Corporate Services and
Economic Development Committee
Comité des services organisationnels et du développement économique
and Council / et au Conseil
Submitted by/Soumis par : Alex Cullen, Councillor / Conseiller
Contact Person/Personne ressource : Alex Cullen,
Councillor, Bay Ward / conseiller, quartier Baie
(613)
580-2477, alex.cullen@ottawa.ca
SUBJECT:
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OBJET :
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That the Corporate Services
& Economic Development Committee recommend to City Council:
1.
That the City of Ottawa
request the Minister of Municipal Affairs and Housing to enact legislation
amending the Municipal Elections Act to
permit municipalities to prohibit corporate and trade union contributions to
candidates for municipal councils, to be effective for the next municipal
elections;
2.
That upon enabling
legislation, City Council consider enacting a bylaw to prohibit corporate and
union contributions to municipal candidates for Ottawa City Council, to take
effect for the next municipal election;
3.
That the City of
Ottawa request the Minister of Municipal Affairs and Housing to provide
enabling legislation to permit municipalities to require that campaign
surpluses accrued by municipal candidates be paid to the municipality at the
end of the election period, to help defray the costs of the municipal election;
and
4.
That the City of
Ottawa request the Minister of Municipal Affairs and Housing to provide
enabling legislation to permit municipalities to pass bylaws requiring
municipal candidates to file a preliminary list of campaign contributions
received with the City Clerk on Nomination Day (i.e. one month before Election
Day).
Que le Comité des services organisationnels et
du développement économique recommande au Conseil d'approuver les mesures
suivantes :
1. que
la Ville d'Ottawa demande au ministre des Affaires municipales et du Logement
de faire adopter, avant les prochaines élections municipales, un texte
législatif modifiant la Loi sur les élections municipales afin de
permettre aux municipalités d'interdire les contributions de sociétés et de
syndicats à un candidat au Conseil municipal;
2. qu’après
l'adoption de ce texte législatif, que le Conseil municipal considère adopter
un règlement municipal interdisant les contributions de sociétés et de
syndicats à un candidat au Conseil municipal, interdiction devant entrer en
vigueur avant les prochaines élections municipales;
3. que
la Ville d'Ottawa demande au ministre des Affaires municipales et du Logement
de faire adopter un texte législatif afin de permettre aux municipalités
d'exiger que les excédents de caisse électorale des candidats dans une élection
municipale soient versés à la municipalité à la fin de la campagne électorale
afin d'aider à payer les coûts de l'élection municipale; et
4. que
la Ville d'Ottawa demande au ministre des Affaires municipales et du Logement
de faire adopter un texte législatif afin de permettre aux municipalités
d'adopter un règlement municipal exigeant que les candidats dans une élection
municipale déposent auprès du greffier de la Ville, le jour de la déclaration
de candidature (soit un mois avant le jour de l'élection), une liste
préliminaire des contributions à leur campagne électorale.
Democracy is a process of governance where people choose their governors through elections (one person - one vote). A key principle that helps make democracy function well is that elections must be conducted fairly – that candidates have the opportunity to present themselves to voters, and that voters have the opportunity to learn about their candidates, who they are and what they stand for, and make informed choices. The evolution of democracy in North America has led not only to laws governing who can vote and how, but also governing the conduct of candidates, particularly in the area of fundraising and spending, in order to ensure fairness in the democratic process. In Ontario at the municipal level, this includes limits on campaign contributions and campaign expenses, on the campaign period, and includes reporting mechanisms to ensure transparency to help voters make informed choices. Despite this, recent reviews of municipal campaign experiences in Ottawa reveals that more work needs to be done to ensure a level playing field – fair to both voters and candidates – that is crucial to the integrity of the democratic process.
In 2005 Councillor Alex Cullen (Bay Ward) prepared a report entitled “Reforming Ottawa’s municipal election finances” (April 28, 2005), which was presented to the City’s Corporate Services & Economic Development Committee and City Council (on file with the City Clerk). The report reviewed the financial returns of all candidates seeking election to Ottawa City Council in the 2003 municipal elections. It showed that nearly $1 million was raised and spent by the 76 candidates seeking municipal office. It also revealed that the ability to raise and spend money to wage a campaign was a significant determinant in electoral success. The analysis further showed that challengers running for municipal office faced significant barriers to election, particularly as they on average were only able to spend less than half the amount their incumbent rivals spent on their campaigns. Further, challengers relied significantly on providing their own funds for their election campaigns, whereas incumbents did not. Conversely, incumbents (making up 21% of all candidates) were able to snare nearly three-quarters (72.7%) of all the corporate contributions in the 2003 municipal election. This raised questions then about how level the election playing field is in Ottawa, particularly as every incumbent running in that municipal election (16 out 22 positions) won.
