Major Liberal donor administers $46-million incentive program
One of the B.C. Liberal Party’s top donors, the New Car Dealers Association of B.C., has overseen millions of dollars in provincial government electric car incentives since 2011.
It’s an unusual arrangement. B.C. government transfers normally go to health authorities, schools, colleges and non-profit groups that deliver social services, not profitmaking enterprises or their associations.
By this spring, $18.7 million will have passed through the new car dealers group for the $5,000-a-car incentives.
About $1.42 million of that will have been spent on administration, marketing and training of salespeople, according to information provided to Postmedia News after a request to the provincial government.
The Liberals recently promised to renew the new car dealers’ arrangement for another three years and put another $27 million into incentives, which will bring the total transferred to the car dealer group to nearly $46 million by 2020.
As the third-largest donor to the provincial Liberals, the association contributed $1.3 million between 2005 and 2016. Individual car dealers have contributed tens of thousands more to the party. The top 50 donors to the B.C. Liberals gave more than $30 million in the past decade, according to an earlier analysis by Postmedia using B.C. Elections data.
Among the top 50 donors, the new car dealers group is the largest beneficiary of transfers from the B.C. government, according to a Postmedia analysis of B.C. Public Accounts data.
In total, $23.6 million was transferred to the top 50 Liberal donors by Victoria, including to several forestry companies.
Critics of donations to political parties have focused on the potential influence contributions provide donors — both to the Liberals and the NDP — with a provincial election weeks away.
Increasingly, companies that do business with the government cannot make political contributions in Canada. That’s because the federal government, as well as Quebec and Manitoba and most recently Alberta and Ontario, have banned corporate and union donations and set a cap on the amount that can be donated by individuals.
The NDP and the Greens in British Columbia have said they would follow suit, although the NDP continues to raise money under the existing system.
Premier Christy Clark has resisted putting B.C. laws in lockstep with other provinces but, under sustained criticism, she promised recently to set up a panel, whose findings on political financing would be non-binding, after the election. The B.C. Liberals also continue to raise money — about $2 million in 2017, including another $21,350 from the new car dealers group.
Dermod Travis, executive director of the political watchdog group IntegrityBC, said the transfer agreement with the car dealers group is an “immense” problem, in part because a private enterprise is providing a government incentive program through a third level of bureaucratic process.
Travis said it couldn’t be that hard for the province’s bureaucrats to directly rebate $5,000 to an electric car purchaser without involving the new car dealers group.
Both Ontario and Quebec use rebate systems. Dealers either reduce the car price and then collect the rebate from the government, or the purchaser applies directly to the province for the rebate. In both cases (up to $14,000 in rebates in Ontario and $8,000 in Quebec), no management fees are provided to dealers and it is the government that provides the rebates, not the car dealers or their associations.
“You end up in a situation where you have a major donor who is effectively getting a major benefit, which almost negates — probably does — the cost of their donations to the party,” Travis said, referring to the transfers to the new car dealers’ group.
One of the benefits of this program is the government is helping private dealers sell electric cars with money for marketing and sales training, Travis said.
It is probably right that it is not normal to do this with a for-profit organization. … That makes it doubly, triply important for it to pass the smell test.
The province argues the pointof-sale rebate — $5,000 is taken off the price of an electric car at the dealer — entices customers to buy electric cars and cuts down on work for the province.
In an interview, B.C. cabinet minister Bill Bennett said he believes the car dealers group can deliver the program cheaper than the province.
Bennett acknowledged there are some people who believe that corporate donations provide influence, but said what’s important in this case is to ensure the new car dealers’ arrangement has “integrity.” That is being done through regular reporting to the province and a financial review of the program that will take place this year, he said.
“It is probably right that it is not normal to do this with a forprofit organization. … That makes it doubly, triply important for it to pass the smell test,” said Bennett, whose ministry took over responsibility for the incentive program in 2015.
He said new car dealer administration costs have come down — from a high of 14.3 per cent in the early years of the program to less than five per cent now, according to figures the province provided to Postmedia. From 2011 to 2016, the average administration cost has been 7.6 per cent.
There are no comparable administration-cost figures for the Ontario and Quebec programs.
There was no bidding process for the right to manage the electric car incentive and the deal was given through a direct award to the new car dealers group.
It made sense to do so, Bennett argued.
“On the practical side of it, who else are you going to work with that can provide direct point-ofsale incentives to those who buy a new electric car? Who would be better placed other than the new car dealers?” Bennett asked.
The New Car Dealers Association represents 370 car dealers in B.C. There are 541 licensed new car dealers in the province, according to information from the Motor Vehicle Sales Authority of B.C., so not all dealerships belong to the association.
To be part of the point-of-sale program, a dealer must belong to the association, provincial officials said.
Officials said that, as far as they know, all dealers interested in selling electric vehicles are members of the association.
In B.C., it’s believed more than 3,400 electric cars will have been sold under the incentive program by this spring. About 7,500 cars have been sold under Ontario’s incentive program, started in 2010. The New Car Dealers Association said questions about whether companies that do business with the government should be allowed to make political contributions would be better answered by the province.
Blair Qualey, the group’s president, wrote in an email that the province had asked the group to manage the program to make it easier for consumers to get the incentive.
“We certainly believe that the agreements we have with the province to administer the program achieve this objective and are in the best interest of the consumers as it provides them with a true point-of-sale incentive,” he wrote.