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Overseas Visits
Germany
Regulating elections
The president of the Bundestag (the equivalent, in the UK, of the Speaker) has the tasks each year of determining (within a statutory framework) the amount of funds for each party, auditing the party's accounts, and reporting to the Bundestag on the state of the accounts.
State aid
State funding is well developed in Germany and entails work by a good number of bodies. It is paid at national, regional and local level, and to political parties, MPs and Stiftungen (research foundations directed by each major political party). The parties receive some DM30 million (£77 million) a year; a further DM112 million (£38 million) goes to the Fractionen (party groups in the Bundestag); and DM190 (£64 million) to the Stiftungen for domestic political research.
An important underlying function of state funding is to ensure the health and vigour of political parties in Germany. The parties are expressly recognised in the Basic Law (Article 21) and in the Election Law (Articles 1 and 2) as bulwarks of democracy. State funding is thought to lessen the risk of political parties becoming dependent on large donations or falling prey to the influence of lobby groups.
In order to attract state funds a party has to achieve 0.5 per cent of the vote in a general election. Then, as a measure of the how far a party is rooted in society, the total of its membership fees and private donations is taken into account. A party is entitled to receive DM1.3 (44p) per vote for its first 5 million votes, and thereafter DM1 (34p) per vote. It is entitled to DM0.5 (17p) for every DM 1 which it receives in subscriptions or donations. If the total of all the parties' entitlements on this basis sums to more than DM230 million (£77 million), the theoretical share of each party is scaled down so that the DM230 million cap is not exceeded.
Critics of the system suggest that the large parties have become, as it were, pillars of the state and almost part of the Government machinery. Each large party has a substantial bureaucracy. Coupled with a system of proportional representation, the state funding of the parties is seen by critics as having the effect of insulating the MPs from their constituents. However, the Committee found that the parties generally welcome the present arrangements and would Strongly resist any attempt to make significant cuts in state funding.
Political donations
There is a requirement to disclose all donations above DM20,000 (£6,700), the previous threshold had been DM40,000 (£13,400). The legislation tackles the problem of 'foreign' donations by providing that donations may be accepted from «a citizen of the European Union, or a business enterprise whose shares are more than 50 per cent owned by Germans»; «a foreigner» may contribute up to DM1,000 (£336).
Tax relief has been restricted since 1994 to donations of up to DM6,000 (£2,000) per individual per year.
Forty-six political parties campaign at national and state levels in Germany. Only five parties have seats in the Bundestag. Eighteen parties are in receipt of public funding. Major corporate donations to political parties are now less significant than previously, possibly because of the lowered disclosure threshold. Small donations now account for 90 per cent of all the SPD's income. In the case of the CDU in 1996 only 40 persons or corporations made donations caught by the DM20,000 (£6,700) disclosure requirement. There were 23 such donors to FDP and 15 to SPD.
Although independent audit certifies that each party's annual accounts are in order, it may happen that a large company keeps below the DM20,000 (£6,700) disclosure threshold by giving to a party via subsidiary companies - each company being legally a separate person. Similarly, wealthy individuals' contributions might be split among friends or family members if the aim were to maximise tax relief or to avoid disclosure. But such practices would attract the media's attention and it is not thought that such evasions are widespread. A party caught failing to disclose its receipts properly could be fined double its entitlement to state funding. The parties spend what appear to be very large sums each year in preparing accounts and having them audited. More than one party mentioned a figure of DM1 million (£336,000) in this connection.
The system is supposed to lessen the dominance of lobby pressure groups and big business, but a party's donations could add up to substantially more than its entitlement to state funding under the DM230 million (£77 million) cap. So the objective of matching private resources with state funds would not be met.
Expenditure limits
There are no restrictions on the amounts which political parties may spend during an election campaign. German practice is to be libertarian on the amount of money which can be raised and spent, while interventionist on transparency and subsidies.
Sweden
Regulating elections
State funds are determined each year by the Riksdag, as part of the Budget formulation, and then allocated by the Party Subsidy Board/Party Funding Committee, which is appointed for six years and is headed by a retired judge. Its decisions are binding and cannot be appealed.
