|| That this House denounce the government's unrelenting efforts to marginalize the Quebec nation, in particular by depriving it of the major economic lever of securities regulation, a matter that is under the exclusive legislative jurisdiction of Quebec and the provinces and for which they have established a harmonized regulatory system recognized for its effectiveness by the OECD and the World Bank, among others, and that it demand, along with Quebec's National Assembly and the business community in Quebec, that the government immediately withdraw its draft bill.
He said: Mr. Speaker, I am very happy with the support provided to me by my colleague, the member for , but I would also like to have the support of the hon. member for . Indeed, I think it is very important to reread this motion from the Bloc, which says the following:
|| That this House denounce the government's unrelenting efforts—one might even call it pathological obstinacy—to marginalize the Quebec nation, in particular by depriving it of the major economic lever of securities regulation, a matter that is under the exclusive—we emphasize that word—legislative jurisdiction of Quebec and the provinces—including that of the member for Macleod—and for which they have established a harmonized regulatory system—and I will come back to this, of course—recognized—internationally—for its effectiveness by the OECD and the World Bank, among others—to mention only those two organizations—, and that it demand, along with the Quebec National Assembly and the business community in Quebec, that the government immediately withdraw its draft bill.
The very important thing is to be aware of the mission of a securities commission. The mission of the Autorité des marchés financiers du Québec, the Quebec financial markets authority, is to enforce the laws governing the regulation of the financial sector, notably in the areas of insurance, securities, deposit institutions, other than banks—as we know, the banks are in federal jurisdiction—and the distribution of financial products and services. I will come back to the word “distribution”, as it is very important.
The Autorité des marchés financiers, like the securities commissions in each Canadian province, provides assistance to the consumers and users of financial products and services; ensures that financial institutions comply with standards; supervises distribution activities; supervises stock market and clearing house activities; and in a program unique to Quebec, sees to the implementation of protection and compensation programs for consumers of financial products and services.
Something that may not be well known is that the AMF has regulations and administers 14 different acts in Quebec. This is really a very broad and very crucial sector. Of course, there is the Act respecting the Autorité des marchés financiers, but there are also acts covering automobile insurance, deposit insurance, insurance, financial services co-operatives, the distribution of financial products and derivative financial instruments, the Mouvement Desjardins, securities, the Caisses d'entraide économique, the Sociétés d'entraide économique, and others. We can thus see that a securities commission is not just an office that one can simply close, or that, looking down from the heights of an Ontario ivory tower, one can simply turn into a branch office, end of story. That kind of thing is just not possible.
The AMF has considerable expertise. It is a Montreal institution and a Quebec institution, and the services of the Autorité des marchés financiers and the securities commissions are provided locally. That is also true of its counterparts in Ontario, Alberta and British Columbia. It is important that these entities have a good knowledge of the needs in their markets and that they serve their clients in their own language.
The financial sector of the AMF commissioned an independent study that shows that a regulator—and I will come back to the term “regulator” later—is an important component of the financial sector. So, when we say—in the more than 20 questions that we have asked in the past month, and that have not, by the way, been answered satisfactorily—that it is an important component in the financial sector, we are not kidding around. This is not just some authority, it is a part of the daily life of our services.
More than 150,000 direct and indirect jobs in Montreal and Quebec are affected by the financial regulator. That is 7.5% of the jobs in the Montreal region. There are 97,000 direct jobs in Montreal in this field, and the average salary is approximately $60,000. These are significant salaries. It is a major force in the Quebec economy. In Montreal, there are people with expertise in the areas the AMF is involved in. They do business with credit unions and banks, brokerage offices, lawyers and notaries' offices, etc.
Proximity is important. When someone asks a question, they need to obtain an answer in their own language and quickly, and that is done in Montreal.
To make the Canadian government's position look better, some people have said that the Canadian experience has been bad.They have said it was awful to have 13 financial markets authorities, 13 different sets of regulations, 13 different tariffs and 13 different invoices. This is the way it was long ago. In the mid-1990s, the previous government, the Liberal Party, asked the financial markets whether harmonization could be increased, as borders were increasingly porous. The financial market authorities replied in the affirmative to the question from the Liberal government of the day by increasing harmonization. There are no more specific instructions.
My colleague from the Liberal Party who also has personal experience in the financial arena, no doubt remembers the particular instructions from the OSC and the securities commission of Canada. We had Q-21, and on their side, they had something else, in the area of mergers and acquisitions. Now, there are no particular or provincial instructions. The instructions are now national, and cover all of Canada.
I was an issuers' representative. When an issuer paid to issue a prospectus, at the time it had to prepare 10 to 13 different cheques. This was annoying. That is no longer the case. Issuers prepare a single cheque which is sent to CDS, and that is the end of it. People recognized that there was a problem and the financial market authorities came up with a solution.
Now there is a coordinated approach and investors benefit from uniform protection. The current system also allows both regional approaches and local expertise to be taken into account. For instance, in Quebec there are start-up funds and specific workers' funds. The Canadian west has its junior capital pools that work well, and that is a good thing. It is possible to establish regional authorities which together offer harmonized services to the financial community, while taking into account the specificities of our regions.
This system has been recognized by the OECD and I will get back to that later if I have time. Since this system is recognized internationally, why change it? Why destroy something that works very well?
What the government is doing, this interference, this sort of hostile takeover—to use a term from the field—has been planned for a long time. In 2005, some people were mandated to study the advantages of a single regulatory system. The Purdy Crawford group was given the mandate to study the advantages of a single commission. So what's a guy to do, as we say back home? He indeed examined the advantages of having a single system. But the current system functions very well and all the studies show that there is no advantage to be gained from disrupting everything and introducing a single system.
Stubbornness is a factor here, and there are costs to be considered. Since the Conservatives started stubbornly trying to implement this hostile takeover of the provinces' and Quebec's regulatory systems, $317 million has been spent—wasted. These days, people are making political hay with the billion dollars for three days and the $14 million an hour. But for the Canada-wide—also known as centralized, federal or Conservative—financial markets authority, $2.8 million in additional credits was allocated in May 2008; in last year's budget, $154 million was allocated to this, and this year it is $161 million. That is illegal and shameful. The Conservatives do not even know if the Supreme Court will give them the slightest authorization to do that and they have already spent a third of a billion dollars to crush the provincial securities systems.
