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Section Two. Alternative formulae for distributing public financial subsidies to parties, electoral associations and electoral blocks
1. Different concepts of `fairness'
Elections need not only to be free, they must also be fair and `genuine'. This is set out - albeit in brief and broad terms - in a number of international instruments such as the 1948 Universal Declaration of Human Rights (article 21), the 1966 Covenant on Civil and Political Rights (Article 25). The idea of fairness is thus basic to democratic practice. Indeed, it is incorporated into Germany's postwar constitution. Article 21 of the (West) German Basic Law of 1949 sets out the principle of Chancengleichheit (equality of opportunity). In the United States the most commonly used term is a `level playing field.' This term has become common in modern English usage, particularly in the USA, to refer to competition on a fair basis. It is an allusion to a football field where neither side has the advantage of running downhill against opponents who are handicapped by having to run uphill.
Yet the terms such as `fairness' and `level playing field' may have a number of different, contradictory meanings. They include:
a. fairness of outcome (for example, all political parties or electoral associations should have the same allocation of free television time or of state finance);
b. fairness as a bias towards opposition or small parties (e.g., the small parties should have especially large portions of free television time or state finance since they need it most);
c. fairness based on the extent of each party's political support (e.g. free television time and state funding should be proportional to each party's share of the vote at the last election).
Each of these alternative concepts of `fairness' will now be examined in more detail. The examination will show that the first concept of `fairness' - equal shares for all political parties regardless of their size - is usually inadequate and is, by international standards, unusual. This form of `fairness' has usually been adopted only in the early years after the transition to multi-party democracy in countries where new parties and electoral associations have (for the obvious reason that there have been no earlier competitive elections) failed to establish any record of past performance.
It is thus usual and logical for countries to start with rules that provide for equal aid for all parties and electoral associations regardless of size but subsequently to move to other methods of allocation of state financial aid.
a. Fairness as equality of outcome
Arguably, one way to ensure that each party and each candidate is treated fairly is to provide precisely the same opportunities and subsidies to each irrespective of their size and popularity. The argument for giving all parties and all candidates an equal share of free television time or of financial subsidies is that they all require an equal opportunity to put their case to the electors.
This is the principle followed for the allocation of free postal facilities to parliamentary candidates in Britain. Candidates nominated by major and minor parties as well as independent candidates have equal entitlements.
By contrast, it can be argued that equal treatment for major parties and for fringe groups is both impractical and unjust. It is arguably unreasonable to give a fringe party the same public benefits and the same financial aid as a major party. For a fringe party, that may have only a handful of members, the chance to obtain even a few minutes of free time on television represents a huge benefit. By contrast, that same few minutes will be inadequate for the major contenders. Where there are dozens or hundreds of competing parties, a policy of allocating precisely the same amount of time to each inevitably results - as argued earlier - in near chaos as electors are confronted with a multitude of different messages.
Moreover, such an `equal time' policy may conceal a strong bias against the main opposition parties. The governing party will normally have separate opportunities to project itself. If the main opposition party receives the same small slice of free television time as dozens of insignificant parties, it will receive a wholly inadequate opportunity to present its message, something that will help the government. The unsatisfactory results of the policy of equal television time for large and small parties has been seen in founding elections in several of the previously Communist countries of Eastern Europe and the former Soviet Union.
One compromise is to divide subsidies into two categories: first, one relatively high level of subsidy for all parties gaining over, perhaps five percent and the second lower level subsidy for all parties with a voting support of, perhaps, one-and-a-half to five percent.
b. Fairness as a bias towards opposition parties and small parties
It may be argued that `fairness' demands positive discrimination in favour of new or small parties. According to this interpretation, the major political forces in any society already have ample chances to express themselves. Extra opportunities need, therefore, to be provided to the political outsiders to organise themselves and to put forward their views to the electors.
An example of an application of this compensatory ideal of `fairness' is the scheme introduced in 1975 in the British House of Commons whereby financial subsidies are given to the opposition parties represented in the lower chamber. The governing party does not receive a subsidy. The rationale for the arrangement is that the governing party receives the benefit of the advice of the civil service. It is only the opposition parties that need funds to employ staff to prepare their arguments.
In some Scandinavian countries, the method of allocation of state financial aid to political parties also discriminates against the governing party. Each party receives aid based partly on the number of seats it has won in the previous parliamentary election. But the governing party receives less aid for each seat won than the opposition parties.
c. Fairness based on the extent of each party's or each candidate's political support
This involves the principle that small parties and fringe candidates should receive less support than the main ones. This idea may apply to the allocation of time for free electoral broadcasts on television and radio. It may apply also to financial subsidies. For example, it may be argued that only the principal candidates in a presidential election should be expected to debate with each other on national television, or that the large parties should be given more time slots for party political broadcasts than small ones.
