Mark Holland, Liberal MP, and an interest-free loan [Udpated]
The election is over, but I think it is interesting to see how different the Liberals and the Conservatives operate. Financial declarations are not yet available for the 2006 election, but the 2004 election, held a mere 17 months earlier, provides a fascinating insight.
Let's look at my riding of Ajax-Pickering. In 2004, Liberal Mark Holland beat Conservative Rene Soetens.
Here's the breakdown of the money.
Let's start with Conservative candidate Rene Soetens.
Soetens received 78 donations from individuals, totalling $24,320.
A total of 22 local corporations donated another $10,600.00.
Soetens took out no loans.
The Conservative Party, via the local riding association, donated an additional $25,404.71.
Soetens raised $1,719.90 via local fundraising events, and received a federal rebate cheque from Elections Canada of $11,064.27.
Adding it up, you get $76,313.98, broken down as follows:
- 31% from dozens of individuals
- 13% from over twenty local businesses
- 0% from loans
- 33% from the Conservative Party
- 17% from other sources
Compare this with Liberal candidate Mark Holland.
Holland received 2 donations from individuals, totalling $902.00.
No local businesses donated to the Holland campaign.
Holland accepted a loan from local developer Ron Halliday of Coghlan Homes for $17,000.00. Halliday is charging 0% interest.
The Liberal Party, via the local riding association, donated a whopping $72,729.21.
Holland did not raise any additional funds from any other sources, such as fund raisers.
Adding it up, you get $89,729.21, broken down as follows:
- 1% from two individuals
- nothing from local businesses
- 19% from one local developer in the form of an interest-free loan
- 80% from the Liberal Party
- nothing from other sources
Quite the contrast, eh?
From Mark Holland's website:
Whether or not you supported me in the recent election, my responsibility is to serve all constituents of Ajax-Pickering.
Let's hope so, because it appears that just about no one supported his re-election, at least not with money. On the face of it, it looks like Mark Holland will be considering the interests of the Liberal Party in Ottawa first, Ron Halliday second, and the constituents and businesses of Ajax-Pickering a distant third.
Ron Halliday, by the way, is not new to the notion of bankrolling local elected officials. Consider the local member of the provincial parliament, Wayne Arthurs, who sat on the Regional Planning Committee, and is now the assistant to the Minister of Finance. Arthurs is on record supprting the opening some large tracts of protected land in Durham region to new development:
I would also like to point out from another media article in the Metroland newspapers that there were some financial contributions that went to Mr. Arthurs from developers, which certainly raise some concerns: "Arthurs Draws Red Flags; Says $25,000 in Donations Recognizes `Common Interest in Growth.'" This is from Wednesday, August 4, 2004.
"Despite concerns from Pickering residents, MPP Wayne Arthurs is defending his election campaign contributions, including $25,000 from one address.
"The concerns about the Pickering-Ajax-Uxbridge MPP's donation list have been raised in public meetings by local individuals and groups, including Lorne Almack, a member of the local environmental group the Green Door Alliance.
"The $25,000 came in 25 separate $1,000 donations from one address -- 27 Buggey Lane in Ajax. The address is the head office of Coughlan Homes, owned by developer Jerry Coughlan.
"Mr. Coughlan and his business partner Ron Halliday briefly addressed the issue in a telephone interview, saying the donations reflect their belief in Mr. Arthurs and the Liberal Party. They did not comment further.
Belief in the Liberal Party. Right.
The federal party finance rules are clear -- donations from corporations are capped at $1,000 per year. But loans are a different story. Clearly, there is no ceiling, and in 2004, Mark Holland was happy to receive $17,000 in a loan from a local developer. It certainly helped make up for the shortfall in donations from people and businesses, which added up to a paltry $902.00.
And interest free to boot! When's the last time someone loaned you $17,000, charged you no interest, and expected no special favours or consideration in return?
By definition, a loan is money lent with a condition attached. That is different from a donation, for which there are no conditions. The condition attached to a loan is usually repayment with interest. But what if there is no interest? What is the condition attached in that case?
And doesn't the interest saved (compared to the prime interest rate set by the Bank of Canada) constitute yet another donation?
Mark Holland won the riding on January 23, so I'm stuck with him. I didn't arrange an interest-free $17,000.00 loan, so I won't be expecting much in return when it comes to representation in parliament.
When the 2006 financial statements come out, you can be certain I'll be delving into the details.
Updates:
First, I've explored further into the issue of loans. Unfortunately, I'm becoming more confused.
Second, the way a candidate's return to Elections Canada is structured, he or she is required to fill in a sheet entitled "Summary of Contributions, Transfers and Other Cash Inflows - (Does not include loans)".
Why not loans?
