Never mind the furniture

John Ivison discusses the possibility that the Libs might end up canceling late-campaign ad buys in order to save money. Which is a big enough story on its own - but downright stunning when one considers the context in which the money would (or wouldn't) be spent.

Here's what Ivison has to say:

Insiders suggest that discussions about reining in spending on the current campaign are are ongoing, as party executives weigh the prospect of saving seats against the need to conserve cash to fight another day.

Financial pressures are likely to build after this election because the party's biggest-single source of revenue -- the $1.75 it receives annually from the government for every vote cast -- is likely to fall in line with the slide in Liberal support.

According to the last Liberal accounts, the party received $8.5-million of its $12.7-million of revenue from its government allowance. If the Liberals vote falls in line with current polling, the party will see that figure cut by $2-million a year -- money they can scarcely afford to lose, since they recorded a deficit of $1.7-million last year. This, after all, is a party that spends 50¢ to raise $1 in donations, according to its own financial figures.

The real world impact on the current campaign could be on advertising budgets in the last week of the campaign. Since Mr. Dion does not have sole discretion over Liberal spending, it may well be that when he goes to his party executives asking for last minute air support, they turn him down.

So what makes the possibility of the Libs cutting back on spending during the campaign so remarkable? Remember that federal parties are entitled to a 50% rebate on their national election expenses - meaning that whatever the Libs spend nominally on the campaign, they'd effectively get half of it back almost immediately. Assume for the moment that the Libs were otherwise planning to spend $2 million on ads which would be canceled: a million of that would be returned to party coffers as a matter of course.

So what would they get for the million that would actually come out of pocket? For those who aren't familiar with Canada's party financing rules, the answer is in Ivison's text: every vote the Libs can win with the money they spend is worth $1.75 per year until the next election. Assuming voter turnout comparable to 2006, that means that the Libs would make their million back if the ads could persuade 4% of voters to join their camp in a Parliament that lasts a year, or 2% if Parliament lasts for two years. And all that would be in addition to the possibility of potentially winning more seats than they would otherwise.

So what would the Lib sources discussed have to have concluded in order to even consider that they might end up financially better off by refusing to authorize ad spending? From my standpoint, they'd not only have to have decided that the party is headed down in flames, but also that Dion and his camp have absolutely no clue how to spend the money to improve the Libs' share of the popular vote. And if even the top decision-makers within the Libs have that low an opinion of Dion and the people running the party's campaign, it's all the more hard to see why voters should have any confidence in them.