Funding of Political Parties in New Brunswick

Parties need funds to both develop and promote their platforms, and then convince the electorate to vote for them. Where does the money come from?

The Political Process Financing Act (PPFA) provides for the partial funding (from tax revenues) of registered political parties in New Brunswick and also specifies how individuals, corporations and unions may also contribute funds to political parties. Provincial financing of political parties was originally based on a $1 per vote formula (indexed to inflation; e.g. the amount per vote allotted in 1981 was $1.30). However, in 1991, the formula was changed and currently allocations are capped according to amounts set in the provincial budget. A revised formula is used to calculate funds for each party (based both on the proportion of votes received in the previous election and the available budgetary allocations). These amounts are paid out in quarterly installments, but note that, while allocations are determined by fiscal year, parties report their financial information by calendar year. The Act also regulates how parties may raise other funds, from individuals, corporations, or unions. A contributor may not donate more than $6000 per year.

Charts below show trends in funding sources over a four-year period, 2009-2012. Data were obtained from annual and semi-annual financial returns (filed by parties as required under the Act) provided by Elections New Brunswick. Reimbursements for auditing costs and ‘in-kind’ contributions are not included in the charts. It is unfortunate that Elections NB does not simply place these returns on their website, preferably in a searchable format. The reports also contain lists of individuals, corporations, and unions donations to a particular party. Contributions greater than $100 are subject to public disclosure. Although the data can be obtained simply by sending an email request to Elections NB, I am not sure that the non-searchable (electronically) PDFs they supply really meet the spirit of that ‘public disclosure’ criterion.

Parties have the option of filing audited returns on an annual or semi-annual schedule (calendar year basis). Most parties file annual audited returns, but the NBLA files audited semi-annual returns. NBLA totals shown below are the annual totals of the two semi-annual reports for each calendar year.

Annual allowances from provincial revenues under the PPFA totalled $506,506 in calendar year 2009 (divided among the three parties eligible) and $654,052 in 2012 (five parties eligible).

Charts contain the following acronyms:

PCNB – Progressive Conservative Party of New Brunswick; NBLA – New Brunswick Liberal Association; NBNDP – New Brunswick New Democratic Party; GPNB – Green Party of New Brunswick; PANB – Peoples’ Alliance of New Brunswick

PPFA – Political Process Financing Act – Election Financing Manual (funds received from government budget allocations in a given calendar year via the PPFA formula); IND – Individual donors (sum of donations of <$100 and >$100); CORP – Corporate donors; UNION – Union donors

The charts show contributions from each source category by calendar year and party. By hovering your mouse over each section of the bar, you can see the dollar amount (rounded to nearest dollar) for each source for that party and year.
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Service Costs in New Brunswick Local Service Districts (LSDs) – Text of the Comptroller’s Report May 2008

The Finn Report (also known as Building Stronger Local Governments and Regions: An Action Plan for the Future of Local Governance in New Brunswick) was released in December 2008 and contained a number of recommendations regarding local governance in New Brunswick. The Report was produced by the Local Governance Commission that had been established in September 2007 by Premier Bernard Lord and was headed up by Jean-Guy Finn. The Graham administration (which held office when the Report was released) failed to act on the Report but a number of those recommendations were eventually adopted by the Alward government in 2011.

With respect to Local Service Districts (LSDs), the Finn Report relied heavily on the findings of the 2008 Review of Local Service District costs carried out by the Office of the Comptroller (Review of Provincially Provided Services in Local Service Districts May 2008). The main finding in the Comptroller’s Report (which was actually an update of a similar report done in 2002) was that the costs of services supplied to LSDs by the Province were significantly greater than revenues available from property taxes collected from LSD residents and businesses. That is, the analysis suggests strongly that the Province is funding service delivery in LSDs by using other revenue sources  available to it (e.g., income tax revenue, or property tax revenue from non-LSD residents), as well as property tax revenue collected in LSDs.

The reforms put in place in 2011 will result in transfer of various service delivery responsibilities from the Province to Regional Service Commissions and/or local municipalities. In other words, many (if not all) of the ‘Provincial’ services delivered to LSDs and rural communities will, over time, become ‘local’ services rather than the responsibility of the Province. It is hard not to conclude that a motivation for these reforms was a desire on the part of the Province to see that these ‘local’ service costs were paid for by local property taxes, rather than income and other tax revenues. The Comptroller’s Report is thus important, as calculations in the Report appear to support the idea that property taxes are not covering the costs of service delivery in LSDs. A major source of the shortfall in revenue appears to result from the fact that the $0.65 assessment (per $100 of property value) for provincially-supplied services has not increased for several decades.

The Comptroller’s Report is not available directly from the Government of New Brunswick website. I obtained a copy and have converted it into a web document, as shown below. This involved stripping away much of the formatting of the original report, but some re-formatting has been done to add clarity. I believe the text and data have been reproduced accurately, but, if any errors are found, please advise me.

[Note – this is the second post on LSD service costs and governance. I suggest reading the first post in this series prior to this one. Additional posts on this topic will follow.]

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Can we fix the revenue generation problem?

“We will find efficiences and cut waste”

During election campaigns, political parties make various promises to the electorate. They seldom tell us where the money to fund the programs will come from, and, to be fair, when economies are growing quickly and tax revenue is flowing in, money might very well be available. These days, however, regional economies are not so robust and new dollars to fund new promises are hard to come by. Federal and provincial tax cuts in recent years have further reduced available revenue. Consequently, the new mantra is to make the promises and then state that funding will come from ‘finding efficiencies’ or cutting ‘waste’. It is rare for politicians to admit that certain taxes might have to be raised in order to fund their campaign promises.

Canadians expect to receive similar services from governments, regardless of which province they live in. Provincial governments have to find the revenue to meet those voter expectations. There is not much point in claiming we can eliminate a large number of those services and thus make large expenditure cuts – if you feel that way, you might find it more productive to go bark at the moon. As I showed in a previous post, when we adjust spending for inflation, non-healthcare government spending in New Brunswick has been fairly flat since the early 90s. Since then, the major contributor to rising spending has been growth in health care costs. That does not mean that new non-health programs have not been launched – it just means that they have been funded either by taking money from other programs or via debt financing. So it comes as no surprise that when Messrs Alward and Higgs promise to make spending cuts but not service cuts, they have a hard time doing so. Most of the ‘efficiencies’ have already been found over the past decade. That does not mean more can’t be found, but it can become increasingly difficult to do so.

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Decades of Deficits: Revenue Sources and Spending in New Brunswick

New Brunswick is currently experiencing a fiscal crunch. Revenues are below expectations and expenditures are proving difficult to control. Meanwhile the Federal Governmnent has announced a new formula for allocating equalization payments that will tie increases in health care payments to GDP growth, plus those payments will (after 2015) be allocated on a per capita basis. That might effectively reduce payments to NB once inflation, slow population growth, and growing health care costs are factored in. Fortunately, although the provincial debt is approximately $9 billion, interest rates are now low by historical standards and debt servicing has not yet caused a crisis. That is just as well, since slowing economic growth is doing a fine job of reducing government revenue all on its own.

The aim of this post is to present some historical background to NB’s funding sources and examine the role of health care spending as a driver contributing to spending increases over time. More details on how NB spends its revenue, and how that compares with spending in other provinces will be provided in following posts. As we will see (note the last chart below), when we adjust spending by inflation, government spending increases on things other than health care have been kept fairly modest in recent years.

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