This principle has common sense and justice behind it. But it also has problems. The common sense argument for fairness as an allocation pro rata to the support enjoyed by each contestant is that it avoids the situation where dozens or even hundreds of trivial candidates and parties set themselves up merely to gain the free publicity that results if all legally recognised contestants are given the same exposure. It is simply not practical for electors to digest so many different messages. In the slang of political scientists and diplomats, there exist (especially in newly formed democracies) `sofa parties' - parties so small that all their members can be seated on a single settee.
The argument of justice is that it is unreasonable for a party or candidate representing a sprinkling of supporters to have the same opportunity to broadcast to the electors as a major party.
The above considerations provide a strong basis for the argument that `fairness' should mean the proportionality of state aid to each contestant's support. However, the application of this principle produces problems.
The first problem is whether the extent of each party's support should be measured according to its past performance or according to its current performance. The easiest and apparently most objective measure of support is the percentage of the vote gained by each party at the most recent election. This is the main basis for state funding of party organisations in Germany. A difficulty of this system of allocation is that is may support existing parties at the expense of newly-formed ones or ones that have increased their popularity (as measured by opinion polls or other means) since the last election.
The second problem is that party organisations and electoral associations may split or merge between elections. It therefore may be difficult to decide whether an existing party or electoral association is the same as one (possibly with a different name) which contested the last election. If current financial allocations are based on earlier electoral performance, this becomes a crucial question. Unless there are clear rules about the internal management of parties and electoral associations, there are likely to be legal quarrels between different factions of a former electoral association, each of them claiming the mantle (and the financial subsidy) of the `successor.' Such quarrels will resemble those between brothers and sisters each claiming their parents' financial inheritance.
The third problem is whether the extent of support should be measured by votes gained in the previous election or by some other indicator. It could be argued, for example, that public financial subsidies should match the membership or the private financial support for each party rather than its votes. Apart from the proportion of votes won in the previous election, the following are among the alternative criteria by which political significance (and thus public funding) may be guaged:
i. number of seats (as opposed to votes) gained in the last election;
ii. number of seats and/or votes gained in the last two elections;
iii. number of seats being contested in current election;
iv. number and size of small or medium-sized donations received by party from members or supporters. (This is the basis for matching grants given to politicians seeking party nominations as presidential candidates in the United States. The exact rules of this and of similar schemes are not included in this paper but are available if needed.)
d. Allocations based on a combination of principles of fairness
There is no need for policymakers to adopt one principle of fairness alone in making allocations of public funding to political parties and electoral associations. It is common to adopt a formula that combines at least two different principles. For example, there are several countries (including Sweden, Denmark and Israel where allocations of state funding (or of free broadcasting time) are calculated partly on the principle of equality for all parties regardless of size and partly on the basis of past electoral performance. In The Netherlands, allocations of free broadcasting time are based partly on the principle of equality and partly on the number of seats being contested in the current election by each party or group.
As the examples show, it is also possible to have a system in which public subsidies are provided to parties based upon past performance, but permitting new parties or parties that did not succeed in the past to demonstrate current popular support and thus qualify for subsidies (for example seats presently contested, donations raised, or signatures collected).
e. Allocations based on principles apart from fairness
Although fairness is a fundamental principle governing the management of competitive elections, it is not the only principle. There may sometimes need to be a compromise between fairness and other principles. For example, it is common practice to enact regulations which aim to restrict politically-extreme or very small parties, regardless of the fact that this is `unfair'. In these cases, a small measure of fairness is sacrificed for purposes of practicality - that is, to limit the number of parties so that clear and meaningful choices may be made by electors.
2. Types of state financial aid to political parties and candidates
First, financial assistance from the state to political parties may be given on an annual basis to support the regular activities if the party organisation regardless of whether an election is about to take place. Germany is an example of this system. Alternatively, state aid may be directed specifically to the expenditures of parties and/or candidates in election campaigns. Canada is an example of this system.
Second, financial assistance may be given either in monetary form or it may be given in-kind. Examples of assistance in-kind are free broadcasting time, free or reduced postal facilities, free use of halls for public meetings, free space for advertisements in newspapers, free use of billboards.
Third, financial aid from the public funds may either be given unconditionally to each party or candidate or it may be conditional upon each party's own fundraising efforts. Methods of conditional financial aid include (a) tax reliefs on political donations, (b) tax credits (a method that favours parties whose supporters are generally poor and who therefore do not normally pay income tax), and © matching grants.
