Speech by Senator Pamela Wallin to the Regina & District Chamber of Commerce
January 12, 2011
Speech by Senator Pamela Wallin to the Regina & District Chamber of Commerce at the Conexus Arts Centre, Regina, Saskatchewan
A National Securities Regulator: Why it’s important for Saskatchewan and Canada
– As delivered
Thank you *** And good afternoon everyone!
It is such a pleasure to be here in Regina – or as I refer to it – Wadena, with an airport and better shopping! I went to university here and worked in the media here many years ago and the changes with each trip home are palpable!
I was home for Christmas, driving up highway 35 from Fort Qu’Appelle to Wadena. For years, I could drive that road and not see a car or a truck – often a deer – for 100 miles and now to see the traffic and the evidence of economic activity!
I am so proud to be a Senator representing Saskatchewan. Sure, we’ve all heard the jokes – “In Saskatchewan, it’s so flat, you can watch your dog run away – for two days.” Or “Saskatchewan: hard to say, easy to draw”.
But we know something else about this province. Something more important.
“Saskatchewan is more than a province. It’s a state of mind.” And its people truly are its greatest natural resource, and these days, that’s saying something. Saskatchewan people share the belief there is something unique about (our) province. That to be from (here) is special because the bonds of the community we call Saskatchewan seem so much more powerful than in other parts of Canada. That, in some unarticulated way, our commitment to the province, each other and our future together, reaches deeper into our shared identity and is more powerful than what most others experience.” The distances, the harshness of the climate – all conspire to make us need and connect with one another!
As a daughter of Saskatchewan, I understand the connection that endures even if we move away, even if we put down roots somewhere else or work in Ottawa! A connection grounded in the values that are bred in the communities of this province – on farms and in legion halls, church basements and curling rinks. Values such as hard work and playing fair and dealing honestly with other people.
I cherish the Saskatchewan spirit of thinking big – something that’s part of our DNA in this province. After all, as former Premier Devine once said, “Saskatchewan takes on and completes two world-scale mega projects every single year – seeding and harvesting.”
Above all, I am proud of our passion for creating a vision of what can be. Of building for the next generation. Leaving this land better than we found it.
I thought about this legacy as I focused on the issue I’d like to talk about today – a national securities regulator – because it really represents something so key to what Saskatchewan is – and is becoming.
It’s about building on what we’ve created together. It’s about looking outward, confidently, to international markets. Strengthening businesses. Protecting investors. Lowering barriers for investment and investors! And positioning ourselves for success.
Brad Wall went to New York city to meet Wall Street and as I reached out to guests, each made it clear that as a personal favour to me they’d come but stay only until they had to run and catch their trains at 9 pm. Well, at midnight they could spell Saskatchewan, draw it and they knew what potash was! Couldn’t wait to invest their dollars here!
You see, during my time as Consul General in New York, I had the rare opportunity to see Canada from the outside from a very different vantage point – and to experience how others saw us. Sometimes there were misconceptions to be corrected and sometimes there were important truths to be learned. And I could keep you here all afternoon talking about some of the myths Americans have about us – and we have about them!
We are their best friends whether they know it or not – and we are their best friends whether we like it or not! Americans are benevolently ill-informed about Canada. Canadians are malevolently well-informed about the U.S. (but often we know less than we think). “Where is Saskatchewan?” “Go to Minnesota or North Dakota and turn right” – but then New Yorkers didn’t know where those are either!
The U.S. economy is still three times the size of China, but 50% more IPOs are launched in China than in London and New York city combined, so we need to remain competitive!
But working so close to Wall Street, I learned that when many American investors look to Canada, they see not one market, but 13. That’s because our securities system is fragmented. Every province and every territory has its own regulator. Its own rules. Its own fees. It’s confusing. It’s complicated. And it’s a disincentive!
And for many American companies, it’s just not worth the effort. And so they invest elsewhere, where there are fewer hurdles to clear, fewer hoops to jump through.
