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Colleagues, let's start our meeting this morning. I want to advise members right off the bat that the meeting will be held in public.
As well, I want to advise that you have received this morning the information from the Chief Electoral Officer and Elections Canada. That was circulated this morning. Hopefully, you've had an opportunity to read that. A second copy is being circulated to members right now, just in case that might drum up some questions for our witness this morning.
Colleagues, the order of business today will be to pose any questions we may have regarding Bill to our witness today, who I'll introduce in just a moment. At the conclusion of these questions, and I'm certainly hoping we will have time, we have two other pieces of business.
The first one, following the witness, will be dealing with the subcommittee's report on the conflict of interest code.
On the second one Monsieur Guimond has just approached me and we will give him some time at the end of that, following that, if in fact we still need the time. I will offer that to Monsieur Guimond.
Colleagues, pursuant to the orders of reference of Monday, May 28, the committee will now resume its consideration of Bill 2007.
I want to advise the members that we did in fact contact all the witnesses that the steering committee, and ultimately the committee itself, agreed to, and as the committee agreed, those witnesses who could appear would appear here on Thursday. Those witnesses who could not appear would be requested to submit something in writing, so that we could review that for our Tuesday meeting, and then we would start clause-by-clause on Tuesday.
I have to tell members that Equal Voice was in fact e-mailed. We do have acknowledgment that the e-mail was received. However, we have had no response whatsoever from Equal Voice.
The Supreme Court judge we were trying to reach was not reachable, and the other gentleman is simply not available.
Elections Ontario has accepted our offer to appear here and has sent to us this morning a witness whom we can question.
As to the other witnesses who have responded or we've been in touch with, again, I just want to repeat that they've been asked to submit so that we can get their opinions on this issue.
Without further delay, colleagues, let me introduce Mike Stockfish. He's the director of election finances for Elections Ontario.
Madam Redman, please.
Thanks to the committee for the opportunity to appear before you today.
My name is Mike Stockfish. I'm the director of election finances at Elections Ontario.
I understand that I have approximately five minutes to give you a bit of an overview of the current requirements under Ontario's Election Finances Act as they relate to loans.
Loans and guarantees are regulated by sections 35 and 36 of the Election Finances Act of Ontario. The chief electoral officer of Ontario also provides guidelines to help our stakeholders interpret the legislation; G36 is the one that's specific to loans and guarantees.
I'll provide you with a very brief overview of the rules and regulations within the Ontario system overall.
First, I thought I'd take a couple of minutes to talk about borrowing. A registered political party, a constituency association, candidates, and leadership contestants can borrow money from one of the following groups: a chartered bank or other recognized lending institution, a registered party, or a registered constituency association. Those are the three that those groups can borrow moneys from.
Loans from eligible sources made at a market interest rate and for which payment has not been waived are not contributions; they're loans. However, if the interest rate the lender charges is below the market rate, the difference between that actual interest rate that's charged and the market rate does become a contribution and is subject to the contribution limits.
In addition to actual loans, any delay in paying suppliers or other liabilities could be considered a loan outside the intent of the Election Finances Act. Other payables could turn into loans; for example, suppliers' accounts must be paid within the suppliers' normal credit terms. Also, the repayment of any prohibited contributions that would be required to be forfeited cannot be delayed and ultimately become a loan.
That's the overview of borrowing.
In terms of guarantees and forgiveness, only a person, a corporation, or a trade union eligible to make a contribution under the Election Finances Act can guarantee a loan. In Ontario, those who are eligible to contribute moneys to those political entities would include those groups: individuals, trade unions, and corporations.
Any payment made by a guarantor for forgiveness by the lending institution of a loan—i.e., the guarantor or lending institution forgives or waives all or any part of the borrower's indebtedness—is considered to be a contribution for the purposes of the Election Finances Act and may be forgiven or waived only to the extent of the contribution limits. However, a payment by a guarantor for a guarantee is not a contribution unless the guarantor waives the right to recover the loan. In that instance, the loan becomes a contribution that is subject to contribution limits.
