House of Commons Hansard #60 of the 40th Parliament, 3rd Session. (The original version is on Parliament's site.) The word of the day was financial.

Topics

Opposition Motion—Securities Regulation
Business of Supply
Government orders

1:10 p.m.

NDP

Jim Maloway Elmwood—Transcona, MB

Madam Speaker, it is very clear that the federal government is simply taking advantage of the economic crisis to push this argument. We all know that the idea of a national securities regulator has been around since 1935 with the royal commission. That was some 75 years ago. It has been discussed. There was a five-year study done in 1973. In 1988 there were more initiatives in this area and then again in the mid-1990s. There is nothing new here.

The fact is the passport system, which many members have spoken about, only came into effect in 2006. Manitoba joined the passport system in 2006. It has been mentioned many times that the passport system works very well in this regard. The Manitoba government is 100% in favour of it. However, the Manitoba government has been dead set against the idea of getting involved with a national securities regulator for about 10 or 15 years now.

This is not only a Quebec issue; it is a Manitoba issue and an Alberta issue. In fact, last week, some major corporate executives in Alberta came out strongly against this idea because there would be job losses in Alberta. For those members of the Conservative Alberta caucus, who are looking over their backs at the wild rose chasing after them, they ought to pay some more attention to this. A lot of business people in Alberta are not supportive of what the government is doing. The government is gradually losing touch with the voters who it claims to be representing.

Opposition Motion—Securities Regulation
Business of Supply
Government orders

1:15 p.m.

Bloc

Robert Bouchard Chicoutimi—Le Fjord, QC

Madam Speaker, I want to thank the hon. member for his question.

He is right to say that the Conservative government is taking advantage of the economic crisis to push this plan to interfere in the jurisdictions of the provinces and Quebec, as a number of previous governments have done before it. We are in fact going through an economic crisis. It seems to me that the government should think about that before investing $150 million.

I also want to thank the hon. member for mentioning that it is not just Quebec that is opposed to the federal government's intentions and its bill. That is something worth thinking about. I think the Conservative government should give this more thought. The Liberal members should also give this some more thought. In Quebec, we are against the bill because this aspect of the economy is a responsibility of Quebec and the provinces.

Opposition Motion—Securities Regulation
Business of Supply
Government orders

1:15 p.m.

Conservative

James Rajotte Edmonton—Leduc, AB

Madam Speaker, it is a pleasure to stand today with yet another chance to debate another Bloc opposition day on securities regulation in Canada, a topic I very much enjoy debating. This is either the fifth or sixth such opposition day that the Bloc has introduced on the exact same subject. We are hearing some of the same arguments, but it is always worth visiting these issues again.

I would like to address my comments to a particular aspect of this debate that members have referred to and focus especially on my home province of Alberta. However, before I do, I would like to briefly address two items.

First, in my capacity as chair of the finance committee, I would like to note for the benefit of the House that the finance committee has endorsed a national regulator on numerous occasions, most recently in its prebudget consultation tabled last December in which the committee again recommended that the government should continue to move forward on a national securities regulator.

Second, I would like to take to task, frankly, the Bloc and other opponents of a national securities regulator for repeatedly attempting to suggest that both the IMF and the OECD believe Canada's security system is without flaw. This is clearly not supported by fact and in the spirit of fair and reasoned debate among learned individuals, we should not allow this to continue.

Both the IMF and the OECD have been crystal clear that the lack of a national regulator is a key and significant flaw in the Canadian financial system. The OECD has said:

The current diversity of regulations, for example, each province has its own securities regulator, makes it difficult to maximize efficiency, and increases the risk that firms will choose to issue securities in other countries. A single regulator would eliminate the inefficiencies created by the limited enforcement authority of individual provincial agencies.

The IMF sounded a very similar warning when it said:

A federal regulator could coordinate more readily with other regulators in monitoring risks and responding quickly to a crisis, and could also have an enhanced focus on the issues that securities markets may pose for national financial stability.

Neither statement is open to interpretation. Both the IMF and the OECD clearly support a national regulator. What is more, both of these organizations are not alone. Countless groups in Canada and beyond have joined their call. While the list is too long to mention, I will note a few.

The list includes everyone from victims groups like the Earl Jones Victims Organizing Committee, unions like the National Union of Public and General Employees, financial service groups like the Canadian Bankers Association, nearly every major newspaper editorial board in the country, investor groups like the Canadian Foundation for the Advancement of Investor Rights, retiree groups like the Canadian Association of Retired Teachers, pension plans like the Municipal Pension Board of Trustees, and the list goes on and on.

