The House resumed consideration of the motion.
Mr. Serge Cardin (Sherbrooke, BQ):
Mr. Speaker, I would like to mention that my colleague, the member for Longueuil—Pierre-Boucher, will be sharing his time with me, or the other way around, whichever you prefer.
Once upon a time in Quebec City, in December 2005, a pretender to the throne, in an effort to please, promised to practice open federalism and respect Quebec's jurisdictions. A little later on, he recognized in this House the existence of the Quebec nation, but within a united Canada. I should say rather that he recognized a subjugated Quebec within an integrated Canada. That was his plan. With his budget and his throne speech he proved that he wanted to unilaterally fiddle with the equalization formula and impose a national securities commission.
Equalization, as a number of dictionaries clearly set out, is the distribution of a portion of the federal government's revenues in order to reduce inequalities among the provinces. For nearly 40 years, various governments in office have tried to play with the equalization formula. Major changes have been made by the government, without warning, without consultation, and, especially, without relevant information at the time the government should have given it. It has been known for the past few months that Quebec will be out of pocket some $991 million next year. This flies in the face of the definition of equalization. It is a system of redistribution based on a province's capacity to generate tax revenues. The provinces too have responsibilities and must provide services.
The lawmaker's intention was clearly that people in each of the provinces receive comparable services, regardless of the province's capacity to generate revenues. From the taxes it gathered, the government was to provide various provinces with an amount that would equalize the revenues of the provinces. History has shown us that, one day a province is entitled to it and another day, not, and one day it is no longer entitled to it because of its revenues and its capacity to generate them.
Governments have fiddled with the equalization formula and eliminated 100% of natural resources, including oil, from the formula and then, at other times, eliminated only 50%. In the budget put before us, the consequences for Newfoundland and Labrador could have been significant, and we saw Liberal members rise to oppose this provision. In doing so, they voted against their party but not against their province. They were working for it.
There are 14 Liberal members from Quebec. They have not dared to do the same thing; to stand in this House and confirm their desire to serve the interests of Quebec. There are also 10 Conservative members from, Quebec. They, too, have not been able to rise and affirm that they are working first for the Quebec nation and not for the Canadian nation.
An example of how they are always fiddling with equalization is the difference between Hydro One and Hydro-Québec, as a result of which Quebec, once again, will lose part of its equalization payments.
Of course the government wants to establish principles that are predictable and long term. How can there be long-term predictability when equalization takes place in today’s economic context? The variations in each province’s ability to find and produce revenue could be wildly different from one year to the next. To plan and especially to freeze a formula for a number of years goes against the very principle of equalization.
We have heard several members blithely say that Quebec is a spoiled child. In terms of money, it is true that Quebec receives several billion dollars and that its share is probably the largest. However, in terms of services to the public, we need to consider the population figures. In the 2008-09 budget, Quebec receives only $1,037 per capita while Prince Edward Island receives $2,300, New Brunswick $2,011, Newfoundland $1,781, Manitoba $1732, and Nova Scotia $1,679.
That is why I spoke earlier of the 10 Conservative members and the 14 Liberal members from Quebec, who are ignoring the concerns of that province, especially the unanimous voice of the National Assembly and its 125 members. That is something. We call on those members from Quebec to confirm that they are here to represent the values, and above all, the interests of Quebec.
The second part concerns the government’s desire to create a national securities commission. Everyone knows that this falls under Quebec’s jurisdiction. Once again, the National Assembly is unanimous on this question, but we the Quebec members here in this House are not all on side. And that is unacceptable. The Liberals and the Conservatives do not dare defend the Quebec nation, preferring to defend the interests of the Canadian nation.
When this securities commission is described as national, how many nations are we talking about? This House has stated that Quebec is a nation. It has different interests and values. For those reasons, the Quebec securities commission must be maintained.
Therefore, as I said earlier, this goes against the unanimous will of the National Assembly. The federal government has centralizing visions, always in agreement with the nation building principle. Day after day, there is a federal will to build the Canadian nation to the detriment of the tools and jurisdictions of Quebec. Slowly, indeed insidiously, the federal government tries to make them disappear.
As far as securities are concerned, the government has been coming back with the same idea and making attempts for almost 40 years. Yet, section 92.13 of the Constitution Act, 1867 clearly indicates that this is part of Quebec's jurisdictions. Now, the Conservative Party and its government have decided not to bother with the Constitution, and the Liberals obviously are in favour of the establishment of this Canada-wide securities commission.
Meanwhile—I have said it and I will say it again—all of Quebec political parties are against it.
There is currently a passport system which is very effective. All provinces, except Ontario, are part of the harmonization project.
When the government is not speaking for western interests, that is for oil companies, the Liberal Party is speaking for its friends on Bay Street.
These are two unacceptable elements for Quebec. In fact, a majority of the members of the National Assembly of Quebec have stated that. Thus, all members from Quebec in this House should vote against the equalization system and against the creation of a single Canadian securities commission.
Mr. Jean Dorion (Longueuil—Pierre-Boucher, BQ):
Mr. Speaker, the hon. member for Saint-Maurice—Champlain is asking the government to drop the idea of unilaterally amending the equalization formula, and I fully support his motion.
Indeed, in the 2007 budget, the Conservative government boasted about restoring fiscal balance by, among other measures, reaching an agreement on the equalization formula. That is confirmed in this excerpt taken from an annex to the budget:
|| Budget 2007 puts in place a renewed and strengthened Equalization program, legislated through 2013-14 to provide long-term predictability for provinces.
Let me repeat it again: “...to provide long-term predictability for provinces.”
In its 2009 budget, in the midst of a global economic crisis that is also affecting Quebec, the federal government is going back on its word and imposes a limit on transfers, thus depriving Quebec of about $1 billion, compared to what was anticipated.
At the same time, the Conservative government is providing $1 billion for the establishment of a new southern Ontario development agency. This is in addition to the $2.7 billion given to the auto industry, which is primarily based in Ontario, while Quebec's manufacturing and forestry sectors are only getting a few million dollars.
Yet, Quebec is hard hit by the economic crisis. The federal government's laisser-faire attitude in recent years regarding the needs of the manufacturing sector only adds to the problems generated by the crisis.
Then there is the unilateral amendment to the equalization formula. This change is a step backwards. Quebec and the provinces will lose hard won gains that had been made regarding the fiscal imbalance.
Moreover, in the middle of the holiday period, the government published in the Canada Gazette changes affecting the status of Hydro One revenues, Ontario's hydro company, in the equalization calculations, thus favouring Ontario. Indeed, from now on, the federal government will consider Hydro One's revenues as business revenues rather than natural resource revenues.
Why is Hydro-Québec not being treated like Hydro One? Two thirds of Hydro-Québec's revenues come from its transportation and distribution activities, while one third comes from electricity production.
By refusing to give Hydro-Québec's distribution and transportation revenues the same treatment that it granted to Hydro One, the Conservative government is cheating Quebec out of an additional $250 million in annual revenues. The Conservative government is once again using a double standard when dealing with Quebec and Ontario.
We are in a time of crisis, and it is the government's duty to act. Two weeks ago, Pratt & Whitney, which is headquartered in my riding, announced that it would be forced to lay off a thousand workers at plants around the world. It goes without saying that several hundred Quebec workers will be affected by these job losses.
Over half of those who lose their jobs are not eligible for employment insurance. Those who are eligible have to suffer through a two-week waiting period before they can collect benefits. The Conservative government has abandoned Quebec and those of its workers affected by the crisis.
The Conservative government has thumbed its nose at Kyoto, has refused to set absolute greenhouse gas reduction targets, and has set 2006 as the base year instead of 1990, despite the demands of environmental groups. In so doing, it has deprived Quebec of the tools it needs to renew its economy. Kyoto would be lucrative for Quebec.
According to Canada's greenhouse gas inventory, Canada's emissions rose by 21.8% between 1990 and 2006. That pathetic record would be even worse without Quebec's 1.2% reduction in greenhouse gas emissions over that period, during which Alberta raised its emissions by 36%, and Saskatchewan by 63%.
Quebec's manufacturing sector alone reduced its greenhouse gas emissions by 24% between 1990 and 2006. That is four times the target set by the Kyoto protocol, achieved six years before the deadline.
Just imagine if Quebec could participate in an emissions credits exchange, a carbon exchange located in Montreal. Companies exploiting the oil sands in Alberta could buy emissions credits from Quebec manufacturing companies, thereby doing their part in the fight against climate change undertaken by industrialized nations in 1997 when the Kyoto protocol was signed.
The Conservatives must not use the economic crisis as an excuse for their laissez-faire approach to the environment. Instead, we should see the crisis as an opportunity to make the green shift that will renew our economy. The federal government should get to work and take a more serious look at the proposals the Bloc Québécois submitted last fall.