Fourth, financial aid may be given either to central organs of each party (a method which will have the effect of centralising power within the party) or some or all of the aid may be given to local organisations of each party.
Fifth, aid may be given either to political parties and/or to candidates for public office.
3. Examples of allocations of state financial aid to political parties and candidates
a. Thresholds
It is standard practice to impose a minimum requirement on parties and candidates wishing to receive public financing. The requirement may be in a number of different forms.
i. A condition of financial aid to individual candidates may be that they should obtain a certain percentage of the votes cast in their districts in the election for which the subsidy is being sought - i.e. in a future election. Since it will be unclear before the election whether each candidate will obtain the necessary threshold of support, it will then be necessary to reimburse money after the election to those candidates who qualify. This system has the disadvantage for candidates who are uncertain about whether their level of support is likely to meet the requirement for subsidies. Such candidates will therefore be under pressure to limit their outlays in case they do not receive a post-election reimbursement.
Alternatively, for routine grants to political parties, the threshold may be based on the results of the most recent general election.
ii. For a political party, the requirement for subsidy of campaign costs may be that it puts forward candidates in a certain number of seats.
iii. For subsidies for routine organisational costs or of campaign costs, parties may be required to win a certain number of seats in the legislature.
iv. The test may be a certain percentage of the national vote.
v. There may be a combination of tests: a minimum percentage of the national vote and a minimum number of seats in the legislature.
In general, (a) thresholds are higher for candidates in individual seats than for parties nationally, and (b) thresholds for obtaining state financial aid for parties' organisational or campaign costs are usually lower than thresholds for gaining seats in the legislature. For example, in Germany, the threshold for receiving state aid is one-half percent of the national votes whereas the threshold for obtaining seats in the legislature is five percent.
Thresholds for public subventions vary between one-half percent of the national vote in Germany to 15 percent of the vote for individual candidates in Canada. Other examples include: France (National Assembly election): five percent; Australia: four percent; Sweden: two-and-a-half percent in the last two elections; and Japan: two percent or over five candidates.
b. Examples of formulas for financial subventions
i. Canada: An example of the reimbursement of campaign costs is the Canadian system. (a) Each candidate receives a reimbursement of 50 percent of campaign costs. Candidates must receive 15 percent of the vote in order to qualify and they must also adhere to a set spending limit. (b) For campaign expenses of national party organisations, the reimbursement is 22.5 percent of the total. Again, there is a spending ceiling. National parties are not required to obtain a minimum percentage of the vote in order to qualify; instead, they are required, first, to spend at least 10 percent of the maximum permitted budget and, second, they must field at least 50 candidates.3
ii. Germany: An example of a formula for annual, routine subsidies to national party organisations is the German system. (a) The public subsidy is computed on the basis of the latest election result. For the first five million votes, each party receives DM 1.30 per annum and DM 1 thereafter. (b) In addition, DM 0.5 is granted for every DM 1 received by the party in membership dues. (c) The direct subsidy must not exceed the amount raised by each party from membership subscriptions and other private sources. (d) In order to qualify for matching funds, membership subscriptions must be no more than DM 6,000 per person per annum. (e) The party must have obtained at least one-half percent of the vote in the last election (or one percent of the vote in a state election). (f) According to an amendment of 1993 to the Parties Law, there is an absolute ceiling of DM 230 million a year on the total direct subsidy to all parties combined.4
These formulae exclude a number of additional categories of state financial aid to party organisations. These include (a) large-scale aid to `party foundations' (such as the Konrad-Adenauer-Foundation and the Friedrich Ebert Foundation), (b) aid to the party groups within the federal and länder legislatures, (c) free broadcasting time, (d) free use of billboards in some municipalities, (e) assistance to youth groups attached to the political parties, and (f) `party taxes' - i.e. enforced contributions to the party from its public office-holders of a set portion of their official salaries (which are, of course, derived from public funds).5
iii. Nicaragua: This is another example of a combination of criteria. For the 1990 elections, the Supreme Electoral Council was authorised to allocate a specific amount to political parties. (a) Fifty percent of this was to be divided between them in equal amounts, and (b) the remainder on the basis of the number of votes received in the 1984 elections. (c) Parties which did not contest the earlier ballot each received the same as the party with the fewest votes.6
4. Examples of methods of allocating free broadcasting time to political parties
a. Equality between parties regardless of size and previous performance
For example:
i. India: Party political broadcasts were first arranged on radio and television during the 1977 state elections, with the order of speaking arranged by drawing lots. This followed agreement by all parties that they would have equal time.7
This is also the most common method in `new democracies.' For instance:
ii. Czech Republic: In the electoral campaign, all political parties contesting the elections are allotted a total of 21 hours of broadcast and television time which is divided among them equally. The actual hour of presentation for each party is determined by lot.8
b. Allocation based on the number of candidates put forward by each party in the current election
This method is used in Japan .
