Mr. Speaker, thank you for giving me an opportunity to respond to the motion presented by the member for Hochelaga.
The Bloc Québécois' finance critic has the right to express his point of view on a Canadian securities regulator, but he cannot twist the facts to suit his purposes, which is something he does very well.
This is not the first time that an opponent of a Canadian securities regulator has quoted the Organisation for Economic Co-operation and Development (OECD) selectively to back up his position.
The OECD supports creating such a body in Canada. In its survey of Canada, it said the following:
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 International Monetary Fund (IMF) noted the following in its report on Canada: 2009 Article IV consultation.
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.
If the Bloc Québécois finance critic refuses to acknowledge what the IMF and the OECD have said, then he should at least listen to Earl Jones' victims, who also agree with this proposal. Joey Davis, the spokesperson for Earl Jones' victims, stated that they support the Minister of Finance's initiative and that he wants Mr. Bachand and Premier Jean Charest to work with Ottawa instead of against it.
Canadians know that we are going through tough times, and they want the government to do everything it can to ensure the country's stability and economic growth, which is exactly what our government is doing very well.
We all know that in 2007 and 2008, the global economy was on the brink of disaster for reasons that were not under Canada's control and were due primarily to bad decisions made in the United States. The stock markets plunged and many multinational banks went bankrupt, only to be saved by the state, or in other words, by taxpayers.
The turmoil that the capital markets were thrown into around the world has had a real impact, and not just on prosperous bankers and fund managers. Whether it was small investors, retirees or families setting money aside for the future, everyone felt the effects of the crisis when the value of investments like RRSPs and mutual funds literally collapsed.
During the global crisis, access to credit became the main problem facing Canadians. After all, if families and households could not obtain the financing they needed, Canada would be unable to promote the strong growth needed to get out of the recession.
That is why the government created a $200 billion extraordinary financing framework to facilitate access to financing for Canadian households and businesses during this extremely difficult period.
This was a robust initiative with several components. Under the framework, we launched the Insured Mortgage Purchase Program to respond to the global credit crisis. We expanded financing support through two Crown corporations: Export Development Canada (EDC) and the Business Development Bank of Canada (BDC).
We also established the Canadian Lenders Assurance Facility (CLAF) and the Canadian Life Insurers Assurance Facility (CLIAF), which are both designed to help Canadian financial institutions gain access to global credit markets by providing loan guarantees similar to those offered in other countries.
This speedy and energetic response meant that Canadian banks and other financial institutions remained very solid, well capitalized and less dependent on leverage than their foreign competitors. Clearly, our plan has worked.
Today, global capital markets are relatively stable, and the Canadian financial system is on solid footing. The World Economic Forum considers our banks to be the most solid in the world. We can be proud of this.
However, there is a major flaw in our system that the global economic crisis brought to the forefront: Canada is the only industrialized country that does not have a single securities regulatory authority.
The debate about creating a Canadian securities regulatory authority has gone on for years. In 1935, the Royal Commission on Price Spreads recommended that a national securities commission be created. Since then, Canadian and international studies have recommended that a single regulatory body be created.
Unfortunately, things have changed little over the decades. The result is that our country of 34 million people has 13 regulatory agencies, 13 sets of rules and 13 fee schedules. In a world characterized by the interconnectedness of capital markets, where investors can invest billions of dollars virtually instantaneously, we have to lower barriers rather than raise them.
International organizations like the International Monetary Fund and the Organization for Economic Cooperation and Development believe this fragmentation is a major flaw in our system. And the government is taking measures to remedy that flaw.
Creating a Canadian securities regulatory body was a key commitment in each of the budgets we have introduced to date. Working with the provinces and territories, we were the first to call for a more efficient and simpler system of securities regulation. And today we are closer to the goal than any government that came before us.
Since the 2006 election, the government has been preparing to establish a Canadian securities regulatory body. We have made more progress than all of the previous governments.
In February 2008, the government established the expert panel on securities regulation, tasked with providing independent recommendations and advice to federal, provincial and territorial ministers on how best to improve securities regulation in Canada.
According to the expert panel's final report:
While the terminology has differed over the years...the conclusion of virtually every study has been the same: Canadians are ill-served by such a balkanized system. It is worth noting that Canada is the only developed country without a national securities regulator.
