders when it came to election expenses, you are wrong, at least for the 2011 election.

The Conservatives spent just over $10.5 million on election advertising for the 2011 General Election, while the Liberal Party spent almost $12 million and the NDP spent almost $11 million. The Green Party spent just shy of $1 million.

Other significant funds went to office expenses, professional service, the leader’s tour, travel and hospitality and salaries and benefits. All expenses had to be under the limit of $20,955,088.86 set out by Elections Canada prior to the campaign.

In total, the Green Party spent $1.9 million on the last election while the NDP spent $20.3 million, the Liberals spent almost $19.48 million and the Conservatives spent $19.45 million. This does not include what individual candidates spent.

4. A longer election equals more money

The 2011 election cost taxpayers $291 million, and it was only 37 days long. This year’s 79 day-long campaign will likely cost an estimated $25 million extra, per party, according to Elections Canada.

This election’s spending limits for national campaigns, as listed by Elections Canada, are $54,475,840. Take into account the spending limits in each of the 339 constituencies across the country, which equal  $73,611,589.45 combined per party, and the total spending limits for this year’s election reach $128,087,429.78 per registered political party

Assuming the three largest parties reach their spending limits, campaign expenses will cost roughly $384 million alone, not including the actual cost of putting on an election.

By adding an extra 42 days to the typical election period, costs for office leases, agreements with service providers, extra hours for key staff and additional hours for staff at Elections Canada will all increase the bill for taxpayers.

5. Expenses and subsidies combined equal a big tonne of money

If we think about the cost of the election in terms of total expenses and the cost of taxpayer-funded subsidies, the numbers are staggering.

In many constituencies there will be five or six candidates. Let’s just assume that there are three candidates receiving more than 10 per cent of the vote in each of the 339 electoral districts and that each of them spends the entire spending limit.

Let’s look at the West Vancouver-Sea to Sky electoral district because they have a candidate running from every major party. The spending limit there per registered party is $185,972.98. Per candidate, it is $237,680.75. Assuming each party and each candidate reach their spending limit, that equals $743,891.92 for party expenses and $950,723 for candidate expenses – totaling $1,694,614.92 just for that one riding.

With almost $1.7 million from taxpayers, the cost doesn’t stop there.

Let’s assume this year’s election results are similar to the 41st General Election in that riding. The Conservative candidate won 45 per cent of votes, the NDP candidate won 23 per cent, the Liberal candidate won 22 per cent and the Green Party candidate won seven per cent. Because each party received more than five per cent of the votes, all parties would receive the 50 per cent expense reimbursement. Because the Conservative, Liberal, and NDP candidates won over 10 per cent of the votes, they would receive the 60 per cent candidate reimbursement as well.

So let’s do some math.

This year, each of those four parties would receive a spending reimbursement of 50 per cent of $184,972.98, equaling $92,986.98 per party. Combined, it totals $371,945.96.

Each of the three candidates with more than 10 per cent of the vote would receive the reimbursement of 60 per cent of $237,680.75, totaling $142,608.45. Together that equals $427,825.35.

How much would that riding cost taxpayers in reimbursements? $799,711.31. And that is just one out of 339 ridings across the country, all with similar spending limits between $180,000 and $250,000.

For argument’s sake, let’s be fair and round that down to $750,000 in reimbursements per electoral district. A modest estimate concludes that $250 million of taxpayers dollars will be spent on these subsidies this election.

As stated in the above section, parties will spend $384 million on campaign expenses. Combine that with the $250 million they will receive after the election, and that totals roughly $630 million of taxpayer dollars spent on this election – again, not including the costs incurred by Elections Canada to actually put on the election.