I was talking about the advantages and disadvantages. In Quebec, we have what is known as a compensation fund. It already exists. Not only did we invent it, we apply it. What is the purpose of this compensation fund? When a financial agent—such as a broker or a distributor of financial products—duly registered with the Autorité des marchés financiers, commits fraud, resorts to deceitful practices designed to lead people astray, or embezzles his clients' money, the clients are compensated. People register with the Autorité des marchés financiers and if brokers commit criminal acts, the victims are compensated. This was done for the clients who were defrauded by Vincent Lacroix. Not everyone was compensated, but 900 of those who had their funds embezzled were compensated. The others were tricked by criminals who were not registered. Now, if a criminal does not register in Quebec, he will not register either with the federal authority. Quebec spent $31 million to compensate 900 individuals who were the victims of fraudulent proceedings in the Norbourg-Lacroix scandal.
The Conservatives' argument refers to people who were duped by Earl Jones. That is misleading and a misrepresentation. Criminals do not register. That was very clear in the case of Bernard Madoff in the United States. The SEC was unable to catch him. Those people, whether or not there are victims, do not register with any federal authority or provincial, so who is going to catch them? Those are the people who deal with crimes. The OECD looked into the people who handle criminals. In the OECD's ranking of countries Canada places fourth, because of its policies and because of the Competition Act, which is a federal statute.
Australia is second, and the United States is first. That is not too bad.
In the area of regulation of the banking industry, and in terms of competition, Canada ranks ninth, and in terms of stabilizing authority, it is eighth. That is not very high. This an area of exclusive federal jurisdiction. The federal government should start enforcing its own laws in its own areas of jurisdiction with respect to the Competition Act and the banking sector; when it does that, we can say it has done its job.
The OECD looked at the regulation of financial systems. Canada overall ranks second. The United States is fourth, the United Kingdom fifth and Australia seventh. Who regulates financial systems? They are responsibility of the financial market authorities in Quebec and the other provinces.
We have been told we have to consider international representation. Apparently we seem crazy to the rest of the world because we are divided into 13. The annual conference of the International Organization of Securities Commissions is taking place right now. Where? The conference is being held in Montreal. International authorities are in Montreal under the auspices of the AMF and the other provinces’ financial market authorities to discuss issues. This is happening in Montreal.
This morning’s newspapers reported that the president of Standard and Poor’s was talking about the International Organization of Securities Commissions. He is there, too. Quebec’s finance minister, Mr. Bachand, who officially opened the public portion of the conference, had the following to say, “All indications are that the Canadian system we have adopted works very well, in part because many international organizations rank it among the best in the world.” I was referring to an article in Le Devoir. Now I am going to talk about an article in La Presse. The article states that even the president of the Securities and Exchange Commission is there. If the AMF and the provincial securities commissions applied their rules in a way that made no sense, would Mr. Volcker or Ms. Shapiro of the SEC be in Montreal? Are those people wrong?
We have produced a long list of people in Quebec who support the Autorité des marchés financiers and are telling the Government of Canada that it is mistaken. We have the Association de l'exploration minière du Québec, the Barreau du Québec, various chambers of commerce, the Fédération des chambres de commerce, the Conseil du patronat, Canam, Quebecor, Jean Coutu, Desjardins, Power Corporation, La Capitale, Transat and Transcontinental. Are all those institutions wrong?
They are not socialists, which is what the called them two weeks ago when he was a bit tired. This is not a gang of socialists. They are not people from the Bloc. Let them read the other articles and the letters sent on October 2, 2007, by Ms. Jérôme-Forget, who is not a socialist. Desjardins did it in 2008, Allaire and Nadeau in 2009. There is also the study by Secor and Pierre Lortie. Pierre Lortie, no less. Pierre Lortie is a lot of things, but he is not a sovereignist. That is too bad. That is going to take us a while. Still, he produced an excellent report. He said that what the Conservatives are doing is utterly mad.
I have 30 seconds left. Why are spending so much time talking about this issue? Is it because it falls within our jurisdiction? Passports work. Everyone knows that. This is a development and economic ownership tool. These are our jobs and our young people. It is deceptive to say that voluntary adherence will be easy and that that will solve the problem of all the Earl Jones in this world.
Most importantly, whatever is done in Quebec will be done with respect for our language, which would not be the case if the federal plan were to become a reality.
Mr. Speaker, I would like to advise my friend from that I actually had a long visit with Alberta's finance minister after a wonderful event in Black Diamond, Alberta last Saturday, and we did discuss this. There were slight differences of opinion, but I would like to share with the hon. member that we had a very respectful debate and discussed this issue. That is exactly what we should do. I would encourage all hon. members to have that respectful debate in this House today.
I must say that I have a great deal of respect for that hon. member for the role he is playing on the finance committee, and we welcome his presence and his contribution there.
To the point at hand, I am joining this debate, yet again, on another Bloc Québécois opposition motion that repeats, and I have referred to the broken-record analogy, the same, tired Bloc rhetoric opposing our government's attempt to strengthen securities regulation in Canada.
Before I continue, right off the bat I want to set the Bloc straight once and for all, if I can. To paraphrase the late American legislator, Daniel Patrick Moynihan, the Bloc may be entitled to its opinion, but not to its own facts. Many opponents of improving Canada's securities regulation, especially the Bloc, have repeatedly suggested that both the IMF and the OECD are in some way against a national securities regulator in Canada. That is wrong, that is misleading, and that needs to stop.
The Bloc knows, or should know, because we have told it repeatedly, that both the IMF and the OECD are actually long-standing and strong supporters of a national securities regulator for Canada. I reflected the quotes that the hon. member is selectively using. I would suggest that he look at all quotes from the OECD and the IMF. With the greatest of respect, I would ask my colleague in the Bloc to listen carefully now to the collection of key quotes I am about to share with him. These quotes will provide indisputable proof that they are dead wrong and will end this nonsense the Bloc keeps repeating.
The first is from a recent OECD survey of Canada:
|| 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 second is from a recent IMF mission to Canada statement:
|| Consolidating and enhancing securities regulations would further strengthen the already robust financial stability framework. Over time, bringing a greater financial stability focus to securities regulation, and achieving greater national integration....would provide a more holistic perspective to financial stability arrangements. In this connection, the [IMF] welcomes the [ Canadian government's] intentions...to follow the recommendations of the Expert Panel on Securities Regulation.
Those are pretty clear quotes.
What is more, the IMF has also further noted:
|| Given that Canada is playing in the highest league, you should equip yourself with the best instrument. I think that on financial issues, you still have to provide your customers—your investors and savers of your country—with better tools....Canada is currently the only G7 country without a common securities regulator, and Canada's investors deserve better.