However, as impressive as the list of supporters is, it unfortunately has not yet swayed opponents of a national regulator. Unfortunately, one of those opponents is the government of my home province of Alberta, which is what I want to focus on in the rest of my remarks.

I underline that the government of Alberta is in opposition and, I emphasize, not necessarily the people or businesses of the province. In fact, even my friend, Alberta finance minister Ted Morton, was recently forced to concede that Albertans were not of one mind on this issue.

I would further note that a recent Canada West Foundation survey of 300 economists and financial analysts in the four western Canadian provinces found nearly 70% support for a national securities regulator, including a solid majority of 68% support in Alberta. As Canada West Foundation policy analyst Dan Gibbins noted, “From an economic perspective, it is still seen as a positive -- even in Alberta”.

Moreover, many prominent Alberta leaders or public interest groups have spoken out in support of a national securities regulator. I think I should recognize the efforts by Hal Kvisle with TransCanada, who was with the Hockin panel that did an awful lot of work in terms of producing a report that spurred the government to act in this manner.

I would also like to point out other people. For instance, Heather Douglas, president and CEO of the Calgary Chamber of Commerce, has strongly registered her support for the initiative. She stated:

—our member companies continued to express a great deal of frustration with the multiple regulators' insufficient enforcement, lack of technical expertise, conflicting regulations, and high costs to raise money on Canada's multiple stock markets. The Chamber calls on the provincial government still opposed to a sole regulator to reconsider their stance. Our startup member companies need capital to take their innovative goods and services to the marketplace. Our profitable businesses will be choked if they continue to waste investor money complying with conflicting legislative demands.

The Prospectors and Developers Association of Canada has also recognized the “urgent need for a common securities regulator and for proportionate-based regulation”. It has also noted that “giant sized rules for junior companies create poor conditions for companies that help open up economic opportunities, particularly for communities in Canada's northern and more remote regions”.

I would like to quote another friend and someone who played an instrumental role in getting Alberta back on a fiscal track, perhaps the person who did so more than any other, former Alberta treasurer Jim Dinning, who wrote an excellent article recently on a national regulator. He declared:

We need our financial regulators to better monitor these peril-creating events and act quickly to protect Canadians and their marketplace. But a system of 13 securities regulators can't keep up; it's almost built to frustrate effective action....[W]e need a regulatory framework that can speed up reforms required by structural changes coming at us, largely from rapidly evolving technologies. The existing system is not designed to accommodate that, lacking both co-ordination and depth of expertise.

I encourage members on both sides of the House to read the full article by Jim Dinning, the former treasurer of Alberta. It is an excellent argument in favour of a national regulator. I would also like to quote from newspaper editorials.

A recent Edmonton Journal editorial stated:

We remain the only country in the developed world to lack a national regulator of financial markets....Let's get on with having a common regulator, like adults elsewhere.

A Calgary Herald editorial was quite forceful in stating:

A single regulator should lead to a smaller, simpler, less costly and more efficient system, making it easier and cheaper for companies to raise capital....Today, Canada is the only developed country in the world without a single regulator, much to our competitive disadvantage globally.

The irony is that Alberta companies have long left that territorial mentality behind. Like TransCanada, Alberta has no business being a holdout. However, while noting the many supporters of a national regulator in Alberta, I concede that, like Quebec, some have remained skeptical and opposed. I would further suggest that most of that opposition is based on fears that a national regulator will not recognize the unique characteristics of regional markets and a legitimate interest in promoting vibrant local markets. That is why I want to address some of these concerns.

I strongly suggest and will outline why what is being proposed by our Conservative government actually dispels those fears by acknowledging the importance of regional input and by prompting strong local markets. Again, to quote former Alberta treasurer Jim Dinning:

This is a national regulator that's being proposed, not a federal regulator. The DNA of provincial and regional markets must be integrated into the decision-making process, right from the outset.

First and foremost, our Conservative government when developing the securities act, did not do so unilaterally in Ottawa. This was not a made in Ottawa top-down exercise. We invited all willing provinces to the table. We set up a transition office which was not headed by, as the Bloc will often point out, someone from Toronto. This was headed by the chair of the British Columbia Securities Commission. In fact, I want to thank Douglas Hyndman for all his excellent work to date. This is what he did. He made an effort to work with the provinces to get the federal government and the 10 provinces and territories to work collaboratively on this initiative.