The Government has appointed a Council for the Evaluation of the 1998 general election, with members chosen from all the major parties in the Riksdag. Its remit is to monitor the new voting arrangements for individual candidates, and to evaluate whether financial factors affect the election.
It is a fundamental principle in Sweden that Government authorities should not interfere in the internal affairs of political parties. There are seven parties in the Riksdag. In effect, Parliament says to the parties: «You have the money. You are responsible for using it to promote democracy.» There are no rules at present to prevent an MP using his office and support funds for party purposes; and regional subsidies can be used to pay for services rendered by party headquarters.
State aid
The present system dates from legislation enacted in 1972. State subsidies are paid only to parties with sufficient support at a general election. Fixed rules allow for no discretion in distribution. There is no official control on how parties use their funds - they are spent as the parties see fit - and no accounting is required.
State support to political parties amounts to SEK141 million (£11 million) a year. The party is assisted directly by funds based on its support at the last two elections. This assistance is given to all parties who receive over 2.5 per cent of the national vote (for parties who have lost their seats in parliament this funding is decreased proportionally each year). Parties which receive over four per cent of the vote, and thus some seats in parliament, are given SEK282.450 (£21,000) annually for each seat won. Those parties which have seats in parliament are also entitled to assistance for the maintenance of an administrative office. Each party receives a basic sum of SEK4.9 million (£363,000) with the governing party receiving an extra SEK13.850 (£1,000), and the opposition parties an extra SEK20,650 (£1,500), per seat won.
Parliament supports party groups, and pays MPs a secretariat grant and members' allowance, to the tune of SEK80 million (£6 million) a year. The governing party receives SEK930,000 (£69,000) with the opposition parties given approximately SEK2.3 million (£173,000). This sum is supplemented by SEK28.000 (£2,000) given for each seat won, regardless of whether the party is in government or opposition. Support to local councils, summing to SEK500 million (£38.5 million), can be used to support those political parties which have seats in local authorities, but those responsible for the allocation must show neither favour nor disfavour.
The Moderate Party wants to reduce state funding. The SDP and Centre Party are agreed that it should continue. The existence of state subsidies lessens parties' dependence on private donations and sponsorship. State subsidies are believed to be the safest way for democracy to avoid bribery. The Swedes are not particularly strongly persuaded that state funding lessens parties' ability to represent the interests of the people to Government; there is greater excitement over individual politicians' misuse of Government credit cards.
Swedish newspapers are heavily subsidised. Even small towns tend to have two local newspapers. They incline to support the Moderate and Centre parties. Every political party has an education department, comparable to the German Stiftungen. The present funding arrangements reinforce stability and the status quo: large parties are funded generously; small parties not to a great extent; fledgling parties zero.
In the past 10 years there has been a rapid increase in the amount of public funds given to local levels (national support has not gone up much in real terms). As a result local councillors are perceived by critics to be becoming institutionalised and remote from the voters.
Political donations
The Social Democrat Party receives each year some SEK5 million (£385,000) from members' subscriptions, SEK19.4 million (£1.5 million) from trade unions; SEK35 million (£2.7 million) from lottery income and SEK41 million (£3.15 million) in the form of state subsidies. (The unions withheld SEK13 million (£1 million) in 1996 because they disliked the SDP's policies. Harmony has now been restored but the incident shows how leverage can be exercised on a political party.) The SDP employs 70 people at headquarters, rising to 100+ in an election year. A further 60 full-time equivalent staff are employed around the country.
The Moderate (Conservative) Party insist that they no longer receive funds from business. There is no requirement for them to disclose any political donations they receive. But they seem to spend generously on posters, travel, and advertising. They may hold events at which people pay to meet party representatives; they may receive help in kind.
Expenditure limits
At present there are no restrictions on the amounts political parties may spend during an election campaign.
