Tuesday, April 22, 2008

How a rich party can prosper if they adopt an in-and-out scheme

There are 3 paragraphs from the affidavit in support of the search warrant that stuck out for me today, principally because they represent the light bulb moment where Elections Canada's antennae went up and the investigation into the in-and-out scheme began. They also suggest the full implications of where the Conservatives are going with their vigilant defence of their actions. They aren't letting up ("The natural instinct of the party is to fight, fight, fight."; "We take a very aggressive approach to politics. I haven't heard anybody say we did wrong," said one government official.) and the answer as to why they won't be letting up is obvious to anyone looking at this scheme. The payoff is too big for the flush Conservative party. Here are the paragraphs (click to enlarge):

Note the operative sentence(s) in paragraph 35 explaining how amounts varying between $2,000 and $52,000 were transferred by the national party into the bank accounts of 67 local Conservative candidates. The amounts transferred totalled over $1.3 million and the local Conservative candidates then put in their claims to get their refunds from taxpayer funds. As long as they got 10% of the vote in the election, that is. So in the end, 65 Conservative candidates who benefited from these transfers put in for their refunds. The taxpayers would have been on the hook for $777,000 had Elections Canada not disallowed these expenses.

So what are the implications here? Peter Van Loan was quoted as saying this today:
“We say that a local campaign should be free to advertise on national messages if it wishes and that Elections Canada shouldn't get into controlling the content,” he told CBC Newsworld.

“We always encourage our riding campaigns to spend as fully as they can to make our campaign as a party as strong as possible, and that's exactly what happened in the last election,” he said, adding everything was fully disclosed to Elections Canada.
So Lawyer Van Loan is saying that the national campaign is free to transfer funds into ridings and the riding can then freely and "fully" spend that money on national, not local, advertising. As long as the ridings have room in their budget for the federal transfer, of course. And that's what they appear to have done in 2006. They assessed which ridings had budget room to accept funds, as the election date drew near, then transferred it in and quickly received it back.

There's nothing to stop the Conservatives from executing such a scheme in a future election. They appear to be convinced that they're in the right. They've sued Elections Canada for these refunds being disallowed and will likely carry on as if they're in the right until a court orders them not to. I mean, who's going to stop them?

But let's just humour Mr. Van Loan and engage in a fun hypothetical scenario. Given that there are 308 ridings in Canada, let's assume that all run Conservative candidates. And let's assume that all Conservative candidates will get 10% of the vote. And let's further assume that the local riding spending limits are each $80,000 (they tend to be in that range, with some variation). And let's acknowledge that some candidates are better local fundraisers than others. Some will raise $20,000 for their campaign, others $40,000, others the full amount. But for fun, let's just say all of the Conservative candidates in our scenario raise $40,000 by themselves, for their own local budget. That leaves them with $40,000 of room left in their budget.

Along comes the rich national party that has maxed out its approximately $18.3 million national spending limit. It still has plenty of money on hand. And it sees $40,000 X 308 ridings of spending room just going to waste. So it executes an in-and-out scheme. And transfers, say, $20,000 into each riding (just because we're being modest in our example, heh).

The $20,000 is then quickly transferred back to the national party, the whole process being controlled by the national party, for the local candidate to buy national ads touting the great party leader. Because they do love to tout.

Suddenly, we have $6,160,000 ($20,000 X 308) of additional national ads flooding the airwaves.

That's the logical follow-through to the Conservative argument. Now they'd likely never do it on a scale that big. It would draw too much attention. The number of ads would be overwhelming. But a million dollars worth? Just enough to get that competitive edge and spread out throughout the country in key ridings that polls indicated were on the fence...well, it just might be enough to make a difference but still fly under the radar.

But then again, if the Conservative reasoning were to be accepted, there'd be nothing to stop a wealthy national party from doing just that, spend a big sum based on what's left in the local riding budgets. Take all the local riding budgets with room, top them all up and have the locals buy national ads. Doesn't even matter where the ads run. But oh yes, ad a local tag line to the ad.

Final step, after having outspent your opponents in national advertising, get those local candidates to claim back from the taxpayer a 60% refund of their local funds raised. So the taxpayer will be refunding a local candidate not just 60% of what "Conservative John" raised, in our example, $40,000 (refund to Conservative John would be $24,000). The taxpayer will be refunding 60% on the full amount, including what the rich national party dumped in, i.e., $60,000. Refund to Conservative John from the taxpayer is now $36,000 in our hypothetical situation.

And think of those candidates who manage to raise paltry amounts. They can be topped up to the full $80,000 budget by the rich national party. And then get 60% of a much greater sum back from the taxpayer. All the better to run with next time.

All of which follows if you buy into the Conservative arguments that their scheme was perfectly legal (and everybody does it). It renders the national spending limits virtually meaningless. And it's a recipe to spread the wealth and ensure that your candidates will typically, and perhaps perpetually, start at the local level with a leg up on their competition thanks to the presently wealthy national party and the good ol' taxpayer coffers. Because the other guys don't do this!

(Sorry if this was too Mickey Mouse for some...:))