The conclusions of the report on the 2003 were:
In 2007, following the results of the 2006 municipal election, Councillor Cullen prepared another report which reviewed the financial returns of all candidates seeking election to Ottawa City Council in the 2006 municipal election, entitled “The Need for Reform: A Report on the 2006 Municipal Election” (June 20, 2007 – see attached). All Councillor incumbents who ran outspent their opponents by nearly 3-to-1, aided in large part by receiving the bulk of corporate campaign contributions (64.8%). All Councillor incumbents (19 in total) were re-elected. Corporate contributions favoured Councillor incumbents by more than a 2-to-1 margin, with 11 incumbents receiving more than half their campaign revenues from corporations. Most corporate contributions come from developers, construction companies, waste disposal companies, etc. – companies who do business with City Hall. Most Councillor challengers had to contribute personally to their own campaigns (providing 20% of their campaign revenues) while incumbents hardly did (3% of campaign revenues). Many incumbents continued to rack up campaign surpluses, providing an instant monetary advantage for the next election. As well, there were many instances of associated companies (i.e. controlled by the same management group) providing multiple contributions to favoured candidates (mostly incumbents), appearing to violate Ontario’s municipal election law. Further, numbered companies give thousands of dollars to favoured candidates (mostly incumbents), violating transparency principles.
The conclusions of that report were much the same as the 2003 report, namely:
The problem of corporate campaign contributions distorting the democratic playing field is not new and has prompted reforms, as at the federal level (under the Canada Elections Act) corporate and union donations are not permitted. Only individuals may contribute to the federal political process. The same applies in some provinces (Quebec, for example). At the municipal level in Ontario, currently corporations doing business in Ontario and unions representing workers in Ontario as well as individuals resident in Ontario can contribute to municipal election candidates (under the Municipal Elections Act). However, the City of Toronto, under special legislation (The Stronger City of Toronto for a Stronger Ontario Act, 2006), has the power to restrict municipal campaign contributions for candidates running for city council to only from individuals.
In Ottawa it should be noted that union contributions are not a significant factor in the municipal election process, nor in the campaign of any specific candidate. Only three Councillor candidates in the last municipal election received any union contributions at all, and in each case the contributions were small, both in absolute terms and compared to the amount of corporate contributions (in total $12,401 in union contributions of $100 or more, vs. $553,863 in corporate contributions of $100 or more).
However, if union contributions are not very important in Ottawa, corporate contributions are and they are heavily weighted toward incumbent candidates. In 2006 11 Councillor winners, all incumbents, received over half of their campaign contributions from corporations (note, though, that 5 incumbents did not receive or refused corporate contributions). The overall average of corporate contributions for incumbents was 42%, for winners a little over 39%.
The Councillor losers were not so fortunate in 2006. Of the 45 losing Councillor candidates only 3 received more than 50% of their contributions from corporations. Of these, one was the former Regional Chair, a second was a former Mayoral candidate, and the third received corporate contributions totaling $750, in a campaign where he provided over 75% of the campaign contributions from his own funds. The overall average for losing candidates was 15%.
Moreover, many of these corporate contributions came from organizations doing business with the City (i.e. developers, construction companies, waste disposal companies, etc.). Businesses are not philanthropic enterprises - they contribute to further their self-interest, or at best as a form of investment. This raises questions regarding the purpose of these contributions, about the relationship between the incumbents who garner so much of the corporate contributions and their corporate donors. This leads to perceptions, whether true or not, that something is being given for something. This impairs the legitimacy of the electoral process in the eyes of many in the electorate, leading to cynicism among voters and contributing to lower voter turnouts. Eliminating the ability of corporations (and unions) to make campaign contributions to municipal candidates would eliminate this perception and improve the sense of integrity in the municipal election process.
As well, the current system of both individual and corporate/union contributions permits some citizens to contribute more than once to a particular candidate, as an individual and again through a corporation or union, whereas the overwhelming bulk of the electorate can only do so once. It is difficult to see how this can be fair.
The situation is made worse when some of these corporate contributions are made anonymously, through numbered corporations. The principle of transparency, which should apply to all transactions involving election finance, is violated, as it is not easy to determine who controls the numbered company and what business it is in.
The financial advantage of incumbents is further exacerbated by the ability to accumulate surpluses that can be used for future elections. Given the restrictions on campaign expenses under the current municipal election law, there is no justification to fundraise beyond the campaign spending limit, yet incumbents can (and many do) fundraise well beyond these limits, creating campaign warchests that give them an automatic advantage for the next election campaign. These surpluses should be returned to the municipality as a means of helping to defray the costs of the municipal election, and will have the effect of creating a more level playing field among candidates for the next municipal election.