Canada
Regulating elections
At federal level, responsibility for the regulation of elections is vested in Canada's Chief Electoral Officer supported by the executive body - Elections Canada. The Chief Electoral Officer has responsibility for all aspects of the conduct of Federal elections; the funding of political parties (including elements of state funding); the registration of political parties; the oversight of disclosure of donations greater than Can$100 (£40) to political parties; the registration of electors and organisations conducting referendums; and electoral boundaries.
The Chief Electoral Officer appoints a Commissioner of Canada Elections whose role it is to ensure that the legislation relating to the conduct of elections is complied with. The Chief Electoral Officer also appoints a broadcasting arbitrator for the period of a general election to ensure fair play in the allocation of party political broadcasts.
In order to qualify for registration as a political party an organisation must meet a series of criteria including sponsoring candidates in at least 50 electoral districts at a general election. There are also requirements on the registration of those involved in a referendum campaign. A person or group may not incur referendum expenses that in aggregate exceed Can$5,000 (£2,000) unless they are registered.
State aid
A series of tax credits are available for small donations; 75 per cent of the contribution is provided if the contribution does not exceed Can$100 (£40); between Can$100 and Can$550 (£220) the tax credit is Can$75 (£30) plus 50 per cent of the amount contributed over Can$100; above Can$550 the tax credit is Can$300 (£120) plus 33х per cent of the amount over Can$550, up to Can$1,150 (£460). No further tax credits are allowed. This results in a maximum tax credit of Can$500 on a Can$1,150 contribution.
In addition to the return of a Can$1,000 deposit subject to certain conditions, a candidate is also entitled to the reimbursement of up to 50 per cent of actual election expenses paid (to a maximum of 50 per cent of the expense limit) provided he or she received at least 15 per cent of the valid votes cast.
Political donations
At Federal level, contributions are not limited in the amount, however the source is regulated.
The Canada Elections Act provides that no person or registered party shall accept or use contributions from:
 a person who is not a Canadian citizen or permanent resident within the meaning of the Immigration Act;
a corporation or an association that does not carry on business in Canada; a trade union that does not hold bargaining rights for employees in Canada; any foreign political party; or
a foreign government or an agent of a foreign government.
No registered referendum committee shall accept contributions from:
an individual who is not a Canadian citizen or a permanent resident;
a corporation that does not carry on business in Canada;
a trade union that does not hold bargaining rights for employees in Canada; or
a foreign government or an agent thereof.
Expenditure limits
The amount that can be spent at an election is limited both for parties (under section 39) and candidates (under sections 208 to 212) of the Canada Elections Act.
The actual election expenses limit for a candidate is based on the number of names on the preliminary list of electors in the electoral district. The 'basic' limit is increased where the number of names in the district is less than the national average and also where the district has a density of less than ten electors per square kilometre.
At the time the election is called, the Chief Electoral Officer gives the registered parties and chief agents an estimated election expenses limit to help them prepare their election budget. The estimated election expenses limit for registered parties is based on the number of electors on the preliminary list of electors in every electoral district multiplied by Can$0.30 (12p) and indexed by applying the factor published annually by the Chief Electoral Officer.
The actual election expenses limit for a registered party is calculated by a formula of Can$0.30 multiplied by the number of names on the preliminary list of electors in all the electoral districts in which the party is sponsoring a candidate.
These actual spending limits for both candidates and registered political parties are indexed by applying the factor published annually by the Chief Electoral Officer. The average limit for candidates at the 1997 general election was Can$62,624 (£25,050). The limit for a registered party that sponsored candidates in all 301 electoral districts at the 1997 general election was Can$11,358,749 (£4,543,000).
Provincial legislatures
The arrangements at the Provincial level in Canada in most cases mirror those at the federal level, although disclosure and expenditure limits may vary. There are, however, also a number of significant differences in approach. For example, in Quebec, corporate donations of any form are banned and only individuals whose name appears on the electoral role may donate to a political party. Any such donations, including contributions in kind, are limited to Can$3,000 (£1,200), with any contribution in money over Can$200 (£80) having to be made by cheque or payment order drawn on a financial institution with a base in Quebec.