That is a key point. I want to emphasize for my friends in the Bloc that Canada's investors deserve better. Those investors include the good people of Quebec, whom they are sent here to this House to represent. I would suggest that not only do we deserve better securities regulation, we deserve better than misleading arguments from opponents of a national securities regulator when it comes to the positions of both the IMF and the OECD. Canadians do too, and so do their constituents, the ones ultimately most impacted and affected by our decision on this matter.
If this debate on the Bloc opposition motion sounds all too familiar, it is, as I said before, because we have debated it before. We have debated this Bloc opposition motion three, four, five, or six times already in the past few years. I have actually lost track of how many times we have debated it. As the legendary New York Yankees catcher Yogi Berra once noted, “It's like déjà vu all over again.”
In fact, almost one year ago today, on June 15, 2009, to be exact, we had a Bloc opposition motion debate that dealt with the exact same debate we are having today. Today we will largely see the exact same Bloc members rise to speak. They will repeat the exact same Bloc talking points. Then they will recite the same old tired Bloc speeches with the same over-the-top rhetoric.
For those watching who are not familiar with the ways in which this House of Commons works, every session each opposition party is given a limited number of what we informally call opposition days. An opposition party, on its designated opposition day, can pick whatever issue it wants to debate. This is its biggest opportunity to focus the attention of the House of Commons as a whole on what its members consider the most pressing or important issue to their party, and more importantly, to their constituents.
I emphasize that the opposition party can select literally whatever issue it wants without restriction. It can be literally whatever it wants. It could be anything from the environment to foreign affairs, defence, international trade, or natural resources.
However, time and again, the Bloc has chosen to debate the same issue and has brought forward essentially the same motion that opposes stronger securities regulation in Canada. How can we explain the Bloc's singular obsession with this one topic? Does the Bloc honestly think that this is the only issue Quebeckers care about? Are they that out of touch with their constituents?
Maybe it could be that the Bloc is suffering from collective amnesia, as they keep bringing forward the exact same motion to debate, time and time again. I believe that all members have access to medical assistance right here on the Hill. Perhaps the Speaker may want to encourage Bloc members to take advantage of this service. Regular checkups are very important, I would remind everyone.
However, in this case of collective amnesia, let me briefly refresh the Bloc's collective memory on the continued failure of its motions. Every single previous Bloc motion brought forward on this issue was soundly rejected and defeated by this House. In other words, every single time, the House has said that the Bloc is wrong and has instead supported our Conservative government's attempt to strengthen securities regulation in Canada. I predict that it will happen again today.
I predict that yet again, this House will agree with our Conservative government, along with the IMF and the OECD, that a Canadian securities regulator is about giving investors the strongest protection possible, which is something that is long overdue. Indeed, the drive for a Canadian securities regulator is not a recent phenomenon.
In fact, as far back as 1935, the Royal Commission on Price Spreads advocated the creation of a national securities board. Seventy-five years later, after countless Canadian and international studies recommending that we replace the current system of 13 securities regulators with a national securities regulator, we are closer than ever before to finally replacing the balkanized system that has evolved, a balkanized system that is widely mocked.
For instance, the National Union of Public and General Employees has described it as:
||—ineffective provincial securities commissions, each seeming to vie with the others for the title of the weakest sheriff in town.
That is why, since we formed government in 2006, we have been working with provinces and territories and have been leading the call for a more efficient, streamlined securities regulatory system that better reinforces financial stability and that reduces unnecessary costs, strengthens enforcement, and better protects investors.
Indeed now more than ever, we have to better protect Canadians from fraudsters and Ponzi scheme organizers.
We are an investing country. Canadians own RRSPs, equities, mutual funds, or are covered under registered retirement plans. These nest eggs represent Canadians' financial future.
Too many small investors, retirees and families putting money away for the future have felt the impacts of fraudsters like the Earl Jones and Vincent Lacroix schemes. Too many have lost their life savings. For these people it is absolutely devastating. For our country it is embarrassing.
As a Toronto Star editorial stated:
|| Currently, our capital markets (stocks, bonds and derivatives) are regulated by the provinces and territories – 13 different jurisdictions in all. This has led to a patchwork quilt of regulations that allows con men and corner-cutters to slip through the cracks and evade justice. Think of Conrad Black (charged in the United States, not Canada) or the principals behind the Bre-X gold scam....In other words, the current system is not good for investors, who comprise about half of all adult Canadians, directly or indirectly (through mutual funds)....
Even more damning is the assessment of the Canadian Foundation for the Advancement of Investor Rights:
|| We have rampant insider trading in Canada and the regulators appear to be completely ineffective at detecting it.
Our Conservative government will not sit by and let Canadians be bilked of their hard-earned money. We owe it to Canadians to do all we can to protect them. Canadians need stronger enforcement to better detect, deter and investigate wrongdoing. Canada is the only industrialized country without a single securities regulator. This is not only unacceptable at the present time but it is now no longer an option. That is why we have proposed a new Canadian securities act.
What is more, let me be clear and dispel the Bloc's rhetoric. This act is not a federal power grab. Indeed the act was developed working with 10 participating provinces and territories. Let me stress that this is a voluntary initiative. This act will not force any province or territory to participate in a Canadian securities regulator, if it chooses not to. Provinces and territories will be able to opt in at will.
We also recognize that a Canadian securities regulator will require the support and expertise of the best talent from Canada's financial markets. That is why we have committed that local offices will remain in place. Current staff in the provinces and territories will be offered jobs in the regulator.
Additionally, we will also work hard to ensure that local offices have the authority they need to make regulatory decisions that they should. This is in keeping with the proposed act which envisions an organization with comprehensive national standards. It will be made up of strong local offices with an understanding of regional economies and that enjoy the confidence of local businesses.
We are going even further to underline our commitment to respect the provinces and territories and ensure we are not acting beyond Parliament's jurisdiction. Accordingly, to achieve absolute clarity, we have referred the matter to the Supreme Court of Canada. We will be asking the court a clear question: Is the annexed proposed Canadian securities act within the legislative authority of the Parliament of Canada?
Furthermore, we will wait to have an answer from the Supreme Court about the constitutional authority of Parliament to legislate in this area before we proceed further on a new Canadian securities act. This is the right and fair course of action.
Even former Quebec intergovernmental affairs minister, Benoît Pelletier, has admitted such:
|| The fact that [the federal government] decided to ask the court for an opinion in my view is something that is fair.
Before I conclude, let me just say that the global recession has been a wake-up call for all of us to rethink and refocus the way we do things. Modern stock markets call for timely regulatory and structural reform to improve integrity and strengthen efficiency.
