Feds reach deal with B.C. and Ontario to create securities regulator
Bruce Cheadle, The Canadian Press
Published Thursday, September 19, 2013 10:21AM EDT
Last Updated Thursday, September 19, 2013 5:22PM EDT
OTTAWA -- The Conservative government that bulled ahead with unilateral changes to federal-provincial health funding and job-training programs is hoping a more "co-operative" approach will pay dividends for a national securities regulator.
Finance Minister Jim Flaherty, flanked by his B.C. and Ontario counterparts, announced Thursday they're proceeding with a national body to oversee Canada's investment industry.
They hope the proposed system is in place by July 1, 2015.
"Our economic union stands taller today than it did yesterday," said Flaherty, even as he invited other provinces and territories to join the "co-operative."
"It isn't a federal regulator or a provincial regulator," said Flaherty.
"It's a common regulator, a co-operative regulator, which will share whatever powers the different orders of government have."
Quebec, as expected, immediately trumpeted its opposition, while Alberta, another longtime opponent of the idea, kept its powder dry while complaining about a lack of consultation.
Flaherty and Ontario, home to the Toronto Stock Exchange, have long sought a national securities regulator to replace the current patchwork of provincial and territorial bodies that they argue increases costs to businesses seeking to raise money in Canada and makes enforcement and prosecution of fraud more difficult.
However, in 2011, the Supreme Court ruled Ottawa could not unilaterally create such a system because it intruded on provincial jurisdiction.
Tortuous, years-long negotiations with B.C. and Ontario -- which together represent almost two thirds of the Canadian securities market -- resulted in Thursday's pitch.
The new regulator, with its head office in Toronto, will administer a single set of regulations and be directed by a board of independent directors chosen by a federal-provincial council of ministers.
"It doesn't make sense in a nation the size of our population to have 13 regulators and to introduce yet possibly another federal regulator with all the others included," said Charles Sousa, Ontario's finance minister.
"(That) would create, I think, an international or reputational signal that would say, you know, we don't have our act together."
B.C. Finance Minister Michael de Jong said the co-operative model was designed to avoid constitutional court battles.
"My apologies to the constitutional bar," said de Jong. "They'll have to find something else to make a million bucks off."
That won't forestall a political battle, however, and possibly another court challenge.
Quebec Finance Minister Nicolas Marceau blasted the announcement as "unacceptable."
"The federal government is seeking to achieve indirectly what it cannot achieve directly," Marceau said in a release after tabling a motion against the federal move in Quebec's national assembly.
Quebec's business community also came out swinging, with the Montreal Board of Trade and the federation representing the province's chambers of commerce deriding the plan.
Both said the current system is working well, while the provincial chambers of commerce group accused Ottawa of invading provincial jurisdiction.
Alberta Finance Premier Alison Redford was also cool to the proposal.
"My expectation is that there is probably still work to do if any of the jurisdictions that want to see a regulator would like Alberta to be involved," Redford said in Calgary.
Flaherty has waded into battle with the provinces before.
In December 2011, he arrived at a federal-provincial conference in Victoria to announce unilateral changes to the federal funding formula for health care. Premiers howled, but the Harper government stuck to its guns.
Ottawa upset a number of provinces with changes to employment insurance rules last year.
And in his March 2013 budget, Flaherty promised a new job training grant premised on equal funding from the feds, the provinces and employers.
While the Conservatives have already spent millions advertising the Canada Job Grant as part of their Economic Action Plan branding exercise, the program doesn't exist and must still be negotiated with the provinces and territories, who are balking at federal funding cuts to other job-training programs administered by the provinces.
A common securities regulator, however, is heavily favoured by English Canada's business leaders and may be hard to resist if a model can be shown to work.
The Canadian Bankers Association and the Investment Funds Institute of Canada were among those who lauded the announcement.
"Canada's current fragmented system puts us out of step with other countries around the world," CBA president Terry Campbell said in a release.
Getting Alberta on board would all but assure the project's success.
As Ontario's Sousa noted during the news conference, "the importance of having Alberta's oil and gas and British Columbia's expertise in the (mining) industries is essential for this to work, and we will encourage everyone's participation."
The announcement now gives Prime Minister Stephen Harper another economic argument for his arsenal when Parliament resumes in October with a new throne speech laying out the Conservative economic plan.
With free trade talks and pipeline proposals currently stalled in apparent gridlock, the government needs an economic win and the securities proposal may fit the bill.
"Quite frankly, I expect that a number of the other provinces and territories fairly quickly will climb onboard and accept this proposal," Flaherty said.
"It's in their self-interest, I would think, to do so and not be left behind."
"And we'll see with a couple of the others that are more intransigent how they ... how that works."