This government claims to have recognized the Quebec nation, but the truth is that it has chosen to stifle our economy and shamelessly encroach on areas under Quebec's jurisdiction.
That takes me to another part of my colleague’s motion and the creation of a single securities commission. The establishment of a Canada-wide securities commission would create a regulatory monopoly and a dangerous situation in view of the elevated concentration of the industry in question. Canada would lose the advantages of the competitive regulatory system we have now.
There are not many arguments in favour of this new commission being able to reduce the direct costs. The Australian example even seems to show the opposite. On the other hand, a system based on harmonization and mutual recognition by the various commissions of what is called the passport has advantages that led the European community to opt for this method of regulating securities.
The passport system works very well. It provides for a coordinated approach to the enforcement of the legislation and uniform protection of investors. In addition, the current system has enabled each securities commission to develop its own particular approach and areas of expertise, allowing for differing but complementary views on how the rules are being complied with.
The system could be made more effective, however, if Ontario decided to stop trying to go it alone and joined the harmonization efforts of Quebec and the provinces. This system of differing but complementary standpoints helps us to detect and prevent scandals like the ones in the United States, which has had a central authority for the last few years. These scandals have resulted in social costs that are much more serious than anything we have experienced.
The Quebec National Assembly expressed its unanimous opposition to the federal government’s plans to create a Canada-wide commission. The National Assembly passed a unanimous motion to this effect on October 16, 2007: “That the National Assembly ask the federal government to renounce its plans for a Canada-wide securities commission”.
Authority over securities was conferred on the provinces by virtue of their jurisdiction over property and civil rights under section 92.13 of the Constitution Act, 1867. The Conservatives are prepared to infringe on Quebec’s jurisdictions in order to advance their plans for a single Canada-wide securities commission. The federal Liberals are in favour of this commission. That is unacceptable to Quebec. The government prides itself on its open federalism and claims to have recognized the Quebec nation, but everything it does weakens Quebec, with the help of the Liberals. The creation of a single securities commission and the levelling out of equalization to the detriment of Quebec are only two new examples of this, even though Quebec has been hard hit.
Recognizing the Quebec nation means showing respect for its economic and social jurisdictions and its language, culture, history and institutions, as well as the unanimous demands of its National Assembly. The federalist parties are on their knees in Ottawa and only the Bloc Québécois stands up for Quebec.
Hon. Maxime Bernier (Beauce, CPC):
Mr. Speaker, I wish to inform you that I will be sharing my time with the hon. member for Burlington.
The hon. member is opposed, among other things, to our government wanting to unilaterally amend the equalization formula. He says this is because it would be incompatible with the commitment made by the Prime Minister to the Government of Quebec that “transfers to the provinces would be predictable and long term”.
The Government of Canada has amended the equalization formula precisely—and I want to be clear about this—so that these transfers to the provinces may be predictable and long term. I would add that these changes to the equalization formula in no way reduce the transfers, contrary to what some opposition members have tried to say. The equalization payments and all Quebec transfers are at historical peaks and will continue to rise. In 2009-10, Quebec will receive more than $8.3 billion in equalization, a leap of over 70% from what it was in 2005-06, when we came to power. Indeed, the changes we have made only guarantee the sustainable growth of the program, in step with the expansion of the economy.
Out of a concern for fairness, we have taken this opportunity to introduce a floor, so as to avoid a contraction of the overall size of the program, and we have offered transitional protection to the recipient provinces.
It is not clear to me how the hon. member defines the word “sustainable”, but I suspect that his definition differs somewhat from mine. The fact remains that the equalization program has increased from $8.7 billion in 2003-04, under the previous Liberal government, to $14.2 billion in 2009-10, when we implemented the recommendations of Mr. O'Brien’s independent panel of experts. If nothing had been done, the costs of equalization would have risen by over $26 billion over the next five years.
Everyone knows as I do that this pace of growth is not sustainable, and the government would have had much more difficulty avoiding a long-term structural deficit. Like the Government of Canada, the provinces are aware of the consequences of unsustainable program expansion, and I can assure you that “predictable and long-term” funding is not on the list.
Anyone who witnessed the budget cuts of the previous Liberal government in the mid-1990s will say that, at the time, federal appropriations for the provinces were certainly not predictable, long term and on the rise. That is no doubt why, when the details of these changes were released to the provincial and territorial finance ministers last November, Minister Jérôme-Forget of Quebec described them at the ensuing press conference as “reasonable”, particularly in the circumstances facing all governments due to the current Canadian and worldwide recession.
Not only are these changes reasonable, they are also consistent with the recommendations of the O'Brien expert panel, which declares on page 43 of its equalization report:
|| The Equalization program must be affordable and sustainable over time. The federal government is responsible for determining how much it will spend to achieve the goals of the Equalization program.
Clearly, the O'Brien report recognizes that the financial sustainability of equalization is the responsibility of the Government of Canada. But contrary to what this motion would have us believe, this does not mean that we have acted without informing the provinces and keeping them abreast of the consequences of these changes. As I have said, all the provinces were informed of these changes at the meeting of finance ministers last November 3. They even had the benefit of exceptional advance notice of their equalization entitlement for 2009-10 so that their budget planning would be solidly based. A news release describing these changes was issued on the same day.
All the details of these changes were also sent on November 13 to the provincial civil servants responsible for the technical aspects of the program. In addition, the economic and financial statement of November 27 described the nature of the changes and explained why they were necessary.
When they met in December, the provinces were informed of the projected impact of the changes over five years. I feel that is proof that the provinces have been more than sufficiently informed of the changes.
We will continue to see that the transfers remain viable and fair to Quebeckers as well as all Canadians.
Federal support to the provinces and territories is reaching unprecedented highs. Key transfers are over $51 billion for 2009-10 and will continue to rise. The Canada health transfer will increase by 6%, the Canada social transfer by 3%, and equalization payments will continue to increase and parallel the economy.
At over $17.6 billion, the federal support for Quebec is also at an all-time high and continues to rise. Transfers to Quebec alone have gone up 74% since 2005-06, the highest increase in transfer payments of all the provinces.
And, as I said, transfer payments will continue to rise. In this time of unprecedented economic difficulty however, they will need to progress at a sustainable rate so that future generations can also benefit from them. This is why we are defending the changes we have made to improve the sustainability of the equalization program.
I would like to read from the daily newspaper La Presse some comments by André Pratte:
|| In reality, the Government of Quebec will lose nothing. The equalization payments it receives, which have increased considerably in recent years, will continue to grow—
He goes on to say:
|| To review a few figures, in 2005-06, the Government of Quebec received $4.8 billion in equalization payments. Since then, the federal government has expanded the scope of the program and corrected the inequalities and as a result, over five years, the amount received by the province has risen to $8.4 billion in 2009-10, a 74% increase—
Mr. Pratt also wrote:
|| Politicians—claim that the fiscal imbalance problem remains unsolved. Not only is that position no longer tenable, it is unreal as well. Today, federal transfers represent 22% of the provincial government's budget revenue, exactly the same share as they did in the early 1990s before the cuts imposed by Paul Martin.
Those were the words of André Pratte, a great economist and editorial writer for La Presse, and they confirm what I said earlier.
In the name of all Canadians in all provinces, Quebec included, I ask my colleagues to reject this motion.
Mr. Mike Wallace (Burlington, CPC):
Mr. Speaker, I thank the member for Beauce for sharing his time with me.
I am pleased to have the opportunity to speak in opposition to today's motion and, more broadly, for the pressing need to improve the securities regulation in Canada.
While current global market turmoil has led many to call for strong regulation of financial markets, this issue is not new to our Conservative government. In fact, it had been a key priority for us from the start, as our government's mandate began in our initial election in 2006.
As outlined in budget 2006, we recognized that, and I will to quote from that budget. It states:
|| An important foundation for a strong economy is a regulatory regime for the securities market that ensures market integrity and investor protection....All jurisdictions recognize that Canada’s securities regulatory system must be improved to respond more rapidly and effectively to regulatory and market developments at home and abroad.
Since 2006, we have worked towards improving that system, most notably through the work of the expert panel on securities regulation. However, during that time, the global economy has dramatically changed. Market turmoil that began in 2007 in the United States, sparked by the havoc wrought by toxic subprime mortgages on their domestic housing market, has exploded into a synchronized global recession.
The global financial crisis has thrust the role of regulation and the importance of financial stability into the spotlight. Canada has learned from the experience of other countries that systematic risk can arise from all parts of the financial sector, not just the banking sector. Obviously that includes the capital markets. Yet one thing has not changed: Canada remains the only industrialized country without a national securities regulator.
From labour to business, from left to right, from small to large investors, we have heard the same refrain. This irregularity exclusive to Canada is now, more than ever, no longer acceptable.
