The Shotgun Blog
« Actress Brittany Murphy dies at 32; Is there a drug war connection? | Main | Premier Stelmach deserves credit for delaying cell phone ban; Art Johnston deserves an early retirement »
Sunday, December 20, 2009
Wildrose Alliance must support Alberta’s court challenge over federal move to create a national securities regulator
The Wildrose Alliance has a policy to “cut red tape and the regulatory burden by 1/3 from 2009 levels.”
That sounds great. So does the party’s policy to “support social responsibility within the framework of a free enterprise economic system and promote compassionate service, volunteerism, individual responsibility and care for those unable to care for themselves.”
But creating good policy at policy conventions is the easy part. The hard part is acting on those policies in the face of political opposition.
Wildrose Alliance Deputy Leader and MLA Paul Hinman was quick to abandon the party’s policy on “social responsibility” last week in an attempt to score political points over the government’s wise decision to cut a modest 10% from People with Developmental Disabilities (PDD) service agencies, a small part of a broader effort to reduce the province’s $4.7-billion deficit.
Hinman called the cuts “repulsive and disgraceful” but offered nothing meaningful by way of alternative policy, and certainly offered nothing resembling the party’s stated policy to work within the “free enterprise economic system” to “promote compassionate service.”
Don't get me wrong. I haven’t lost confidence in Wildrose Alliance. In fact, I’ve never been more excited about Alberta’s future given recent polling numbers showing the party could form the next government under the leadership of Danielle Smith. But Hinman’s posturing on this issue demonstrates how quickly and easily even a principled politician – and Hinman is about as principled a man as you’ll find in politics – can be taken off course by the allure of positive headlines.
So when the party promises to “cut red tape” and “regulatory burden,” we should anticipate that this policy as well will invariably face opposition from within the party as operatives and strategists try to capitalize on misguided public sentiment that wrongly blames deregulation for the global financial crisis.
Decisions to reduce the size and scope of government are always difficult, which is why I’m impressed with the Alberta Tories over their decision to reduce social spending, and with their decision to fight the federal move to create a national securities regulator, which is what I want to write about in this post.
In a statement on December 18, Iris Evans, Minister of Finance and Enterprise announced that the Alberta government will be going to the Alberta Court of Appeal to test the constitutional soundness of the federal government’s move to create a single Canadian securities regulator.
“Securities regulation is a matter of provincial jurisdiction, and acknowledging federal authority in this area would have implications in other areas of financial regulation that have historically been provincial responsibility,” said Iris Evans, Minister of Finance and Enterprise. “The interests of Albertans and the Alberta capital market are best served by the existing regulatory structure. There is no need for this intrusion into provincial jurisdiction.”
Alberta will also intervene in support of a similar challenge by the Québec government to the Québec Court of Appeal. According to the government, joining with Québec will allow the two provinces to share resources and co-operate in other aspects of the two cases. It also sends a stronger message of opposition to the federal plans.
Alberta will argue the federal move to enact federal securities legislation and establish a single national securities regulator represents an unwarranted expansion of the federal trade and commerce constitutional power, opening the door to the federal regulation of other areas that have historically been regulated by the provinces. This could impact many areas that are currently considered to be matters of provincial responsibility. It could also hinder investment opportunities for small Alberta businesses.
The federal government has announced its intention to ask the Supreme Court of Canada to confirm that it has the power to enact comprehensive legislation regulating securities. However, as it may be many months before a federal reference is initiated, Alberta is moving forward now with both its own reference and its intervention in Québec’s reference.
“We believe this intrusion into this important area of provincial jurisdiction will set a precedent for the federal government to intrude in other critical areas of provincial jurisdiction, and we must take bold action now to defend against that,” said Evans.
The Alberta government may simply be acting to protect its own turf, but in doing so they are defending small businesses against costly and ineffective financial regulations that keep good investment opportunities out of reach of average investors and drive independent players in the financial service sector out of business.
In a post last year on this topic entitled “Tories slithering to socialism with national securities regulator,” former Western Standard blogger and now a Commissioner with the Alberta Utilities Commission, Dr. Moin Yahya, wrote:
The [federal] Tories announced that they will introduce a national securities regulator. This is an utter disgrace and an open war on provincial sovereignty. If this new regulator were to be effective, they would have to abolish all the provincial regulators.
Yahya argues that “The real driver behind this is Ontario that wants all the other provinces to follow their inefficient and socialist regulatory lead.”
Anyone committed to political decentralization and free markets should support Alberta’s court challenge to stop this national regulator.
That includes the Wildrose Alliance.