This is about co-operation, not about jurisdiction. It is about establishing a national Canadian securities regulator that would provide clearer national accountability, reduce overlap and duplication, and strengthen enforcement; a regulator to better serve the needs of investors and contribute to the financial stability of Canada's financial sector. We owe it to Canadians to put in place a system that protects their hard-earned savings.
I could spend the rest of my time here today trying to convince the Bloc of the merits of improving securities regulation in Canada. I could quote the OECD, the IMF, the Canadian Council of Chief Executives, the Certified General Accountants Association of Canada, the Canadian Chamber of Commerce, the Canadian Foundation for Advancement of Investor Rights, the Earl Jones Victim Organizing Committee, the Quebec Provincial Association of Retired Educators, the Small Investor Protection Association and countless other supporters of a national securities regulator, but I know it would be useless. The Bloc is not listening to reason on this.
As we largely already know the Liberals' position based on their long historical support for a national regulator, I want to turn my attention squarely to the NDP. I ask the NDP not to ignore the pleas of those who have advocated a national regulator, such as unions like the Canadian Labour Congress, the National Union of Public and General Employees, and CUPE.
I ask the NDP not to ignore the many past and present NDP members of Parliament, including their former finance critic, Judy Wasylycia-Leis, the incoming mayor of Winnipeg I understand, who advocated a national securities regulator. Indeed, Ms. Wasylycia-Leis once told the Toronto Star that she was convinced of the need for a national securities regulator rather than the piecemeal provincial approach. I ask the NDP to understand that we owe it to Canadians to provide them the best protection possible.
As an August 2009 report from the left-leaning Canadian Centre for Policy Alternatives concluded:
|| The lack of a national securities regulator is a clear “black hole” in Canada's financial regulatory system....The recent moves to bring security regulation under a national regulator should be accelerated....
I note that even the NDP leader recently told the Toronto Board of Trade that he would like to see us moving toward national securities regulation.
I ask the NDP members to oppose this Bloc motion today. Instead, join together with the government and the many voices in Canada that believe we need to get serious about white collar crime and protecting all Canadians by finally moving forward with a Canadian securities regulator.
Mr. Speaker, it is my pleasure to speak on this opposition day motion.
The first part of the motion is a bit of a no-brainer: that the House denounces the government's unrelenting efforts to marginalize the Quebec nation. Indeed, Liberals agree that the has been a failure when it comes to federal-provincial relations and we disagree with the Conservative approach of acting unilaterally to sow divisions in the country. It is a party that governs by division, a party that believes so long as it can retain the support of the 35% of Canadians it needs, it can ignore and marginalize the remaining 65%.
In fact, I would expand the first part of the motion as the Conservatives not only marginalize Quebec, but all Canadians who they feel they do not need to win an election. We hear it all the time. We have heard the voice his disdain for people who attend arts galas. To the Prime Minister, those people are not real Canadians. We have heard the Conservatives attack our hard-working police officers, dismissing them and their views on crime prevention, because Conservatives believe police officers are part of some nefarious cult.
Therefore, yes, I agree with the Bloc motion that the current Conservative government marginalizes not only Quebec, but virtually everyone who they feel they do not need in order to cling to power.
The second part of the motion deals with the issue of securities regulation. As we all know, last month, the referred a draft securities regulation bill to the Supreme Court for its opinion on the constitutionality of the bill.
Some experts believe the regulation of the securities industry falls under the property and civil rights sections of the Constitution; that is to say, under provincial control. Others believe the regulation of securities falls under the federal government's powers to regulate trade. There has been an academic discussion on these issues for decades, and it could go on for decades more.
Technically, the debate began in 1964, when the Royal Commission on Banking and Finance recommended that a single securities regulator be established.
In 1973 the Department of Consumer and Corporate Affairs began a five-year study on the idea of a single securities regulator.
Then, around 1988, federally-regulated banks began to enter the securities market and the debate took on a new form. At the time, it was reported that Pierre Fortier, Quebec's minister of financial institutions, and Tom Hockin, his federal counterpart, were close to a deal on the issue. However, in the end, nothing was accomplished.
The idea of a single regulator appeared again in the mid-1990s, and here we are again debating it still in 2010.
One thing is clear. Today, we have the opportunity to hear the Supreme Court's opinion about the constitutional and jurisdictional issues that have never been answered clearly in the 56 years of this debate. I am happy to report that we only have this opportunity because when the Conservatives announced that they would unilaterally impose a securities commission on the provinces, back in February 2008, the Liberal Party said, no. We said that, first, the matter should be referred to the Supreme Court and that the government should seek the court's opinion on whether the federal government had the constitutional authority to proceed in this way. The Conservatives eventually came to their senses, agreeing with the Liberal Party, and last month they took our advice by referring a draft bill to the Supreme Court for its opinion.
Now that we are roughly a year away from a Supreme Court ruling that would answer the 56-year-old question about a single regulator, we should at least wait to hear what the court has to say. If the Supreme Court agrees with the Bloc's legal opinion on this matter, then Bloc members should be ecstatic. The whole issue would go away after 56 years of on and off debate.
That is why the Liberal Party, after we called for the referral to the Supreme Court, is eager to hear what the court has to say. It is why we cannot vote for this motion that would essentially lead to years of more debate that, for all intents and purposes, is pointless until we hear the opinion of the Supreme Court.
It is here as well that I take issue with the government. While it followed our advice and eventually referred the matter to the Supreme Court, it has acted in such a way that it is assuming the Supreme Court will go in its direction or it is taking a wild gamble with one-third of $1 billion of Canadian taxpayer money. It is spending money lavishly on this project before it knows what the Supreme Court will say.
If the Supreme Court decides against the government, the government will have thrown down the drain more than $300 million of taxpayer money. Why would it spend so lavishly before it even knows what the Supreme Court has to say? I would contend that it should spend more modestly.
Yes, some money is required for consultations and so on, but that does not cost over $300 million. The government is taking a big risk spending Canadian taxpayer money on a project that may never see the light of day, depending on what the Supreme Court says.
Make no mistake, all Canadians want an efficient securities regulation regime that protects their interests. Once the Supreme Court has made its ruling and provided clarity, the Liberal Party will approach this issue with the belief that the best approach is one that protects investors, promotes capital market efficiency and ensures the unique expertise of each region is not lost.
The Liberal Party, as everyone in the chamber knows, has a long track record of financial leadership, of which this regulator issue is one aspect. The stable financial system in Canada, which the Liberals built, has become a model for the world during the economic crisis.
I would note that strong banks have fared Canada well in this past crisis and that a single regulator certainly is not a panacea for stability during a financial crisis. We observed in the U.K. and the U.S., each of which has a single regulator, that their banks required bailouts and did far worse than Canadian banks.
