Liberals crafted leadership rules to avoid debt buildup

The federal Liberal Party revamped its rules about how much debt could be racked up by leadership candidates in its recently concluded contest after some of its members were labelled as deadbeats due to large campaign debts amassed during the 2006 race.

The rules about debt were "very, very deliberate," said a party official. "One of the lessons the party learned from last time is they didn't want to spend the next several years paying off other people's debts."

Allowable debt was divided into two buckets, the official said. Candidates were able to borrow up to $75,000, and many of the candidates borrowed the full amount from themselves to pay the $75,000 non-refundable entry fee. Another category was called "net accounts payable," or goods and services purchased during the campaign. Candidates could run up only $25,000 in unpaid bills.

The "two buckets" meant the total amount of money owing couldn't exceed $100,000. If candidates ran over that limit, they could have faced sanctions from the party, including being forced out of the leadership race.

It was a marked contrast to 2006 when the absence on a cap on borrowing led to candidates being in hock for hundreds of thousands of dollars. Even today, seven years later, three candidates from 2006 — Joe Volpe, Hedy Fry and Ken Dryden — still owe money. 

Embarrassment for the party

The spectre of leadership candidates with loans hanging over their heads for years became an embarrassment for the Liberal Party.

The 2006 Liberal candidates weren't helped by the fact that the Conservative government changed electoral fundraising rules in the middle of their campaigns, moving the donation limit to $1,000 —now $1,200 adjusted for inflation — from $5,400, making making it much harder to raise money

"You had a deliberate, malicious manipulation of the rules…with Mr. Harper, and that was coupled with the fact that we were first through with the new rules on the leadership, so people hadn't had a lot of experience with the rigours of fundraising," said Steve MacKinnon, who acted as chief electoral officer for the Liberal Party in the 2013 leadership race.

However, MacKinnon sees it as a "real positive" that candidates in the 2013 race probably didn't incur a lot of debt. The spending limit for each candidate was $950,000, a much smaller amount that the $3.4 million allowed in the 2006 race.

MacKinnon thinks lower spending limits and loan caps will be the model for future leadership contests in the party. "Frugal leadership campaigns will be the order of the day."

Martha Hall Findlay, who ran in both races, said she finished paying her 2006 debt only in the months before registration for this year's race. The money owed was actually to her own bank account, since, like many candidates, she loaned herself money to finance her campaign.

Hall Findlay, who came third in the race that elected Justin Trudeau as the party's new leader, has said that she will come out of the contest debt-free.

All of the final six leadership candidates have filed reports with Elections Canada about how much money they raised during the campaign, and it's no surprise, given his 80 per cent winning margin, that Trudeau hauled in the most cash.

Money raised by candidates in 2013

Trudeau raised more than $1.3 million before the last week of the campaign. He and the other candidates have six months to file a report for the final week, April 7-14.

Part of that $1.3 million includes the almost $95,000 that Trudeau collected before the race officially started.

Vancouver MP Joyce Murray, who came a distant second to Trudeau in the voting, raised over $260,000.

The order in which the candidates raised money matches up almost perfectly with their finishing order in garnered votes, except that Deborah Coyne collected four more points than Karen McCrimmon, even though McCrimmon raised more money.

Although there is one week's worth of fundraising results still to be reported, neither Coyne nor McCrimmon raised enough money to cover their $75,000 entry fees. Both will have to continue fundraising to pay back that money, or a portion of it, unless they managed to raise huge amounts of money during the last week of the campaign.