fundraising Archives - Page 5 of 7

February/March election? Think again

As we break for the Christmas/New Years holidays, Ottawa has been talking about a real possibility of an election in February and March.

I believe that the current conventional wisdom on the timing of an election is wrong.

First, no party is really in a good position for an election.

Consider the Conservatives; statistically tied with the Liberals in the latest Harris/Decima poll, the Tories aren’t riding their traditional high numbers. Some have attributed this decline to Canada’s bad press at Bali, some blame the attention that Mulroney has received. But a budget will be a bonanza of tax cuts in February, you may think, and this surely will be enough to buoy Conservative numbers. It may, but the Conservatives need the decision of at least one party to survive and three to defeat it.

That brings us to the main opposition party: the Liberals. Stephane Dion has been routinely embarrassed in the House of Commons by being forced to abstain from votes of confidence such as the throne speech and subsequent crime legislation (named a matter confidence by the PM). A staffer in Dion’s office recently told me that this pattern cannot continue at length. He’s right. The Liberals will stand in February to defeat the budget. In fact, they’ve already indicated that they intend to try force an election. This is a necessary move by Dion, as he cannot remain neutered indefinitely lest his caucus revolts. The smart play here is that he’s been first out of the gate in declaring his intentions meaning that he will not have to race Jack Layton and Gilles Duceppe to the waiting cameras outside of the House doors (besides Layton and Duceppe are closer to the doors anyway). So Dion is forcing the NDP and Bloc to react to Dion whereas earlier Dion reacted to the declared intentions of those two parties instead. Dion is well ahead on this vote. This will help relieve some of the negative attention received from his chronic abstentions in this latest session in 2007. The move, however, is somewhat disingenuous as Dion knows that at least one other party will save Harper’s government (and Dion) to fight another day.

While the NDP has had better fundraising fortunes than the Liberals, this opposition party still needs to continue its strides in becoming a viable opposition in the minds of Canadians. While they will no doubt vote against the budget (and the Conservative government won’t change its legislation to accommodate them), they are unlikely thrilled about a March election. Further, the NDP standing with the Conservatives on a conservative budget would destroy much of the NDP’s credibility.

That leaves us with the Bloc, who shares a particularly important electoral interest with Stephen Harper: Quebec. The Bloc will vote for the budget because there will undoubtedly be some good items for their province. In fact, we can be quite confident in this prediction as Harper/Flaherty would be unlikely to pen a budget without extended consideration for Quebec. If they did, they would guarantee that their government would fall and that their hard-fought gains in that province would be tenuous at best and their planned gains would evaporate overnight. Expect good things for Quebec in 2008 and expect the Bloc to pass the budget; the Bloc is the only party Harper needs onside to survive.

This scenario generally satisfies all parties to some extent. The Conservatives will continue to govern while entrenching their image as tax fighters in the minds of Canadians. They will also continue to build in Quebec. The Liberals (and especially Dion) will relieve a lot of pressure internally in caucus and externally in their image as the hapless leader breaks his abstention streak. The NDP will still get to stand up to the Conservatives (the NDP gains from this scenario are the least of the four parties). Finally, the Bloc will have voted for a better budget for the people of Quebec, even if it is delivered by Conservatives. The Bloc has been concerned by the Conservative encroachment upon their nationalist strategy as it has been reconfigured by Harper as decentralization and respect for provincial jurisdiction. Duceppe would only be handing Harper voters if he defeats this government as the Prime Minister will be seen to be a better defender of Quebec’s interests.

If the Prime Minister really wants an election in March, the budget will contain a poisoned pill that is inert to Quebeckers but unacceptable for the Bloc.

Questions for Garth Turner

Sunday night, I broke the story that Garth Turner, Liberal MP for Halton was collecting funds from donors into a trust. As specified by Elections Canada, trusts are generally forbidden as one cannot pay out of a trust the many donations that went into a trust. Check the full story here.

Garth’s response was both predictable and unpredictable. Predictably, he alluded to some well-organized conspiracy that was out to get him and immediately claimed victim status. Unpredictably though, he acknowledged his mistake and has taken steps to significantly reconfigure how he will be collecting money in the future. However, there are significant questions that remain.

Since this comes on the heels of Liberal questions in the House about election spending, they have much to do to get their own campaign finances in order. This week, we’ve seen apparent campaign finance discrepancies by Bonnie Crombie (more on that soon), Blair Wilson and now Garth Turner. How can they criticize the Conservatives before they sort out their own affairs?
Since many cheques to Garth Turner were made out to “Garth Turner Campaign, in trust”, does this mean that he’ll have to return all of that money? All cheques should have been made out to the “Halton Federal Liberal Association”.
In April of this year, Garth held a fundraising event with former Liberal leadership candidate Ken Dryden. Garth wrote:

“Tonight was also an important milestone in my local election campaign. We exceeded our fundraising goal and, in the past three weeks, have raised five times more funds than the local Conservatives did in an entire year. All those bag signs, arterials, stakes, wire frames, ties and pounders in my garage are now paid for in full. We have cash in the bank � enough to get seriously and immediately ballistic the moment the writ is dropped.”

