Editorial

Time to Ban Corporate Donations to Municipal Campaigns

Developers generally get the candidates they want elected into municipal office - and they get the policy decisions they want as well.

By Ryan McGreal
Published August 18, 2009

In the 2006 Hamilton municipal election, a campaign by Citizens at City Hall (CATCH) challenged local candidates to voluntarily refuse corporate and union donations. The responses were varied, tending to break into three distinct positions:

  1. Some candidates, like mayoral candidate Fred Eisenberger and incumbent Ward 1 councillor Brian McHattie, agreed and, in fact, already refused such donations.
  2. Others agreed in principle, but would only comply as long as their competitors also agreed to comply.
  3. Still others disagreed, suggesting either that such a move would be legally problematic or that such donations didn't influence them and hence weren't an issue.

In fact, most of the incumbent councillors who won re-election never responded at all - councillors like Tom Jackson, who collected so much corporate money that he had to throw a $13,334 "voting day party" for his supporters to avoid running afoul of election rules.

Toronto Moving Ahead With Ban

Late last year, a campaign to ban corporate and union donations in Toronto made it to City Hall. Toronto has more powers than most Ontario municipalities via the City of Toronto Act, and its executive committee voted in January to ask staff for a draft bylaw that would outlaw both corporate and union donations.

Not long after, Ajax Mayor Steve Parish wrote an op-ed for the Toronto Star that pulled no punches in its critique of the sprawl industry - its political practices, its role in influencing public policy, and its long-term effects on city development.

In an interview with Raise the Hammer, Parish insisted the only solution is to "Ban developer contributions to municipal candidates!" He also called on the Province to push back when municipalities like Durham Region try to pass growth plans that continue sprawling patterns of development.

Hamilton Revisits Campaign Donations

In a somewhat surprsing decision last week, Hamilton's City Council voted nine to five to ask the province for the right to ban corporate and union donations. It joins Ajax in calling for the change in municipal rules.

Of course, some councillors balked. Ancaster Councillor Lloyd Ferguson insisted, "I can't believe any of us would sell our souls for $750," the maximum allowable donation from an individual corporation.

Does Ferguson have a point? Is the hoopla over corporate donations merely about "perception" or is there a real undercurrent that affects how democracy works at the municipal level?

The Hamilton Spectator punted on this question in a recent editorial, arguing that they "don't believe that council overall or certain members are unduly influenced by campaign contributors" but supporting the ban on "that pesky matter of perception."

Developers Affect Election Results

York University Professor Robert MacDermid is ground zero for the question of whether Ontario municipalities should allow corporate donations to candidates for Council in municipal elections. He's been researching the role of corporate - and specifically developer - donations in election results for years and has published several papers.

In a major study [PDF link] of the 2006 municipal election filings across Ontario, MarDermid found that among the 905 municipal politicians who get most of their campaign donations from corporations, most of their money comes from the development industry.

He discovered that the GTA is an interesting case study in contrasts - between the downtown Toronto Councillors, who for several years have refused corporate donations, and suburban councillors in places like Pickering and Vaughan, who get up to two-thirds of their money from developers and other corporate donors.

Overall, winning contestants in 905 area wards received 54 percent of their funding from property developers; whereas losing candidates got only 35 percent of their money from developers.

Interestingly, donations from unions represent a tiny fraction of the total received - even in places like downtown Toronto and Oshawa, in which union donations accounted for two percent and four percent, of each respective total.

Bidness in Hamilton

The major political obstacle to progressive, sustainable development in Hamilton is that special network of single-use residential and big box commercial property developers who have effectively held the reins of urban development for the past several decades - what I have called Hamilton's Bidness community.

The Hamilton Halton Home Builders Association (HHHBA) and its members - including the Spectator, a "Platinum Member" - are responsible for most of the corporate donations to candidates and also were responsible for most of the illegal over-contributions that arguably tipped the 2003 election to a sprawl-friendly council that approved the construction of the Red Hill Valley Parkway and opened up a billion-dollar sprawl development at Summit Park.

Setting aside all the environmental, social and psychological costs associated with sprawl, I want to highlight two very specific ways that sprawl development harms cities like Hamilton:

  1. As a 2006 report for the City of Hamilton demonstrated, sprawl development costs more to service than the city collects from developers and residents, so every new house actually raises the city's fiscal deficit. (A recent decision by council not to follow staff advice and raise development fees was strongly influenced by the heavy lobbying of the development industry.)

    The result is public infrastructure with very low productivity compared to its costs. This inefficiency increases the cost of servicing for both residents and businesses, while the opportunity cost of that unproductive infrastructure crowds out potential public investments that might actually generate value.