In terms of candidates, any existing campaign deficit, which would include unpaid loans left over at the end of the official candidate's campaign, becomes the responsibility of the constituency association; if it's there at the end of the campaign, by default it becomes the obligation of the association. Independent candidates are responsible for their own debts, but any surplus at the end of the campaign needs to be forfeited to the chief electoral officer of Ontario.
In the event that the borrower defaults on a loan and a guarantor has to make payment to the lending institution, the guarantor may choose to treat the payment as a contribution, subject to the limitations under the Election Finances Act, so in the case of default, the guarantor pays that. As a result, it is possible for the guarantor to forgive the indebtedness over several years. However, once this procedure has begun, it must continue without interruption until the debt is cleared, and that would be up to the contribution limits for that entity.
In the area of disclosure, the chief electoral officer has prescribed forms for reporting financial activity on an annual basis, a campaign basis, or a leadership contest period basis.
Contained in these forms are schedules that require full details of the name and address of the financial institution, the terms of the loan, including the amount borrowed, the name and address of each guarantor, and the amount guaranteed, and the amount outstanding at the end of the reporting period.
That's just a very quick, five-minute overview of the rules in Ontario. There clearly are a lot of other differences that you may want to delve into in terms of contribution limits.
I guess the one closing remark I'd make before taking questions is that there clearly is a distinct difference between the framework in Ontario and the federal one in terms of who's eligible to make contributions.
I think this looking at loans as a separate piece needs to be taken into context. It's part of the bigger framework; it's a piece of the puzzle. One needs to be careful about looking at it just as one separate piece, without taking into consideration the whole package.
I'm open for questions.
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A central concern that has been raised, certainly by the official opposition, is that this could limit access to the political process in leadership contests and nomination contests for people who are of limited means, compared with access for people with high personal means, because they would not be able, without a guarantor, to receive the consideration and loans from financial institutions that someone of means would have. The concern, of course, is that this could create a barrier to democratic participation.
First of all, could you let us know the contribution limits under the Ontario system and how they might compare to the current federal ones, which as you know permit no unions or corporations, but only individuals and only up to $1,100 a year, for various purposes.
I wonder whether, in your scheme—after you tell us about the difference in contribution levels—you have had the experience of there being a barrier to entry, at least a relative lesser access to participation, for people who didn't have the personal means to receive a loan from financial institutions without guarantors.
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In terms of contribution limits, I indicated in my comments who's eligible to make contributions: individuals, corporations, and trade unions based in Ontario. As to contribution limits, to a political party you can contribute up to $8,400 per year, and on top of that, if there's an election or an event during the year, there'd be an additional $8,400 that could be contributed.
I'll give this year as an example, where we have had by-elections in 2007 and we have a general election that's scheduled for 2007. You could contribute $8,400 to the party on an annual basis, for the by-election, and a third $8,400 through the general election. So it's $8,400 for parties.
For constituency associations, the contribution limit is $1,120, and it's the same for a candidate, $1,120. Any contributor can only contribute to a maximum of five constituency associations—so $5,600 in total—and similarly for candidates, up to a maximum of five candidates.
Those are the contribution limits in Ontario. Clearly, it's a different environment from that in place federally.
As to the experience we've had or what has come to our attention with respect to barriers to entry, it's not our experience, and I have no evidence indicating that there are systemic barriers in our system for candidates to run or for parties to be created. Obviously, all eligible contributions receive a tax credit receipt, so there's some opportunity for smaller parties and entities to raise funds, not necessarily through borrowing money, but in fact through the normal contribution process.
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To answer the first question with respect to the nomination process, our legislation does not have us play a role in the nomination process, so there are no reporting requirements. There are no financial rules around the nomination process under the Election Finances Act of Ontario.
In terms of the incidence of loans, I apologize; I didn't have enough time to do a lot of research with respect to how many loans and their values. But I can give you a general anecdotal summary of our experience. Certainly as you'd expect, the large parties are the ones who borrow money most consistently from financial institutions. The larger and more active associations would do that as well. Certainly candidates do borrow money in some instances to help finance their campaigns. What we see is a very cyclical nature of the loans, as you'd expect.