The fact is that in today’s world of interconnected capital markets, where investors can move billions of dollars at the click of a mouse, we need to reduce barriers, not multiply them. Make it easier to invest here, not harder. And that’s why we need one regulator, not 13.
The current system creates overlap and duplication – and that adds expense. And for investors, there’s unequal protection – and that adds risk.
Again and again, I was asked why Canada is the only industrialized country that doesn’t have a national securities regulator. I can tell you, I was hard-pressed to come up with a good answer.
The fact is that international organizations have identified this as a key flaw in the Canadian financial system – one of the few, as we today are the envy of the world for the stability of our financial sector! The Organization for Economic Cooperation and Development has said …the situation “increases the risk that firms will choose to issue securities in other countries. A single regulator would eliminate the inefficiencies created by the limited enforcement authority of individual provincial agencies.”
The International Monetary Fund sounded a similar warning when it said that, “A federal regulator could coordinate more readily with other regulators in monitoring risk and responding quickly to a crisis and could also have an enhanced focus on the issues that security markets may pose for national financial stability.”
Now, as you know, the idea of a national securities regulator is not new. It goes back at least as far as 1935 when the Royal Commission on Price Spreads – yes, we had such a thing – recommended the creation of a national securities board.
More recently, in 2003, we had the Wise Persons Committee, which was so ably co-chaired by the distinguished Regina lawyer, Harold MacKay, who couldn’t be with us today because he is touring factories in China. That Committee was blunt about the present system:
“(I)nsufficient resources are directed towards enforcement. Wrongdoers too frequently go unpunished and adjudication is unduly delayed… There are disparate priorities and a lack of uniform investor protection. Policy development is characterized by compromise and delay… Canada cannot respond as effectively or innovate as quickly as it should in the fast-changing global marketplace. The system is too costly. The multiplicity of regulators leads to an inefficient allocation of resources and unnecessary opportunity and compliance costs. Internationally, Canada’s securities regulatory structure is recognized as being unnecessarily complex.”
I don’t know about you, but I get the impression they weren’t too impressed with the current securities system!
In 2008, an Expert Panel on Securities Regulation was appointed, headed by the Honourable Tom Hockin. Its main recommendation? To create a single Canadian Securities Regulator.
It seems that generation after generation, government after government, have studied this issue and come up with similar conclusions – the present system is broken and needs fixing. But nothing ever came of it. Governments of every political stripe simply kicked the can down the road, unwilling to either pay the price or do the work required.
Well, with the current federal government, that finally changed. Finance Minister Flaherty declared that enough was enough, the buck had to stop and it was stopping with him.
And so, in July 2009, the Government established the Canadian Securities Transition Office, with a mandate to lead the transition to a Canadian Securities Regulator, including developing new legislation – The proposed Canadian Securities Act. By May of 2010, the Transition Office had drafted the Act and the Government referred it to the Supreme Court of Canada for its opinion.
This reference should confirm that the proposed Act is within the legislative authority of the Parliament of Canada and provide much-needed certainly for all concerned – provinces and territories, market participants and individual investors.
Once the Supreme Court has ruled, the government is confident the way will be cleared to have the kind of securities regulation Canada needs and investors deserve.
One system – with one set of rules. Reducing overlap and duplication. Providing simplified and consistent national standards. Resulting in greater clarity for businesses and new tools for supporting the Canadian financial system.
And for investors, large and small – better protection against the kind of fraud and abuse that’s been so much in the headlines over the past few years.
I was always struck, when I was in New York, how aggressive the United States was in prosecuting white collar crime, whether it was Martha Stewart, executives from Enron or Worldcom. They missed Bernie Madoff, but everyone did! Under the proposed Canadian Securities Act, things are about to get a lot tougher for con artists and swindlers here in Canada.
Some have argued that the Canadian Securities Act simply replicates what the provinces already do in terms of enforcement – but that’s not the story! What it does is keep the best elements of provincial securities law while going much further to protect the savings of Canadians.