Listen to the Small Investor Protection Association, which states, “We don't have a national system of protecting investors....we think it's important that all Canadians should have the same amount of protection. And that can only be done through a national organization”.
Listen to the recent Montreal Gazette editorial, which states, “It's absurd, in the era of unprecedented anxiety about all things financial, that 13 different agencies, one in each province and territory, regulate the trading of stocks and bonds and the like in Canada”.
Listen to the Canadian Bankers Association, which states, “We have been debating securities regulation in Canada for decades: enough is enough....the debate is over, it’s time to get this done”.
Listen to the National Union of Public and General Employees, which states, “Canada is the only member of the Group of Seven industrialized nations without a national securities watchdog. It has a dismal reputation at home and abroad in dealing with corporate crimes and wrongdoing”.
Listen to Michael Code, a securities professor at the University of Toronto, Faculty of Law, who has said, “If there was a time when the need for a national securities regulator cries out, it's now”.
Our Conservative government has listened to these voices and we are taking concrete action in response.
We are taking an important first step toward a new regulatory regime by introducing legislation based on recommendations of the aforementioned expert panel. That panel, chaired by the Hon. Tom Hockin, conducted an extensive and open consultation process, publicly seeking and inviting submissions. From that process, recommendations were developed on the best way forward to improve securities regulation in Canada. I encourage all to take the time to read this important report. It is reachable at expertpanel.ca.
There is good reason why we must urgently take action on this front. We all recognize that Canada has a strong financial services sector, one that spans the country from coast to coast to coast, providing good, high paying jobs for Canadians. Indeed, our financial system has been judged as the soundest in the world by the World Economic Forum. However, we have a capital markets regulatory system that can and must be improved.
This is why we plan to introduce a new securities act that will provide for greater investor voice in policy-making, better and more coordinated enforcement and the creation of an independent tribunal. Most important, the act would also give a financial stability mandate to the Canadian securities regulator.
As I stated earlier, financial stability is a key factor in setting up such a regulatory body. The proposed regulator will be integrated into Canada's financial stability framework, a framework that includes the Minister of Finance, the Bank of Canada, the Office of the Superintendent of Financial Institutions, the Canada Deposit Insurance Corporation and the Financial Consumer Agency of Canada.
Giving this new regulator a seat at this table will ensure that capital markets will be better represented in Canada's financial stability regime. The role of this framework was amply illustrated in 2008 with the introduction of the Canadian lenders assurance facility, which helps Canadian financial institutions secure access to term funding.
Shortly after the CLAF was created, the federal government agreed to extend its coverage to Caisse centrale Desjardins, a provincially regulated financial institution, after urgent requests by the government of Quebec. This shows the ability and promise of a national body to secure financial stability in a collective fashion that does not intrude on provincial rights.
In the words of Quebec's minister of finance, Monique Jérôme-Forget, it spoke to “the intangible benefits that can be realized when the governments work together with a common purpose to support the Canadian financial sector”.
Indeed, working together, we can build on the rudimentary steps toward an improved securities regulation through the passport system.
For a quick refresher, in 2004 provinces and territories, except for Ontario, admitting to the flaws of the current regime, agreed to create a passport-style system to regulate securities. While the passport system slightly narrowed the regulatory differences and streamlined security laws, and this was a first step, it was recognized that it did not go far enough or even fast enough.
With the passport system, we still have 13 regulators, with 13 sets of laws and 13 sets of fees. We still lack a national co-ordination of enforcement of activities.
In the words of the Canadian Bankers Association, the passport system is only a second best solution. The current fragmented regulatory system remains in place, entrenching a potentially confusing and inefficient enforcement mechanism.
Clearly the passport system is not where Canada needs to be in today's global economy. As we move forward on these next steps, we are confident that a majority of provinces and territories will join us as willing partners to explore this vital initiative.
I point out that this is just one of a series of steps that we are taking to strengthen Canada's financial system and we hope to continue the good work beyond our own borders. The global financial crisis has shown that regulation is a shared responsibility between the countries and we must continue to eliminate barriers for this common purpose.
I thank the House for the opportunity to speak to this item today as the member for Burlington. I have a tremendous number of financial services located within my riding. It is an important issue which has been brought to my attention by people who live in my riding and by the businesses in my riding. In fact, it was part of a discussion I had last week with the local chamber of commerce. It is looking for a common regulatory body. We are looking for a common securities commission, and I look forward to seeing that happen.
Ms. Meili Faille (Vaudreuil-Soulanges, BQ):
Mr. Speaker, I am pleased to speak today about this issue and to inform you that I will be sharing my time with the hon. member for Quebec. I would also like to share my views during these difficult economic times on two files that seriously affect Quebec.
Many of my colleagues have spoken and tried to do so very objectively. They expressed the views of various players on Quebec's economic scene. I did the same in this House a number of times over the past months when I was responsible for defending the securities file.
I would like to congratulate my colleague from Saint-Maurice—Champlain for his clarifications in the House and his work on the Standing Committee on Finance. It seems that the government is stubbornly pursuing its plans to implement a national securities commission and unilaterally amend the equalization formula. I am imploring the House to stand united and demand that the federal government renounce these two measures that were in the last budget.
The National Assembly is unanimously opposed to the proposed amendments to the equalization formula and to a Canada-wide securities regulator. Amending the equalization formula would mean a loss of $991 million for Quebec next year. By refusing to include revenues generated by Hydro-Québec’s transmission and distribution activities, as is the case for Hydro One, Quebec would receive approximately $250 million more in equalization. Securities fall under the jurisdiction of Quebec and the provinces. The National Assembly is unanimously opposed to the establishment of a common securities regulator. Establishing a common securities regulator would jeopardize the survival of trading activities in Montreal and would favour the concentration of financial markets in Toronto. The World Bank and the OECD reported that the current system works well and is both efficient and effective.
The Bloc Québécois and the people of Vaudreuil-Soulanges—I am speaking on their behalf today—agree with the Bloc Québécois motion and we are asking the government to renounce these measures that were in the last budget.
Quebec's demands are clear and precise. On the eve of the federal provincial meeting in January in preparation for the federal budget, the National Assembly unanimously passed a motion expressing Quebec's demands. I will not bother with all the paragraphs in the motion, but I would draw the House's attention to two points, two demands:
|| That [the National Assembly] demand that the federal government maintain the equalization programme that is currently in place;
|| That it reiterate its firm opposition to the Canada-wide securities commission project.
Here, in this House, the Bloc Québécois and all the Quebec MPs have a duty to represent the National Assembly. And with a unanimous motion like this, we can defend—to our respective parties—the position we intend to take on the vote that will be held this evening. I implore Quebec MPs not to turn their backs on their colleagues from Quebec in the National Assembly and to support the Bloc's motion.
Indeed, as I explained earlier, the whole matter of the securities commission is Quebec's, constitutionally. It belongs to the provinces and to the Government of Quebec. The Conservative government, and the current finance minister in particular, seem obsessed with denying Quebec important rights to manage its finances and with moving those rights to Toronto for the country as a whole.
The consensus in Quebec is real, and no one wants to give up any authority at all in this area. Earlier on, the member for Mississauga South expressed confusion over the relevance of this debate today. And there is another reason the Bloc is drawing this matter to the attention of the House. A clear message must be sent to the government that this is unacceptable.
Why are we paying such attention to this question? Because the whole issue of securities is vital to the economy. In our current, more difficult economic situation, this issue is vitally important, and the provinces are entitled to take offence at the attitude of the federal government in this file.
The public has to know that the position of the Bloc is, I repeat, the same position adopted unanimously by the Quebec National Assembly. We speak with one voice at the moment where Quebec is concerned. This evening, we will likely see a common front against Quebec on this. I implore members to do their job and to consult the securities commissions in their respective provinces—except members from Ontario—and to report to this House what they think about this single securities commission.
Today, it could not be put more clearly. We have a motion, passed unanimously by all parties in the National Assembly and, here, an offensive by the Bloc calling on this government to abandon these two budget measures.
Quebec has the authority in this area and wants to keep it. It wants to maintain this power in the economic sector. The desire of the provinces in this matter must be respected.
Earlier today, the member for Saint-Léonard—Saint-Michel expressed concern about people swindling other people. We are referring to those who commit economic crimes and the thinking behind that, namely that these individuals tend to get off easy. His case for a securities regulator included references to such situations. He was concerned about people slipping through the cracks. I would like to respond to that. A number of experts and securities commission presidents are of the opinion that the federal government should focus on its own areas of responsibility, such as the Criminal Code, for instance, specifically to address economic fraud. I think the member was probably alluding to the widely publicized case of Vincent Lacroix. While Mr. Lacroix was found guilty under the Act respecting the Autorité des marchés financiers, additional charges might be laid against him by the RCMP under the Criminal Code. There are loopholes, and the legislation is not strong enough. In that regard, the federal government and the members of this House could do more to precisely strengthen that aspect.