  2. Sprawl measurably reduces the city's rate of innovation by reducing opportunities for people to cross paths and share ideas. A lower rate of innovation means less potential for the city to launch and grow wealth-generating businesses.

    The only recourse is to try and lure foreign businesses to move, which it can do only through a race-to-the-bottom competition on lower prices (which further exacerbates the city's finances) and/or looser regulation (which reduces the quality of life for residents).

Corporate Donations Matter

Councillor Ferguson misses the point when he suggests that councillors won't be swayed by the money they receive. Ferguson doesn't support the sprawl industry because he gets donations - it's the other way around. He gets donations (and can run a successful campaign) because he supports the sprawl industry.

Allowing corporations to make political donations increases the resources and electability of politicians who already represent the developers' interests and, as MacDermid demonstrated through his study of election data, increases their likelihood of getting elected.

The result, as MacDermid demonstrated through election data and Parish argued from an insider's perspective, is that the interests of the council that ends up getting elected end up disproportionately reflecting the interests of developers.

Of course, it doesn't always work that way. Eisenberger ended up narrowly winning the Mayoral race in Hamilton, even though he spent only $60,000 compared to the $236,000 spent by incumbent Mayor Larry Di Ianni. Similarly, McHattie handily re-won Ward 1 despite a concerted top-down campaign by Tony Greco, fueled by corporate donations from property developers.

However, at least in the Mayoral race, the results may have been due to a backlash against a too-well-funded campaign by an incumbent already tainted by an historic conviction for campaign finance violations. (It's worth pointing out that Di Ianni hismelf disputes the claim that his conviction was a factor in his defeat).

Outliers aside, developers generally get the candidates they want elected into office. When it comes time to form policy, they generally get the decisions they want as well, and to hell with the broader public interest.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan writes a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. He also maintains a personal website and has been known to post passing thoughts on Twitter @RyanMcGreal. Recently, he took the plunge and finally joined Facebook.

22 Comments

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By nobrainer (registered) | Posted August 18, 2009 at 15:15:52

Ha ha ha, we could ban corporate donations or we could......extend the vote to tax-paying corporations! http://www.hamiltoncatch.org/view_articl...

Seriously WTF?

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By J (registered) | Posted August 18, 2009 at 15:23:32

Great article. Thank you.

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By grassroots are the way forward (registered) | Posted August 18, 2009 at 15:56:14

Corporations are not people, period.

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By JonC (registered) | Posted August 18, 2009 at 16:30:10

"extend the vote to tax-paying corporations"

I was going to suggest that as a joke. I can't believe how off the wall some councillors are. Why not give them one vote per employee or one vote per $x in taxes generated?

Lobbyists for corporations would probably fight that legislation tooth and nail since they'd be forced to vote (one of the candidates has to better than others and not supporting them would violate their corporate responsibilities). Then they'd be forced to disclose why they chose one candidate over another to shareholders. The ideal situation for corporations is a two party system where you can afford to influence both sides (see America). Ryan nails it here "Ferguson doesn't support the sprawl industry because he gets donations - it's the other way around. He gets donations (and can run a successful campaign) because he supports the sprawl industry".

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By LL (registered) - website | Posted August 18, 2009 at 16:39:11

I don't think banning corporate donations will be sufficient to stop the CLASS control of municipal politics. We call them the "developers" but it's actually a wider group of people that sociologist G. William Domhoff more aptly calls the "growth coalition":

see sociology.ucsc.edu/whorulesamerica/power/local.html

Whatever you call them, they can easily sidestep the ban on their corporations and use another institution they control. For example, they can easily put election money in the name of friends or employees and their family members. Or, they can set up "charitable" or other "non-profit" institutions. The most you can do is cause them a pain in the ass (which I don't object to).

Then there's the problem that the local media capitalists are part of the growth coalition. And behind all this is the more anonymous pressures of "macro-economics" - for example, the use of cities by the more high level ruling class as a space for building and destroying surplus capital.

see David Harvey:

davidharvey.org youtube.com/watch?v=tr1Cj1QzdCY

There is an anti-democratic political problem with corporations. But this is merely an articulation of a much older problem of class control. You're never going to efface this without direct action and grassroots organization.

I still see some of the urban progressivism as just nibbling around the edges of the urban progress. Good work though.

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By cal difalco (registered) - website | Posted August 18, 2009 at 18:06:55

Great article. Well said! Mayor Fred is showing good leadership on this front. Now if only my local ward councilors would follow suit and put the interests of Hamiltonians first.

Cal

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By Cal DiFalco (registered) - website | Posted August 18, 2009 at 20:07:36

I just noticed that one could, in fact post comments on thehamiltonian.net on the Larry Di Ianni interview. If you're so inclined, please do.

