Definitions of Leadership and Nomination Campaign Expenses
Discussion and Analysis
Leadership and nomination campaign expenses are defined in subsection 2(1) of the Canada Elections Act as follows:
"leadership campaign expense" means an expense reasonably incurred by or on behalf of a leadership contestant during a leadership contest as an incidence of the contest, including a personal expense as defined in section 435.03.
"nomination campaign expense" means an expense reasonably incurred by or on behalf of a nomination contestant during a nomination contest as an incidence of the contest, including a personal expense as defined in section 478.01.
A problem with the definitions of leadership and nomination campaign expenses is that the definitions do not refer to non-monetary contributions as also being campaign expenses. Indeed, if the strict wording of the definitions were to be applied, contestants could receive gifts of services or property that could be used to promote their selection without having to report these as campaign expenses.
Moreover, another problem stems from the fact that campaign expenses are limited to expenses incurred during the contest.Footnote 1 It can be argued that expenses incurred before the contest are not campaign expenses and therefore are not subject to being reported in the contestants' financial transactions returns under paragraphs 435.3(2)(a) and 478.23(2)(a), despite the fact that the goods or services purchased were actually used by the contestant during the campaign to promote his or her selection. Such an interpretation, while consistent with the explicit wording of the Act, runs counter to the Act's legislative objective pertaining to transparency. Also, in the case of nomination contestants, it would allow contestants to circumvent their spending limit by ensuring that all expenses for goods and services that will be used to promote their selection are incurred before the start of the contest. Clearly, this type of outcome would negate very deliberate choices made by Parliament in 2003 to regulate such expenses to level the playing field among the various contestants, and this is why these provisions have been interpreted by Elections Canada in a manner that ensures that the regime applicable to contestants is, to a large extent, similar to the one applicable to candidates for election. Nevertheless, a contestant may choose, at some point, to challenge this interpretation, using the wording of the current definitions to argue that any expense incurred before the contest for goods or services used during the contest to promote his or her selection need not be reported. This gives rise to vulnerability.
Another problem that is attributable to the express wording of these two definitions is that they appear to exclude, from what constitutes a contest expense, those goods or services purchased or donated after the end of the contest. Often, contestants may have unpaid claims after a contest, which can be paid only by undertaking fundraising activities that give rise to new claims against the campaign. These new expenses are "reasonably incurred as an incidence of the contest," yet they are not typically incurred during the contest itself.
It appears to be inconsistent with the legislative intent of ensuring transparency and of creating a level playing field to treat two campaigns differently, depending on the fundraising model they choose to implement. Where a campaign chooses to "pay claims as they go" by undertaking fundraising activities during the contest, such fundraising expenses would fall within the current definitions of campaign expenses, and thereby constitute regulated fundraising expenses. As such, they would have to be paid using contributions that are in line with the eligibility, limits and reporting requirements of the Act. On the other hand, a campaign choosing to incur debts during the contest to be subsequently repaid after the contest as money flows in from various fundraising activities could, pursuant to a strict reading of the current definitions, incur fundraising expenses after the contest to raise money to pay these debts without such fundraising expenses being subject to the rules on expenses. Furthermore, these unregulated fundraising expenses could be paid using unreported contributions, since they would not be covered by the Act.
To address problems identified with the definition of leadership and nomination campaign expenses, both definitions could be amended to:
- remove the requirement that an expense be incurred during the contest to qualify as a campaign expense; and
- include, as an expense reasonably incurred as an incidence of the contest, any cost incurred or non-monetary contribution received by a contestant 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.
As such, the text of these definitions could be amended as follows:
[Leadership or Nomination] campaign expense means an expense reasonably incurred by or on behalf of a [leadership or nomination] contestant as an incidence of the contest. It includes a personal expense as defined in section [435.03 or 478.0 I] as well as any cost incurred, or non-monetary contribution 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 (leadership or nomination) contestant during the contest.
Such an approach would ensure that those expenses for goods and services that, ultimately, are used during the contest to directly promote or oppose a contestant are made reportable and are subject to the rules on expenses and contributions.
Moreover, the inclusion of post-contest expenses that are reasonably incurred as an incidence of the contest would ensure that all contestants are treated in a similar fashion, regardless of decisions made on how to finance their campaigns.
Finally, in the case of nomination contestants, this approach also allows for a sub-class of campaign expenses to be identified, consisting of those that are used to directly promote or oppose the selection of a contestant during the contest. This is important because it allows a further refinement that would make only expenses within this particular sub-class subject to the spending limit applicable to nomination contestants. This would make the regime applicable to nomination contestants similar to the one applicable to candidates: for candidates, only "electoral campaign expenses" that are included in the sub-class known as "election expenses" are subject to the spending limits. As such, unpredictable expenses sometimes incurred after the contest (such as court costs to seek an authorization to make a late payment on a claim) would not be included as an expense that falls within the contestant's spending limit, and would not inadvertently cause a contestant to spend in excess of the allowable amount.
To make this further refinement, section 478.14 of the Act should be amended to only include as expenses that are subject to the spending limit applicable to nomination contestants those that fall within the sub-class identified in the definition of"nomination campaign expense", namely, "costs incurred, or non-monetary contribution 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 nomination contestant during the contest."
Return to source of Footnote 1 The period of a leadership or nomination contest is set by the party or the association that is holding the contest and can be as short as a single day.