Free-for-all, free for none: Campaign financing in Newfoundland and Labrador

The past year has shaken Newfoundland and Labrador’s political parties significantly. Former Premier Kathy Dunderdale’s resignation prompted the Progressive Conservative Party to begin searching for its new leader; the Liberal Party elected its new leader following a long and expensive campaign; and infighting forced the New Democratic Party to perform a leadership review, scheduled for this May.

Chaos at the top of Newfoundland and Labrador’s three major political parties happened to spark debate about provincial campaign financing rules. In the Liberal leadership race, candidates could accept donations of any amount from individuals, corporations, and unions, had no spending limits, and did not have to disclose the origin of donations made to them. Election rules are similarly scant. There are no donation limits, although there are spending limits: candidates can spend roughly $4.30 per elector in each district.

In a democracy, candidates must convince voters why they are suited to govern and campaigning allows the former to provide the latter with information necessary to make a decision at the ballot box. Winning requires candidates to compete with each other and persuade voters in their direction, whether by connecting with them through advertisements, lawn signs, websites, phone calls, or knocking on doors. Politicians need money to make these connections, though, which is why strong financial support is a primary determinant of candidate success.

Unlimited campaign contributions harm Newfoundland and Labrador’s democracy. They allow candidates to rely on a few large donors for support and, in some instances, permit those donors to fund their own campaigns. In many ways, small groups have more influence over policymakers than do individual voters. Reciprocity, however, is instinctual, and even if it was not, politicians must keep their donors happy if they depend on them for re-election. Moreover, unlimited campaign financing allows affluent candidates to use their personal wealth as an electoral advantage.

The lack of rules governing leadership races is of even bigger concern. In the most recent provincial by-election, candidates were permitted to spend $42,278. This is a large sum of money, but it is not insurmountable for candidates with some of their own money, a respectable donor base, and party support. But the “capital requirement” of a leadership bid is prohibitive for all but the wealthy. In the Liberal Party of Newfoundland and Labrador’s 2013 leadership race, for instance, two candidates spent over $400,000. Much of this came from their own pockets.

Only candidates willing to spend large sums of their own money, or those with donors willing to fund their campaigns, stand a chance to lead one of the province’s main parties, which gives wealthier individuals an advantage or holds leadership accountable to large donors. (Moreover, leadership candidates do not have to disclose their donor lists, exacerbating the situation.) Until the situation ceases, parties will not have an incentive to reduce their own spending or contribution limits to reasonable levels.

The problem is not, strictly speaking, that wealthy people have too much power in politics. Even if corporations, unions, and individuals represented the interests of those without their own wealth to spend on campaigns, their ability to almost singlehandedly fund campaigns makes politicians more accountable to a few voices than to many. Without contribution limits, groups representing people control elections rather than people themselves. This weakens the connections between voters and democracy’s outcomes.

The Government of Newfoundland and Labrador should, therefore, institute a campaign financing regime, similar that of the federal government. It should cap contribution limits, extend its financing laws to leadership elections, and ban corporate and union donations. Taking these steps would make democracy in the province less accountable to money and more accountable to voters.

Michael Sullivan is a 2013-2014 Atlantic Institute for Market Studies’ Student Fellow. The views expressed are the opinion of the author and not necessarily the Institute


Income Splitting and the “Fairness Critique”

The federal government recently tabled its 2014 budget projections, claiming a slight surplus of $2 billion in 2015. With this is mind, discussion has arisen around what to do with the extra money. Should Ottawa pay down the national debt? Should it increase program spending? What about reducing taxes?

One campaign idea from the Conservative Party is income splitting. Essentially, a couple living together could “average out” their combined incomes for tax purposes, pushing the higher earner into a lower tax bracket. The Conservatives are selling this policy as “easing the tax burden on Canadian families,” which would presumably be picked up by someone else.

While I generally favor lowering most taxes, much of the time, and for almost any reason, we must ask the question that continually surfaces in economics: As opposed to what? In the case of income splitting, what alternative is the government foregoing?

