Finance Committee on May 28th, 2008

[John McKay, Liberal, Scarborough—Guildwood, ON]

So Ontario effectively sees it as better not only for themselves but for the rest of the nation.

I was looking at your chart on the budget propaganda, and on page 15 you've got the TSX in decline on initial public offerings--that and the New York Stock Exchange. Apparently the New York Stock Exchange took a bit of a hit because of the Sarbanes-Oxley Act, and a lot of the issuances got shifted to London.

I'd be interested in your explanation for the decline of the TSX and the TSX venture exchange. Has that reversed since 2006 with the recent run-up of the TSX about to become the MTSX?

[Serge Dupont]

That's a good question. I don't have an update on the numbers, and I think you're quite right that a number of factors are at play in this chart, including Sarbanes-Oxley, and including the bursting of the dot-com bubble, which is in here as well.

I think what the chart was intended to show is, first, to draw out the fact that these various exchanges are in a competitive field; and second, to draw out the success of London, which has pursued a more principles-based approach to regulation, which we think has considerable merit. And it's still an issue for discussion, frankly. A lot of people prefer more rules-based.... But we thought it was useful to illustrate the success that London has had to this period, perhaps partly attributable to the approach to regulation, and even to be aware that the Australian exchanges are in the running as well and that this is all part of the competitive field.

Certainly the merger of the TSX and the MX was carried out precisely to unite forces and to provide a stronger platform to compete internationally. Hopefully you would see that this would help this chart over time.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll go to Monsieur Laforest.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chair.

I just have one quick question. The $2.8 million in the supplementary estimates are to pay for the development and implementation of a common regulatory body. How much is allocated afterwards? After the study, how much will it cost? That is a form of study. How much will it cost to create a body in which, right from the outset, you are practically assured that several players will not participate?

[Serge Dupont]

That is a good question. I have no figures for the honourable member. The initial program is to study a proposal. We have asked an expert panel to suggest ways in which a transition could be made. Certainly, the change cannot be made overnight; there will have to be a transition of some sort. In addition, if governments were committed to such a program, we would also have to consider the question of transition costs and the best way to move from one authority to another. I cannot provide an answer today.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

You have no idea how much it will cost and yet you are asking for $2.8 million to be committed at the outset without knowing how much the next steps will cost. Knowing that there is already significant resistance in the form of a unanimous rejection from the National Assembly that said, no, Quebec is not getting involved in this project, it is a little absurd to see $2.8 million committed right away with no knowledge of what it will cost later. What will it cost? Will it cost $10 million, $20 million? It seems to me that it is important to know.

[Serge Dupont]

I understand. It is a little like in other areas. First, you do a feasibility study. When you are working on the feasibility study, you do not necessarily have an idea of the costs of stage 2 or stage 3. You are just developing a proposal. Eventually, the proposal has to be quantified and developed much more precisely. We are right at the start; to be specific, we are developing a common bill.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

But you just said that a common regulator requires unanimity, willing participation. You said "willing participation". First, we know from the outset that participants have to be willing. Second, the parties in the Quebec National Assembly have unanimously said no, they want none of it. How can you imagine that you are going to get from there to political participation by Quebec? But you still want to spend a significant amount of money for something in which the people of Quebec will not participate. That is what I call waste.

[Serge Dupont]

Many people will perhaps say that this money should not be committed and the federal government should simply move forward. Right now, in the Senate, Senator Grafstein's private member's bill suggests simply moving ahead and doing it. But our minister prefers to see what proposals can be made to the provinces that might secure their agreement.

Second, from our perspective, there is perhaps a greater meeting of the minds than may appear to be the case. Quebec has already come out in favour of an in-depth harmonization of legislation. It is working very closely with other jurisdictions. Minister Jérôme-Forget also said that she supported a national body that would apply the law uniformly in Canada. Furthermore, if the passport system is implemented, Quebec has agreed to delegate a lot of power to other jurisdictions. For example, it is now accepted that, when a prospectus is issued, it can be done in Manitoba, in Nova Scotia or in other provinces. The delegation is done to a common regulator, not a federal one. From our point of view, no difference of opinion automatically precludes the possibility of discussion.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

That is your opinion. It is not at all shared by...

[Serge Dupont]

Our minister is also convinced that there is always room for discussion, for on-going discussion and for providing his counterparts with concrete proposals.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

The arguments you have just made come down to the fact that, from the moment that there is agreement to work on some aspects...

[Serge Dupont]

Yes.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

...even if there are things that one of the parties has absolutely no interest in, the door is still left open just enough that the other party can push it open and barge in. The feds will come up with something that others do not want, but that will be okay because they left the door open for cooperation. That is what it means.

[Serge Dupont]

Or it may mean that, with very harmonized legislation and common legislation, there does not have to be an insurmountable gap.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chair,

[The Chair, Conservative, Rob Merrifield]

Thank you very much. We want to thank you for coming in.

We have an indication that Mr. Crête would like to deal with something with regard to this issue.

We'll allow you to introduce your motion at this time.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I move that, under the heading "Finances", Vote 1a in the amount of $6,608,199 be reduced by $2,848,000.

The amount of $2,848,000 is the same as the amount allocated to support the development and implementation of a common securities regulator. So my proposal, which has been drafted according to...We can debate it if necessary, but I feel that it is very clear.

[The Chair, Conservative, Rob Merrifield]

Is everybody clear on the motion?

Is there discussion on the motion?

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I am asking for a recorded vote, please.

[The Chair, Conservative, Rob Merrifield]

We will ask for a recorded vote, and we'll have the clerk proceed with that now.

(Motion negatived: nays 8; yeas 3)

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I would like to make one comment, Mr. Chair. It took a vote against Quebec to get the Liberals to decide not to abstain.

[The Chair, Conservative, Rob Merrifield]

The translation didn't come through, but maybe that was all right.

Thank you very much for coming forward for your presentation.

We'll now have a quick recess and then we'll go in camera.

[Proceedings continue in camera]