As one participating province, through the head of the Saskatchewan Financial Services Commission recently confirmed, “We've enjoyed some pretty good dialogue with the Canadian Securities Transition Office on the development of the act”.

Indeed the proposed Canadian securities act goes to great effort to stress that. To start, it would not force any province or territory to participate in a Canadian securities regulator. It would be strictly voluntary. Provinces and territories would have the complete freedom to opt in or not.

What is more, far from being an intrusion into provincial jurisdiction, it actually respects constitutional jurisdiction, regional interests and local expertise. For instance, the proposed act would establish a federal-provincial-territorial council of ministers consisting of the minister of finance and other members appointed by and representing each participating province and territory. The council would have a statutory mandate to facilitate consultations and the exchange of information with respect to the administration of the act and securities regulation policy in general.

In addition, the council of ministers would advise on appointments of the board chair and members and other members of the Canadian securities tribunal. The council of ministers would also be directly involved in the development of regulations and policies.

To further understand that to be effective the national regulator will fundamentally require the support and expertise of the best talent in Canada's financial markets from across the country. Likewise, we recognize that local offices and staffing were areas of particular interest to all provinces. Accordingly, we committed that local offices will remain in place and that all current staff in the provinces and territories will be offered jobs with the new regulator to ensure that that expertise stays in the local markets.

This will permit the new regulator to build on that existing infrastructure and the expertise of participating provincial and territorial securities regulators.

What is more, we additionally committed to ensuring that local offices have the authority they need to make the regulatory decisions that they should. This is in keeping with the proposed act which charts an organization with comprehensive national standards made up of strong local offices with both an understanding of regional economies and that have the confidence of local businesses.

Finally, to respect our provincial and territorial partners to the fullest extent, we also referred the proposed act to the Supreme Court of Canada to obtain an opinion on whether it is within the legislative authority of Parliament before proceeding further. This will clear the air, we will get direction from the highest court in the land and it will provide certainty for all concerned provinces and territories, market participants and individual investors.

Benoit Pelletier, the former Quebec intergovernmental affairs minister in the Charest government himself has admitted, “The fact that the federal government decided to ask the court for an opinion in my view is something that is fair”.

Clearly and without a doubt our Conservative government is working and is committed to keep on working collaboratively with willing provinces and territories to establish a national regulator that is responsive to the distinct needs of regionally based sectors and market participants. We also continue to invite all other provincial partners, including Alberta, Quebec and Manitoba, to participate in the process, even if it is in an exploratory manner.

Charlie Spiring, CEO and founder of Wellington West Holdings, Inc., yet another western Canadian supporter of a national regulator lamented Manitoba's non-participation recently by stating, “Coming to the table now doesn't mean you are committed to it. It just means you want to be at the table when they are making the cake”.

Before concluding, I would like to briefly address the issue of the passport system. Some have suggested a national regulator is not necessary because the provinces have already adopted a passport system to regulate securities. However, we have heard time and time again that that does not go far enough.

With the passport system, Canada would still have 13 securities regulators, 13 sets of laws, however harmonized, and 13 sets of fees. As Ian Lee from the Sprott School of Business at Carleton University has noted, “This is still an unnecessary frivolous duplication of expenditures as companies have to pay extra fees and go through extra paperwork to complete the process”.

Or as the Saskatoon Star-Phoenix editorial has pointed out about the passport system:

...that piecemeal approach doesn't begin to address the kind of concerns raised by the IMF, reduce duplication, confusion, red tape or costs for investors or offer the centralized oversight and rules enforcement a single regulator provides.

I believe that not only should we reject today's opposition motion but that provinces like Quebec, Alberta and Manitoba should reconsider their opposition and should work as partners with the federal government on this very important initiative going forward.

Our Conservative government's plan to create a national Canadian securities regulator is long overdue. It represents a common sense approach with principles of clear accountability that will reduce overlap and duplication, strengthen enforcement and more. We can no longer accept the current system. We owe Canadians better.

Use of Camera in Chamber
Points of Order
Government orders

1:30 p.m.

Conservative

Terence Young Oakville, ON

Madam Speaker, I rise on a point of order.

Last evening at the moment of the unanimous passing at third reading of Bill C-475, the private member's bill initiated by the member for West Vancouver—Sunshine Coast—Sea to Sky Country, a bill which will significantly help police and our courts protect Canada's young people from the dangers of street drugs and notably methamphetamines, in this wonderful moment for Canada, I inadvertently broke a rule of the House in taking the member's picture as members of the House congratulated him. This was to present to him at a later date, perhaps at his retirement 20 years from now.

