Today, the law provides for the possibility of political campaigning reimbursement for the parties that will get into the parliament. Therefore, the political party that will overcome the 5% electoral threshold in the 2019 parliamentary election will be eligible for a refund of the amount actually spent by the political party from the state budget. The maximum possible compensation is equal to the maximum size of the election fund of a political party, which is 375,570,000 UAH. These funds will be reimbursed to political parties from the state budget, at the expense of taxpayers.

Given the upcoming parliamentary election, it is important to answer the question: what costs are actually to be reimbursed by the state, what implications will such a mechanism have in practice, and is it feasible to reimburse the parties for their election expenses at the expense of the state budget – the answers to these questions you will find in the analytical review below.

A novelty? Not quite so

Despite the introduction of a reimbursement mechanism in 2015 [1], such a mechanism is not a novelty in Ukrainian legislation, it is rather a long-forgotten story. Reimbursement of party expenses for election campaigning was stipulated in the Law of Ukraine “On the Elections of MPs of Ukraine” as amended in 2005 [2]. According to it, the parties could reimburse up to 100 thousand minimum wages, provided that they receive at least 3% of the votes of the voters.

Thus, in 2006, the Central Election Commission of Ukraine decided to reimburse election campaigning expenses to five parties that overcame the 3% threshold following the results of the 2006 parliamentary election campaign. In total, these costs amounted to 126,853,243 UAH (at that time, 25 million USD). At the same time, the maximum amount of compensation in the amount of 35 million UAH (at that time, almost 7 million USD) [3] was claimed by each of the three parties: Party of Regions, Our Ukraine Bloc and Socialist Party of Ukraine. Later, in 2007, the compensation norm was suspended, and in 2018 it was canceled.

How much and to whom will the state pay?

According to a sociological survey conducted by the Kyiv International Institute of Sociology, Razumkov Centre and the Rating Sociology Group [4], six parties have a real chance to get into the Verkhovna Rada, and, consequently, get the appropriate reimbursement. Assuming that each of the six parties will need to be reimbursed the maximum amount of possible expenditures (90 minimum wages), the expenditures from the state budget will amount to more than 2 billion UAH (almost 85 million USD). This is an extremely large amount of money.

By the way, the preparation and holding of early parliamentary election will cost the same [5]. It turns out that the reimbursement to political parties is equal to holding another election

What does the state really pay for? TV commercial?

Reimbursement covers the financing of parties’ election campaign [6]. Today, election legislation defines election campaigning as “any activity that can be carried out in any form and by any means, the main purpose of which is to motivate the voter to vote for a particular candidate” [7]. Thus, the legislation does not specify which forms of election campaigning are subject to reimbursement. And the vast share of such costs is TV commercial. In particular, at the presidential election, its percentage in the expenditure structure reached about 80%. This is also promoted by the absence of any restrictions on the amount of expenditure on TV commercial/election campaigning. It turns out that the state assumed the responsibility to basically compensate political parties for the cost of advertising campaigns on TV.

Thus, we have a situation here where candidates will have the opportunity not only to conduct a large-scale advertising campaign on television, but also to do it for public money. It is also important to note that, in addition to the said compensation, according to the current legislation, every party that overcomes the 2% threshold in the parliamentary election will be entitled to annual state funding.

What does the draft Electoral Code propose?

The draft Electoral Code of Ukraine [8], which is being considered in the second reading, proposes a change in the rules for the reimbursement of campaign expenditures. First, it weakens requirements for the parties that can claim such a reimbursement. While at the moment such a right is held only by those parties that overcome the 5% threshold in the parliamentary election, the draft reduces it to 2%. And, consequently, it significantly increases the number of applicants for reimbursement. For example, according to polls [9], at the upcoming parliamentary elections, about 10 parties can overcome the 2% electoral threshold. And as a result, they will be able to receive a refund in the future.

Second, it is proposed to increase the maximum amount of possible compensation – from 375,570,000 UAH to 417,300,000 UAH. While today this size is linked to the maximum size of the election fund of a political party – 90,000 minimum wages, the Electoral Code sets the maximum amount of compensation at 100 (!) thousands minimum wages. Such proposals of the Electoral Code increase the already significant amount of compensation from the state budget for election campaigning of the parties.

Thus, if 10 parties claim the maximum refund, the amount will reach over 4 (!) billions UAH (10 parties х 417,300,000 UAH = 4,173,000,000 UAH). Decrease in the electoral threshold will allow more parties to get the reimbursement. However, an increase in the maximum amount of compensation will further increase the expenditure of the parties that will have real chances to overcome the 2% threshold. This will mean an increase in expenditure on political advertising as the main form of election campaigning and a high costly election in general.