Another matter is the issue of who supports whom financially for municipal council – valuable information for voters – is withheld from the electorate until after the municipal election, based on current reporting procedures in the legislation. Transparency here, through the filing of election contribution and expenses returns with the City Clerk, is not useful to the voter as it appears after the election. As much of the fundraising to pay for expenses occurs before the election, then it makes sense to require candidates to file preliminary campaign contributors lists with the City Clerk before voting day, for example, on Nomination Day (one month before election day). This way, voters will have some appreciation as to who is supporting whom to be their municipal representative.
It is obvious that reforms are needed to municipal election finances to increase transparency. In election finance, as in most things to do with public life, more sunshine is the best medicine.
RECOMMENDATIONS
Recommendation 1: That the City of Ottawa
request the Minister of Municipal Affairs and Housing to enact legislation
amending the Municipal Elections Act to
permit municipalities to prohibit corporate and trade union contributions to
candidates for municipal councils, to be effective for the next municipal
elections.
Recommendation 2: That upon enabling
legislation, the City Council consider enacting a bylaw to prohibit corporate
and union contributions to municipal candidates for Ottawa City Council, to
take effect for the next set of municipal elections.
The rationale for these recommendations is to enable the voter, who is electing his or her municipal representative, to be the sole source of campaign contributions, and avoid creating a class of privileged individuals who, by virtue of their control of corporations or unions, can contribute yet again to a candidate (or group of candidates) through their organizations. This is consistent with the principle of democracy – one person, one vote.
Recommendation 3: That the City of Ottawa
request the Minister of Municipal Affairs and Housing to provide enabling
legislation to permit municipalities to require that campaign surpluses accrued
by municipal candidates be paid to the municipality at the end of the election
period, to help defray the costs of the municipal election.
Since there are campaign expenditure limits for municipal candidates, there is little point to fundraising past those limits as the money raised cannot be used in that campaign. However, under current law these surpluses can be banked and used for the next municipal campaign (for any municipal office – mayor or councillor), thereby providing an instant advantage for that candidate over others who must start from scratch. Having such surpluses be turned over to the municipality at the end of that campaign not only creates a more level playing field for the next municipal election, but would also help defray the costs to the municipality of holding that municipal election.
Recommendation 4: That the City of Ottawa
request the Minister of Municipal Affairs and Housing to provide enabling
legislation to permit municipalities to pass bylaws requiring municipal
candidates to file a preliminary list of campaign contributions received with
the City Clerk on Nomination Day (i.e. one month before Election Day).
Part of the purpose of the current municipal election law in Ontario is to create transparency in the financing of municipal campaigns, so that the voter can be informed of who is financially supporting whom to become their municipal representative. However, this information is compiled and filed with the City Clerk after election day, which is not helpful to the voter in making his or her decision. As much of the fundraising to pay for expenses occurs before the election, then it makes sense to require candidates to file preliminary campaign contributors lists with the City Clerk before voting day, for example, on Nomination Day (one month before election day). This way, voters will have some appreciation as to who is supporting whom to be their municipal representative, and make their choices accordingly.
The report "The Need for Reform: A Report on the 2006 Municipal Election"
was released in June 2007 and has garnered wide-spread public interest. A copy
of this report was distributed to community associations and major business and
union organizations in Ottawa.
Comments from the City Clerk & Solicitor Department (Elections and MFIPPA Branch)
Staff is offering the following comments on this matter:
The recommendations are dependent upon legislative changes to the Municipal Elections Act, 1996 (MEA). While the MEA doesn't specifically require that this type of legislative amendment be enacted prior to the commencement of a regular election year, it would be practical that any such amendments dealing with campaign financing would be required to be in force and effect prior to the first day a person may file a Nomination Paper with the City Clerk. Recommendations 2, 3 and potentially 4 also require that a by-law must be enacted by Council.
Should the Corporate Services and Economic Development Committee recommend approval of any of the recommendations to Council and if Council subsequently concurs, the City Clerk's office would forward the requests to the Minister of Municipal Affairs and Housing for his review.