The Conservative members, including myself, are so proud to have him as a member of our caucus, a member who dedicated himself to this cause.

I note that in the last six months there have been two important occasions when many members took pictures in the House, first, when the Olympic athletes visited with the flame in December, and more recently when they visited the House again.

As well, I thought the House was adjourned at the time.

Nevertheless, I accept the point of order and I apologize for my inadvertent breach.

Use of Camera in Chamber
Points of Order
Government orders

1:30 p.m.

NDP

The Acting Speaker Denise Savoie

I understand a point of order was raised last night and I believe that addresses the issue.

The House resumed consideration of the motion.

Opposition Motion—Securities Regulation
Business of Supply
Government orders

1:30 p.m.

Bloc

Christian Ouellet Brome—Missisquoi, QC

Madam Speaker, the member for Edmonton—Leduc asked the member for Chicoutimi—Le Fjord a question a few minutes ago. He is not listening to me now, but I would still like an answer to my question. He asked why Quebec did not agree that there should be one commission in Toronto for all of Canada. His question was relatively simple.

Is he aware that in Quebec there are 14 statutes at present that protect our commission? It goes back to 1867, and it is under our jurisdiction.

If there were to be one commission in Canada and the Americans in Chicago asked Canadians why they didn’t join with them, what would the member for Edmonton—Leduc say to that?

Opposition Motion—Securities Regulation
Business of Supply
Government orders

1:30 p.m.

Conservative

James Rajotte Edmonton—Leduc, AB

Madam Speaker, I never said why one securities commission would be in Toronto. It has not been decided. Obviously, the legislation has not even been introduced. However, it is not certain that the national commission would be in Toronto. There are other options. I would encourage the member to have Quebec participate and fight for Montreal to be the centre. I would fight for somewhere in Alberta, or perhaps in Ottawa, wherever.

We have said with our proposal that we would keep the expertise in the local offices. One of the concerns from Alberta is the issue of junior capital pools. They want to keep that local expertise in Alberta because they feel that people in other regions do not understand that expertise, so the proposal that we are putting forward, if the members are actually interested in it, is that we keep that local expertise there and we would rely on that.

The concern here is that we are the only nation of the G7 that has a security system with 13 different regulators. The intent is to have a uniform system across the country for better enforcement, for better protection of market participants, and for better protection of investors so that we can have one uniform system.

In terms of whether we should have one between Canada and U.S., I would still fight for a Canadian securities regulator and it would be up to Parliament, if it adopted the Canadian securities regulator, to protect and ensure it remained in place.

This is the one area of our financial regulatory system, in my view, that is not up to the level it should be. Every other area of our financial regulatory system, in my view, is tops in the world, but this is the one area that does need to be improved. The member just has to read the reports from the IMF and the OECD, including the most recent reports, to recognize that Canada should follow this path.

Opposition Motion—Securities Regulation
Business of Supply
Government orders

1:35 p.m.

NDP

Jim Maloway Elmwood—Transcona, MB

Madam Speaker, I would like to know what the member would have to say to his very own Conservative senator from Alberta who is leading the charge against the national securities regulator, and who points out that over time, there will be a job loss in Alberta, and that a national securities regulator will not be sensitive to the financial community as it exists in Alberta right now and where it plans to go.

This is a question that, over time, Alberta will lose jobs. We know that this will be headquartered in Toronto. Everybody knows that. The fact that the Conservatives say they have not decided yet is just a big joke. We know that is where it will be headed and over time those jobs will move from Montreal, from Edmonton, from Winnipeg, and will be concentrated in Toronto.

What would he say to the people in Alberta about that?

Opposition Motion—Securities Regulation
Business of Supply
Government orders

1:35 p.m.

Conservative

James Rajotte Edmonton—Leduc, AB

Madam Speaker, in fact, it does not have to be headquartered in Toronto. It is possible that we could have a system that could actually be headquartered in Ottawa with regional offices in Toronto, Montreal, Vancouver, Calgary, and Halifax. That is a very viable system.

If the member wants to get more information on this, he should talk to the chair of the body that has been overseeing this, Douglas Hyndman from British Columbia. He was initially an opponent of this proposal, but has come around and says that he wants to be a part of this. He wants to be at the table actually defining what this regulator could possibly look at. He wants to be defining the rules and regulations that would be in place across the country.

That is what provinces like Manitoba, Quebec and Alberta should do. They should state what their concerns are, bring forward their concerns, and see whether they can be accommodated within the legislation. Then they can choose whether or not they wish to participate. This is a voluntary system. If Manitoba chooses not to participate, that is up to the province of Manitoba.