Finally got my picture smaller on the blog.

Cal

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By Ryan (registered) - website | Posted August 18, 2009 at 21:28:34

LL wrote:

I don't think banning corporate donations will be sufficient to stop the CLASS control of municipal politics.

I expect you're right, but it's certainly a start. If nothing else, it's an acknowledgement that disproportionate corporate influence is a problem.

Then there's the problem that the local media capitalists are part of the growth coalition.

The Spectator is an excellent case in point. Their whole business model is predicated on selling new homes, automobiles, furniture and consumer electronics to affluent suburbanites. It's deeply self-serving to argue, as the Spectator editors do, that receiving large contributions from a given industry doesn't unduly influence the recipient.

I still see some of the urban progressivism as just nibbling around the edges of the urban progress.

For me, a successful urbanism is one in which the urban dynamics of density, scale, proximity and connectivity serve as engines of sustainable economic growth and development - based on cultivating innovations and leveraging real efficiencies, not unsustainable growth based on artificial subsidies.

I'm not anti-business and I would debate with anyone who suggests that business per se is the problem. In cities like Hamilton, the problem is the "Bidness" of parasitic property speculators and sprawl developers who get rich on planning and building rules that externalize the real costs - both out-of-pocket and opportunity - of sprawl onto the backs of others.


By the way: as a registered RTH user, you can post full URLs including the http:// and they're automatically converted into clickable links.

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By highwater (registered) | Posted August 18, 2009 at 22:16:40

Ryan wrote:

Similarly, McHattie handily re-won Ward 1 despite a concerted top-down campaign by Tony Greco, fueled

Well? Don't leave us hanging!

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By Ryan (registered) - website | Posted August 18, 2009 at 22:32:50

highwater wrote:

Well? Don't leave us hanging!

Oops, editing fail. It should be fixed now.

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By nobrainer (registered) | Posted August 19, 2009 at 12:50:37

This is such a no-brainer I can't believe the province doesn't just unilaterally ban corporate and union donations to all municipal elections irregardless of whether councilors support it. We keep hearing that cities are creatures of the province, so let the province take the lead on this one!

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By grassroots are the way forward (registered) | Posted August 19, 2009 at 19:01:46

LL: Thanks for posting that lecture, it is something everyone should watch.

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By JonC (registered) | Posted August 19, 2009 at 21:53:35

You get stupider daily.

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By JonC (registered) | Posted August 19, 2009 at 21:55:43

Ignore that. Not intended for this forum. Thanks.

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By adrian (registered) | Posted August 19, 2009 at 23:43:11

We need substantial reform, no doubt about it. We need the mayor to have greater powers, we need term limits, and we definitely need to ban these contributions.

Ferguson doesn't support the sprawl industry because he gets donations - it's the other way around. He gets donations (and can run a successful campaign) because he supports the sprawl industry.

This is a brilliant insight. Utterly logical but so easy to miss.

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By markwhittle (registered) - website | Posted August 27, 2009 at 17:36:33

If there's so much lobbying going on respecting the development Industry, how come i'm the only Lobbyist registered with the city of Hamilton? Surreal!

http://www.myhamilton.ca/NR/rdonlyres/92...

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By LL (registered) - website | Posted August 27, 2009 at 22:32:39

"If there's so much lobbying going on respecting the development Industry, how come i'm the only Lobbyist registered with the city of Hamilton?"

As CATCH has amply demonstrated time and again with their investigations, and as was amply revealed in the Chapman vs. DiIanni case, the vast majority of municipal campaign donation dollars come from sprawl developers. If you're actually suggesting that this has nothing to do with the subsidies and rubberstamping for sprawl projects, you are the one who is surreal.

I hope you didn't spend a lot of money on registering as an official lobbyist. That's not how it's done at the municipal level.

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By markwhittle (registered) - website | Posted August 29, 2009 at 11:50:45

I know the influence is real, so cutting off donations will only drive the influence further underground, where most of it (lobbying) already exists.

I recall a committee meeting where over 300 development industry representatives (Lobbyists) attended, signalling their displeasure at council proposing to raise development charges, they won a reprieve.

What this town really needs is a sheke-up at the ballot box, the voter participation rate is pathetic, to say the least.

LL, you might find the following conversation interesting.

http://www.thehamiltonian.net/2009/08/10...

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By LL (registered) - website | Posted August 29, 2009 at 20:59:31

markwhittle:

Fair enough. I hesitated to post my comment after I typed it, not sure if you meant there is no lobbying, or there is all this unregistered lobbying. I apologise.

