One of my lawyer colleagues said that is not a bad thing. I respect his opinion, but I do not agree with it.
This issue also has another option, and that is a hybrid solution where there is an opt-in proviso. When the provinces come in, they can decide whether or not they want to opt in and whether or not compensation becomes a consideration.
Jack Mintz is the Palmer chair in public policy at the school of policy studies at the University of Calgary. He has written on this subject and advised the Government of Canada. He has laid out some of the compelling reasons that we should move to a single regulator. Let me synthesize a couple of the points. He states:
One benefit of a single regulator is to reduce the costs. Businesses complying with the existing system in Canada face higher regulatory costs to the extent they issue securities in each province. Although not a major issue in boardrooms, companies will find it easier to comply with a single regulator rather than facing duplication and overlap among provincial authorities.
He goes on to say that today, because we are witnessing this global economic recession and we are experiencing financial distress, national regulators operating with global financial markets are one of the ways we can learn from each other and, in fact, defend ourselves, not only nationally but internationally in regard to the securities matter.
It is a very good article and I commend it to members.
The other article I looked at was from Mr. Marcel Boyer, who is vice-president and chief economist of the Montreal Economic Institute and Bell Canada professor of industrial economics at the University of Montreal. He laid out some of the criteria that members should keep in mind when we discuss this. I assume there will be a lot more discussions following this. He asks the rhetorical question, “Which type of system--centralized or decentralized--would help reconcile the preferences and interests of investors and issuers most effectively and at the lowest cost?” It is balancing the interests of investors and issuers of securities.
He also asks, “Which would help achieve the delicate balance between guaranteeing efficient financial markets for issuers and maintaining adequate protection for investors?”
Those are two extremely important questions. There is a balance. Some members have raised some concerns about whether it would be a monopoly situation, where we would have one regulator that effectively would constitute a monopoly, but it is a monopoly of the whole, which is kind of an oxymoron in itself.
I tend to agree that a national regulator, although there are good arguments on all sides, would bring to bear certain economies of scale.
The members from the Bloc have presented the interesting argument that in Quebec they not only deal with securities regulations, but with other parts of Quebec financial markets, except for the banking side, which is a federal responsibility.
However, the bottom line still comes down to the fact that we are suffering from a major recession induced by a credit crunch. It has been brought about by the underpricing of credit risks in asset-backed security markets. That is exactly what we are talking about. The housing crisis that started in the states and then all of a sudden the asset-backed security issue, the tremendous amount of money that was lost and the disruption of the markets, are the kinds of things that have to be guarded against.
What really ends up happening is we have separate jurisdictional authorities dealing with the regulations for securities. However, when problems occur, who fixes them? Who is responsible for bailing out the situation? It turns out to be the federal government. That is the problem. There is no accountability at the provincial-territorial level when the buck stops at the federal government table. It is probably one of the most compelling arguments for a national regulator, particularly in the context of the current situation, and who knows how long it will go on?
Mr. Mintz concludes:
Thus, regulation will need to become broader to ensure that all parts of the financial markets are included in the net. This is an argument for smart, not excessive regulation, which is a significant risk when government overreact to recent events.
Those are my inputs. I believe members will find there is no agreement. I am not exactly sure why this issue is in the budget and in this motion. It is a matter which will have to be debated much more fully. To resolve it through the budget or to force it through in the budget is not an accountable way to deal with it. It should have been handled as a separate item.