Backgrounder: Fair Elections Act – Keep Big Money Out of Politics

Big money from special interests can drown out the voices of everyday citizens. That is why Canada’s laws strive to keep it out. The Fair Elections Act will ban the use of loans to evade donation rules. It will allow parties to fund democratic outreach with small increases in spending limits, while imposing tougher audits and penalties to enforce those limits. It will also make it easier for small donors to contribute more to democracy through the front door and harder for illegal big money to sneak in the back door.

Closing the Political Loans Loophole

Some have used unpaid loans to evade donation limits and bring big money back. The Fair Elections Act will end that practice.

It will:

  • Require a uniform and transparent reporting for all political loans, including the terms and the identity of the lender.
  • Stipulate that total loans, loan guarantees, and contributions by individuals could not exceed the annual contribution limit for individuals. 
  • Stipulate that only financial institutions and political entities could make loans beyond the annual contribution limit for individuals, and only at a fair rate of interest. 
  • Tighten rules for the treatment of unpaid loans to ensure candidates cannot walk away from unpaid loans. Riding associations or the party will be held responsible for unpaid loans taken out by their candidates. 
  • Alter the contribution limits for leadership contestants from a per-event basis to a per-calendar year basis, consistent with the contribution limits for other political entities. 

Trust, but Verify: Tougher Audits and Penalties

Party filings should not only appear to be in compliance. Auditors should confirm that they are. Canadians also want to know whether candidates or parties are using voter contact services.

The Fair Elections Act will:

  • Expand the responsibility of the registered party’s external auditor to include a compliance audit to assess the party’s compliance with the political financing rules.  The Chief Electoral Officer would be required to consider the auditor’s assessment of compliance with the political financing rules before certifying the party’s election expenses as being eligible for reimbursement.
  • Create an obligation for political parties, registered associations and candidates to identify expenses for voter contact services by telephone in their returns.
  • Set out that political parties and candidates who exceed their election expenses limits would have their reimbursements reduced based on a sliding scale as follows:
    • by $1 for every dollar that exceeds the maximum amount by less than 5%;
    • by $2 for every dollar that exceeds the maximum amount by 5% or more but by less than 10%;
    • by $3 for every dollar that exceeds the maximum amount by 10% or more but by less than 12.5%; and,
    • by $4 for every dollar that exceeds the maximum amount by 12.5% or more.

Contribution and Spending Limits

The Fair Elections Act will increase:

  • the annual contribution limit to $1,500 per year; and,
  • the overall spending limit for national and local campaigns by 5% each.
  • the total ban on union and corporate money remains.