Statement made on 17 June 2010 by Senator Céline Hervieux-Payette
Hon. Céline Hervieux-Payette:
Honourable senators, I would like to briefly come back to the recommendations made by the Standing Senate Committee on Banking, Trade and Commerce in 2006 — I was a member of that committee then and I still am — concerning a national securities regulator. A report from this Senate committee clearly states on page 88 that:
. . .oversight of securities markets is the responsibility of the provinces/territories, and each province/territory has its own securities commission or administrator that regulates the securities industry. . .
This report is very clear about consumer protection in the financial services sector. The committee would encourage the federal government to be a leader for the provinces and territories but not interfere in provincial jurisdictions and to be a leader in inviting the provinces and territories as well as the securities commissions to choose how to improve regulations in Canada.
As well, in this same report, the Investment Dealers Association of Canada stated that there were two ways of improving regulations in Canada. The first is the current system — but more harmonized — which has happened, thanks to the passport system that is currently in place in Canada and which has been improved, allowing business registration requirements and exceptions to be simplified and harmonized, or a national system that recognizes regional markets. I would like to emphasize the word "recognize."
We all know now that it was the passport system that managed to harmonize the Canadian markets for issuers here and abroad. As for the second option, we know that efforts are being made, by the Minister of Finance in particular, to come to a consensus with all of the provinces but they, quite legitimately, did not want it to happen this way.
While the Prime Minister and the Minister of Finance are proclaiming that the banking system works very well and even that it is a model, the same Prime Minister and Minister of Finance are calling for a national securities commission, apparently to improve that system, without proposing any alternatives.
The Conservatives' proposal makes even less sense in light of the fact that, in his most recent budget, the Minister of Finance, Mr. Flaherty, stated that Canada's existing financial regulatory regime was a model to other countries. That was quoted in La Presse on May 17, 2010.
I should point out that the national regulators in the United Kingdom and the United States did not see the crisis coming even though it originated in those countries and dragged us down with it.
A single securities commission in Canada would not have seen the crisis coming either. It would not have been any more able to do anything to ensure that existing federal institutions worked properly. In fact, according to an article by Gilbert Lavoie in Le Soleil:
The Governor of the Bank of Canada and the Deputy Minister of Finance are members of a committee of the Office of the Superintendent of Financial Institutions of Canada. The committee, whose mandate is to oversee financial institutions, did not see the commercial paper crisis coming, a crisis that is still affecting several federal agencies, including the Canada Mortgage and Housing Corporation and Canada Post, which bought commercial paper.
Now we know that those investments were very poor, if not entirely fraudulent.
Minister Flaherty uses the example of Earl Jones, of Quebec, as a pretext to demonstrate the necessity of a national securities regulator. He voluntarily or involuntarily forgets to tell the Canadian population that Mr. Jones was not registered with the Autorité des Marchés Financiers. Thus, under these conditions, a national commission would have changed nothing.
I understand more than ever that the Conservative government is ready to use false pretexts and arguments to persuade us of the necessity of its centralist policy. Besides being ineffective, this policy would be useless and would serve only the interests of one province, Ontario, which might represent an electoral potential for the Harper government, but has nothing to do with the greater protection for investors. The true nature of the Prime Minister's open federalism has been revealed, or perhaps endangered.
I would like to add that this week the Premiers of Quebec and Alberta said that they would rather add more police, RCMP and experts to go after white collar criminals than intrude into provincial jurisdiction.