In announcing its intention to ask the Supreme Court of Canada to assess the constitutionality of a planned national securities regulator, the federal government risks inflaming an already smoldering battle with Quebec.
The move could essentially supersede Quebec’s own case against the scheme in the provincial Court of Appeal, which could refuse to hear the matter in favour of its more senior counterparts.
If Ottawa wins, Premier Jean Charest would then likely find himself under pressure from critics fearing a loss of provincial autonomy, a scenario that could inflame nationalist tensions.
Nevertheless, the federal government’s bid to move forward with a single regulator is wise. The benefits of doing so, of course, are well known. Chief among them is the end of the current patchwork of provincial bodies that makes it challenging to properly enforce market rules.
The system is also inefficient and an anomaly in a world where most other countries have a national regulator, proponents of change argue.
Besides, Ottawa has a good case that it has the constitutional authority to assert jurisdiction over securities under its trade and commerce power.
At the same time, Finance Minister Jim Flaherty has repeatedly emphasized that the federal government’s intervention will be voluntary. As a result, reluctant provinces, which besides Quebec
include Alberta and Manitoba, will be able to opt out of the national regulation scheme and continue to operate their own bodies.
Quebec has a legitimate worry that despite those reassurances, the advent of a federal scheme will eventually force it to concede jurisdiction to Ottawa. Still, after years of debate, it’s time for the federal government to make a move.
Flaherty has already done so by establishing a transition office under former British Columbia Securities Commission chairman Doug Hyndman to lay the groundwork for its planned regulator.
Now, by seeking the opinion of the country’s top court, the government has acted prudently to minimize the roadblocks it will face.
Should the Supreme Court back the scheme, Ottawa will find itself on more solid ground in launching the new body and thereby blunt the inevitable fallout.
Flaherty and his colleagues, then, deserve credit for showing determination on an issue that has been calling out for bold action. With a court opinion, at least the country won’t face the added burden of ongoing legal wrangling.
Given our history, Quebec’s objections are largely inevitable. Still, with Ottawa’s reassurances and its promises that a new body will be sensitive to regional economies, hopefully our governments can reach a national solution that works better than the current system.
- Glenn Kauth