On the Financial Summary, loans are factored back in. The candidate then takes his expenses, and subtracts them. Note that the expenses are limited by law. In the case of Ajax-Pickering, each candidate could spend a maximum of $73,761.78. Mark Holland, for example, spent $73,168.59, just under the limit. Counting his loan, that means he ends the election with a surplus of $17,231.31.
So what did the $16,000 loan succeed at doing? Holland wasn't allowed to spend it, and according to his returns, he didn't spend it. I guess he just give the money back to Halliday.
Was the loan bridge money to address temporary cashflow problems, with the intention of paying it back out of the surplus at the end of the election? But even then that's still a big favour for Halliday to do for Holland.
Seems like there is no limit to how big this kind of favour can be. It's the sort of short-term help that can save a struggling campaign.
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Comments
Anybody want to suggest to the CPC that they add to their Federal Accountability Act that all political loans be secured through an accredited financial institution, and not through loans by businesses who can disguise donations as interest free loans?
Wouldn't that make sense since they want to get rid of coporate donations as it is?
Posted by: Surecure at January 31, 2006 10:54 AM
What's to stop the Stronach family settling up the LPOC's debt with an interest free loan, so their golden girl can ride to the top?
Posted by: Cheri at January 31, 2006 11:45 AM
I don't think we need to restrict people from lending money. What we do need to keep an eye on, is the zero interest, if the load doesn't have an interest rate, it should be called a donation. At least for the value of the interest charges.
Also, we should keep an eye, that loans are repaid, and not 'forgiven' at a later date.
Having a candidate financed in large part by the federal party probably isn't that unusual. The NDP and Conservatives in Quebec probably need the federal party to run local candidates, the Liberal party in Alberta. (I assume)
The Americans view political donations as a form of political speech - putting your money where your mouth is - I tend to agree with this sentiment. I think we should be careful not to overly restrict, and publicly finance elections.
Posted by: Curtis at January 31, 2006 11:48 AM
It is well known that the Liberals and Conservatives are both supported to a large extent by Business donations. Many companies used to cut cheques for equal amounts to both parties.
The key point is that Business does not differential subtantially between Liberals and Conservatives.
However, I think changes in financing is long overdue but the changes have to be real.
It may be that the Conservative candidate got 78 contributions from individuals but HOW MANY OF THOSE 78 WORKED FOR THE 22 COMPANIES THAT CONTRIBUTED TO HIS CAMPAIGN??
In the next election, a guy like Halliday could approach 30 of his employees and ask them to cut cheques for the Liberal candidate with the promise to reimburse them with a Bonus for work well done! Perhaps this is already being done.
There is only one way to ensure that the politicians are owned by the taxpayer in the global sense and that is to have them pay for elections through their taxes.
It is the only way we can have any type of assurance that we are all being represented. This change, along with proportional voting, would go a long way to ensuring people stay engaged in the political process. If indeed that is what is wanted.
Posted by: steve donohue at January 31, 2006 11:55 AM
Gee, it seems to me that as the financial agent for a Conservative candidate in the 2004 election, that we had to pay interest on money loaned to the campaign. At least that is what I was told by Elections Canada. Our candidate lent the campaign money and had to charge interest. Y
Posted by: The Surly Beaver at January 31, 2006 12:20 PM
I am not clear on how or why anyone would make a loan to an individual running for elected office?
If the candidate loses if he was a lawyer for example he could pay the loan back fairly easily, but why not pay the 4.5 % interest and not be seen to be beholding.I guess if they win, their Mp salary would make it easy to pay the loan back.
Maybe the candidate is an outstanding individual and the loaner really wants to help get the guy into parliament, but why does he not have more individual donations?I really don't follow this whole concept
Posted by: ian at January 31, 2006 12:25 PM
No, Steve you're wrong.
Federal finance of elections wont 'buy' the candidate for the people. It will 'buy' the candidate for the federal government. He'll become a representative from Ottawa to the riding, instead of the other way around. Besides there are probably a thousand other things I would rather the money be spent on.
Proportional Representation will never fly. Ever. Give it up. Its a bad idea. Next!
Every nation that has it, Italy, Israel, Germany, etc, are all unstable coalition governments, that have election every year or 2. On that point alone, its no good.
Proportional Representation will not fly because of regional alienation. The influence of voters in each region will decline, as seats would be allocated on a % of national votes that a party gets. Also, as these seats are provided to the party, the party leadership would have a much tighter control over who sits in them. Free votes would become a thing of the past. Members of parliament would become partisan representatives, rather than representatives of ridings or communities.
http://www.fairvotecanada.org/fvc/Current_News/
Proportional representation, would only make things worse. Its a bad idea.