If the stability of the banking system has little to do with a single regulator, to what can we credit the relative stability and success of Canada's banks? The answer is pretty clear. During the 1990s, under a Liberal government, we resisted the fad or trend of the day to move in the direction of deregulation. The U.S. and U.K. moved in that direction. The then Conservatives, Reformers or Canadian Alliance, whatever they were called back then, were pushing the Liberal government also to move in the direction of deregulation. They were pushing the Liberal government to allow Canadian banks to merge.
Mr. Chrétien said no to bank mergers and he said no bank deregulation. He was right and the Conservatives were wrong. I would admit that I was wrong too on one of those points. At that time I worked for the Royal Bank and believed merger was a good idea. However, now that we have seen the fate of Canadian banks versus others in this financial crisis, it is clear to me that, notwithstanding what I might have thought in those earlier days, the Liberal government was right to say no to mergers and to the deregulation of the banking system and the Conservatives in opposition were wrong.
I think we can all agree that the strength of Canada's banks, which has helped us during this financial crisis, is part of the Liberal legacy to the country, a legacy the Conservatives were extremely lucky to inherit and would not have existed had they been in power. They would have allowed mergers, moved in the same direction, as the U.S. and U.K., of bank deregulation and our banks would probably have ended up in no better shape than the banks of the U.K. and the U.S. This is an example of the financial or fiscal stewardship that one can expect from the Liberal government, carried out in the 1990s.
The other dimension of that, which the Conservatives inherited, is the strength of our fiscal situation. As we all know, in the mid-nineties the Liberals inherited a $42 billion Conservative deficit. In a few short years we converted that to surplus. We paid down debt for a decade.
Whereas at the beginning, when Liberals came to power, Canada was the basket case of the G7. The Wall Street Journal said we were on our way to becoming a third world country. By the end of the Liberals' period of government, we had the lowest debt ratio in the G7 countries and a fine record of paying down debt.
That was the other thing, in addition to strong banks, that the Conservatives inherited as a consequence of this Liberal legacy. While it is true that they frittered away their inherited $13 billion surplus to the point where they were in or near deficit before the recession even struck, nevertheless, they were unable to undo the basically good fiscal record, fiscal situation, which they inherited.
The reason I go into these issues is that members of the House can be assured that once the Supreme Court decision comes down, perhaps in a year, that we on the Liberal side, should we be the government at that time, will act in the best interests of what is good for the Canadian financial situation and the Canadian economy, just as we did in the 1990s with respect to ensuring sound regulation of the banks, to not allowing mergers, resulting in strong Canadian banks today.
In terms of fiscally prudent behaviour, which eliminated that big fat Conservative $42 billion deficit, we paid down debt for a decade, left Canada in good stead to deal with the financial crisis which happened a couple of years ago. And in some respects this is ongoing.
Madam Speaker, on behalf of the New Democratic Party, I am pleased to rise here once again in support of the Bloc Québécois motion on the securities regulatory system.
I will be giving much of my speech and making most of my comments in English, which is unusual for me, because it seems to me that for many people in the rest of Canada, it is much easier to follow in English.
It is important for people to understand that this is not a petty federal-provincial squabble. It is not that we are determined to maintain a system in opposition to the federal government. So I will begin in English and I would like to come back to what my hon. Liberal colleague just said, although I have to ask myself the question I often ask myself when the Liberals speak: will they walk the talk? Will their fine words lead to any concrete action?
The Liberal member of Parliament for , who just spoke, called the Conservatives' spending of large sums of public money on this issue imprudent and irresponsible. He is right. One does not spend public money on a crapshoot.
This issue is before the Quebec Court of Appeal right now, which is where the Quebec government referred it. The federal government is saying that it will be referring it to the Supreme Court of Canada. I heard the Conservative chairman of the finance committee, the member for , speak a little bit earlier and he said that the Supreme Court would rule in about a year.
That is not possible. It is absolutely impossible to formulate the reference to the Supreme Court, give appropriate time for the preparing of facta, hear the case and render a decision. It will not take place in a year. That is totally unrealistic. The money that is being spent, to quote the Liberals, imprudently and irresponsibly on this uniform securities regulator, risks being totally wasted.
That is on the pure public policy angle of it. Does it make any sense, therefore, to have this draft bill and to be spending that money? The Bloc motion simply calls for the government to withdraw the draft bill. That is good common sense to the extent that even the Conservatives are admitting, by their reference to the Supreme Court, that it is an open question whether the federal government has jurisdiction in this field. I will give arguments as to why I believe it does not. It follows, therefore, that the very least it should do is stop spending public money on it until that issue is clarified.
I have just said that the New Democratic Party of Canada will be backing this motion because we believe that the essence of the motion is to withdraw the draft bill before the House and we agree with that.
I have only one question for the Liberals. If they indeed feel that the government is spending taxpayer money imprudently and irresponsibly, will they vote for this motion to withdraw the draft bill? Unfortunately, I did not get the slightest indication from the Liberals as to what they will do at the end of the day on this important motion.
In any field of modern life and in a democracy such as ours that is a federation, there will be those who argue that the initial federative pact, in our case one that dates from 1867, contains lacunae. It cannot contemplate all of the realities of today. I will use that as my starting point to say that one of the big mistakes we make in our society is to assume that it is just normal to have a democracy that has been functioning. The American constitution has life, liberty and the pursuit of happiness, but to use the bromide from our own Constitution, we talk about peace, order and good government.
A lot of people make the mistake of believing that 150 years of peace, order and good government have come naturally, that they are a given and that they are to be expected. In fact, if we look at the world and the hundreds of countries in the world, we realize that 150 years of peace, order and good government cannot be taken for granted because it is quite rare on the world stage not to have gone through a revolution, a civil war, an external invasion or an attack of some kind.
That is the good fortune of Canada, but it is not only good fortune. It is because the structure we put in place in 1867 as we created our country took into account certain realities of the partners who were coming together. One of the realities was that the province of Quebec was the only province in the newly formed country that not only had French as its majority language but it also had the French civil law as the basis of its legal system. We often talk about a country that is both bilingual and bicultural, sometimes forgetting that we are also bijuridical.
Certain things that crossed boundaries were spelled out in the founding pact of the federation. At the time, we would talk about railways or telegraphs, but that expanded. The understanding of that federative pact led the Supreme Court to say that telecommunications, which is something that has to cover the whole country, would fall under those general headings. That is how the Constitution evolved and that is good common sense
However, since the beginning, property and civil rights understood, not in its 1960s connotation from the U.S. and in the battle for civil rights, but understood in its 1860s connotation of the civil law that covers the relations between people, the contracts and the property rights, that was left to the provinces.