Another example of the divergent Provincial approach is in Ontario where instead of a Chief Electoral Officer, the conduct and financing of elections (including contribution to political parties) is overseen by a Commission on Election Finances. The Commission on Election Finances is a committee composed of two members from each of the three main political parties. It does, however, have three 'independent members': the Chief Election Officer; a 'bencher' from the Ottawa Law Society; and the Chair who is appointed by the Provincial Government in consultation with the other parties.
United States of America
Regulating elections
The issue of party funding is virtually unheard of in the United States; it is seen there as an issue of the funding of political campaigns. Various attempts were made to regulate funding, culminating in the Federal Election Campaign Act (FECA) 1971. This dealt specifically with elections to federal office; the Presidency and Vice-Presidency, the Senate and the House of Representatives. The Act sets out limits on contributions and for disclosure (see below) but the effect of the Act has been considerably weakened by a key Supreme Court decision, Buckley v Valeo which declared that both contribution and expenditure limits restricted a number of First Amendment rights - relating to freedom of speech and association. It accepted however that reasonable contribution limits could be justified by a countervailing governmental interest in protecting the integrity of the electoral system from real or apparent corruption. The Court ruled unconstitutional the Act's expenditure limitations, including the limitation on a candidate himself or herself to spend his or her own money on an election. The effectiveness of the FECA has been further limited by court decisions widening the scope of activity not covered by the FECA which can be financed using so-called 'soft money'.
The Federal Election Commission (FEC) is the independent regulatory agency charged with administering and endorsing the federal campaign finance law. The FEC has juristriction over the financing of campaigns for federal office. The Commission is composed of six Commissioners - no more than three from one political party, in practice three Republicans and three Democrats. In order to reach a decision on any matter the Commission must have four votes in favour. When contentious issues arise, determinations have therefore to be decided by at least one member of the opposing party breaking ranks. As this is an infrequent occurrence the Commission is perceived to be a weak body.
Within the limitations outlined above the Federal Election Commission enforces campaign finance law over three broad areas:
public disclosure of funds raised and spent to influence federal elections;
restrictions on contributions and expenditures made to influence federal elections; and
the public financing of Presidential campaigns.
State aid
Qualified Presidential candidates receive money from the Presidential Election Campaign Fund, which is financed exclusively by a voluntary tax `check-off'. By checking a box on their income tax returns, individual taxpayers may direct US$3 (£1.90) of their tax to the Fund. Checking the box does not increase the amount a taxpayer owes or reduce his or her refund; it merely directs that US$3 from the US Treasury be used in Presidential elections.
The funds are distributed under three programmes:
Eligible candidates in the Presidential primaries may, with some limitations, receive public funds to match the private contributions they raise. To participate, a candidate must demonstrate broad-based support by raising more than US$5,000 (£3,125) in matchable contributions in each of 20 different states. Candidates must agree to use public funds only for campaign expenses, and they must comply with spending limits.
The Republican and Democratic candidates who win their parties' nominations for the Presidency are each eligible to receive a grant to cover all the expenses of their general election campaigns.1 The funds are also available to other candidates who subsequently receive 5 per cent of the popular vote. The grant is adjusted for inflation each Presidential election year. In 1996, the grant was US$61.82 million (£38.65 million). Nominees who accept the funds must agree not to raise private contributions (from individuals, Political Action Committees (PACs)2 or party committees) and to limit their campaign expenditures to the amount of public funds they receive. They may use the funds only for campaign expenses.
Each major political party may receive public funds to pay for its national Presidential nominating convention. In 1996, the major parties each received US$12.36 million (£7.73 million).
Political donations
The FECA places limits on contributions by individuals and groups to candidates, party committees and PACs. The chart below shows how the limits apply to the various participants in federal elections.
