On balance sheets

In the comments to Danielle's post which suggested based solely on income that the Libs' financial picture would be better than the NDP's, I theorized that the picture would likely look very different taking into account how much money the parties had actually spent since the 2006 election. Having actually done that today, my suspicions appear to have been confirmed.

Here's what one can tell from the 2007 year-end returns (the most recent ones available) for the Cons, Libs and NDP respectively.

On the surface, the 2006 numbers were extremely similar between the Libs and the Cons: both parties took in roughly $34-35 million, and spent approximately $31 million. But there are two important differences.

First, the Libs' income and expenses included the leadership race and convention which added significant numbers to both totals - meaning that the Cons were already spending more on basic party operations than the Libs. More importantly, though, the Libs' expense numbers don't include the debt incurred by leadership candidates, which has of course led to a large chunk of the Libs' fund-raising being diverted away from the party's bottom line.

In contrast, the NDP's 2006 numbers are substantially lower, but also included an extremely healthy bottom line. Indeed, the NDP's 2006 net position of over $5 million in the black makes for the healthiest year enjoyed by any of the three parties in 2006 or 2007.

For 2007, with no general election or leadership race, the Libs' expenses predictably dropped a long way to under $15 million. But the Libs' income dropped even further, resulting in their expenses exceeding their income by just under $2 million. Which makes the Libs' 2007 the only year for which any of the parties ran an overall deficit.

Meanwhile, the Cons took in and spent almost exactly the same amounts in 2007 as in 2006. That's a fairly stunning result given that there wasn't a federal election to serve as a focal point for expenditures, but it ensured that the Cons posted a profit of $2.6 million for the year rather than running up a particularly bloated bottom line.

And the NDP? It cut back its expenses to under $8 million for 2007. And that allowed it to stay in the black by $1.6 million despite the lack of election rebates to boost the party's bottom line as in an election year.

Totalling up the numbers, here's where the parties stood at the end of 2006-2007 compared to the beginning:

NDP: +$6,891,450
Cons: +$5,565,975
Libs: +$2,385,764

Now, none of the parties should be in particular trouble based on those totals. But it seems fairly clear that the NDP was careful to ensure that it could afford its 2008 election expenses, while the Libs have cut their margins the closest even while receiving far more federal funding than the NDP. In effect, the NDP has run a party that's sustainable at a donation level just under $4 million a year; the Libs don't appear to have done the same.

Moreover, if the Libs anticipate running another big-money leadership race as well as continuing to spend money at their historical pace, then they could be looking at plenty more red ink to come. And since the costs of finding a new leader don't seem to be a matter of choice at this point, the Libs' reduced federal funding now may well force them to cut back their operations just a time when they most need to try to build their party.