There are those who would say that we need to follow the American model here, but it should be borne in mind that U.S. states individually guard just as jealously their jurisdiction as do Canadian provinces for very similar reasons. The United States, the most successful democracy in the history of the world, has shown that the institutions laid down, in its case it will be over 225 years that they have functioned effectively, it laid down its institutional rules.
Interestingly, in the United States, the state policing power, which is a key power, determines all aspects of licensure, enforcement and regulation for the professions, as does our federative pact with regard to education. For example, even though the dental, architectural and medical professions have their licensing exams in each of the provinces and could work together in their own associations across Canada, it is the individual provinces that deliver licences just as licensure is a subset of the state policing power in the United States.
Furthermore, in the U.S., criminal law is determined on a state-by-state basis. In Canada, we have always had a uniform Criminal Code for the whole country, a very fundamental difference between the two of us. Application of the criminal law can be either at the federal level or it can be provincially or municipally. The reflex we are dealing with on the Conservative side is a reflex born of a certain conceit that somehow, despite the federative pact, despite 150 years of peace, order and good government based on the original deal, that somehow when problems arise Ottawa just knows best.
Let us look at the facts. The OECD ranks regularly the relative performance of its member countries in important policy areas. In recent years it has rated competition laws and policies, the regulation of the banking industry and the quality of securities regulation and investor protection. Now let us look at banking regulation and the four countries that are covered.
In the U.S.A., U.K., Australia and Canada, banking is and always has been a federal jurisdiction. Canada is ranked eighth for its banking regulations. It is ranked, for example, behind Australia but it is ranked ahead of the U.K. and the U.S. On securities regulation, the OECD says that Canada's extant rules are the second best in the world. We are ranked ahead of the U.S., the U.K. and we are ranked well ahead of Australia. That is not the opinion of the Bloc Québécois, nor the opinion of the New Democratic Party. That is the Organization for Economic Co-operation and Development, an extraordinary group that has produced these objective studies.
How is it that we have come to the stage where the federal government keeps trying to take away jurisdiction that has been with the provinces for 150 years. What is the rationale behind it, other than the prejudice I just spoke about, this feeling that somehow Ottawa knows best? Again, let us look at the facts.
Recently there was a case of an alleged $100 million mortgage fraud in Alberta. The first thing we heard from the RCMP was that it did not have the resources to take on the case. That is an interesting admission. There is something called the Integrated market enforcement team, IMET. It has been a complete failure. That is not our opinion. That is the result of objective outside analysis.
One of the issues that is raised constantly, and I often hear the use it as one of his touchstones, is the Earl Jones case. For people from outside Quebec who might not know the name immediately, Earl Jones was a criminal who is in jail now under the Criminal Code. He was not registered, certified or licensed anywhere. He was a criminal pure and simple, a fraud artist, a con man. In the proper sense, he took people's money based on the confidence that he established with them.
In other words, Earl Jones, a criminal, would have got around any regulatory scheme, be it federal or provincial, because he never registered anywhere. That has not stopped the Conservatives from trying to use that sad case as an illustration of the need for the federal government to invade an area of provincial jurisdiction.
I am an attorney and I have been dealing with corporate and commercial law for most of my career, so I will read an official court document from the Superior Court of Quebec. The case involves Virginia Nelles , one of the many people who were defrauded by Earl Jones and the Royal Bank of Canada. Now, as we all know, the regulation of Canadian banks is the exclusive purview of the federal government.
On November 7, 2001, in an official exhibit filed in court in this case, we learned that the Royal Bank specifically identified the irregular operation of the Earl Jones in trust account in an internal note written by someone from the Royal Bank summarizing the account. It reads as follows:
|| Mr. Jones returned my call. I offered him our ratelink essential package service because his fees are over $150 every month. He is using this account for business purposes as an In Trust account, however, I told him this is not a formal trust account and he could get himself in trouble because this is just a personal account in his name alone, the In Trust does not mean anything in this case.
What the regulatory authorities responsible for regulating Canadian banks did in the case of Earl Jones was nothing. What the Royal Bank did with regard to Earl Jones after that official note in its own file in November 2001 was nothing. What the people who were defrauded to the tune of $50 million by Earl Jones got as a result of that was nothing.
In the most literal sense, the federal government should mind its own business. It should start taking care of its areas of responsibility, something that it does not do. That is the fact of the matter.
I used to be the president of a large regulatory agency in Quebec. I was president for six years of the Office des professions du Québec . I met firsthand this reflex in Ottawa that somehow if they could get enough federal bureaucrats to look at any issue in the country somehow things would be better.
I remember coming to the office one day in Quebec City when I was president of the Office des professions du Québec, which is the large regulatory agency that is responsible for all of the regulated professions in the province, to find out that the gnomes in Tunney's Pasture, which is where the health department hides out, had decided that they would take over the regulation of pharmacies in the province of Quebec, much to our surprise because, as in every other province, pharmacies had always been the object of regulation by the provinces, a subset to education and the regulatory structure I referred to earlier for individual professions that come under the provinces.
Therefore, I called them in and met with them trying to understand what they were up to. They said that the rules for what requires a prescription vary from province to province, such as what can be behind the counter, what can be on the open shelf or what can be behind the counter with a signature, and that they found this to be a bit of problem so they decided they would take over this particular area of jurisdiction. That is interesting because, of course, health is also a provincial jurisdiction.
I remember sitting down with a wonderful man named David Skinner, who was with a group that was then called the Non-prescription Drug Manufacturers Association of Canada. I remember saying to him that this was not on.
The French word for jurisdiction is “compétence”, and it has the double meaning of jurisdiction and the ability to do something.
I went to one of the meetings of this group in Toronto, after I had met with Mr. Skinner. I said that it was not going to be allowed to invade an area of exclusive provincial jurisdiction just because some civil servants in Tunney's Pasture woke up one morning and decided that they were going to do that. Of course, we did not allow them to do it. We were able to block them. They had organized a big colloquium on this in Toronto. It was absurd to see lots of taxpayers' dollars being spent on this futile effort.
This did not stop the provinces from talking to each other. I remember that a network was established among the provinces for matters of professional regulation. We were working together to find the result, because it was their exclusive area of jurisdiction.
How did Canada wind up being evaluated by the OECD as having the second best regulatory structure in the world for securities regulation? It is because we put together a regime that allows the provinces to create a passport system, which has been producing results.
