The Virtues of Public Financing
Dec 02, 2008
The current political crisis unfolding in Ottawa is clearly the fault of the governing Conservatives. Behaving as if they had a majority government, their recent fiscal update was controversial on several fronts, including the lack of any financial stimulus, cuts to federal spending, and a ban on the right to strike for federal employees.
But arguably the most regressive move of the government – which they have since backtracked on – is their decision to end taxpayer subsidies to political parties. While this has been a controversial measure since it was introduced by the Chretien government in 2003, it brings democracy to political financing in a way that hadn’t been there previously.
In the past, political parties in Canada and elsewhere have traditionally been funded through private individuals and organizations. One of the goals of Chretien’s initiative to fund parties out of the public purse was to wean parties from the big corporate and union donations which undoubtedly constituted the vast majority of their funds. The hope was that the entire process would become more transparent and democratic and that special interest groups would be less of a factor in the financing of parties.
At present, the government of Canada returns about $27 million annually to political parties based on $1.95 per vote that is refunded to each. Although eliminating the subsidy would cost the Conservatives a greater amount financially, it would be much more harmful for the NDP and Liberals, as the Conservatives have a significantly larger war chest.
Many countries around the world have come to embrace some form of public financing for their political parties because it is cost-effective and beneficial to democracy because it makes the political process more open and fair to everyone. Some countries use government funding to run campaigns. Funding campaigns from the budget is also widespread in South America and Europe. The mechanisms vary, ranging from direct subsidy of political parties to government matching funds for certain types of private donations.
Supporters of public financing generally believe that these types of systems decrease corruption. Many also believe that public financing promotes other values, such as civic participation or greater faith in the political process. The Council of Europe, which represents 47 member states and some 800 million people, has encouraged public financing given the number of scandals linked to the financing of political parties in several member states in recent years. They specifically advocate financial contributions from state budgets.
Regulating the financing of political parties is a delicate process. Obviously, some provision must be made for reasonable private donations. But governments must also ensure that mechanisms are in place so that these are transparent and that some form of public financing is also used to ensure that all parties have the ability to participate in the democratic process.
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