As they're heading into a campaign or going through a campaign, parties in particular will borrow money. That will be part of what they use in their campaign spending. Over the course of the subsequent four-year period, those loans will be repaid. When they get to the next event, then they start to build their bank accounts again for the purposes of supporting their campaign activity.
I did look at it quickly before I left, and certainly the size of the loans for the large parties in Ontario at the end of 2006 was dramatically lower than coming out of the 2003 election.
Thank you for coming to testify before us, Mr. Stockfish. I have two quick questions to ask you.
First, under the Election Act of Ontario, are the parties ultimately responsible for loans taken out by candidates?
Second, are parties required to lend money to candidates or associations at current commercial rates?
Given that I made no introduction, that I am surprising myself with my speed this morning, and that I am impressed with myself, I am going to ask a third question and get a full meal deal like at McDonald's.
Third, in Bill , if a party grants a loan to a candidate or to an association, and if the rate is lower than the market rate, for example if the market rate is 7% and the party lends money at 5%, we consider that the 2% difference would be seen as a contribution, and so could show in the books. Does Ontario have a similar provision?
Thank you, Mr. Chair. Those are my questions.
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Thank you, Mr. Stockfish, and welcome.
That is the reason why it is better for a political party to give a candidate money rather than to lend it, correct?
Let's say that the constituency association goes to a financial institution for a loan. First, in Bill only a loan of $1,100 can be guaranteed, and if someone has made a contribution of $1,100, he cannot then guarantee a loan. No guarantee can be made because it is the same as a contribution.
If the association makes the loan, can the association president, the election agent or anyone who signs the loan also give $1,100? Are these people just guaranteeing the loan, or do they represent the association? Is my question clear?
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I keep looking at your name and think, “Now, say it right.”
I really appreciate some of the enlightenment you can bring us from Ontario with your having a track record.
Quite frankly, I have read , and I wonder what the government is trying to fix with this. It may be what Monsieur Godin was trying to get at a little bit. If somebody defaults on a loan and is a candidate, do the members of the riding association then become personally liable? I guess that's the hard part of it, if allows riding associations to guarantee a loan.
The other issue I'd also like to cover off is floor crossing. You may or may not have had a lot of floor crossings in Ontario, but in our last election we had a Liberal candidate, Mr. Emerson, who crossed the floor to become a Conservative two weeks after the election. I see nothing in this legislation that would ever cover that eventuality. I can well appreciate that a riding executive of one party stripe would not want to be the guarantor and indeed be paying off the campaign loan debts of somebody who was no longer a member of that party.
So I guess I have a two-part question: who is liable in default, and have you covered off floor crossings at all?
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In terms of who's liable in default, I can repeat that if a candidate has a loan and that loan becomes the responsibility of the association because it's not repaid at the end of the campaign period—I should mention that certainly the expectation, the requirement, is that any campaign expense subsidy cheque that comes to the candidate would be used to repay any outstanding loans.
Regardless of that, if there are loans outstanding at the end, they do become the responsibility of the association. The individual officers are personally liable for those loans. I'm not sure, to be honest, whether that legally falls to those associations, whether they take on that responsibility, or whether it would become something that would be dealt with in a court of law. At our level, certainly it becomes a responsibility of the association.
That leads to your second question. Is it fair, if the person who incurred that loan and it becomes the responsibility of the association, that this individual is no longer aligned with—? I could offer you a personal opinion on it, but I don't think that's really appropriate. Whether there's legal recourse someone could take to deal with that, based on our legislation—the Election Finances Act—it would become the responsibility of the association. They may not be happy with it, but that's where it would lie.
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Yes, thank you, Chair. Just a quick comment on Madam Redman's comments that perhaps if you have a newly established party, like the Brown Bread Party, I think you used as an example, your democratic right may be somewhat denied because you haven't got the ability to access a loan through a financial institution. Again I go back to my point that it has been my experience, certainly federally, that almost any candidate who approaches a bank for a loan has to put up security, and they usually have the bankroll of the constituency association behind them.