People in the rest of Canada might not know the name Norbourg. Norbourg was the name of a company owned by another fraud artist, named Vincent Lacroix. Lacroix was behind bars serving an eight-year sentence after prosecution by the Autorité des marchés financiers in Quebec, the financial markets regulatory authority in the province, before the first federal criminal prosecution even began.
The provinces have no lessons to receive from the federal government with regard to the regulation of financial markets. It has worked. The provinces have done their jobs. The federal government has not done its job. It is astounding to hear the federal government simply affirm that we should just allow the federal government to move into an area of exclusive provincial jurisdiction and that it is something that would be better for the country. It is wrong. We know that it is wrong.
Interestingly enough, some newspapers have tried to say that Mark Carney, the Governor of the Bank of Canada, is somehow in favour of the federal government moving into this sphere. I would like to read what Mark Carney says. I have had the pleasure of meeting him quite often. I have never heard Mark Carney come out four-square in favour of what the federal government is trying to do. I have heard him talk about the importance of having a regime that produces results. That is what we have.
Some journalists interpret Mr. Carney's remarks as an affirmation that he is in favour of the federal government imposing itself in this area. I have never heard Mr. Carney say any such thing. I defy them to prove to me, in Mr. Carney's own words, that he has ever given his support to this scheme. He has always talked about the need for a regime that works, and that is what we have.
The passport system works. There has never been a problem with it. As the old saying goes, “if it ain't broke, don't fix it”, but that is not going to stop the federal government from continuing to try to destabilize the confederation, to break the federative pact, and to go after the provinces.
If it were only the province of Quebec that was screaming bloody murder in this case, one could imagine how easy it would be for the Conservatives and the rest of Canada. However, two other major provinces are onside with Quebec. We are getting an interesting vibration from British Columbia, which seems to be about to say the same thing. The two other provinces that are saying the same thing are Manitoba and the own home province of Alberta. We will see--
Madam Speaker, I will be sharing my time with the member for .
This morning, my colleague from , with whom I have the pleasure of sitting on the Standing Committee on Finance, moved the following motion:
|| That this House denounce the government’s unrelenting efforts to marginalize the Quebec nation, in particular by depriving it of the major economic lever of securities regulation, a matter that is under the exclusive legislative jurisdiction of Quebec and the provinces and for which they have established a harmonized regulatory system recognized for its effectiveness by the OECD and the World Bank, among others, and that it demand, along with Quebec’s National Assembly and the business community in Quebec, that the government immediately withdraw its draft bill.
The elected members of this House must have their say on this issue, because as we know, on May 26, 2010 the Conservative government introduced proposed legislation that would create a Canadian securities commission. The Bloc Québécois is strongly opposed to this attempt by the federal government to interfere in Quebec's jurisdictions. Under the Constitution, Quebec and the provinces have exclusive jurisdiction over securities regulation. The federal government's proposed Canada-wide securities commission ignores the fact that Quebec has responsibility for property and civil rights.
In addition, the current passport system works. With this system, a company that registers in one participating province can do business with people in all the other participating provinces.
This Canada-wide commission will strip Quebec of a very important economic tool. Major decisions will be made outside Quebec. As everyone knows, the Autorité des marchés financiers, Quebec's securities regulator, has a knowledge of Quebec's distinct nature and needs that a single commission in Toronto will not have. Jobs in the financial sector are threatened. This is a key sector of Quebec's economy that accounts for 155,000 direct jobs. In all, 300,000 jobs in Quebec are connected with the financial sector, which gives an idea of the impact of creating a Canada-wide commission.
With their proposed Canada-wide commission, the Conservatives are trying to do Montreal out of what it has for Toronto's benefit and are encroaching on Quebec's jurisdictions. For these reasons, the National Assembly and the business community in Quebec reject the proposal.
Voluntary membership is a ploy. By destroying the passport system and counting on conflicts among the regulatory bodies, the Conservative government is creating a reason for issuing organizations to turn to the national commission. Contrary to what the Conservative government is saying, the existence of such a commission would not have prevented investors from being fleeced by white-collar criminals such as Earl Jones. He was a criminal who was not registered anywhere. In Montreal or in Toronto, he would have committed his crimes the same way. It is up to the RCMP to hunt down criminals. Similarly, the existence of a single commission in the United States did not prevent Bernard Madoff from defrauding investors of over $50 billion.
It is obvious that this commission will also be detrimental to the use of French in business. It is unlikely that companies registered with the single national commission, whether or not they are from Quebec, will be required to publish in English and French.
The Bloc Québécois reiterates its opposition to the creation of a national securities commission. The Bloc Québécois supports the current harmonization of the rules governing the financial system. The passport mechanism maintains the autonomy and jurisdictions of Quebec and the provinces. This mechanism has existed since 2008 and is also used in the European Union.
Creating a national securities commission goes against the wishes of the National Assembly, which unanimously adopted a motion in that regard on May 27, the day after the introduction of the Conservative government's draft legislation to create a national securities regulator:
|| That the National Assembly denounce the obstinacy of the federal government in tabling unilaterally a bill to create the Canadian Securities Commission; that it denounce this invasion into the fundamental jurisdictions of Quebec; that it recall the opposition of the Quebec business community; that, finally, it urge the Canadian government to reconsider this decision and, failing that, the Canadian Parliament not to pass such an act.
The Bloc Québécois position also acknowledges the growing concern of the business community with regard to the Canada-wide commission. The president of the Fédération des chambres de commerce du Québec, Françoise Bertrand, said:
|| In addition to potential job losses resulting from this project, we are also concerned about a significant transfer of decision-making positions and expertise out of Quebec. Montreal, as a financial centre, and Quebec will be weakened.
A coalition of representatives from Quebec's business community is opposed to a national securities commission
Here are just a few of them: the Québec Mineral Exploration Association, the Québec Bar, the Caisse de dépôt et placement du Québec, Cascades, the Board of Trade of Metropolitan Montreal, the Quebec City chamber of commerce, the Chambre des notaires du Québec, the Chambre de la sécurité financière, the Conseil du patronat du Québec, the Fédération des Chambres de commerce du Québec, the Power Financial Corporation, the Solidarity Fund QFL and Le Groupe Jean Coutu. I will not go on because the list is too long. The entire business sector is opposed to a centralized securities regulator.
