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.