The member talked about a Conservative senator who he did not name. I would just point to the former treasurer of Alberta, Jim Dinning, who spoke very forcefully in the Financial Post, May 27 of this year, saying that we need a national regulator, not a federal one. He wrote very eloquently in terms of why we do need a regulatory framework. He wrote:

But a system of 13 securities regulators can’t keep up; it’s almost built to frustrate effective action. Canada came through the past financial crisis in reasonably good shape. We may not be so fortunate next time. We need to streamline the structure to help make rapid decisions.

He went on to write:

Take for example, the regulatory response — or lack of one — to the six electronic alternative trading systems operating in Canadian equity markets for the past three years or so. These platforms have captured more than 30% of trading volume from the Toronto Stock Exchange. Yet regulators--

Opposition Motion—Securities Regulation
Business of Supply
Government orders

1:35 p.m.

NDP

The Acting Speaker Denise Savoie

Order. I see many members who are rising to ask questions, so I will give them the opportunity. The hon. member for Fort McMurray—Athabasca.

Opposition Motion—Securities Regulation
Business of Supply
Government orders

1:35 p.m.

Fort McMurray—Athabasca
Alberta

Conservative

Brian Jean Parliamentary Secretary to the Minister of Transport

Madam Speaker, we are eliminating duplication and unnecessary costs. There are going to be no office closures and no job losses. It is a voluntary membership. It is a competitive advantage because we are competing against the world.

I would like this regulatory office, if it happens, to actually be located in Fort McMurray, since I understand some 30% of the TSX is related directly to the oil sands.

My question to the member is this, why is the passport system not working as effectively as it could be to compete against the rest of the world, which is our competitiveness in this case?

Opposition Motion—Securities Regulation
Business of Supply
Government orders

1:35 p.m.

Conservative

James Rajotte Edmonton—Leduc, AB

Madam Speaker, there was a lot in there. I appreciate the member's comment in terms of clarifying that this proposal would keep the local offices, the expertise and the infrastructure. They would be part of the national system, after they chose to.

The issue in terms of the passport system is there is still 13 different sets of laws, despite how harmonized they are, there is still 13 different sets of regulations, and there is a need for companies that are willing to invest to have 13 different sets of documents. That is in fact true. The member can talk to any company dealing with this system.

There is also more than 30% of the Canadian equity market not involved in that passport system. The province of Ontario is not participating in that system.

This is one reason why we need a national regulator to cover the entire country, to reduce overlap and duplication, attract investment, and protect Canadian investors.

Opposition Motion—Securities Regulation
Business of Supply
Government orders

1:40 p.m.

Liberal

Joe Volpe Eglinton—Lawrence, ON

Madam Speaker, we in the Liberal Party have continuously advocated for mechanisms that make for a freer flow of trade, commerce and people. One of the things that we have done is we have always been respectful of the processes that are impacted by the Constitution. That is one of the reasons why we made the first suggestion to refer this to the Supreme Court.

If the government is going along already and trying to establish the infrastructure, which as I understand it will cost some $300 million, and the Supreme Court suggests that it would be inconsistent with the Constitution, is the member's plan then to simply say that the $300 million is blown and it is not a problem? Does the member not think it would be a little bit more prudent to just simply wait until the decision comes down?

Opposition Motion—Securities Regulation
Business of Supply
Government orders

1:40 p.m.

Conservative

James Rajotte Edmonton—Leduc, AB

Madam Speaker, I think a government and political parties must show leadership and choose what they decided to support.

There has been the Hockin report, a panel that was commissioned to produce a report on this, that recommended a national securities regulator. We in this party, in this government, believe that this would be in the interests of Canadians. The Bloc feels opposite. The NDP used to and now has changed its position to oppose it.

However, the Liberal Party of Canada has to decide whether it supports a national regulator, whether it would be in the interests of our country, our citizens, in terms of protecting our investments better, in terms of attracting capital better. If it believes that, then it is prudent to prepare for the day in which we can hopefully make that happen.

We referred it to the Supreme Court, a specific question, to ask whether it is within the jurisdiction of Parliament. We hope that will happen within the next 12 to 18 months. Then we will proceed with legislation if we get a positive response.

However, it is incumbent upon political parties and governments to state where they stand on important issues like this and try to move the policy ball forward in order to protect Canadian investors, and to ensure that we attract as much investment to this country as possible.