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Money is the mother's milk of politics.

- Jesse Unruh, California Assembly Speaker, 1966

An underreported story of this election campaign is the fragmentation of partisan support. In the latest polls, the combined support for the two leading parties (Conservatives plus Liberals), which was 66 per cent in the 2004 and 2006 elections, is declining toward its value in the 1993 election – 60 per cent (Liberals plus Reform). In 1993, everyone blamed the splintering of the vote on the crack-up of the Mulroney coalition, which produced a five-party system.

It is less clear why the vote should be fragmenting in this election, but changes in party finance are part of the explanation. Jean Chrétien's Bill C-24 and Stephen Harper's Accountability Act outlawed union and corporate contributions as well as large personal donations, leaving parties to survive on government subsidies and grassroots fundraising. One of several unintended consequences is to encourage the proliferation of parties.

The effect is clearest with the Greens, a party that has never elected anyone to the House of Commons and got less than 5 per cent of the vote in both 2004 and 2006. Under the old system of party finance, its supporters would have given up and it would now be a fringe party, nominating a few candidates but not having a significant impact. Yet, under the new regime, all pollsters (except Nik Nanos, who has a different way of asking the ballot question) have the Greens in double digits.

The Greens have been able to thrive because they received enough votes in 2004 and 2006 (more than 2 per cent) to qualify for an annual subsidy of about $1-million – enough to finance a professional organization and national campaign. Thus, without ever electing anyone, an advocacy group has turned itself into a viable political party, courtesy of the system of public subsidies; and even if the Greens never elect anyone, their status as a party makes their advocacy more effective.

Consider also the Bloc Québécois, a party that hardly bothers to do any fundraising on its own because its federal subsidy is almost entirely sufficient to its needs. The Bloc was founded to promote Quebec independence, a cause that is temporarily moribund. Also, its leader, Gilles Duceppe, is thought to be on the verge of retirement. Instead of promoting its separatist raison d'être, it has campaigned on the necessity of keeping the Conservatives from winning a majority. A party dependent on its grassroots supporters for its well-being could hardly contemplate such a volte-face, but the Bloc can carry on, confident of its subsidies.

The NDP's unprecedented decision to run a fully funded campaign has also been affected by the new subsidy system, which more than makes up for the contributions it used to get from organized labour. With Elections Canada rebating half the party's national campaign expense, and with its subsidy growing in line with its increasing vote totals, the NDP should be in reasonably good shape, though it will also have to ratchet its fundraising up a notch if it hopes to wage the frequent election campaigns that result from the fragmentation of federal politics.

Whereas the new system has helped the three smaller opposition parties, it has hurt the Liberals, who, despite their bigger cash requirements, have not yet learned the art of grassroots fundraising. With their much bigger war chest, the Conservatives outspent the Liberals by a huge margin in the pre-writ period and thus entered the writ-period campaign with a big advantage, although that is dissipating amid the international financial turmoil.

But if the Liberals end up badly in this election, the subsidy system will cushion their fall. No matter how poorly their own fundraising performs, they can expect an annual subsidy of $6-million to $7-million, which will discourage them from facing the need to “unite the left” through a coalition or merger with the NDP and/or Greens. Once again, the subsidy system will promote fragmentation.

My long-term prognosis: Whether the Conservatives win a minority government (a majority now seems out of the question) or the Liberals stage a comeback to win their own minority, we are in for years of fragmentation. Usually, a period of splintering would be followed by consolidation, as happened with the Canadian Alliance-Progressive Conservative merger, but our system of finance tends to turn advocacy groups into parties and keeps them alive even after they have outlived their usefulness.

Tom Flanagan is a p rofessor of political science at the University of Calgary and a former Conservative campaign manager