To reimburse, or not to reimburse?

Election legislation proclaims the principle of equality of rights of all candidates during their election campaigning and access of voters to the various, objective and impartial information necessary for the informed and free decision. In contrast, the existence of a mechanism for reimbursing pre-election expenditure to political parties in its current form is offset by the aforementioned.

Firstly, parties with real chances of getting into the parliament have a certain guarantee of refunding all expenditures – and therefore more opportunities for campaigning, spending on political advertising as the main form of election campaigning. After all, politicians know that these funds will be reimbursed. By contrast, new political forces that do not have significant financial or electoral support will not be able to compete with the political parties that are likely to overcome the threshold in “television” election campaigning.

Secondly, the mechanism of campaign expenditures reimbursement contributes to the increased use of TV commercial as the main type of election campaigning. Consequently, other types and forms of campaigning aimed at closer communication between political parties / candidates and voters will be neglected. For example, meetings with voters, professional discussions, press conferences, debates on election programs, ideas, political activity of candidates, public events involving voters, etc. Moreover, TV commercial does not contribute to an informed and free decision giving voters a biased vision in the form of a TV image of a political party or a candidate.

International experience: do they reimburse?

The mechanism for election campaigning reimbursement is used in other countries of the world. In France, for example, the state undertakes to reimburse about half of the costs for candidates who have received at least 5% of the support of voters. However, these costs do not include expenditure on political TV commercial, since it is banned in France. In addition, the amount of compensation cannot exceed half of the cost of the election campaign and the amount of the candidate’s own contribution to the election fund. In Poland, only those parties whose representatives have been elected to the upper or lower chamber of parliament can receive reimbursement.

In Slovenia, to receive reimbursement, parties need to get at least 6% of the votes in the region and 2% in the state as a whole. At the same time, the amount of such compensation is linked to the number of voters who cast their votes for them. It is about 0.17 EUR per voter’s vote. Moreover, the mechanism for campaign costs reimbursement is also foreseen for the presidential elections, where a candidate needs 10% support by voters, and for each vote the candidate receives 0.12 EUR. By way of contrast, a party that gets 5% of the votes in Ukraine under such a system could get about 4 million UAH as reimbursement. Instead, according to the current legislation, such a party will be able to receive over 375 million UAH. For example, at the 2008 election, the total amount of compensation in Slovenia amounted to 1.6 million EUR, while in Ukraine in 2006 it reached about 20 million EUR. In 2019, such an amount could reach 75 million EUR. As you can see, the cost of election campaigning is also reimbursed in other countries. However, the amounts of such reimbursements are much lower, the reimbursements themselves are sometimes partial, and the cost of political advertising on television is not reimbursed by the state.

Conclusions

Given that the current rules of election campaigning expenses reimbursement to political parties not only create unequal opportunities for all election campaigners, but also provide for reimbursement of significant costs of TV commercial from the state budget, there is a need to revise such rules. In the current form, it would be feasible to abolish the mechanism for campaign expenditures reimbursement to political parties. If we choose a less revolutionary way, then it is possible to leave a reimbursement mechanism in Ukraine only if:

1) The expenses on TV commercial of political parties/candidates are excluded from the expenses subject to reimbursement;

2) The maximum amount of possible reimbursement of election campaign expenses is substantially reduced.

[1] Law of Ukraine “On Amending Certain Legislative Acts of Ukraine on Prevention and Combating Political Corruption” No. 731-VIII dated October 8, 2015.

[2] Art. 98 of the Law of Ukraine “On Elections of MPs of Ukraine” as amended on October 1, 2005

[3] Resolution of the Central Election Commission No. 1215 dated May 4, 2006

[4] http://razumkov.org.ua/images/sociology/2019_03_Monitoring_Ukraine.pdf

[5] https://zakon.rada.gov.ua/laws/show/v0925359-19

[6] Art. 17-4 of the Law of Ukraine “On Political Parties in Ukraine” No.2258-VIII dated October 1, 2018

[7] Art. 58 of the Law of Ukraine “On Elections of the President of Ukraine”, Art. 68 of the Law of Ukraine “On Elections of MPs of Ukraine”, Art. 54 of the Law of Ukraine “On Local Elections”

[8] http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=56671 /The text of the draft law for the second reading dated June 5, 2019

[9] http://ratinggroup.ua/research/ukraine/monitoring_elektoralnyh_nastroeniy_ukraincev_16-21_maya_2019.html

Nadiia Shuvar, Head of the Rule of Law, Centre for Democracy and Rule of Law