Regarding Quebec, I would like to make another point about the Autorité des marchés financiers concerning operations monitoring and the types of operations. It reflects a perhaps different, made in Quebec model. This model is characterized by Quebec social values which pervade the general approach to public finance management in Quebec. We are talking about such things as the implementation of protection and compensation programs for consumers of financial products and services. Compensation funds are set up by law. The originality of the Quebec model has to be noted. We do not want to do without this ability to innovate in such an important sector.
Unfortunately, the budget confirms the government's intention to put in place a single securities commission. We, in Quebec, want to have an exciting economic future to look to.
Ms. Christiane Gagnon (Québec, BQ):
Mr. Speaker, we are having a debate today and it is an opposition day sponsored by the Bloc Québécois. In this debate, we are raising two questions. We call on this government to renounce two measures contained in the budget. We could address other measures, we think there is a consensus on these two in Quebec.
It was mentioned earlier that there had been a consensus at the National Assembly, a consensus on the banks, the financial market and a consensus on a Canadian securities commission, a consensus opposed to this commission's being aimed at the Ontario market.
How can the members from Quebec, the members of this government, be against such a broad consensus in the National Assembly of Quebec and other intervenors in the financial sector? I do not understand.
The second question, which also leads us to call for a renunciation of certain measures. concerns the equalization formula, and I will come back to it shortly.
I would first like to address the securities question. We all know that the provinces have jurisdiction over securities because of the authority given them over property and civil rights by subsection 92.13 of the Constitution Act of 1867.
The government is on the wrong track with this national securities commission, a single regulatory body. There would be a regulatory monopoly. The government has handed out $150 million to set up a group of experts to harmonize certain recommendations appearing in a report. Really, $150 million.
This is a flagrant violation of Quebec's jurisdictions. This is nothing new, since other governments besides the current one have tried to take this route. There was the Liberal government as well. Year after year, we have managed to counter the desire of the governments sitting in this Parliament to establish a single securities commission.
I wonder why the European community finds establishing a passport system a good way of controlling things. Why the passport? Because it allows companies registering in one the of the participating provinces to do business with everyone in all the provinces, except—and this is weird—Ontario. It is off on its own and is not interested in the proposed harmonization, an approach praised by the European community. To create a single securities commission would be to create a regulatory monopoly. This is why the Bloc is opposed to the idea, and we said so concerning the last budget.
We believe that this situation is dangerous given the very high concentration of regulated industries which would cause advantages to be lost both in Canada and, in this case, in Quebec. The prevailing regulation encourages competition. To go in this direction makes no reference to this consensus of the National Assembly of Quebec, which passed a motion urging a step back from this proposal.
Why is Ontario going it alone? And they want to establish a securities commission in the province that is presently acting on its own and does not want to be bound by the existing body of regulations? Even the Autorité des marchés financiers says that it is the last bastion before the disappearance of stock exchange activities. So there are a lot of repercussions for Quebec, and that is why the Bloc Québécois is against this direction, out of respect for Quebec’s jurisdiction in securities.
As for the second aspect of today’s question, once again, we do not understand how the hon. members who come from Quebec and sit on the government side can tell us that equalization respects the will of the representatives of Quebec or the population, and that it represents more money.
During the election campaign, we did not understand the Quebec Liberals who were saying we would lose about $75 million due to the way the calculation of equalization was being set up.
On November 3, a federal-provincial meeting of finance ministers was held, which was attended by the minister from the Conservative government. They said it would be barely $75 million. That is money, all the same. After the election of the Liberal Party in Quebec, people woke up and realized it would be a loss of a billion dollars. The Parti Québécois had it right during the election campaign. All of sudden, the Liberal Party realized that it meant a net loss of one billion dollars for the coffers of the Government of Quebec. We are told there is a lot of money for Quebec, but there would be even more money for Quebec if the agreement had been respected, for example. The Prime Minister had just told the Premier of Quebec that there would be an open consultation with the Government of Quebec. I have the letter in my hands, and I could quote a large part of it concerning the desire to respect the fields of jurisdiction of the provinces and of Quebec. They have talked to us about the open federalism of this Conservative government. But the more we proceed, the more we see how the Conservative government flouts the will of Quebec.
The way the Conservative government has gone about calculating equalization is simply unthinkable.
The other aspect of the issue—as we have said earlier—is the way in which revenues generated by Hydro One and Hydro-Québec are handled. If revenue were calculated the same way for Quebec, we would have $250 million more. So how can the Government of Quebec still trust this government?
A number of letters have been written by the Quebec finance minister—no sovereignist she—which reached the same conclusions on this as the Parti Québécois has on this issue.
This is why the Bloc cannot vote in favour of this budget, because Quebec is the loser. There are other aspects of the matter that we have not discussed either. For example, the job losses in the manufacturing and forestry sectors. There is just a few million for Quebec, compared to $2.7 billion for the automotive industry. That is a real double standard.
How can it be that the people who have become MPs and members of Cabinet in this Conservative government are thumbing their noses at what Quebec wants in order to progress, to become more productive and more competitive? And then, how is it possible to become more competitive on the stock market and the financial market, with the creation of this securities commission? Do you know what we are being told? They will leave the provinces free to join this single securities commission. But you know very well what will happen. When there is a choice, they will abandon Quebec and join with the securities commission in Ontario.
I cannot understand how Quebec MPs, members sitting here in this Parliament, can forget Quebec when they arrive here in this Canadian Parliament. That has happened all too often. The province is no longer close to their hearts.
They can try to sell us on anything all day today, but we have the documents here to tell us not to go in that direction. If today the Bloc is standing tall, is it because we have promised to speak out whenever things are heading against the interests of Quebec, and that is what we are doing today in bringing a motion like this one to the House.
Ms. Judy Wasylycia-Leis:
Mr. Speaker, as I was saying, I am pleased to have this opportunity. I thank the Bloc for introducing this motion and will give my support to the motion with some qualifications.
The House will know that we in the NDP oppose the Conservative government's budget with every means available to us. I am sure the Bloc has not changed its mind with respect to the egregious matters pertaining to the budget. Unfortunately, the Liberals have decided in fact to give carte blanche to the Conservatives. There has therefore been little opportunity in the House to, in effect, create change or bring about some responsible amendments to the Conservative plan of action.
Today the Bloc was good enough to bring to us two parts of that budget and both are important. I want to start with the second part which has not had as much attention today as it should and that is the question of what the government is doing and has done with respect to transfers to provinces and equalization.
Everyone will note the amendment says that we should denounce the federal government for unilaterally amending the equalization formula. It goes on to say that the Prime Minister had promised transfers to the provinces would be predictable and long-term, and should in fact be based on an equalization calculation previously agreed to. That is a reasonable proposal. That is precisely what all provinces had hoped for. I am sure all provinces stand with us today in condemning the federal government for its arbitrary, arrogant, unilateral abdication of its commitment to work in harmony with the provinces and to do something on the basis of informed consent.
Informed consent was absolutely missing from the budget when it came to equalization and transfer payments. I had raised in the House a matter of what appeared to be cutbacks to transfer payments for health care. It was not just a matter of appearances, it was a matter of fact.
The government, in terms of its configuration of the whole formula around equalization and transfer payments, arbitrarily decided to reduce transfer payments for health care to several provinces, including my own. Manitoba is to see a loss of $13 million as a result of the government's magical configuration of the numbers.
I raised it. The Conservative government, of course, refused to acknowledge what it had done and it took behind-the-scenes manoeuvring until something finally happened with respect to federal officials letting the provinces know that they would not see their numbers reduced for this fiscal year. Nobody in the government will admit that this ever happened. There has been no acknowledgement, no up-front disclosure. It was all done behind the scenes, both the cutbacks, in the first place, and, second, the embarrassing retreat on this issue. That is what it was.
In the health committee when the health minister was confronted with the question of when she informed the provinces that their money would be returned, she pretended she knew nothing about it. That is part of the problem we are dealing with.
Furthermore, when it comes to equalization and transfer payments, that is in an area where every province counts on responsible, reasoned actions on the part of the federal government to be able to provide the services that they need to meet the requirements of their health care systems.
That is fundamental. One cannot govern in this country without the knowledge that transfer payments will be available on a reliable basis and in the numbers that are required based on the demand and need. We are still struggling, trying to catch up from the days when the Liberals unilaterally cut $6 billion out of our health and social services systems, setting us back an entire decade or more. We are still trying to catch up from those days.
Let us hope that in this time of economic recession we do not repeat the mistakes of the past, that we do not allow any government in this country to cut back health care in order to respond to an economic recession. Let us make sure that the health care of Canadians comes first and it is at the top of all of our agendas.