With regards to Recommendation 3, Section
79 of the Act outlines the process to determine if the candidate has a
surplus. Subsection (4) states that
"if the candidate's financial statement or supplementary financial
statement shows a surplus exceeding $500 and the election campaign period has
ended at the time the statement is filed he or she shall, when the statement is
filed pay the total surplus to the clerk with whom the candidate's nomination
was filed and the clerk shall hold the amount in trust for the
candidate." Subsection (8) provides
that in the next regular election or in an earlier by-election if the candidate
is nominated, the clerk is to pay this amount to the candidate with
interest. If this subsection does not
apply, the amount becomes the property of the municipality. Subsection (10) states that the obligation
to pay the surplus to the candidate does not apply to an amount that has become
the property of the municipality by virtue of a by-law made under section
82.
Section
82 deals with contribution rebates. It
provides that a municipality may by by-law provide for the payment of rebates
to individuals, corporations or trade unions that made contributions to
candidates for office on municipal council.
The by-law establishes the conditions under which an individual, corporation
or trade union is entitled to a rebate and it may provide for the payment of
different amounts to these entities.
Subsection (5) states that the by-law may provide that all or part of
the amounts held in trust under section 79 become the property of the
municipality.
The
City of Ottawa has a by-law authorizing the payment of rebates to individuals
only (By-law No. 2005-505). It provides
that a candidate must register to participate in the contribution rebate
program with the City Clerk by the end of nomination day. At present, it does not contain a provision
that any amount held in trust for a candidate becomes the property of the
municipality.
Since
contribution rebate by-laws and their conditions of payment are permissive not
mandatory under the Act, if a municipality chooses not to enact a contribution
rebate by-law, the surplus of any candidate exceeding $500 would continue to be
held in trust for that candidate should he or she be a candidate in the next
election pursuant to section 79 of the Act.
In
addition, since the municipality can set the conditions for payment of rebates
and subsection (5) is permissive, a municipality can choose not to require the
surplus of a candidate to be the property of the municipality.
Should Recommendation 4 be approved, staff
would require additional resources to assist with the publication of the data.
In addition, should the Province enact any amending legislation in this regard,
the issue of enforcement and penalties will also have to be fully addressed at that time. As indicated by Councillor Cullen, currently
under the MEA enforcement, for the most part, falls to the control of citizens.
It has been the tradition of the Minister of Municipal
Affairs & Housing to conduct a review of the Municipal Elections Act,
1996 (MEA) prior to the commencement of each regularly scheduled
municipal election (now every four years).
This review for the purposes of the 2010 municipal election had
commenced sometime in 2008 and it is anticipated that the amendments to the
current legislation will be introduced and passed sometime later this year.
The Association of Municipal Managers, Clerks &
Treasurers (AMCT) submitted two discussion papers (February & June 2008) to
the Minister of Municipal Affairs & Housing containing its recommendations
on amending the Municipal Elections Act,
1996. While there were no
recommendations dealing with campaign contributions from corporations and/or
trade unions, there was a recommendation in the June 2008 submission suggesting
that campaign surpluses of over $500 become the property of the municipality.
The City of Toronto, in the Fall of 2004 adopted an
Election Campaign Finance Reform package and submitted it to the Minister of
Municipal Affairs & Housing requesting legislative changes. The main recommendations of the reform
package were:
1. Prohibit
all corporate and trade union contributions to municipal election campaigns.
2. Disallow
candidates from transferring financial surpluses from one campaign to the next.
3. Update spending
limits and redefine rules with respect to excluded expenses.
4. Require
Elections Ontario to be responsible for the monitoring and enforcement of the
provisions of the Municipal Elections
Act, 1996.
The Province did not enact the permissive legislation
in time for the 2006 Municipal Elections.
Bill 53, City of Toronto Act - Stronger City of Toronto for a
Stronger Ontario Act, 2006, enacted on January 1, 2007, amended the MEA to specifically permit only the City
of Toronto to pass a restrictive by-law on election campaign
contributions. Through discussions
with staff of the City of Toronto Elections Office, it is anticipated that a
final report on this matter will presented to Committee and Council for deliberation
at the end of September. It is also
anticipated that an election campaign by-law will be brought forward to
Committee and Council for enactment in time for the commencement of the 2010
municipal elections.
An April 2009 City of Toronto report to its Executive
Committee also indicated that the Province will give consideration to other
requested changes for enactment later this year. The report was not specific as to what other amendments might be
considered by the Province.
There are no
legal/risk managment impediments to approving these recommendations. The
recommendations are dependent on amendments to the Municipal Elections Act,
1996 prior to implementation at the municipal level.
Funds for the additional staffing requirement identified in recommendation 4 are available in the Election Reserve Fund subject to legislative approval from the Ministry of Municipal Affairs and Council approval of this report.
(issued separately to all members of Council and held on file with the City Clerk)
Upon adoption of the report recommendations by City Council, the Clerk will write to the Minister of Municipal Affairs & Housing reporting on City Council's request for legislative changes.