Anti-fed paranoia over securities proposal out of step with the times

By Doug Firby Alberta Columnist Troy Media Corporation Though they are both western provinces – and therefore naturally suspicious of Ottawa - left-leaning Manitoba and the right-flankingAlberta are rarely seen to be in alignment over major policy issues.

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But the report of an expert federal panel calling for the establishment of a long-overdue national securities regulator has created a curious threesome: with those two provinces cuddling up to Confederation's bad boy – Quebec – to express anger and indignation with the very idea of a single regulator. “This report is out of date,” fumed Manitoba Premier Gary Doer. “Securities regulation is a provincial responsibility, and this would be an intrusion into an area of provincial jurisdiction,” chimed in Alberta's Finance Minister Iris Evans, the steel-willed bad cop to milquetoast Premier Ed Stelmach. Lawsuits were threatened, as were fights to the finish. Yet, it's hard to imagine a lot of ordinary citizens working themselves into a lather over this putative federal power-grab. Certainly, the opposition comes across more as “parochial” (to quote one columnist) and paranoid than motivated by reason. In Alberta's case, it's yet another symptom of the anti-Ottawa bias with roots reaching back to the early-20th century federal-provincial skirmishes over ownership of resources. In a nutshell, Alberta sees the move as a potential power-grab from Central Canada, which would effectively shift the province's ability to raise capital to the financial heart of Canada: Toronto. Looking back two decades to a time when energy companies really did have trouble raising money, Alberta argues the ability to find financing will be compromised if there is no longer a provincial regulator. The argument is largely without substance, and gets even weaker upon close examination of the report by the 11-member panel, chaired by Tom Hockin, a former cabinet minister of the Brian Mulroney government. The panel argues it's gone out of its way to address the regional concerns in Alberta and British Columbia. Rather than having a bureaucracy based in Toronto or Ottawa, provinces are invited to be equal players in the building of a decentralized system. With its stunning growth in the past two decades as a financial centre, Calgary is almost certainly destined to be a major operations centre for the agency. The other compelling argument for the single regulator is the disgraceful state of Canada's regulatory system. Unlike 109 countries belonging to the International Organization of Securities Commissions, Canada has more than one point of contact. In fact, a lot more than one: Instead, it has a patchwork of 13 provincial and territorial watchdogs – each with regulations just different enough that major funds have to be registered in every jurisdiction. The redundancy adds bureaucracy and costs that are a constant annoyance to investors. Though the regional jurisdictions point out that these regulators are generally considered to hold high standards, many investors have not forgotten past fiascos, like the spectacular BreX gold scam of the late 1990s. That fraud, the largest in Canadian history, ruined lives and gaveAlberta's investment climate a permanent black eye -- the wild west with a bitter twist. Of course, federal Finance Minister Jim Flaherty makes another compelling point for regulatory reform. At a time when markets are melting down and investor confidence is at historic lows, any move to a more professional looking oversight body can only help. Calmer minds might be able to take a broader view, but Alberta,Manitoba and Quebec are expected to stick to their guns. Jointly, they have proposed a “passport system” that would maintain the provincial and territorial securities commissions, but reduce the paperwork that companies face across jurisdictions. This Band Aid approach feels a bit like tinkering with a Hummer, and pronouncing it as thrifty as a Prius. Don't count on common sense any time soon. Said Alberta's Evans: “Alberta remains steadfastly opposed to a single federal regulator.” Quebec, too, is unlikely to back down as long as it has the opportunity to exploit a good old federal/provincial dustup for ulterior motives. If there is a “weak” link in this trio, it might be the more pragmaticManitoba. No doubt, Flaherty will be playing let's-make-a-deal over the coming weeks to soften the opposition. Alberta's Stelmach would do well to look for a path of graceful retreat. With so little evidence to support the anti-Ottawa suspicion – at least over this move - Canada's cowboy government may find that no matter how much it beats this horse, it's not going to reach the finish line. Doug Firby, former editorial pages editor of the Calgary Herald, is Alberta columnist for Troy Media Corporation.

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