I will go to the issue of equalization because that is specifically mentioned in the Bloc motion. I have to say that the Bloc is absolutely right. We had long deliberations at the finance committee around equalization. We had thorough meetings around the country. We acknowledged the work of the O'Brien commission, which made a series of recommendations, which the government of the day said it supported. The present Minister of Finance said when the new equalization program was introduced in budget 2007, that the budget “delivers a new equalization program that is fair to Canadians living in all provinces. It will be formula driven and principled”.
Why did that commitment of 2007 not follow through to the 2008 budget? Why did the government decide to ditch O'Brien, ditch that commitment to fairness, to advance notice, to making decisions based on a formula that is clearly objectively driven, not politically motivated?
We have seen the outrage in the House and the concerns from all parts of the country, especially in the province of Newfoundland. Interestingly, the leader of the Liberal Party gave Liberal members from Newfoundland the discretion to vote against the Conservative budget on that one instance, despite the fact that there are many issues of concern pertaining to equalization affecting many other provinces, and despite the fact that the Liberal Party stood with us in this House calling for a firm commitment to pay equity in this country. The Liberal Party decried the Conservative government's dismantling of pay equity and its death blows to equal pay for work of equal value and its targeted attack on the whole pursuit of equality for women. Has the Liberal leader given the women of his caucus, or any defenders of equality, the latitude to vote against the budget because of that unacceptable Neanderthal notion? Absolutely not.
On equalization, I want to say to the Bloc members that their motion is certainly in line with what has happened. We need to stand together and condemn the government and ask why it did not consult the provinces before announcing its intention to make significant changes to the equalization program.
How does the government explain its decision to weaken a major transfer program so soon after it was renewed on the basis of an expert panel's recommendations and after describing the changes as formula driven and principled? Why did the government not look at the O'Brien report and its recommendations for a consultation process for future changes to the equalization formula? Why has the federal government targeted the equalization program for reductions, particularly when the 2007 Conservative budget noted that the strengthening of the equalization program went hand in hand with changes to other major transfers?
There are many more questions, but I think I have made the case. The government unilaterally and arbitrarily ignored its own recommendations to follow the O'Brien commission to have a formula based equalization program so that provinces could be sure of the money that they would be receiving, know that it was based on objective factors and could count on their federal partner. The federal government let down the provinces and now we have to stand in the House and try to bring some sense to the federal Conservatives.
Let me put aside the issue of equalization. I think enough has been said on that for now. I would like to return to the question of securities regulation in this country.
The motion by the Bloc suggests that a national securities commission is wrong and that establishing such a commission would constitute an intolerable intrusion into Quebec's jurisdiction.
Let me say right at the outset, despite the fact that I support this motion and its intentions in terms of a better securities regulation system, I do not acknowledge or accept the words that this proposal is an intolerable intrusion into Quebec's jurisdiction. With some help from the Bloc, and perhaps at some point somewhere along the line the Liberals might become a constructive opposition and start offering some suggestions, we might be able to fashion a securities system that takes into account the uniqueness of the Quebec system and actually ensures that there is some harmony and coordination right across this country.
The reason I have no difficulty in supporting a Bloc motion that condemns a national securities regulator is that it is a scam; it is a scam on the part of the federal Conservatives to pretend that they are dealing with something while they are not getting at the nuts and bolts of the issues. They are not putting in place the laws, the regulations and the standards that actually would make a difference when it comes to criminal activity in the financial sector, when it comes to scam artists and fraud artists and people who take advantage of others in their most vulnerable times.
Having a national securities commission will not fix anything if the government is not prepared to say that we need a set of recommendations, a wide-ranging piece of legislation, standards and regulations that will a hold the corporate sector in this country accountable. That is what the New Democrats have proposed, a corporate accountability act for Canada, something that does not simply stop at national coordination of different regulators, but puts in place those elements that are vital to protecting people when they are most vulnerable and when they are being preyed upon by hucksters, fraudsters, con artists, and so on.
We have had this debate for many years. For ages we have been crying for the government to take action when it comes to securities regulation. The Liberals created a vacuum. They would not address the matter. The Conservatives for many months ignored this issue, but suddenly, at a time of their own political crisis, they decided to bring in an item to try to box in the opposition with no kind of consultation with Parliament. The Conservatives stand on a soapbox and act as though they were the protectors of Canadians at this time of financial crisis. It is time to call a spade a spade and to point out exactly how empty that promise is and how lacking it is in terms of real meat and potatoes for helping Canadians. It is time to demand from the government the kind of package that Canadians have been asking for, for many years.
What we have is a vacuum that has not been filled by either the Liberals or the Conservatives, so the provinces stepped in. The provinces started developing the passport system. They have had years to develop that system without any hint of involvement by the federal government. Suddenly, the federal government steps in and says that all that work has been for nothing. It wants to put that work aside, disband all of the provincial passport regulators and put in place a national securities regulator. The government wants to run the shop. It says that it will do what is best for Canadians and never mind what has been done before. Does that make sense? Absolutely not.
It would have made far more sense for the government to say to Parliament, “We do have a problem with securities and regulation in this country. We do have a problem with people being taken advantage of. We want to develop a plan and we want to do it with you”. It would have made sense to send the matter to the finance committee and ask it to develop some legislation, after consulting with Canadians, and bring forward something with real meaning and real teeth.
Why not have something like the Sarbanes-Oxley legislation in the United States? Why not have something wide ranging and broad sweeping that would actually deal with the problems at hand instead of another band-aid on a situation where people are hurting each and every day?
This is an issue of great importance. Every day there are people who are feeling the effects of a system that is not being regulated. They feel abandoned and left alone to sort out the mess that has been created by investors who take advantage of them and fraud artists who decide they can get away with something because the federal government is not watching.
What is the securities regulator going to do? How is it that the biggest Ponzi scheme in the world with Madoff in the United States happened under a system that has a very strong, supposedly, national securities regulator? Why? It did not take seriously the mounting evidence. All kinds of conflict of interest had not been guarded against in the first place. People within the system were taking advantage of others outside the system. It was a hornet's nest and no one would jump in and show the leadership that was necessary.
Having a regulator is not going to do that. Does anybody here think that the Conservatives' appointing a national regulator because someone from the investment community recommended it is going to make a difference? What about the expression of the pot calling the kettle black? Give me a break. Is it not time that the government actually did something significant on this front?
Many people have proposed alternatives. The NDP proposed the corporate accountability act. We suggested that there be a number of issues as part of that. In fact, we put forward ideas that included a requirement of having independent auditors appointed, having board members appointed who had no conflict of interest, having whistleblower protection for people in the industries where they noticed there were problems and wanted to let someone know, to ensure that there were some actual checks on CEOs and their excessive salary and benefit packages, to ensure that there was some mechanism in place to prevent that kind of excessive abuse by executives of large companies who end up finding a way to take advantage of individual clients and customers.
That is what we need. We need something with teeth, something with meaning, some solid piece of legislation that would actually make a difference.
We have dealt with many organizations on this matter. This is not something from the NDP. Considerable advice has come from the likes of Stan Buell who is with the Small Investor Protection Association. Considerable advice has come from Democracy Watch, which has provided us with all kinds of recommendations for a corporate accountability act, and from individuals who have a lot of expertise to offer. I think about Dianne Urquhart who has been very active on this front and worked with us on the income trusts file. I know that the Liberals are still trying to reverse the tides on that issue and are not prepared to accept the fact that income trusts have created a serious problem in our society today.
Let me reference a couple of the people who have spoken so eloquently about it and what needs to be done. I want to read a quote from an article by Alex Hutchinson in “The Bottom Line”. It is about Dianne Urquhart, who was working with the National Pensioners and Senior Citizens Federation, who said:
|| The retirement security of its members is being threatened by questionable investment products sold on the basis of misleading information targeted at seniors, and the current enforcement rules are failing to provide the needed protection.
The article goes on to talk about the need for a set of rules that will actually deal with some of those problems, not just a national securities regulator. It talks about the need for actual provisions that are enforceable by the government on the investment, banking and financial world of this country. “It is time to get tougher on white collar crime”, Dianne Urquhart and others have said.
Let me also mention the work of Al Rosen, who has been a very articulate spokesperson on this front. In an article entitled “Do the Math”, he wrote the following, and it goes back to 2006, but it is still relevant today:
|| A former chief accountant of the U.S. Securities and Exchange Commission recently told Forbes magazine that the discredited American Stock Exchange has become the new “version of the Vancouver Stock Exchange”.
My apologies to any members of Parliament from Vancouver.
|| Even though the VSE was cleaned up years ago, the stench lingers strongly south of the border. Nortel, Bre-X and a growing number of income trust debacles have only added to Canada's reputation for failing investors.