Posted by: Curtis at January 31, 2006 12:30 PM
Though the loan looks a bit fishy, Angry you should note that a lot of MPs, particularly incumbents, just have all of their supporters donate money to their riding association and then transfer the money from the riding to the candidate's campaign as opposed to donating directly to the candidate. If you do a search on Elections Canada you'll find a lot of candidates who raise $0 themselves except for one large transfer from their riding association.
Posted by: fjm at January 31, 2006 12:50 PM
Actually, until there is a nomination meeting, wouldn't all the funds have to go to the riding association? So most of the time, the riding association would be doing the fund raising.
Posted by: Curtis at January 31, 2006 01:20 PM
That is right Curtis - only once the nomination meeting has been called and registered with Elections Canada can people register as "nomination contestants" and collect donations.
Posted by: fjm at January 31, 2006 01:23 PM
1% private + 0% corporate and the guy still wins!
Posted by: Ron at January 31, 2006 02:31 PM
Isn't there something in the tax act or other piece of legislation that a loan must have interest charged? Remember seeing that somewhere.
Posted by: Snookie at January 31, 2006 02:38 PM
Probably in the tax law. There is probably something the ethics and election police should look at. It looks bad.
Posted by: Curtis at January 31, 2006 03:01 PM
It only looks bad if you're looking for bad. Do you really think that the amount of money of the loan made the difference between winning and losing?
The loan may have contravened an act but it's small potatoes compared to the big picture. So the loaner adds some interest and that's that.
Posted by: Ron at January 31, 2006 03:16 PM
A deeper look at loans.
Posted by: Steve Janke at January 31, 2006 03:24 PM
Wrongo Rono:
Its not weather we win or lose, but how we play the game.
Interest free loans and sweathart real estate deals look bad. I realize the loan size is rather small (what's 17K in the background of a government that has taken millions?) but on the face of it, it looks bad.
Can we find any conservatives, NDP, or Blockers who got interest free loans? If its a common practice accross all parties, I'll drop my objection. But ya know what? I dont think its common or propper.
Posted by: Curtis at January 31, 2006 05:57 PM
Political Financing need a thourough airing.There are too many loopholes and ways to surcumvent the system and too many explanations to confuse the situation, with the result that nothing ever will be resolved, and everything will go on as before.
Posted by: Jon at January 31, 2006 09:37 PM
As long as you have a system of raising money privately the race will go to the monied if they want it. There is no equity no place for the little guy only the upper middle class professional which compose virtually all the seats. It is not surprising that this is the social class that has been benefitting increasingly in terms of wealth and power. As long as this system continues to feed the rich and starve the poor it will at some point cause social unrest. We have been having a small taste of it already in Toronto.
Posted by: Steve D. at January 31, 2006 11:21 PM
Alright Steve. So, how would you determine what parties are deserving of government funding? Should the Communist Party, Christian Heritage Party, Marijuana Party, Natural Law Party, and whatever-the-hell-else party get the exact same amount in funds as the Liberals, Conservatives and NDP?
Who gets to decide which party gets the funds? You? Me? The government itself?!?!?!?!
Sorry, but it sounds more ridiculous the more I think about it. A $1000 cap is a decent enough compromise because it gives parties the ability to raise enough funds to fund an election if enough people donate, while it doesn't have a seemingly endless ceiling on donations that allow corporations or multi-millionaires the opportunity to make your average joe's donation completely meaningless.
Posted by: Surecure at January 31, 2006 11:44 PM
1st - The Conservative Party itself had a interest free loan of $4.3 Million at the end of 2004 elections (June 2004).
This is a common practice that should be stopped.
2nd - tax laws - All interest free loan are considered income for the amount of the real-market value of the interest. It was once a common practice for business owners to loan themselves money at interest free with a 30 years pay back - in affect receiving a paycheque without paying taxes. The government stopped this years ago by stating that interest free loans was a taxable benefit to the person - thus the person has to claim the interest part as income. In fact T4 slips have for years had a box just for Interest Free loans.
At the end of 2004 - the Conservative were debt free while the Liberals had a $34 million debt - how much of this amount is interest free loans appears to be zero - they list 13 loans to Banks for a total of $34,818,257.32
Posted by: Gary McHale at February 1, 2006 12:36 AM
Actually, money transferred from an EDA isn't really a "loan", per say, nor (in many cases) is it money from the central party. Simply put, at the start of the election, the EDA transfers all of their money to the candidate's re-election account, save a small amount for ongoing expenses. At the end of the campaign, once all the bills are paid, any remaining balance is transferred back to the EDA. This will include the rebate on expenses from Elections Canada.
Posted by: Greg Phelan at February 1, 2006 04:25 PM
 
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