Unveiling details of the new Canada Emergency Wage Subsidy in April, Justin Trudeau took care to stress that abuse of the program by greedy employers would not be tolerated, promising “stiff and severe penalties for trying to take advantage of this system and of your fellow Canadians.”
How fine, then, to discover among those lining up to take advantage of the system are not only the governing Liberals but all of the federal parties, with the exception of the Bloc Québécois. Just how fine it was for the parties to avail themselves of a program intended to save jobs at struggling businesses may be judged from how scrupulous each was to keep quiet about it.
But then, the program was in many ways an all-party achievement. Originally, the plan was to subsidize just 10 per cent of eligible wages, and only for small businesses. Only after much pressure from the opposition parties was it expanded to 75 per cent, and to virtually all enterprises – big or small, commercial or non-profit – outside the public sector.
Probably it never dawned on them that the program might benefit them as well. But after it was up and running, and there were no rules that actually prohibited it, and the money was just sitting there, and no one was looking, well, what did you expect them to do – not take it?
Yes, actually. Usually the parties conspire to exempt themselves from rules of general application, for example refusing to subject themselves to the same requirements of disclosure under federal privacy laws as private corporations. In this case, they are insisting on the right to be treated exactly the same as private employers.
But of course they aren’t like private employers. Political parties are unlike all other private organizations, in that they seek not merely to be free from state control but to exercise it over others: their “business” is coercive power. That is why we regulate how much people can contribute to political parties, in a way that we do not regulate how much they can buy from businesses, or donate to charities.
But we do so imperfectly, to say the least, since the people drafting the laws on political fundraising are also their beneficiaries. The issue with the parties sheltering under the umbrella of the wage subsidy isn’t just that, collectively, they raised more than $66-million last year: it is that they are already the recipients of massive amounts of federal subsidy.
Donations to political parties are, uniquely, eligible for a tax credit of up to 75 per cent, worth a total of roughly $30-million a year. Parties are subsidized further when it comes to spending the money thus raised, being reimbursed 50 per cent of their election expenses (60 per cent for candidates).
There is no objective necessity to any of this, you understand. Parties could perfectly well raise and spend funds on their own, without subsidy. Neither is there some fixed amount of money that parties “need.” The only reason any of them spend as much as they do is because the other parties do. And since most of what they do spend is spent on things that hurt democracy – attack ads and robocalls and the like – there is ample cause to think they could and should get by on much less: less public subsidy, yes, but also less in the way of private donations.
So the parties approach the wage subsidy from a position quite unlike those of private groups. The case for such a program was to freeze employment arrangements as they were before the pandemic. In normal times this would be a mistake: when a company fails, whether because of bad management or broader economic change, it is usually better to encourage its employees to seek other work, with the help of public funds if necessary, rather than lock them into no-hope firms under no-talent bosses.
The pandemic’s circumstances were very different. It was hardly employers’ fault, for one, and it was expected to be temporary, for another. If a firm was viable before the pandemic, it could be assumed to be viable after; if there was a demand for the work its employees performed before, it could be expected to remain after the crisis had passed. Certainly there was no reason to presume the contrary.
The parties, on the other hand, are entitled to no such benefit of the doubt. Do the parties find they are unable to persuade people, even with the help of a 75-per-cent tax credit, to donate as much as they are accustomed to? Too bad! The pandemic has only done, by happenstance, what should have been done long ago by policy, and would have if the parties were not in the position to write both the laws and the cheques to their benefit.
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Andrew Coyne