I might add that it was our former governor of the Bank of Canada, David Dodge, who described Canada in terms of the wild west.
My time is almost up, so let me conclude by saying that I support this motion because it does not address what is essential and we call on the government to put in place a meaningful package that gets at white collar crime.
Mr. Steven Blaney:
Mr. Speaker, I seize this opportunity to thank my colleague from Ottawa—Orléans for his intervention. He works very hard for the people in his riding.
This afternoon, I would like to say that it is important to strongly oppose this motion, with its outrageous content, which underplays the excellent budget presented in this House. Unfortunately, I see that some members do not support it. Nevertheless, I support it, my colleague from Charlesbourg—Haute-Saint-Charles supports it, my colleague from Ottawa-Orléans supports it as well and, of course, my colleagues on this side of the House all support it.
I am rising this afternoon because I want what is best for businesses in Bellechasse, Les Etchemins and Lévis when they are looking for capital. I have especially in mind the Davie shipyard, whose stocks are doing very well these days. I want these businesses from my riding to be able to access the financial market as quickly as possible and with a minimum number of obstacles to overcome. They should be able to obtain the capital which is so important, particularly during these uncertain economic times.
I believe it is important to act, and that is what our government is doing, while respecting areas of jurisdiction and taking a voluntary approach. Since we were first elected, we have been working together with the provinces to institute a simplified, more efficient system for regulating securities in order to bolster our financial stability, protect investors and of course, be accountable.
We currently have 13 commissions and it is difficult to act quickly. We saw during the crucial events in September 2008 that our counterparts elsewhere in the world, including in the United States and the United Kingdom, were temporarily restricting the short selling of certain shares in the financial services industry in order to ensure market stability. Our interventions in Canada were late in comparison with other countries and there were some differences. Our system was not necessarily very efficient. It is important, especially in times of economic uncertainty, to be particularly efficient in order to provide and maintain a competitive advantage.
Canada is also working with its partners in the G7 and G20 to deal with the systemic risks to the financial industry. We have a healthy financial sector in Canada and we want to keep it that way.
Third, it is very expensive to keep multiple commissions going. What we want is to eliminate the barriers and have the most efficient system possible. If we take the Prospectors and Developers Association of Canada, for instance, they will say that they want a more efficient system. We want to ensure that the efficiency and vitality of our financial sector is not diminished by governmental quarrels. What business people tell us is they want an effective, efficient system. They do not want to be the object of squabbles over flags or parliamentary disputes. That is why it is important to vote this motion down today and to vote in favour of the budget.
The support for improving our system comes from far beyond our borders. Last year, the Organization for Economic Cooperation and Development stated that multiple regulatory systems made it hard to maximize efficiency and there was a mounting danger that companies would choose securities in other countries. The report said, “A single regulatory authority...would eliminate the inefficiencies created by the limited enforcement authority of individual provincial agencies”. What the OECD was telling us, as the Government of Canada, is that we should assume our responsibilities and make sure that our companies can access financial and credit markets and that we should eliminate the barriers that are harming them.
Contrary to what our colleagues in the opposition are saying, the creation of a single commission is not an intrusion. This is a voluntary initiative.
Those provinces and territories who wish to do so may join the organization, but they do not have to. In fact, several provinces have already indicated their desire to work together with us during these challenging economic and fiscal times.
The senior vice-president of the Montreal Economic Institute, Mr. Marcel Boyer, said:
|| A single securities commission with a strong regional presence would favourably resolve the complex issue of regulating securities in Canada—
|| Decentralizing to non-exclusive offices that are nevertheless able to influence for the best a single securities commission would promote innovation and efficiency in terms of financial market regulation while at the same time ensuring de facto mutual recognition of regional sensitivities and distinctive features.
We are realizing, thanks to the G7 and G20 countries in particular, that our system needs to be improved and upgraded. This way, our businesses will enjoy the same opportunities and rapid access to capital markets as those from other countries.
How can one be against common sense and local businesses from Quebec, Prince Edward Island or the Yukon having access to capital markets Canada-wide without having to go through 13 different authorities and getting bogged down by bureaucracy?
Here is an opportunity to simplify the process while respecting everyone's areas of jurisdiction, as was clearly pointed out.
I could go on and on this afternoon about the importance of passing the budget, taking concrete action to support our economy and continuing to ensure that our businesses can benefit.
I will gladly answer questions on this topic.
Mr. Daniel Petit (Parliamentary Secretary to the Minister of Justice, CPC):
Mr. Speaker, as custom dictates, in light of the fact that I have been elected a second time, I would like to salute all the citizens of Charlesbourg—Haute-Saint-Charles who have placed their trust in me.
I today invite my colleagues to do likewise and reject the Bloc’s motion because it is against the interests of Quebec. Our measures in this budget are perfectly consistent with the spirit of open federalism that underpins our overall approach toward restoring the fiscal balance. I invite my colleagues to examine our record in this regard. The facts are most eloquent.
First of all, the government is fully honouring its commitment to pay the provinces increasing, long-term transfers to restore the fiscal balance. The federal transfers have never been so high, and they will continue to increase. The Canada health transfer is increasing by 6% per year, and the Canada social transfer by 3% per year. Federal infrastructure support to the provinces is at record highs. Equalization today stands at $14.2 billion, compared with $8.7 billion in 2003-04 under the Liberal government.
Second, Quebec is the province that has benefited the most from the measures we have taken to restore the fiscal balance. Far from decreasing, Quebec’s equalization payments and total transfers are at historic highs and continue to rise, but the Bloc persists in tabling its motion against the population of Quebec. Transfers to Quebec for equalization alone have risen 74% since 2005-06, placing the province far in the lead of the recipient provinces in terms of the increase in these transfers.
Equalization has been very advantageous for Quebeckers over the years, and the government has worked energetically to ensure that this program continues to grow in a sustainable and equitable manner. The measures it has taken were necessary because of the unprecedented and unexpected volatility in commodity prices in recent months.
As my colleagues know, just after the introduction of the 2007 equalization formula, commodity prices steadily increased, with oil prices tripling in a few months before plummeting 75% in the middle of 2008. These exceptionally high resource prices pushed up the costs of equalization, and under the effect of the new formula, they would have continued to push them up for years. If nothing had been done, equalization costs would have risen over $26 billion over the next five years. This pace of growth was clearly unsustainable, and the government would have had a lot of difficulty avoiding a long-term structural deficit.
When it submitted its final report on equalization, upon which the new program is based, the O'Brien panel of independent experts could not imagine that oil prices would reach $150 a barrel or that Ontario would become eligible for equalization. But that is what happened, and it could weigh heavily on future charges. On the other hand, the O'Brien panel recognized that the equalization program could well pose certain problems. It came up with some very wise advice in this regard, which can be found on page 43 of this final equalization report.
The O'Brien report recognizes that the long-run sustainability of the equalization formula is the Government of Canada's responsibility. We are taking this responsibility seriously and we are acting accordingly. I want to emphasize the fact that these measures do not reflect any reduction in equalization payments. In fact, these changes are only meant to ensure that the growth of the program follows that of the economy. They set a threshold to avoid a contraction of the whole program, and they provide transitional protection to offset their impact on the provinces benefiting from equalization, including Quebec.
The provinces were informed of these changes at the finance ministers' meeting held in Toronto, on November 3. They even got advance notice regarding their rights to equalization for 2009-10, to allow them to plan their budgets on solid ground.
Even if these changes recently generated a broad political debate that was strictly academic and only served to create dissension, I want to point out that they had been welcomed when they were first announced at the finance ministers' meeting, back in November.
In fact, at a press conference that followed the meeting, the Quebec Minister of Finance, Mrs. Jérôme-Forget, said that these changes were “reasonable”. They are indeed, particularly under the circumstances that all governments are facing because of this serious global economic recession.
That is why we are defending the changes that we made to ensure the equalization's viability. And we are also defending the way that we implemented these changes.
On behalf of all Canadians from all provinces, including Quebec, I am asking my fellow members to do likewise, to reject this motion—which goes against Quebec's interests—and to support our budget.
I have here many statements made by various groups from Quebec that support the measures proposed in our budget. For example, the Quebec City chamber of commerce said:
|| The moneys committed by the federal government to infrastructures will certainly have a quick and significant impact on the economy—The personal income tax reduction is also a good measure that will stimulate the economy, just like the rebates for renovations and for first time home buyers.
But they voted against those measures.
Also, François Dupuis, chief economist at the Desjardins group, which is in the riding represented by the member for Lévis—Bellechasse, said the following:
||—we believe that the measures proposed by Ottawa will work. The government is hitting several targets at once. For families, this is a breath of fresh air.
They are voting against it.