Table A1.2 Contribution Limits
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To a candidate or candidate committee per election
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To a party committee per calendar year
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To any other political committee per calendar year
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Total per year
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Individual may give:
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US$1,000 (£625)
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US$20,000 (£12,500)
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US$5,000 (£3,125)
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US$25,000 (£15,625)
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Multi candidate committee:
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US$5,000 US$15,000
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US$5,000
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No limit
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Other political committee may give:
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US$1,000
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US$20,000
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US$5,000
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No limit
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Disclosure
The FECA requires candidate committees, party committees and PACs to file periodic reports disclosing the money they raise and spend. Candidates must identify, for example, all PACs and party committees that give them contributions, and they must identify individuals who give them more than US$200 (£125) in a year. Additionally, they must disclose expenditures exceeding US$200 per year to any individual or supplier.
Prohibited contributions and expenditures
The FECA places prohibitions on contributions and expenditures by certain individuals and organisations. The following are prohibited from making contributions or expenditures to influence federal elections:
corporations and labour organisations may not in themselves make contributions or incur expenditure in connection with federal elections, though they may establish PACs.
Federal government contractors; and
foreign nationals
In addition to the prohibitions on contributions and expenditures in federal election campaigns, the FECA also prohibits foreign nationals, national banks and other federally chartered corporations from making contributions or expenditures in connection with state and local elections.
Although the FECA limits contributions to a campaign, an individual or group (such as a PAC) may make unlimited 'independent expenditures' in connection with Federal elections. The source of funds for such expenditure must be disclosed to the FEC and made public.
Expenditure limits
Candidates who accept state aid for Presidential elections are restricted to spending the amount they receive. The overall primary spending limit is adjusted each Presidential election year to reflect inflation. In 1996, the limit was US$30.91 million (£19.32 million) for each candidate. Therefore, spending limits in primary or general elections apply only to those candidates who opt to receive public funding. There is no spending limit for Presidential candidates who do not participate in the public funding programs or for candidates in Congressional elections.
Republic of Ireland
Regulation of elections
The Public Office Commission was originally established in 1995 to study the issue of ethics in public office. This role was expanded in 1997 to monitoring political parties in relations to the distribution of state aid, the disclosure of political donations and expenditure limits. The Commission offers advice and guidance if it identifies a breach.
State aid
The Public Office Commission monitors the distribution of state aid to political parties - allocated from the 'Central Fund' (the Exchequer) - which must not exceed IR£1,000,000 (£900,000) in any 12 month period. To qualify a registered political party must be contesting a D-il election and its candidates must have achieved more than 2 per cent of the total first preference votes obtained by all candidates in the previous general election. State aid cannot reimburse election expenses as it may only be used for, general administration, research; policy foundation, and the promotion and participation by women and young people in political activity.
Parliamentary parties (including those in government) receive an annual allowance to help with parliamentary activities - including research. The allowance is calculated depending on the size of the parliamentary party:
IR£25,000 (£22,000) per member for parties with no more than five members,
IR£20,000 (£17,000) per member for parties with between six and ten members,
IR£10,000 (£9,000) per member for parties with between 11 and 60 members,
IR£5,000 (£4,500) per member for parties with more than 60 members.
If the party eligible is in government, then the allowances are reduced by one-third. Whips and certain Chair (and vice-Chair) persons receive a separate allocation of state funds.
Political donations
Candidates for presidential and parliamentary elections must disclose, within 56 days, any donation above IR£500 (£450). Political parties must disclose any annual donation above IR£4,000 (£3,500) by 31 March. Foreign and institutional donations are permitted. The 'donation statement and statutory declaration' form must give the name, address and description of the donor - as well as an indication of the value and nature of the donation. Anonymous donations over IR £100 (£90) are banned.
Expenditure limits
Expenditure limits are placed on individual candidates who may share this limit with the national party. National and local expenditure is therefore limited and is the responsibility of election agents (each party has a national election agent to complement the work of constituency agents). Ireland operates a system of proportional representation, with different expenditure limits for different sized constituencies; from IR£14,000 (£12,000) per candidate in a three-seat constituency to IR£20,000 (£17,000) in a five-seat constituency.
There are also limits on political broadcasts - primarily a by-product of national expenditure limits - with allocation on a similar basis to that used in the United Kingdom.
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