No receipts? No problem: Taxpayers reimburse parties for election expenses anyway

Federal political parties will be reimbursed tens of millions of dollars by taxpayers for their election expenses without having to provide any receipts or supporting documents detailing their costs – a situation  describes as an “anomaly” that must be changed.

Chief Electoral Officer Marc Mayrand has urged changes to elections laws that allow federal parties to claim election expenses, half of which are reimbursed by taxpayers, without providing “vouchers” such as itemized receipts and other supporting documentation of their expenses.

Mayrand has said it’s “critical” that political parties start providing receipts and invoices to Elections for campaign expenses.

Why is this an issue now?

Individual candidates are required to provide receipts and invoices documenting, in detail, their election expenses, with up to 60 per cent of it reimbursed by taxpayers.

But federal political parties, which can each spend up to $54.5 million each this election campaign, are not required to do so – even though taxpayers will reimburse the parties for up to half of their campaign expenses.

“The chief electoral officer is saying, ‘Well, if you want me to sign off on these monies from the public purse in reimbursements, I’d like to see vouchers,’ ” said Elections Canada spokesman John Enright.

The issue is especially pressing in this election, because the 79-day campaign is more than double the normal length, meaning political parties will be reimbursed by taxpayers more than twice the amount they normally would be.

Moreover, the current political environment – including the ongoing Senate expenses affair – has Canadians calling for more disclosure on how politicians and their parties are spending taxpayer dollars.
“It is striking when looking at provincial regimes that we remain the only jurisdiction in Canada where political parties are not required to produce supporting documentation for their reported expenses,” Mayrand said at a House of Commons committee in March 2014.

“At every election, parties receive (tens of millions of dollars) in reimbursements without showing a single invoice to support their claims. This anomaly should be corrected,” added Mayrand at that time. He was unavailable for an interview this week.

Ted Rhodes / Calgary HeraldTed Rhodes / Calgary HeraldWith political parties getting up to 50 per cent of their costs reimbursed if they run a full slate of candidates, taxpayers could be on the hook for more than $80 million combined for the three main parties.

For example, with political parties getting up to 50 per cent of their costs reimbursed if they run a full slate of candidates, taxpayers could be on the hook for more than $80 million combined for the three main parties.

Since those dollars would be paid back to parties with few or no documents supporting those expenses, Canadians would be left to trust that the parties’ reported expenses they are helping reimburse are factual and accurate.

Are there any safeguards?

Federal parties are required to submit their expense returns to Elections Canada with an auditor’s report on election spending within eight months of election day.

Those reports are only a few pages in length, summarizing the total amount spent on areas such as advertising, election surveys, professional services, leaders’ tours, and salaries and wages.

The chief electoral officer wants the federal government to amend the Canada Elections Act so parties are required to provide vouchers, as individual candidates must.

“Providing Elections Canada with access to supporting documents regarding the financial transactions of parties is also quite critical,” Mayrand added.

What do experts say?

Former chief electoral officer Jean-Pierre Kingsley said the failure of governments to enact the changes requiring receipts and invoices prevents Canadians from seeing exactly how and why their tax dollars are being reimbursed to political parties. He called for the improved reporting requirements back in 2005.

“Now that the party ceiling exceeds double the ordinary $25 million, the problem of ascertaining anything meaningful from the short party reports is significantly compounded, and the ability to verify anything in some detail remains practically impossible,” Kingsley said.

“So much for accountability to Canadians for expenditures from public funds.”

What do the parties say?+

The Conservative party, in an emailed response to a question on why the government hasn’t adopted the changes requested by the chief electoral officer, pointed to a tweak it made to elections laws.

The government’s reforms now require the party’s external auditor to include a compliance audit to assess whether the party adhered with political financing rules. The chief electoral officer is required to consider the party auditor’s assessment on compliance with the financing rules before certifying the expenses as eligible for repayment.

However, since the political financing rules don’t require parties to submit receipts and invoices for election expenses, complying with those rules won’t produce any more detailed documentation of spending for Canadians to see.

The Conservative government’s minor tinkering to the elections laws is nothing but a “smokescreen that’s being shot across a fog,” Kingsley said, and won’t produce any more transparency.

“They don’t want people to know how they’re spending the money in detail.”

If a party is supplementing someone’s income or reimbursing people for someone’s expenditures, for example, the parties might not want Canadians knowing about it, he said.

“If there’s no detailed knowledge, there’s no detailed accounting,” Kingsley said.

The auditors’ reports themselves say they have not, and effectively cannot, verify all of the political parties’ election campaign spending.
“Due to the inherent nature of the transactions of electoral campaigns, the completeness of expenses is not susceptible of satisfactory audit verification,” says the Conservative Party of Canada’s independent auditor’s report from Deloitte following the 2011 election.

“Accordingly, our verification of these amounts was limited to the amounts recorded in the Chief Agent’s accounting records.”

The Liberal party’s independent auditor’s report from the 2011 election
echoes that message.

“The Canada Elections Act does not require us to report, nor was it practical for us to determine, that the accounting records include all transactions relating to the Liberal Party of Canada for the general election held on May 2, 2011,” says the Liberal party’s audit report from PricewaterhouseCoopers.

“Accordingly, our verification of the election expenses was limited to the financial transactions recorded in the Liberal Party of Canada’s accounting records.”

The three main national parties all voted to unanimously support an NDP
motion in 2012 that called on the government, within six months, to introduce amendments to elections laws that would give the chief electoral officer “the power to request all necessary documents from political parties to ensure compliance with the Elections Act.”

A motion does not have the power of law, however. More than three years later, loopholes in the laws remain and parties aren’t required to submit detailed documentation supporting their expenses.

The NDP says it supports more disclosure on party election expenses and would provide detailed receipts and invoices if requested by the chief electoral officer.

The Liberal party, in an emailed response, noted it has been proactively disclosing travel and hospitality expenses online, and would consider Mayrand’s calls for changes to election laws to have political parties produce vouchers on election expenses.

“We take all recommendations from the Chief Electoral Officer seriously,” the Liberals said in a statement.

About Jason Fekete, Postmedia News