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The Grits won't die - they'll just fade away
And if they're not careful, they could end up in a financial pit
TOM FLANAGAN
Professor of political science at the University of Calgary and a former Conservative campaign manager
August 28, 2008
Carthago delenda est.
- Cato the Elder
Although the looming fall election seems mired in technicalities about election dates, the stakes are very high for the party leaders, especially for Liberal Leader Stéphane Dion. He has to do much better than Paul Martin did in the last election. He has to lead his Liberals to victory, or at least to such an improvement that the Conservative minority government is destabilized.
Anything less, and Liberal supporters, who have long been accustomed to winning, will be clamouring for his scalp.
But the party's precarious financial state makes the stakes even higher for the Liberal Party as an institution than for Mr. Dion as a leader.
Here's what we know about Liberal finances:
Their fundraising stinks. They raise only about $5-million a year, barely ahead of the New Democrats and less than a third of what the Conservatives can muster. They are surviving on their government subsidy - currently about $9-million a year, based on the 4.5 million votes they received in 2006.
They have borrowed $2-million from the banks to cover operating expenses. The national party's credit rating was so poor that wealthy constituency associations had to guarantee the loan.
Candidates from the last leadership race still owe about $2-million from their campaigns. Elections Canada has given them another 18 months to pay off those loans, but that is diverting fundraising efforts from the party to the candidates.
The Liberals can borrow the money they need to run a fully funded, $19-million national campaign - but loans have to be paid back. Their 50-per-cent rebate from Elections Canada will provide $9-million, but how will the rest of the loan be repaid? Here's where things get really dangerous for the Liberals.
Suppose Dion-o-mania fails to materialize and the Liberals get fewer votes than they did in 2006. Then their subsidy, already down to 86 per cent of what it was when the new system started in 2004, will fall even further. Yet, much of this declining subsidy will be dedicated to repaying their bank loans because Liberal fundraising will also fall; people don't like to give money to losers. And the banks can't agree to write off the loans or substantially soften their terms because that would constitute an illegal corporate donation.
Moreover, Mr. Dion - never very popular in his party - will be facing calls to resign. But that means a new leadership race, even before the debts from the previous one have been repaid, as the big boys - Michael Ignatieff and Bob Rae - square off for an expensive final slugfest.
The Liberal Party will undoubtedly survive the coming election, but it may emerge financially crippled, with the banks laying claim to much of its (now smaller) public subsidy, and fundraisers working to pay off debts from leadership races past and present.
The first order of business for any new Liberal leader will be to restore the party to financial health. Over four years, John Tory succeeded in doing that for the Ontario Progressive Conservatives, but provincial law allowed him to draw on corporate and high-end individual donations. Under federal law, however, the Liberals are confined to grassroots fundraising, which they have not yet learned how to do.
Against this backdrop, the Conservatives would appear to have a viable long-term strategy: force the Liberals to exhaust their limited resources in repeated battles.
Do you remember your ancient history? From a Conservative point of view, this is a rerun of the Punic Wars, with the Conservatives starring as the rising Roman republic and the Liberals cast as the evil empire of Carthage. In the first Punic War, the Romans took Sicily from Carthage; in the second, they took the rest of the Carthaginian possessions in Europe; and in the third, they defeated Carthage totally, razed the city to the ground and sowed salt in the fields so nothing would ever grow there again.
In the first Canadian Punic War, the Conservatives brought the Liberals down to a minority government; in the second, they pushed the Liberals out of government altogether, although they not did get their own majority. What will happen in the impending third Canadian Punic War?
Destruction of the Liberals is not at hand; there will be further sequels to this movie. But if the Liberals are not careful, they, like the federal Progressive Conservatives of sainted memory, could be pushed into a financial pit they can never climb out of.
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