Ballistic or busted? Were these fundraising efforts for naught? If that campaign materials was purchased by a private account and not the one held by the Federal Liberal Riding Association, Garth cannot use these campaign materials.
This represents a huge oversight by Dion’s new czar of fundraising. Does this represent poor judgment on behalf of the Stephane Dion? Will Garth resign this position? What can be said of the fundraising health of the Liberal party if Garth has been directing it?
Garth claims that he transferred money from a business account to the Liberal Electoral Association. Last time I checked, this is not allowed. Ironically, Garth criticizes the Conservatives for transferring money between EDAs and the federal party (which is allowed). “In and Out” is it called? Or is this “Out to In”? I’ve lost track.
If the Liberal Electoral Association accepted money from this business account (as Garth claims) they would also seem to be in violation. Could this association become de-registered by Elections Canada?
Garth is right in that being an independent can be tough. Independents do not have riding associations (EDAs). They can raise money, but they cannot issue tax receipts. Garth writes:

“When Mr. Harper threw me out of caucus, I sat as an indie for a number of months, during which people sent me money because they took pity on my soul”

I hope these people don’t expect to get tax receipts. But really, now that Garth is a Liberal, what is the status of this money? He can’t transfer money from this “business account” (in trust) to the Liberal EDA.
What are the consequences of this oversight? If this gets investigated, will Garth step aside? Will Dion ask him to step aside?
In a past life, wasn’t Garth a finance guru? Wasn’t he Minister of National Revenue? Is this mistake oversight or a sophisticated financial operator pushing the envelope?

What is Garth Turner doing?

As Halton MP Garth Turner stands in the House of Commons and acts offended by the so-called “In and Out” scandal with which the Liberals are trying to tar the Conservatives, he may want to check his own behaviour as his own financing may be in question.

On Garth’s website, where you can donate, the following information appears:

There are two questionable items in this information, particularly:

Cheques are to be made out to “Garth Turner campaign, in trust
Garth is promising tax receipts for donations made in this way

From Elections Canada, we learn that:

…as of June 12, 2007, as a result of changes made by s. 44(2) of the Federal Accountability Act to s. 404.2 of the Canada Elections Act, transfers of trust funds to candidates from registered parties and registered associations will be prohibited.

It seems that when an election is called, the federal accountability act prohibits the transfer of money from an electoral district association’s or party’s trust fund to a candidate. If this is so, who holds this money in trust? Is it “Garth Turner campaign” (whatever that entity is) or “Garth Turner”? If the account is to be used to elect Garth Turner, it would be useless for the EDA to hold it because of the new changes governed by the FAA. But yet, outside of an election, all funds must be donated to the EDA.

furthermore (from Elections Canada),

A contribution made from a trust fund is treated as a contribution from the trustee.

When a registered party, registered association, candidate, leadership contestant or nomination contestant receives a contribution paid out of funds held in trust, the trustee is reported as the contributor and the contribution counts towards his or her contribution limit.

Therefore, only a trustee who is an individual may make a contribution from a trust fund.

So, Garth is encouraging people to write cheques to “Garth Turner campaign, in trust”. What does this mean? As is the general understanding, and confirmed by Elections Canada, funds held in trust become the property of the trustee. Contributions from trust funds are treated as contributions from the trustee. So, if a candidate were to able to transfer money out of a trust fund to fund their campaign, the maximum they could withdraw would be the maximum contribution amount allowable by an individual (ie. the trustee) per year, which is $1,100. If Garth collects $50,000 into a trust fund from donors, it becomes the property of that trust’s trustee and subsequently, that trustee can only give $1,100. But, can money even be transferred out of a trust (with many contributors) for the purpose of an election campaign?

Trusts are dubious because of the exchanging of money through an intermediary (the trust/trustee). For example, if I wanted to give a political party $100, I couldn’t give it to my friend to donate that money for me. My friend would have to do that in his name because he is the one handing over the money. Again, the nature of trusts is that the money held in trust becomes the property of the trustee and therefore contributing from that trust becomes a donation from the trustee and not the variety of individuals who gave money to put into that trust.

But, as we read on, this becomes clearer. Elections Canada states that indirect contributions are prohibited,

An individual may not collect funds from others in a trust for the purpose of making contributions to registered parties, their associations, candidates, leadership contestants or nomination contestants. (s. 405.3 Canada Elections Act)

This is because individuals cannot make contributions from funds given to them by others for the purpose of making contributions. This rule cannot be avoided by the individual collecting funds in a trust from which to make contributions.

The Liberals have been going on and on about money transfers from parties to candidates and from candidates to parties. Money transfers of this sort happen all of the time. However, according to section 404.2(2.2) of the Elections Act, this may not occur with respect to trusts.

A transfer of funds, other than trust funds, is permitted and is not a contribution for the purposes of this Act if it is

(a) from a registered party to a candidate endorsed by the party; or

(b) from a registered association to a candidate endorsed by the party with which the association is affiliated.

and according to Elections Canada,

A registered party, registered association, candidate, leadership contestant or nomination contestant may not avoid Canada Elections Act controls by collecting contributions directly in a trust fund.

Any such contributions remain contributions. They must be accepted by the relevant agent, put into the campaign account (*** ie. during a campaign, for a candidate as recognized by a returning officer during a writ period — Stephen ***) (if received by a candidate, leadership or nomination contestant) and reported as contributions.

Outside of a campaign, donations for the purpose of eventually electing somebody must be made to the Electoral District Association.

Why is Garth collecting money from his supporters into a trust?

Who owns (and therefore controls) the money in that trust since an EDA cannot transfer money from a trust to a candidate during a campaign?

How would a candidate expect to get more than $1,100 a year out of such a trust?

If a trust is made up of pooled money from a number of people, how can money be transferred to a campaign since indirect contributions are prohibited?

If during a writ period, only a campaign can issue tax receipts and if outside of a campaign, only an EDA can issue tax receipts, how can “Garth Turner campaign” hope to give tax receipts to donors as his website claims?

How much money has Garth Turner collected in trust?

UPDATE 10/29, 11am: Garth has changed his website. It now asks cheques to be made out to “Halton Liberal Association – Garth Turner Campaign”.

Will Garth have to return all of the cheques made out to the trust fund?

How will any donor to the trust receive a tax receipt?

What if he has already cashed the cheques and the money has already accrued interest?

Why was a trust fund set up in the first place?