I would now like to read a Government of Quebec news release dated May 13, 2010. I think this is important because it sums up the Government of Quebec's official position and is not subject to interpretation.
|| Quebec's Minister of Finance, Raymond Bachand, condemned statements by a number of Conservative government ministers and members who are using weak, questionable arguments in an effort to sell their proposal for a centralized securities commission and denigrate the perfectly functional existing system.
|| The minister pointed out that, in Canada, securities regulation falls under the constitutional jurisdiction of the provinces and territories. The minister emphasized the fact that, “The OECD has ranked Canada second in the world [as previously mentioned] with respect to the quality of its securities regulation, while the World Bank has ranked it fifth for investor protection, placing it ahead of the United States”. He added, “Given these international organizations' approval of Canada's financial system, it is clear that the provinces are fulfilling their responsibilities under their constitutional jurisdiction. Provincial commissions, which are in touch with consumers and work with their counterparts, provide the best possible protection to consumers in Quebec and the other provinces”.
|| The minister noted that the federal government has structured its disinformation campaign around a document filled with unfounded hypotheses. The government is falsely suggesting that Canada's current system increases the cost of raising capital, claiming that this leads to major financial losses and a negative impact on employment in the sector. Mr. Bachand emphasized that several analyses show that costs in Canada are equal to or even lower than those in the United States.
In conclusion, Minister Bachand said:
|| I am appealing to the sense of responsibility of the federal Conservative government's ministers and members, whose negative and irresponsible comments about this matter have created instability and tarnished Canada's reputation for securities regulation.
I ask the members of the House to support this motion if recognizing the Quebec nation means anything at all to them.
Madam Speaker, thank you for this opportunity to speak on our opposition day, on a topic that gets a lot of coverage in the newspapers. Members will understand that it is very important for the Bloc Québécois to have a debate on the importance of respecting Quebec's jurisdiction over securities.
By moving forward with a Canada-wide securities commission, the federal government is going after Quebec's economic leaders. The Bloc Québécois sees this as a veritable attack on the Quebec nation and its institutions. The commission favours the Toronto Stock Exchange at the expense of the Montreal Exchange.
Since it was elected in 2006, the Conservative government has been paving the way for the creation of a Canada-wide securities commission. By claiming that a company will be able to operate under the Quebec securities commission if it chooses to, and by saying that it will prevent Vincent Lacroix and Earl Jones from victimizing more people, the Conservative members are distorting the debate and using false and twisted logic to justify their decision.
Such a commission would not have changed anything for the victims of Earl Jones, and the government knows that full well. The federal government currently has complete authority to protect investors under the Criminal Code. These are false pretexts.
Worse yet, by introducing such a bill, the Conservative government, through the , is ignoring the protests from across Quebec and rejecting the opinions of organizations like the World Bank and the OECD, which believe that the current system is inexpensive and very efficient.
I would like to quote from an analysis by Yvan Allaire and Michel Nadeau that appeared in Le Devoir on January 30, 2009. They were talking about an important aspect of creating a national securities commission.
|| We can understand why the Minister of Finance wants to spend to stimulate Canada's economy, but spending $154 million to create a national commission puts the lie to the argument that having a single securities commission would save money.
|| However, $154 million will seem like nothing if all the companies regulated by a federal, national agency are required to communicate with Canadian investors in both official languages.
|| How could anyone justify preventing a francophone investor anywhere in Canada from receiving a French version of all annual reports and other financial documents issued by a publicly traded, federally regulated company? Canadians who eat cereal for breakfast are informed in both official languages of the contents of their cereal box, no matter where they live. So why would it be any different when it comes to a national organization that is supposed to ensure Canadian investors are adequately informed in their official language?
|| Let us look at a concrete example. In the spring of 2008, Visa Inc. became a publicly listed company in Canada. To avoid the costs and time involved in translating the prospectus that was required...Visa decided not to distribute and sell its shares to Quebec investors. How would that be possible with a national commission? How could a federal agency endorse a scenario that would deprive francophone investors outside Quebec as well as in Quebec of information in French?
|| At this time, even among the 253 largest listed companies in Canada, the companies making up the TSX/S&P Index, only 81 (37%) publish their annual report in French as well as in English. And only 60% actually provide a French version of the all-important management information circular, the proxy document that provides information on executive compensation, on board members proposed for election as well as on any special resolution submitted to a vote at the shareholders' meeting.
|| A greater number of the thousands of small and medium-sized companies listed in Canada would have to pay the significant cost of translating all their documents provided to investors. Proponents of a national securities commission must answer this question before continuing much further with this controversial plan.
|| Maintaining the current situation, which is satisfactory for everyone outside Toronto and Ottawa, would save $154 million and spare Canadian companies, which have other priorities, tens of millions of dollars in translation costs.
Mr. Allaire and Mr. Nadeau make an important point and I would like to use my speech to ensure that members of the House of Commons are well aware of this problem.
The Bloc Québécois has chosen this topic for its opposition day because it is an important issue. Securities regulation is an exclusive constitutional jurisdiction of Quebec and the provinces. The federal proposal for a national commission does not respect Quebec's responsibility for property and civil rights.
In reality, authority over securities is given to the provinces by virtue of their jurisdiction over “property and civil rights” under subsection 92(13) of the Constitution Act, 1867.
I will provide a short summary of five reasons why we oppose a national securities commission.
First of all, this Canada-wide commission would divest Quebec of a very important economic tool. All major decisions would be made outside of Quebec. The Autorité des marchés financiers du Québec is sensitive to Quebec's needs, and this would not be the case with a Canada-wide commission.
Furthermore, it would jeopardize thousands of jobs in a key sector of the Quebec economy, which consists of 150,000 direct jobs in the financial sector. All together, 300,000 jobs in Quebec are linked to the financial sector. Although we do not know exactly how many jobs would be affected, it would have a definite impact.
Third, by going ahead with this, the Conservative government is sending a clear message to Quebec, taking this away from Montreal for Toronto's benefit, and infringing on Quebec’s jurisdictions. That is why the National Assembly and Quebec's business community so strongly oppose this plan.
The Minister of Finance can pretend otherwise all he wants, but voluntary membership is a sham. By destroying the passport system and counting on conflicts among the regulatory bodies, the Conservative government is creating a magnet to encourage companies to turn to the Canada-wide commission.
Lastly, contrary to what the Conservative government is saying, the existence of such a commission would not have stopped white-collar criminals like Earl Jones from fleecing investors. Earl Jones is a criminal who was not registered anywhere. Whether in Montreal or Toronto, he would have committed his crimes all the same.
The National Assembly passed a unanimous motion claiming exclusive jurisdiction over this matter. At this time, there is a general outcry among all economic players in Quebec to oppose the federal government's plans. Worse yet, federal Liberal members from Quebec, like their Conservative colleagues from Quebec, support the creation of this single securities commission.
I will close by saying that we in the Bloc Québécois strongly oppose this bill.
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.