Norma Kozhaya, research director and chief economist with the Conseil du patronat du Québec, said:
|| I think that these are good measures both for the short term, given the recession, and for long-term positioning in terms of making businesses more competitive, getting people back to work and increasing taxpayers' purchasing power.
They are voting against it.
The president of the Coalition pour le renouvellement des infrastructures du Québec and mayor of the City of Laval, Gilles Vaillancourt, said:
|| This budget takes into account the reality of an economy that is going through a recession and responds to the Coalition's repeated demands for more funding to help municipalities accomplish their mission, undertake work to upgrade and renew basic infrastructure, and ensure safe, adequate services for citizens. The new funding program will enable municipalities to plan infrastructure more effectively.
They are voting against it.
The Rivière-du-Loup RCM's chamber of commerce said:
|| This is extremely good news for the RCM of Rivière-du-Loup.
They are voting against it.
The Alliance des Manufacturiers et Exportateurs du Québec said:
|| The federal government's budget [...] puts forward measures that will help the manufacturing sector and stimulate the Canadian economy [...] The 2009 budget [...] includes a number of positive measures that will help our businesses during this time of crisis. These measures must be implemented as quickly as possible.
They are voting against it.
We should listen to these groups, reject this anti-Quebec motion, and pass the Budget Implementation Act as soon as possible.
Ms. Diane Bourgeois (Terrebonne—Blainville, BQ):
Mr. Speaker, I will begin by advising you that I will be splitting my time with the hon. member for Argenteuil—Papineau—Mirabel.
Today is a Bloc Québécois opposition day. We introduced a motion that calls upon the government to immediately renounce two measures contained in the recent budget, namely the establishment of a national securities commission and the unilateral amendment of the equalization formula. This places in perspective the debate we have just endured. I use that word because of all the inequities and falsehoods that we have heard in the past thirty minutes or so.
If we opposed the federal budget of this past February, it is in part because of those two measures. The present government is an expert at forcing Quebeckers to swallow one insult after another. I am coming to realize that more and more. These two measures constitute the biggest, ugliest and most disgusting load of insults yet. I must also point out that the Quebec National Assembly has passed a unanimous motion against those two measures.
I will limit my comments to the national securities commission, because my colleague will be addressing the matter of equalization. There has been talk of the national securities commission for 40 years now. People need to be given an explanation of what this commission is, and what securities are.
Securities are negotiable and transferable instruments that can be listed on the stock exchange. These are stocks and bonds, certificates of investment and warrants. All of these financial components fall under provincial jurisdiction, as is clearly set out in subsection 92(13) of the 1867 Constitution Act . We have just heard my colleague from Lévis—Bellechasse say that this did not constitute any encroachment into provincial areas of jurisdiction. That is absolutely wrong, because management of this commission and these securities is a wholly provincial area of jurisdiction.
In Quebec, the Autorité des marchés financiers is the agency responsible for regulating securities and ensuring that companies issuing securities do so according to the rules. For example, a company looking to issue a series of shares on the Quebec stock market has to abide by the rules set out by the Autorité des marchés financiers to ensure that everything is done according to the rules.
Each province has this system for stocks, bonds and securities. An agreement between the provinces sets up a passport system. If, for example, a Quebec business issues shares under the authority of the Autorité des marchés financiers du Québec, it can do business with citizens of other provinces that follow the passport system. This business is legal. There is one province that does not follow the passport system, and it is Ontario.
People have been talking about creating a single securities commission for 40 years. In 2003, the Liberals put together a panel of experts to examine the possibility of establishing a single agency in Canada. In 2006, the Conservative government put the idea in its budget and economic update and repeated it in its 2007 budget. In June 2007, the current Minister of Finance set up a working group to study the effectiveness of the current system. However, in September 2007, it changed the group's mandate so the latter would examine how to create a single regulator. That was in 2007.
What did it do in 2008? It gave this committee $150 million to set up a Canada-wide securities commission. That was quite an affront.
They recognized Quebec as a nation. A nation must manage its assets, make its laws and govern itself. If Quebec is recognized as a nation, then interfering in its jurisdictions is not respectful. It shows a lack of respect. It is meddling. It will cause the loss of hundreds, even thousands of jobs in Quebec because it will lead to the disappearance of stock exchange activities in Montreal. There will no longer be any offices in Montreal. Everything will be concentrated, probably on Bay Street, in Ontario. At that point we will bow down to Bay Street.
I would remind members that this budget gave millions of dollars to Ontario's auto industry whereas we had to accept crumbs for our forestry and manufacturing industries. Creating a single securities regulator is another slap in the face to Quebec. At present, the securities commissions of Quebec and the provinces have a voice at the International Organization of Securities Commissions. That is a voice for Quebec on the international stage. That voice will be silenced. We want to continue to be heard.
The OECD currently puts Canada in second place when it comes to the regulation of securities. The International Monetary Fund and the World Bank feel that Canada has a regulatory framework that is “sophisticated” , “highly effective” and “nearly unified” . The report also mentions “sufficient resources and skilled personnel” and says that the system is “clearly accountable to the government”. As well, it says that the framework is solid and that costs are minimal. The International Monetary Fund and World bank are not stupid. So when the government says that this will cost less and work better, I do not believe it. There are people who have spoken about this.
We should be wondering what the real factor is that is motivating Canada's Minister of Finance to centralize the securities commission and establish a single entity for Canada. If it is not to concentrate money in Ontario and, once again, to try and silence Quebec, what could it be?
The Bloc Québécois motion is forthright, direct and honest. We simply want to protect Quebec and Quebeckers. If we are recognized as a nation, we should have our needs recognized and be respected ourselves.
I am asking all the Quebec members in this House to vote in favour of the Bloc Québécois motion that aims to protect jobs and protect who we are.
Mr. Mario Laframboise (Argenteuil—Papineau—Mirabel, BQ):
Mr. Speaker, I would like to thank my colleague, who interrupted her passionate discourse to give me a little time to speak. I am sure that she would have had no trouble using up all of the allotted time.
In our motion, we are asking the government to drop two measures. My colleague and I agreed that she would talk about the Canada-wide securities commission, and I, the Conservative government's unilateral amendments to the equalization formula. In a letter to the Premier of Quebec dated March 19, 2007, the Prime Minister promised that transfers to the provinces would be predictable and long term. In respect of calculating equalization, he should also agree to the Government of Quebec's request to treat revenue generated by Hydro-Québec's transmission and distribution activities the same way Hydro One's revenues are treated.
It is clear from the positions taken by other parties in this House that the only members who are standing up to protect the interests of Quebeckers are the Bloc Québécois members. There is a reason that, in election after election, we win a vast majority of the seats in this House: when the time comes to stand up for Quebec's interests, we are the only ones who represent the Quebec nation.
Members of other political parties in Quebec will vote against this motion. Today, I am asking the government not to make changes to equalization, but this is not a Bloc Québécois request; it is a unanimous National Assembly of Quebec demand. I would be happy to explain. We have the support of Quebec's finance minister, Ms. Jérôme-Forget, who wrote a letter to Canada's Minister of Finance asking for what we are asking for today. She did not write the letter 10 years ago. She wrote it on January 21, 2009, and I will speak about that later.
Everyone knows that Ms. Jérôme-Forget's political allegiance is not the same as ours, and that nobody on our side voted for her party during the last election. Even though we are not supposed to say for whom we voted, we can say that because everyone knows it.
That is the reality. Why? Because equalization is part of the very foundation of a federation. Canada is not the only federation that shares its resources among its various constituent communities, which are called provinces here. Germany, Switzerland, Australia, India, Pakistan and South Africa have equalization systems similar to ours. The United Kingdom also has an equalization system that reflects the needs of Scotland, Wales and Northern Ireland. Equalization is not unique to Canada, but can be found in other federations as well.
The big question is whether Canada is a true federation. We can always discuss this, but the fact is that the equalization system is in place so that people will have access to public services at reasonably comparable levels of taxation. The purpose of equalization is to try to distribute wealth more proportionally throughout the federation.
Do you think Quebeckers like getting equalization? They do not, because it is a sign of poverty. Quebec is less wealthy than certain other provinces, even though other provinces also receive equalization payments. But other provinces like Ontario, British Columbia and Alberta are wealthier. We can break all that down.
As for the aid given to the auto industry, the wealth this industry generates does not even benefit Quebec. We had an auto manufacturing plant, but it closed a decade ago. Obviously, we are very happy to have some suppliers, but the auto manufacturing companies are all in Ontario.
The good jobs are therefore in Ontario, and household incomes there are higher than in Quebec. That is why we receive equalization. But it is a myth that Quebec is the spoiled child within Canada.
When we look at the provinces that receive equalization, we see that Quebec gets more. Why? Because its population is larger. But Quebec gets the least money per capita, with $1,037 in 2008-09. Nova Scotia receives $1,679 per capita; Manitoba receives $1,732; Newfoundland receives $1,781; New Brunswick receives $2,111 and Prince Edward Island receives $2,310 per capita.