c. Allocation based wholly or largely on results of previous election
This is the method in Germany. Other examples include:
i. Belgium: Free access to the State-owned television network is in proportion to the strength of each party group at the level of the European Union.
ii. Greece: The allocation of time among political parties is based on the size of the party in the previously dissolved Parliament. The three largest parties in the previous Parliament are entitled to at least 38 minutes weekly on televised programmes. Smaller parties having members in the previous Parliament are entitled to eight minutes weekly. Parties with no representation in the Parliament but with a list of candidates in 75 percent of the electoral districts are entitled to five minutes weekly. In addition, each large party is entitled to one 45-minute broadcast.
iii. Spain: The formula is: (a) 10 minutes for parties, federations or coalitions which did not participate or did not have representation in the previous election; (b) 15 minutes for those with up to five percent of the vote at the previous election; (c) 30 minutes for those with 5-20 percent; 45 minutes for those with at least 20 percent.
d. Allocations based on a mixture of principles
i. Israel: The allocation of broadcasting time is based on a compromise between the status quo and the new situation. «Each party, including those which were not represented in the previous parliament, has been given ten minutes and each party already represented in the outgoing parliament receives three additional minutes for each member in the parliament.»9
ii. The Netherlands: The allocation is based on a compromise between the principle of equality and that of preference for large parties as defined by the number of seats contested in the current election. In the period preceding an election the Media Commissariat (established under the Media Law) may allocate extra time to political parties and groups which have submitted a list of candidates in all 19 electoral districts.10
iii. Turkey: All parties participating in the election are entitled to 10 minutes. Parties with parliamentary groups may receive 10 more minutes. In addition the governing party is entitled to another 20 minutes and the main opposition party to another 10 minutes.11
e. Allocations agreed by a committee (of broadcasters or of broadcasters and party representatives)
i. Australia: The Australian Broadcasting Commission (ABC), the public broadcasting authority, is not obliged by law to provide free broadcasting time to participating parties in an election. It is up to the discretion of the ABC's Election Coverage Committee to determine how the public is to be informed on «issues of current debate». It has in the past been its policy to allocate free time
ii. Britain: A committee is formed from representatives of the broadcasting authorities and of the political parties. The committee tries to agree on a fair allocation. This has in the past consisted of a number of elements. First, the two main parties have received equal shares. The share of the third party - the Liberal Democrats - has been based partly on the result of the previous election and partly on its subsequent performance in by-elections local government elections and in the polls. Moreover, the formula has usually given the third party a share which is, on the one hand, smaller than that of the main parties, and on the other hand larger than its pro-rata share as measured either by its previous or current political showing.
The formula that has normally emerged has, therefore, reflected a compromise between a number of conflicting ideas of `fairness.' It has moreover reflected the fact that the broadcasting authorities have the final authority to decide on what they consider to be a reasonable allocation if there is no agreement between the political parties. Finally, if the broadcasting authorities make a decision in the wake of disagreement between the parties, it is open to any of the parties to take the matter before a court of law. It will then be up to a judge to decide what is `fair.'
iii. Canada: Parties are permitted to purchase air time and to receive partial reimbursement of their costs. The Canada Elections Act requires every broadcasting station to make a total of six and a half hours available for political broadcasts during a period beginning on the 29th day before the poll and ending on the second day before the poll. These hours are divided up by agreement between the rival political parties. If an agreement cannot be reached between them, the matter is referred to the Government -appointed Broadcasting Arbitrator.12
3 Library of Congress, 1995, pp. 49-50.
4 Werner Kaltefleiter and Karl-Heinz Nassmacher, `The New German System of Public Subsidies to Political Parties.' In Josef Thesing and Wilhelm Hofmeister, editors, Political Parties in Democracy. Sankt Augustin: Konrad-Adenauer-Stiftung, 1995. Library of Congress, 1995, pp. 74-75.
5 Ibid.
6 Guy S. Goodwin-Gill, Free and Fair Elections: International Law and Practice. Geneva: Inter-Parliamentary Union, 1994, p. 58.
7 Library of Congress, 1995, pp. 103-4.
8 Ibid, p. 58.
9 Ibid, p. 58.
10 Ibid, p. 171.
11 Ibid, p. 194.
12 Ibid, pp. 52-3.
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