Tuesday, December 05, 2006

Liberal Loans and C-24

This Globe article raises the quite interesting question of what Liberal leadership candidates will do to retire their quite considerable loans (especially in the case of Bob Rae). There are basically three options: devote large amounts of time in the next 18 months to raise money to retire the loans; write off the loans and see what action Elections Canada takes; or leave it to the party to pay off the debts. The first course of action is bound to failure and is just purely unwise from the party's perspective. The collective debt of candidates is around 2.5 million. With $1000 donation limits soon to come into effect, this means that for all candidates to retire their debts they would need to find 2500 donors willing to give all the money they are allowed to in a year to retire debts from a race which is over. It is unrealistic and maybe imprudent.

The second course of action, however, runs the risk of exposing a major loophole in C-24 and putting Elections Canada in an awkward position. Moreover, it opens the Liberals up to ethics questions.

The third option is for the party to retire debts using the funds it raises from individuals. But this, it seems, will create a major moral hazard in future races. This is a no win for the Liberals.

Oh, to be back in the days when one could retire leadership debts without having to tell us how it was accomplished.

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