Transparency, Accountability and Public Trust

May 1, 2003

Chairman, honourable members, thank you for the opportunity to appear before this committee as you consider Bill C-24, an act to amend the Canada Elections Act and the Income Tax Act with respect to political financing. This is an important piece of legislation, one that goes to the heart of good governance in a democratic society.

The business community has been engaged in some deep soul-searching over the past couple of years on the question of how to improve corporate governance and restore the faith of investors and of the public in the workings of financial markets. But good public governance also matters, and any perception that corporate donations to political parties buy access or influence policy undermines public trust in both government and business.

The rule of law, free speech, fair elections, an independent judiciary and an honest and competent public service: these are the building blocks of democracy. They also form the foundation of a healthy economy, because they are the hallmarks of a country that can succeed in attracting people, investment and ideas from around the world. In short, in the public and private sectors alike, good governance is also a competitive advantage.

Normally when the Canadian Council of Chief Executives appears before a Parliamentary committee, we express the consensus views of our member chief executives. In this case, however, I want to make it clear that my comments this morning reflect instead the conclusions drawn from a survey of our members in January 2003. As such, I will be reflecting not a consensus, but my interpretation of the balance of opinion within the Council’s membership.

The survey responses suggest broad support for the general goals and thrust of Bill C-24. However, they also flag a couple of important issues that members of this committee may wish to consider in your deliberations on the bill’s specific provisions.

Two principles received close to unanimous support from our members. The first is the critical need for transparency. Fully 90 percent of respondents agreed with this statement: "All contributions for a political purpose (in cash or in kind, to parties, riding associations or leadership campaigns) should be reported publicly."

This conclusion should not be surprising. In the corporate sector, greater transparency is widely viewed as the single most important element in any strategy for improving governance. Greater transparency, however, must begin with clear and unambiguous definitions. In this respect, I note that the initial Library of Parliament analysis of the bill says only that: "’Contributions’ appear to include most donations of money as well as goods and services that are donated ‘in kind’."

The second principle that attracted close to unanimous support was that political parties should be supported primarily through voluntary donations. The support for this broad principle was reflected in the responses to other specific questions.

In particular, by a margin of two to one, members supported expanding the federal political contribution tax credit, a provision included in Bill C-24. By a margin of more than four to one, however, they opposed in principle another measure included in the bill, the idea of replacing revenue lost from corporate donations with new subsidies based on indicators such as popular support in the previous election. By a similar four to one margin, they suggested that parties instead should have to broaden their base of support in the community.

As in corporate governance, transparency goes hand in hand with accountability. While comprehensive public reporting keeps everything above board, a primary reliance on voluntary donations keeps parties accountable to their members and supporters. If this bill improves transparency but replaces corporate donations with taxpayer subsidies in a way that reduces accountability, I would suggest that it cannot achieve the fundamental goal of restoring public trust.

Let me turn now to the practical reform at the heart of this bill, a restriction on the level of contributions to political parties from corporations and individuals. By a margin of four to one, the Council’s members opposed both an outright ban on corporate donations and any exemption for smaller businesses from a general ban. But by a two to one margin, they did support caps on both corporate and individual donations at a "reasonable amount", which was defined in our survey question as between $1,000 and $10,000 a year.

This leads me to what may be the most important question for this committee to consider. There is clearly considerable support in principle in the business community for a reasonable limit on corporation donations, but the responses from our members suggest that the limit imposed in Bill C-24 may be unduly restrictive. My sense is that even among business leaders who support a cap in principle, there is genuine concern that too small a limit could unfairly restrict the ability of a company even to participate in the democratic process at the riding level.
For a company that operates in just a single riding, the $1,000 limit may be perfectly reasonable. But for a company that operates in every riding from coast to coast, the limit drops to a bit more than $3 per riding. And since corporate donors are more likely than individuals to support more than one party, this could effectively drop the annual limit per party to less than a dollar in each riding.

To illustrate the potential absurdity, it could become illegal for the representative of a major employer in a community to buy each of the local candidates a cup of coffee at the company’s expense — much less attend the Member of Parliament’s summer barbecue.

Protecting the integrity of the political process is important to rebuilding public trust in our democratic institutions. At the same time, we must not lose sight of the need to encourage people in every sector of our society to be part of the political dialogue.

To conclude, good governance matters in the public and private sectors alike, and Bill C-24 as it stands includes a number of important and worthwhile measures, especially by increasing transparency.

But if the bill is to be as effective as possible in restoring public trust in our democratic processes and institutions, there is clearly room for improvement. And in considering any specific amendments that may be proposed, I would suggest that the committee might wish to give greater weight to the need for broad democratic participation in Canadian communities and for effective accountability.

Thank you again for the opportunity to participate in this important discussion. I stand ready to answer any questions you may have.