First, debt payments should be seriously considered. One other option is to trim tax rates equally across the board by a small amount. This would address the main criticism of income splitting, which is that it favours “families” (or couples) at the expense of individuals who do not find themselves in two-person households. Indeed, it is unclear whether income splitting is a subtle nudge from social conservatives trying to support the idea of the so-called traditional family.

The “fairness” critique of income splitting extends much further. Not only may there not be a reason to favour certain social arrangements in this way, but also “families” seem to use a larger chunk of public spending–recreational facilities, healthcare and education costs for children, and the like. Critics claim that it would be unfair to reduce the tax burden selectively on that group of people who use the most public services.

For the reasons above, income splitting has generated a rift among Conservatives and among fiscal conservatives, more specifically–the controversy surrounds whether selective tax cuts for a specific group is fair or not.

Another problem is framing the surplus as a prize. It might be useful to remember that it is not, in fact, the government’s money in the first place. In this light, however, it is hard to disentangle the various interest groups that may find themselves scrambling for a piece of the surplus.

Nevertheless, it will be interesting to see whether the Conservative Party moves forward with income splitting in light of the fast-approaching election in 2015. To do so would appeal to their socially conservative base, in addition to fulfilling a campaign promise. However, enacting a broader tax cut would support the kind of “big tent conservatism” that seems to have held together an unpopular government through the last four elections.

Michael Craig is a 2013-2014 Atlantic Institute for Market Studies’ Student Fellow. The views expressed are the opinion of the author and not necessarily the Institute

On Trinity Western Law School

Trinity Western University’s (TWU) proposed law school has sparked debate across the country, not only in British Columbia, where it will operate, but also in Nova Scotia.

Nova Scotia Barristers’ Society (NSBS) held a public meeting recently and opened the floor to the public and legal professionals to present their concerns and opinions about the implications of TWU’s Christian mandate. In addition, there were several written reviews submitted to the Society in previous weeks.

TWU is a private Christian university and part of their faith-based mandate includes a community covenant that outlines values and principles that staff and students must espouse. The agreement, which requires signatories to abstain from, “Sexual intimacy that violates the sacredness of marriage between a man and woman,” has created tension among the public and legal community, and the Federation of Law Societies of Canada’s (FLSC) approval of the university’s law school this past December has exacerbated the dispute. The FLSC approval committee concluded that TWU has the capacity to provide a quality education to its student body, comparable to other Canadian law schools, however, the decision to recognize students with degrees from TWU falls under provincial jurisdiction.

Some provinces, including British Columbia, Nova Scotia, and Ontario have requested external input before making an official decision about whether they will accept TWU-educated law students, yet, whereas other provinces have chosen simply to accept FLSC’s decision.

Gathering public opinion on these issues is theoretically understandable, however, ultimately, the decision should be consistent with the FLSC. This would not only ensure that lawyers can continue to practice throughout the country, but also it upholds religious freedoms, which are entrenched in the Charter of Rights and Freedoms. As long TWU graduates represent Canada’s legal principles and abide by Canadian rules and regulations, personal beliefs are irrelevant.

For instance, refusing to recognize law degrees from a Christian university illustrates another form of discrimination. Although TWU requires students to espouse the values outlined in the university’s community covenant, they continue to accept gay and lesbian students that choose to study there. The province’s should also accept lawyers with varying beliefs and opinions, so long as they are able to put them aside to uphold the law. Diversity includes accepting differing religious beliefs and censuring prospective law students from studying in a religious setting is adverse to the principle.

Nevertheless, debate over this issue is certain to continue and some provinces are just beginning the process already begun British Columbia, Nova Scotia, and Ontario. While there has been support of, and opposition to, TWU’s proposed law school in Nova Scotia, however, it appears that the provincial government will discredit law degrees based on discrimination against the LGBT community. In any case, the government will decide in April and it will be interesting to see whether popular opinion influences the NSBS, causing it to lose sight of the fact that TWU law graduates will receive an acceptable legal education and compelling it to focus solely on their personal beliefs.

Rachel Lowe is a 2013-2014 Atlantic Institute for Market Studies’ Student Fellow. The views expressed are the opinion of the author and not necessarily the Institute