New Political Finance Law Expected to Have a Profound Effect

AUDITOR GENERAL Sheila Fraser, who's known as much for her way with words as how she crunches the numbers, characterized what she exposed in her report on the federal sponsorship program as "shocking." At first, that sounded about right.

New Political Finance Law Expected to Have a Profound Effect

AUDITOR GENERAL Sheila Fraser, who's known as much for her way with words as how she crunches the numbers, characterized what she exposed in her report on the federal sponsorship program as "shocking." At first, that sounded about right. As public revulsion deepened, though, what seemed to be bothering Canadians most was that they were not all that shocked. After past revelations about out-of-control federal job-grant spending, massive cost overruns at the gun registry, imperial excesses in the privacy commissioner's office, who could honestly claim to be flabbergasted? It was the all-too-familiar feel to the latest outrage that made it so outrageous. But there is a way to describe the current state of ethics around Parliament Hill that still stands a chance of being greeted with amazement: the dawn of a new era of clean federal politics.

This sunny proposition is not based on credulous acceptance of Paul MARTIN's I'll-get-to-the-bottom-of-this rhetoric on the latest scandal. His response to the affair might well turn out to be meaningful, but the new measures he's promised stand little chance of being as historic as the reforms he inherited. Jean CHRÉTIEN passed a sweeping political finance law as one of his government's final moves last June. He was driven to it by ethics controversies that cast a dark shadow over his legacy. The impact of the new law, which took effect on Jan. 1, hasn't gotten the attention it deserves. It bans donations to parties and their leadership candidates from corporations and unions, limiting them to giving a maximum of just $1,000 to local candidates. Individuals are allowed to give up to $5,000 a year to a party, its riding associations, and candidates.

Denizens of political backrooms have rarely had to cope with bigger change, aside from bylaws banning indoor smoking. No more courting company and labour bosses, selling them whole tables at fundraising dinners. Parties now need to concentrate on getting wide support from citizens committed enough to contribute from their own pockets. Irving Gerstein, the veteran Tory organizer who heads the Conservative Party of Canada Fund, was a vocal opponent of the new restrictions. But even he now describes the change in basically positive terms: "We're going to see individuals far more involved than they were in the past."

And we're going to see future political scandals that no longer feature what has often been the most disturbing dimension of past ones - a link to dubious donations. Consider this aspect of the now-notorious sponsorship program: Groupaction Marketing, one of the Montreal advertising agencies that collected millions in questionable federal fees and commissions, donated more than $100,000 to the Liberal Party of Canada from 1997 to 2001, the period when Fraser found the program was most egregiously out of control. Other firms and individuals implicated in her report also gave generously to the governing party. Inevitably, that raises the question of whether one aim of the murky financial mechanisms of the sponsorship scheme was to generate kickbacks.

Stung by such allegations, the Liberal party's Quebec wing is having its books audited to find out how much it raked in from the implicated companies and executives. But here's where the subject edges toward the absurd: Deloitte Touche, the accounting giant that has been chosen by the party to conduct the sensitive audit, is itself a big Liberal donor - prompting Conservatives to charge that the firm can't be trusted with the job.

That's the way it goes when companies are allowed to pour money into politics. Their donations tend to cast suspicion over every aspect of their relationship with politicians. Many party fundraisers protest, no doubt with much justification, that most donations come with no strings attached. "I never once encountered a corporate donor who expected the slightest favour from, or access to, government in exchange for supporting the competitive political system," Stanley Hartt, a former chief of staff to prime minister Brian Mulroney and before that a top federal bureaucrat, said in a recent letter to Maclean's. On the other hand, the Public Policy Forum, an Ottawa research group, surveyed 30 corporations last year on why they made political contributions, and 19 admitted they expected to improve their relations with government. Is it too cynical to suppose they hoped for a bit of extra access and the odd little favour?

Under the new rules, thankfully, such cynical assumptions need no longer be made. A problematic link has been cut. Still, questions about money and political influence have not entirely been put to rest - and never will be. Gerstein worries that some companies might look for other ways to spend money to try to influence election outcomes, perhaps by supporting interest groups not formally affiliated with political parties. "An uglier head may be raised by this," he said. That depends partly on the outcome of a case now being considered by the Supreme Court of Canada. The conservative National Citizens' Coalition succeeded in getting an Alberta court to overturn portions of the Canada Elections Act that would cap election advertising and campaign spending by lobby groups at $150,000 nationally and $3,000 in any one riding. The federal government appealed the Alberta ruling, and the Supreme Court heard arguments last month. It's not clear when its decision will be handed down.

Even if the top court upholds the Alberta ruling, it's hard to imagine corporations and unions giving as much to interest groups as they traditionally did to parties. So their financial leverage in electoral politics appears to have been relegated to history. Of course that doesn't mean an end to government spending scandals; there's no way to outlaw sheer incompetence, or legislate away malfeasance motivated by personal greed and corruption. But on those fronts, too, the situation in Ottawa looked promising even before the sponsorship affair broke.

One key is improving the spending safeguards designed to discover waste - and worse - before it gets out of hand. Here Martin deserves credit. One of his more obscure policy commitments during his waltz to the Liberal leadership last year was to put a comptroller in every government department, which he sold as private sector-style financial oversight. The promise didn't exactly set the campaign trail ablaze. But since the sponsorship affair exposed how spending controls can totally break down, some Liberals are talking as if "A Comptroller In Every Department" has taken on the sure-fire ring of "A Chicken In Every Pot." Treasury Board President Reg Alcock, the cabinet minister in charge of modernizing the system, says he'll go further - not just making sure that how Ottawa spends is better monitored, but also that much more of the detail is open to outside scrutiny. "The mandate I've come in with is to build systems to ensure transparency and accountability," he says. "That's the big transformation that has to happen."

His promise of greater openness is tantalizing to critics who see secrecy at the root of the most recent scandal. Aaron Freeman, a board member of the tenacious government-ethics advocacy group Democracy Watch, says a full-scale updating of the Access to Information Act is long overdue. Alcock is looking into the law with an eye to extending its reach at least as far as Crown corporations - including those, such as Via Rail and Canada Post, that are tangled up in the sponsorship affair. Freeman says how far the government is willing to go on this file is a litmus test of Martin's true commitment to a new ethical standard. "We need to overhaul the access to information rules," he said. "Extending them to Crown corporations is the most modest of the reforms we need."

But before attention can turn to new initiatives, the final major one of Chrétien's late bid to be remembered as an ethics reformer remains to be completed. Martin has reintroduced his predecessor's package of legislation to finally create a federal ethics commissioner independent of the prime minister, and impose an ethics code on MPs and senators. That law, Bill C-4, has been passed by the House, but is now before the Senate, which blocked an earlier version last year. Freeman won't believe it's a done deal this time until the senators vote - and worries it could be delayed again, perhaps until after a spring election. "We could be at a watershed moment," he said. "Or the government could find ways of delaying until the public's attention is elsewhere."

Freeman sounds braced to be disappointed. Still, the combination of radical new political finance rules already in force, the ethics package now before the Senate, and Alcock's grand plan to revamp financial oversight systems throughout the government, is too big to be ignored. Chrétien felt forced to address ethics at the end of his reign; Martin has been compelled to go further to try to transcend scandal at the start of his. It's hardly the ideal way to craft policy, but the outcome has to be better than the old status quo. The question now is whether voters will credit the Liberals - or decide that even the dawn of a new era isn't cause enough to forgive the worst of one that's passing.

Maclean's March 8, 2004