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Democracy for Sale

Part One: The Problem. By allowing unlimited donations from corporations and unions, BC’s democracy is corrupted by non-voters.

Matt Price 28 Mar
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In 2002 when a BC Minister was forced to temporarily step aside over allegations of undermining an investigation into a salmon farming company, part of the story was that the same company was a major donor to that Minister’s party. It’s rare to come across evidence of such specific interventions on behalf of campaign contributors, and thankfully even rarer to establish that a direct quid pro quo exists that links specific interventions with specific donations. None was established in this case.

Yet, once we allow campaign contributions by economic actors like corporations and unions, we must face up to a fundamental and systemic problem: even without a specific quid pro quo in place, these donors expect a certain pattern of financially beneficial governance, and both the donors and the recipients know that future political contributions depend on this taking place. By allowing corporations and unions to donate to political parties we are consciously allowing the systemic buying of influence in BC politics by big money interests.

Between 1996 and October 2003, corporations and businesses put more than $28.5 million into the BC Liberal Party, accounting for a full 68 per cent of that party’s donations. During the same period, organized labour put more than $2.7 million into the New Democratic Party of BC, accounting for 10 percent of that party’s donations. When Manitoba and Quebec banned corporate and union donations, they not only ended this buying of influence, they also capped donations by wealthy individuals in recognition of another important principle in our democracy – that a voter’s wealth should not be the main determinant of political access and influence.

BC not only allows corporate and union donations, but also has no caps on individual donations. Our system is therefore open to abuse by party fundraisers who inevitably feel compelled to keep wealthy donors happy by giving them some kind of return on their investment – better access to politicians than non-donors, for example.

In fact, as tomorrow’s installment of this article will show, when we look at the sum total of possible tools used in Canadian provinces to make political financing fairer, BC scores the lowest of any province alongside Alberta in using these tools.

This situation not only means that BC’s democracy is open to the buying of influence, but also that we have one of the least level playing fields when it comes to some parties being able to dominate others with money. Central to any discussion about getting big money out of politics are issues including political speech, the appearance of corruption, and corporate and union considerations.

Political Speech

Diverse debate is one of the cornerstones of Canadian democracy. Voters must be given a full range of analysis and opinions regarding BC’s political governance, and given clear options to choose from at election time. This diversity of debate about how we govern ourselves is often called “political speech.” The values associated with meaningful political speech – both freedom and diversity – are protected explicitly in the Canadian Charter of Rights and Freedoms and in subsequent interpretations of the Charter by the Supreme Court of Canada.

Section 2 of the Charter protects freedom of expression and association, while Section 3 has been interpreted to protect “meaningful participation” of voters in elections, including the right to be adequately informed of all viewpoints, and not having any one dominate the debate.

The Supreme Court has recognized that the rights in Sections 2 and 3 must be reconciled, and in so doing has established the primacy of electoral fairness, upholding reasonable limits on expression where those limits serve that objective.

Despite this clear direction from the Supreme Court, BC has few safeguards on the fairness of political speech. BC allows its political parties to be heavily dependent on financing from entities that have no standing in its elections – corporations and unions – with the result that the political viewpoints of those non-voting entities dominate BC’s political debate.

This dependence on corporations and unions is misplaced, writes Mount Allison University professor William Cross: “The democratic interest in citizen participation in the electoral process lies solely with voters. Corporations, trade unions, foreign entities and other organizations or associations have no such protected interest. There is no compelling democratic or legal reason why these groups should be permitted to participate as independent expenditors.” British Columbians often lament the wild swings in their political cycle. A leading reason for these swings is allowing corporations and unions to have such a dominant financial role in the political process. There is no reason for these entities to have a direct financial role in the process, and there are good reasons to ban their funding of parties and candidates altogether.

Electoral fairness also extends to whether wealthy individuals are allowed to buy more political speech than others. If “one person, one vote” is to be meaningful, any one person must not be able to unduly influence the votes of others by the funding of advertising and other means of persuasion. The challenge of political speech in modern society, however, is that it’s expensive. Not only are there tens of thousands of voters in any given riding, but the means to reach them effectively — media, paid organizing, etc. — cost a good deal of money.

Appearance of Corruption

Political speech is most important during election seasons, like this one, when voters pay attention to their political choices. But the role of big money in politics is perhaps most important during those times in between elections when the business of the province is done. The problem begins as soon as any economic interest — a corporation or a union — is allowed to make political donations. The word “corruption” is usually reserved for those situations where a specific donation is tied to a specific act of government that is in the donor’s interest. Those situations are, thankfully, very rare, but the fact remains that donors give money based on the expectation of a certain pattern of governing. “The dividing line appears to permit contributions based on predictions of official behaviour, but forbids contributions designed to affect official behaviour,” writes Burt Neuborne, director of the Brennan Center for Justice at the New York University School of Law. “The difficulty, of course, is that a contribution given as a prediction will not be repeated unless the officeholder’s behaviour is consistent with the prediction – and both the donor and officeholder know it.

So, while donations by economic actors are rarely “corruption” in the narrow sense of the word, it is nonetheless true that the overall system has been corrupted by their financial participation.

“Under such a conception of corruption, not a word need be exchanged about a link between money and official action, as long as the financial system rewards an official for behaving one way, and punishes her for acting another,” Neuborne asserts.

For this reason, even the U.S. Supreme Court is willing to limit political donations by economic actors in order to uphold the appearance of integrity of the system. The fact that BC’s political financing is so dominated by economic interests should give British Columbians great concern regarding the perceived integrity of our system.

Corporate shareholders and union members

It is clear that from the perspective of strengthening democracy that corporate and union donations to political parties are problematic, but there are also complementary arguments from the perspective of the people that these bodies are supposed to serve – shareholders and union members.

In the case of corporations, directors and executives have a “fiduciary duty” to shareholders to act in such a manner as to pursue the objectives of the corporation and to avoid conflicts of interest.

Presumably, when directors or executives give money to political parties instead of paying that money out to shareholders, they do this not out of personal support for a party (which would be conflict of interest), but because they believe that there will be a greater financial benefit to shareholders in making the donation than the shareholders would have received by getting that money. If this is true, it confirms the fact that democracy is corrupted by economic entities that are paying for self-interested financial outcomes from political parties.

But, it must also be said that many shareholders may not believe in the wisdom of the business strategy. By its very nature democracy means anyone can win at election time. Is the corporation therefore not incurring business risk by backing one party and not another?

For example, Teck Cominco is the single largest contributor to the BC Liberal Party, donating $747,591 from 1996 through October 2004, according to Elections BC records. Teck shareholders could ask tough questions about the disclosure of business risk associated with a Liberal loss. Couldn’t a non-Liberal government view Teck as a “Liberal” company whose potential misfortunes weaken their political opponent?

Likewise, labour unions have at their core a function – workplace rights and benefits – that is different from the support of one or another political party. What if union members support a different party from the one his or her union donates to? Some unions allow members a choice as to whether his or her dues contribute to political action. This is a good step for democracy within unions themselves.

For our larger democracy to work properly, both corporate and union donations to political parties should be banned.

Matt Price is coordinator of Conservation Voters of BC, which works to hold politicians accountable to the environmental values of the BC public. A veteran of the BC environmental community, Matt was raised in Port Alberni and currently resides in Victoria.  [Tyee]

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