My point is that if the constituency association didn't have the wherewithal or the ability to raise any funds themselves in order to leverage money from a bank, then perhaps that says something about the democratic right of that candidate. If a candidate doesn't have the support of enough people to put $10,000 in the bank so he or she can borrow an additional $10,000 in a sign-back to the bank, then I'm not sure if a democratic right has been denied or usurped, because it doesn't appear that that many people would be willing to support that person to begin with.
The point is that currently we have a system in which almost any legitimate candidate has the ability to borrow money from a financial institution because of the backing of the constituency association, and if the constituency association is broke, it means not very many people are willing to support that particular candidate. So I think it works itself out. I don't think there's any particular demographic or any group of individuals who would be unduly penalized by this bill.
Any other questions, colleagues?
Seeing that we appear to be done with our witness, I want to extend the committee's gratitude for your coming this morning, Mr. Stockfish. We certainly appreciate the time you have taken, as well as the time you took prior to coming, for your preparation. I think members have had some questions answered and perhaps a few others generated.
Having said that, I think what we'll do now is...I hate using the word “dismiss”; “excuse” is a much better word.
Mr. Stockfish, again, with the committee's thanks, we certainly appreciate your being here. The witness is excused.
Members, we do have a report in front of us from the CEO. We'll let you read that over, and we can debate it on Monday.
I need to remind members of what the committee agreed on at our last meeting, and this is that we would need any amendments that are recommended by the committee to get to the clerk Monday morning by 11 a.m., which would give us all 24 hours before Tuesday morning's 11 o'clock meeting. Just a reminder, if there are amendments, please have them no later than 11 a.m. Monday.
Just to remind you again, once the amendments are received, they will in fact be distributed to members in advance of the meeting.
Colleagues, I think what we're going to do now is suspend the meeting for one minute, so we can go in camera, as we need to discuss a potential report on a different matter by the committee, the matter of a conflict of interest code.
I'll suspend the meeting for one minute while we prepare to go in camera. Of course, I would like to remind members that once we're done with the code, Monsieur Guimond has asked for some time, and we're going to try to provide that.
[Proceedings continue in camera]
[Public proceedings resume]
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I will just repeat a comment that I made last Tuesday, of concern. That is with respect to the second subsections referring to parties not officially recognized.
I understand, and the clerk gave us the benefit of the conventional interpretation of that, but my concern remains that there might be an interpretation to suggest that members of parties not recognized, by not being independents, might not have any opportunity to pose questions.
I think the clerk's answer was that by convention the Speaker will proportionately take that into account and provide the opportunity.
But since my concerns expressed on Tuesday, members may have seen that Elizabeth May has expressed some concerns in the same way. I think if we were able to give some assurance to her or other people who might be in that situation, that might stop some of the public discourse and concern.
I want to ask Mr. Godin and then Madam O'Brien for a comment. But would it help anybody under subsection (2) if we were to add, “for the purposes of this Standing Order, members of political parties registered under the Canada Elections Act not officially recognized in the House are not considered independent members”? Does that help anybody with this issue?
I'll tell you what I don't want to do. I don't want to have a big, long discussion on Tuesday. We're moving to clause-by-clause. I'm hoping this can be worked out by Tuesday. I think it's up to and , both of whom unfortunately have had to leave.
Are there other issues we need to deal with, or is this becoming a bigger problem?
Madam O'Brien, please make a comment, and then I want to hear from Mr. Godin.
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Colleagues, if I could just interject, it sounds to me as though there needs to be some work done on this motion.
I'm not sure how to get that information back to Mr. Guimond; it would be his responsibility to fix his own motion. We do not have a quorum to make a decision, so I'm going to have to stick with the committee's original decision to discuss this further on Tuesday. However, I think it would be appropriate for Mr. Guimond to be aware of our concerns with respect to this motion.
As the chair, I want to readvise members of decisions made earlier when we had quorum--that is, we're moving to clause-by-clause study of Bill . I am going to be courteous to Mr. Guimond and offer him some time on Tuesday at the end of the meeting. If this is a long, drawn-out discussion, then I think we're in a little bit of trouble and I can't do anything about it.
Discussions on this issue are concluded, in my opinion. Is there any more business for this committee? We are in public.
I'll take a question from Mr. Godin.