There will be improved regulatory and criminal enforcement to more effectively fight securities-related crime. And those who commit securities fraud will face a tougher, more comprehensive regime. No more falling through the cracks, no more checkerboard protection for consumers.
The proposed national regulator will do something else as well – it will make it easier for small and medium-sized businesses to get access to capital not just here in this province, but across the country. And that’s good news for the farmer with a business in Wadena, the family business in North Battleford and the entrepreneur here in Regina.
Finally, the new securities regime will enable Canada to speak with one voice on the international stage – a key consideration in a world of interconnected global markets.
Of course, a more unified approach to financial sector regulation is nothing new to this province. The Saskatchewan Financial Services Commission was created back in 2003, integrating the three major organizations that regulate financial services in this province – the Saskatchewan Securities Commission, the Financial Institution Section of the Consumer Protection Branch and the Pension Benefits Branch of the Saskatchewan Department of Justice.
Saskatchewan is also a signatory to a 2003 Provincial Ministers Discussion Paper, calling for “significant reforms” in response to changes in capital markets. Saskatchewan is seeking to settle the question of the jurisdiction of the provinces in this matter – and not set a precedent for other areas such as resources – but remains open minded, awaiting the ruling of the high court. Minister Morgan remains open to exploring the idea of a national regulator, awaiting the Supreme Court of Canada ruling next fall. And in the meantime, he continues to work with the Canadian Securities Transition Office.
Janice MacKinnon, in her recent article, makes a very important point: be at the table early to influence the decisions and establish a niche of expertise that can be located here in the province!
Of course, any time a new national institution is being created, there is understandable concern that regional voices be heard and regional interests represented. The Government of Canada has been sensitive to that from the get-go. They invited all thirteen provinces and territories to participate in the transition planning process. So far, ten have agreed to do so and together they act as an advisory committee to the Transition Office.
I’m proud that Saskatchewan is one of the 10 – and that Dale Linn, a distinguished lawyer from Saskatoon – is its member on the advisory committee. We need to continue to hear Saskatchewan’s rational and reasoned voice because investment is so critical to our future here!
I don’t need to tell you that this province has become what the Globe and Mail calls the “it” province. Rich in potash, uranium, oil and gas, coal and copper, mustard and lentils. All of this has brought investment to Saskatchewan and made us not only the world’s food basket, but the commodity superstore. The world was invested during the recent potash debate! We are one of the new centers of the universe.
The proposed legislation would preserve and build on these successes. Indeed, the Government of Canada has every incentive to ensure that the Saskatchewan capital markets and industries continue to prosper.
That is why, under the proposed legislation, local offices will be retained – offices that both reflect regional expertise and understand regional economies. Offices that will provide a local window of access – with the authority they need to make the regulatory decisions they should.
These local offices can give Canada a competitive advantage, making our markets – Saskatchewan’s markets – more attractive and accessible to both Canadian and international investors.
So new approaches – bringing together the best of both worlds – the simplicity and consistency of one set of rules with the expertise and experience of regional capital markets. An approach that is long overdue.
Eight years ago, in 2003, Harold MacKay and the Wise Persons Committee issued a report calling for the reform of Canada’s securities regulatory system. The name of that report? It’s Time
Now, in 2011, it truly is time! The financial turmoil of recent years has revealed the weaknesses – and risks – of our fragmented system. We simply cannot afford to put this off any longer.
My hope is that Saskatchewan will, by working with the federal government, help shape a securities regulator that will be good for Saskatchewan and good for Canada.
Building for the future – it’s what we do here in Saskatchewan.
This Saskatchewan attitude, this value system is what and how we are – generosity of spirit – and it is every bit as important as the oil in the ground or the crops in the field to ensuring our successful future!
We should say, “let’s try it” – rather than “we’ve never done it that way before – so let’s not.”
The possibility that our growth offers is that it no longer just allows our children to imagine a life away from small towns and to have the comfort of knowing that when they head home the roads will still take them there.
But more importantly today, knowing they don’t have to leave at all!
They are learning what community spirit is about. It is what Saskatchewan is about!