Definitions of Leadership and Nomination Campaign Expenses
It is recommended that the definitions of leadership and nomination campaign expenses in subsection 2(1) of the Canada Elections Act be amended to make them more consistent with the regime applicable to other political entities. This would reduce uncertainty as to the treatment of expenses incurred by contestants – including with respect to non-monetary contributions received by them– whether these expenses were incurred or received before, during or after the contest. The Act should be amended to:
- Remove the limitation that the expense be incurred during the contest to be included as a "nomination campaign expenses" or a ''leadership campaign expenses";
- Expressly include non-monetary contributions in these definitions, as is the case for expenses of candidates at an election;
- Specify in the definitions that any cost incurred or non monetary contribution received that promotes or opposes the selection of a contestant during the contest is included as a campaign expense;
- Provide that costs incurred or non-monetary contributions received to the extent that the property or service for which the cost was incurred, or the non-monetary contribution received, is used to directly promote or oppose the selection of a contestant during the contest are subject to the spending limit applicable to nomination contestants.
The Canada Elections Act defines a variety of types of expenses for the purpose of specific substantive rules related to disclosure and accountability, spending limits and reimbursements. The definitions for these various kinds of expenses are critical to the scope of the Act's regulatory requirements, particularly with respect to entities that are involved in financial activities outside the purview of the Act. While all financial transactions of registered political parties and registered electoral district associations are under the purview of the Act, the same is not true of individuals who, at some point in time, decide to become nomination contestants, candidates or leadership contestants. In their personal capacities, these individuals may receive funds and incur expenses that are not related to electoral activities and that are not properly subject to the Act.
In order to ensure that the rules designed to ensure transparency and fairness in the electoral process function properly, it is critical that the Act provide a means of distinguishing between those financial transactions that are relevant to the electoral process, and that must be subject to regulatory requirements, from those that are not.
The Act seeks to provide a comprehensive and coherent framework governing the entire life cycle of "regulated money" for candidates or contestants. They must appoint an agent to manage their electoral affairs. The agent must open a special bank account for the sole purpose of the campaign, in which all monetary contributions are deposited and from which all expenses are paid. At the end of the campaign, the financial transactions must be reconciled with entries and withdrawals from the bank account and any surplus remitted.
If the definition of regulated expenses is under-inclusive (i.e. if all expenses that relate to the electoral competition are not captured), this will result in financial transactions "escaping" from the purview of the Act: these transactions, to the extent that they are not covered by the Act, might be conducted by entities other than the designated agent, might not pass through the campaign bank account and might not be disclosed. Moreover, since only campaign expenses may be paid using campaign funds, money used to pay these expenses cannot be "regulated money" subject to the rules governing the source and amount of permissible contributions. Furthermore, in the case of nomination contestants, the campaign may benefit from these goods and services without having them count toward its spending limit.