In July 2009, we announced the creation of the Canadian Securities Transition Office, with the mandate to lead the transition to a single Canadian securities regulator and to develop a proposal for draft Canadian legislation to be known as the securities act.
In collaboration with the 10 participating provinces and territories, the transition office has developed a draft Canadian securities act. It is presently preparing a comprehensive transition plan and will soon begin to develop the regulations and procedures that will accompany the draft securities act.
The Bloc must know that a few months ago the government of Quebec decided to make a similar referral to the Quebec Court of Appeal.
It is therefore appropriate for the Government of Canada to refer the matter directly to the highest court in the land in order to obtain a definitive decision on the constitutional power of the Parliament of Canada to legislate in this area.
Benoît Pelletier, a professor in the Faculty of Law at the University of Ottawa, who was the Quebec minister of Canadian intergovernmental affairs from 2003 to 2008 says that “deciding to ask the [Supreme] Court for an opinion is just and fair in my opinion“.
I believe this measure is raising concerns in Quebec. I can tell you that, over the years, studies have consistently shown that having 13 regulatory bodies, 13 sets of officials and 13 legal standards, let alone all the attendant paper shuffling and red tape, causes very high costs for companies all over the country, including those in Quebec. Those costs will go down when all these various regulatory bodies have been combined into one.
To draft the legislation, the government already had the firm support of the provincial-territorial advisory committee made up of British Columbia, Saskatchewan, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories, Yukon and Nunavut. We thank them for their vision and their desire to create a better system.
The proposed Canadian securities act that resulted from their efforts will lay the foundation for a new Canadian securities regulator, which will provide better and more consistent protection for investors across Canada. Furthermore, it will also improve regulatory and criminal enforcement in order to better fight white collar crime. People who commit securities fraud will face a stricter, more thorough system, and more importantly, one that is easier to enforce.
More specifically, the proposed legislation will cover securities-related offences currently covered by the Criminal Code, including securities fraud, market manipulation, insider trading and misrepresentation of the facts. And these provisions will apply across Canada.
At present, provincial securities regulators hand nearly all cases over to the police for investigation any time criminal conduct is suspected. Giving the regulatory body the opportunity to investigate these crimes will allow it to take on a role that complements that of the police, bringing in new expertise, providing additional resources and increasing the field staff in order to combat securities-related crimes.
The proposed legislation also gives new powers to gather evidence in order to reduce the time and resources needed to investigate securities-related crimes. In short, a Canadian securities regulator will have the mandate, structure and powers needed to intervene on a national level. We will fill in the gaps. This is a major step forward for Canadian investors.
The legislation will also establish new powers to gather information from market participants in order to ensure financial stability.
The provinces, including Quebec, could choose to continue with their own securities regulator. I will repeat that because it is important: the provinces, including Quebec, could choose to continue with their own securities regulator. We will respect the jurisdiction of the provinces that choose not to take part and we will continue to invite them to contribute to setting up a better system.
The Government of Quebec could very well decide to keep its own securities regulator, but we hope it will embrace the wisdom behind creating a new Canada-wide regulatory body, especially given the interconnectedness and the great complexity of modern capital markets.
With the proposed Canadian securities act, the government has taken a significant step toward filling a major gap in our system and ensuring that our securities regulatory system serves as an example, as our financial system does, to the international community. I hope that all the provinces and territories will eventually see the benefits of these efforts and will work with the Government of Canada on implementing a Canadian securities regulator.
In closing, I would like to come back to a statement by Marcel Boyer, vice-president and chief economist of the Montreal Economic Institute and Bell Canada professor of industrial economics at the University of Montreal:
A single securities commission with a strong regional presence would favourably resolve the complex issue of regulating securities in Canada: keeping decentralization beneficial, where businesses remain free to deal with either office, while providing regional or industrial entities with a strong voice within a single national body that defines and applies uniform standards and regulations. With decentralized non-exclusive offices [again, non-exclusive offices] that are nevertheless able to influence for the better, a single securities commission would promote innovation and efficiency in terms of financial market regulation while at the same time ensuring de facto mutual recognition of regional sensitivities and distinctive features.