Ryan:

I find the term "pro-business" to be obfuscatory. It seems to suggest that anyone who objects to the way society is organized is against economic prosperity per se and wants economic failure to happen. Im not "anti-business"; I'm anti-capitalist. In positive terms, I want a society that is truly democratic, eqitable, and sustainable. I'm arguing that that can never happen when a narrow class interest has power.

Secondly, we have to distinguish between capitalism and markets. An independent shopkeeper who contributes most of the value of their service through her own labour, and pays a good wage to those she does employ is consistent with libertarian-social'ism.

Having said all that, I understand the strategy of claiming new urbanism is "good for business". After all, the reconfiguration of the urban world has been a common strategy for the state-capitilist system at key junctures in the past. How do you think we ended up with this sprawl shit after WWII? The architects of the system got their heads together and decided that it was a good way to consume surplus productive capacity (that and the arms race). The state got behind it with subsidies and the rest is history.

Today, urban densification, transit projects and the like could play a similar role in the reorginization of the economy. This could stabilize the capitalist system, bring some benefits to workers (especially white collar ones), and make some limited gains toward ecological sustainability. So I don't object to you invoking economic growth and investment opportunities to pressure the local government for light rail, better planning etc. New urbanism is a solid design concept. I hope it starts happening.

However, I think you are kidding yourself if you think this is going to solve anything in the long run. Poverty will still exist (maybe not downtown) and the capitalist economy as a whole will still outgrow the support system of the biosphere. In short, I see this "neither left nor right" line as a load of pahooey.

I didn't get into urban design questions because I thought they could benefit economic growth and accumulation. I did so because well-designed streets, parks, convivial transportation are of direct USE VALUE to people. Conversely, I see structural auto dependence and other forms of waste as creating extra work for wage earners. Moreover, I see the inevitable tumult of urban re-organization as a chance to involve a grassroots polity with more participatory design processes. Combined with class struggle, sustainable urbanism can lead to a shortening of the workday and the growth of community.

Economic and ecological realities tell us that cities have to change. Let's make it happen on our terms.

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By A Smith (anonymous) | Posted August 30, 2009 at 19:42:28

LL >> urban densification, transit projects and the like could play a similar role in the reorginization of the economy. This could stabilize the capitalist system,

All people that earn money should have the right to do what they want with it. If people CHOOSE to spend their money at Walmart, that's their choice. If, as a result of many people shopping at Walmart, Walmart chooses to invest their profits in building more stores, that's also their choice. The key is that all economic transactions should be based on voluntary agreement, never utilizing the threat of force.

>> Poverty will still exist (maybe not downtown) and the capitalist economy as a whole will still outgrow the support system of the biosphere.

The countries where poverty is the worst, also happen to be where private property rights are the weakest. Look at China, as it has moved from public ownership of resources, to one in which individuals are allowed to accumulate capital, tens of millions of people have been lifted from the threat of starvation.

In contrast, China's neighbour, North Korea, holds onto the idea that resources need to be allocated without the use of prices or profits and as a result, it's people are some of the least productive in the world. They work hard, but they don't produce anything the world wants to buy, because they don't have a system that rewards risk taking and success.

As for the biosphere being threatened by economic growth, this is nonsense. If humans consume too many resources, prices for these resources will rise, reducing profits and forcing profit seeking businesses to search for more efficient ways of producing the same amount of goods and services. This has been the history of human kind, at least where prices are used as the means of allocating resources and it will continue to work as long as private property rights are respected.

>> well-designed streets, parks, convivial transportation are of direct USE VALUE to people.

How do you know what the value of public parks, transit and well designed streets are? What specific unit of value do you use to measure it?

>> I see structural auto dependence and other forms of waste as creating extra work for wage earners.

People CHOOSE to buy cars and live in the burbs, no one forces them. If everybody wanted to live downtown Hamilton, prices for units downtown would be higher than outlying areas , but this isn't the case. Explain why you think this is?

>> Combined with class struggle, sustainable urbanism can lead to a shortening of the workday and the growth of community.

How do you define class struggle?

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By grassroots are the way forward (registered) | Posted August 31, 2009 at 08:54:32

A Smith: People need to know the truth about Walmart and their practices which as a whole affects many across the globe. Of course people like you fail to acknowledge the truth and continue to babble on and spew filth.

I suugest you watch this:

http://www.youtube.com/watch?v=3GINui9Ld...

Of course those voices from Wlamarts own workers are lies, right!

The voices of the small business that have been affected are lies too, right!

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By A Smith (anonymous) | Posted August 31, 2009 at 19:22:37

Grassroots >> those voices from Walmarts own workers are lies, right!

The voices of the small business that have been affected are lies too, right!


If you were made King of Canada, what would you do?

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