The total amount Quebec receives is higher, but it is not true that people are treated equitably on a per capita basis. Obviously, the provinces and the Government of Canada debate this.
As for the division of the equalization formula, there seemed to be agreement. We were all aware of that. The Prime Minister had written to the premier of Quebec in 2007 to tell him that, at last, he had decided to review the formula for calculating equalization payments, within the framework of addressing the fiscal imbalance. We even voted in favour of the 2007 budget, and that is no secret. There was unanimity in Quebec. All political parties were in agreement. The decision was made to give the government a chance. Yet the government was the source of the problem. It has reduced equalization because it has a reduced revenue. It has a reduced revenue because it has reduced the GST. That is the Conservative reality. Now they are trying to scrape up a little money here, a little there, and once again are picking on equalization, which is a revenue calculated into the budget of the province of Quebec. They are saying all manner of things on this subject. The Minister of Finance says the provinces were aware of the new method for calculating equalization, that it was not done unilaterally.
I will read the opening paragraph in the letter that Quebec finance minister Jérôme-Forget wrote to the federal Minister of Finance. It says:
|| In recent days, federal government authorities, yourself and other representatives of your government included, have affirmed that all pertinent information on the changes you are contemplating to equalization was shared at the federal-provincial meeting of finance ministers held last November 3 in Toronto.
|| That is incorrect. Allow me to rectify this.
These are not my words. It is a letter from the Quebec finance minister to the federal Minister of Finance in Ottawa. Let all those who have come here saying there was an agreement know, it is not true. And that includes all the Quebec Conservative members who have gone and told Quebec and their fellow MNAs that it was not their fault, that there was an agreement. There was no agreement. The Quebec Conservatives need to wake up. There was no agreement. Period. She wrote that letter and I have a copy.
Perhaps, Mr. Speaker, would you give me permission to table in this House a copy of the letter written by Minister Jérôme-Forget to the Minister of Finance on January 21, 2009?
Do I have leave of the House to do so?
Mr. Mario Silva (Davenport, Lib.):
Mr. Speaker, I am quite honoured to participate in this debate on the motion that has been brought forward by my colleagues from the Bloc.
In their motion before the House, they denounce the government for two recent actions that were included in the budget. One is the establishment of a national security commission. The other is the unilateral amendment of the equalization formula. Both issues are important, but I must say that they are incorrectly phrased by my colleagues from the Bloc. I think it is important that we take the time in the House to debate this issue and look over some of these items.
First of all, I am not personally opposed to the establishment of a national securities regulator. However, it has to be done in a constitutionally sound manner. Therefore, as my leader has stated, the government should make reference to the Supreme Court prior to proceeding with this plan. I think that is the only fair way and the only way to know that we are acting within the law as well as with the authorization and support of the Supreme Court.
As a party, we remain committed to exploring the national system of securities regulators in cooperation with the provinces and in accordance with the Constitution to enhance coordination and regulation, while maintaining the ability to address unique regional needs. If the United States, our largest trading partner, had a common securities commission and regulator for every state, one can only imagine that it would be very difficult. One of the things we have to realize in this global crisis that is taking place is the important need for us to cooperate and have agencies working together to cut through red tape. That is so important. I think even my colleagues from the Bloc would understand the importance of removing red tape. Red tape can be an obstacle to economic growth. We are living in a global village and times have changed.
It is important to know that securities legislation in Canada and around the world has two main objectives: to protect investors and ensure that capital markets are efficient, fair and transparent. Regulatory discrepancies among jurisdictions in terms of public disclosure and information sharing between companies and investors can create distorted markets and increase risk to investors, both of which are undesirable for economic stability and competitiveness.
Generally, securities regulators administer four broad areas. First, raising capital through sale of securities such as private placements and initial price offerings. Second, ensuring that companies are transparent and continuously disclose relevant investment information. Third, enforcing securities regulations and deterring misleading or deceitful behaviour; and fourth, ensuring traders of securities are qualified, reputable and licensed.
Some provinces have taken different views on this issue. We know that Alberta, Manitoba and Quebec currently oppose the idea of a single regulator, while my home province of Ontario and British Columbia are voicing their support. In October of 2007, the National Assembly of Quebec unanimously passed a motion for the federal government to abandon its Canada-wide securities commission project. It has been stated many times here in the House by my colleagues from the Bloc.
One argument presented by the provinces will be that securities regulation is clearly a provincial area of jurisdiction under the property and civil rights power of the Constitution subsection 92(13) and the federal government should not intrude. In today's regulatory environment, securities in Canada are subject to the rules and regulations of 13 different provincial and territorial regulators, creating a fragmented regulatory framework that serves to hamper investment in Canadian companies.
Some of the specific criticisms of the current fragmented approach include, for example, trying to raise capital. It is expensive to comply with all the provincial laws. Raising capital is time sensitive and compliance with all of the different rules hold up commencement of trading.
Investors in smaller provinces can be denied investment opportunities. Because of the small and fragmented nature of current securities regulation, enforcement is difficult and not adequately funded.
In support of the current multi-jurisdictional model, provinces argue: it allows for the development of more innovative ideas that can adapt and respond better to unique regional markets; it can more efficiently enforce regulation as they acquire experience and expertise in their regional markets; a single securities regulator may impose compliance rules tailored for larger multinational users and may squeeze out smaller regional companies from accessing capital; and it protects regional securities infrastructure that provinces have developed with accountants, lawyers, underwriters and other professionals.
These are some of the issues that have been raised both for and against by the different provincial jurisdictions. These arguments are valid on both sides.
At the same time, I would go back to my earlier argument, and that is, given the financial uncertainty happening around the world and the crisis also taking place, this would be a unique time to go forward with this initiative provided that it does have constitutional support.
We should look as well to see if we can move forward in co-operation with the provinces. It is important that we have the provinces on our side in dealing with this issue. The government talks at great length about its co-operation with the provinces, but it has the backs up of many provinces that feel they are not being treated fairly.
To address the criticisms, all the provinces and territories, with the exception of Ontario, have created the Canadian Securities Administrators, a forum for securities regulators to coordinate and harmonize Canada's regulatory system. The CSA, as it is called, has successfully implemented several initiatives, including a passport system for a single window of access and recognition to participate in all of the regional capital markets.
On March 17, 2008, the passport securities system moved to its next step and any prospectus approved in one jurisdiction will be recognized in all others save for Ontario. The CSA has also implemented a harmonized Internet SEDAR system for information disclosure and a streamlined national registration system for traders.
In 2006 the Crawford panel, a panel commissioned by the Ontario government to look at securities regulation, recommended adoption of a single securities regulator.
In 2003 the Liberal government set up the wise persons' committee to adopt a single regulator to address the issues of regulatory barriers, fees and enforcement. This was supported at the time by the Canadian Bankers Association and the Investment Dealers Association of Canada. The wise persons' committee recommended a national system based in Ottawa with strong, functionally empowered regional offices in Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax.
In 2004 the Liberal government agreed with the CWP conclusion that the best possible securities regulatory structure was a single securities regulator and pledged that it would work with provincial and territorial governments to move this forward.
That is the historical background of what has taken place over time on this issue.
The Conservative government and, in particular, the Minister of Finance consistently stated their intent to implement a national securities regulator in budget 2006. Then the government in March 2007 published “Creating a Canadian Advantage in Global Capital Markets”, which included the creation of this expert panel. This commitment was reiterated in the 2008 budget.
At the request of the Minister of Finance, the International Monetary Fund, in 2008, completed a report calling on Canada to move forward with a single securities regulator. The Minister of Finance appointed a panel of experts to look at the possible creation of a common securities regulator in Canada, headed by Tom Hockin, a former federal Conservative minister of state for finance and a former president of the Investment Funds Institute of Canada.
These are some of the issues that have been addressed both for those who are in favour and who are against a common regulator.
On the second motion by the Bloc Québécois on the issue of equalization, the Minister of Finance, in announcing budget 2007, infamously stated “the long, tiring, unproductive era of bickering between the provincial and federal governments is over”. That was a very short-lived statement, as we all know. It certainly was never realized, except for the very brief second when the minister uttered those words.
In that budget, the Minister of Finance introduced amendments to the equalization formula, amendments the Conservatives believed would fix equalization for good.
Among other things, budget 2007 introduced a return to the measurement standard reflecting the fiscal capacity of all 10 provinces, a new approach to the treatment of natural resource revenues through a 50% exclusion of those revenues from the calculation of equalization payments and, finally, a fiscal capacity cap to ensure that equalization payments did not unfairly bring a receiving province's overall fiscal capacity to a level higher than that of any non-receiving provinces—