Posted by Matthew Johnston
Posted by westernstandard on December 20, 2009 | Permalink
Comments
Wonder what extremist John Collison has to say about this. Then again he's probably just mad that he got the pink slip from Harper a decade ago. Let it go already.
Posted by: Antonia Esposito | 2009-12-20 11:27:45 PM
Hinman definitely is a principled Canadian conservative; a principled, interventionist, regulationist, welfare statist Canadian conservative.
Posted by: shel | 2009-12-21 7:40:52 AM
...and our federal Conservative "keepers" are protecting us from ourselves again:
http://www.theglobeandmail.com/report-on-business/flaherty-warns-on-mortgage-rules/article1407223/
tell me the difference between a conservative and a liberal again?
Posted by: shel | 2009-12-21 7:52:46 AM
"tell me the difference between a conservative and a liberal again?"
Only the ends. The means are the same. But no worries, there is almost no chance of any gov't reigning in the ticking time bomb that is the CHMC. And now that we're inflating and keeping rates low ... I suggest you buy housing-related equities in Canada. Just don't forget to sell them before all of this blows up ;)
Posted by: Charles | 2009-12-21 8:52:38 AM
~Charles
are we the only ones who see it? i've had a sense of forboding for a while. drive around any tradesman town like Leduc and look at the recently acquired mcmansions with the pickups and two quads in the back, and the cars right beside them. the economy is obviously f:)cked, being propped up by nothing tangible, and people keep buying.
am i just paranoid? or...
...ticktickticktick....
Posted by: shel | 2009-12-21 10:43:57 AM
You're not paranoid Shel. The recent increase in housing prices are completely unsustainable. I make monthly calculations of affordability indices per province and I just doesn't make any sense. The CMHC has securitized over 100B of mortgages over the past year and I hear the bankers have lobbied to keep the scam going. Why wouldn't they? It's riskless profit. This, of course, will continue until rates go up high enough to make houses unaffordable. I could be several years.
The problem, as I see it, is that too few people make the connection between the low rates and asset bubbles. Now it is entirely possible that Harper and Flaherty will try and reign this in (although unlikely in my opinion regardless of what Flaherty tells CTV). If they do, all that extra liquidity will simply flow somewhere else (I'm currently betting on green techologies).
"being propped up by nothing tangible,"
Oh it's something tangible alright (at least for now); a whole truckload of printed money.
Posted by: Charles | 2009-12-21 11:20:49 AM
I fail to see what Alberta is worried about.There are no stock exchanges in Alberta. The last two banks to fail in Canada were both from Alberta, Northland Bank and Canadian Commercial Bank and it took the the Royal and BMO to clean up that mess. It's best to leave banking and finance with the experts on Bay St. and Albertans to dig sludge out of the ground.
Posted by: The Stig | 2009-12-21 11:49:30 AM
"The Alberta government [is] defending small businesses against costly and ineffective financial regulations..."
First of all, this has next to nothing to do with "small" business since small businesses do not issue shares on the stock market. As for medium- to large- businesses, you've got it exactly wrong because a single regulator would REDUCE costs for business and the plethora of regulations.
Attacking the idea of a single regulator is like attacking the WTO because it is inconsistent with national sovereignty. It is left wing protectionism. Only Bosnia has a more balkanized securities regulation system than Canada. Ideally, there should be a common North American regulator (a variant of the SEC) or even better a global regulator, since capital markets are global. But absent that we should at least move beyond the absurdity of a securities regulator in PEI.
Alberta's obstructionism is in the face of an initiative of a federal Finance Department with a "Conservative" minister. And it puts Alberta in cahoots with Quebec. Since when is that "right wing"?
I worked at Finance Canada and issuers across the country were sick and tired of having to adjust their prospectus for every jurisdiction. The buy side didn't like 13 regulatory rule books either. THESE are the people whose opinion should matter.
This is yet another optics stunt by the Stelmach govt which will play the anti-Ottawa card every time it is in political trouble.
If Albertans really want economic sovereignty we should be lobbying for our own currency and an end to national equalization.
Posted by: Brian Dell | 2009-12-21 1:34:38 PM
"If Albertans really want economic sovereignty we should be lobbying for our own currency and an end to national equalization."
I like it.
Posted by: Matthew Johnston | 2009-12-21 1:41:21 PM
"The buy side didn't like 13 regulatory rule books either. THESE are the people whose opinion should matter."
You are absolutely right Brian. We do hate this kind of thing. We also hate it when bureaucrats (who know nothing of the industry) are making the regulations. And of course, with more centralization, comes more bureaucracy and more idiotic disclosure rules. Take IFRS for example.
What we really need is more flexible disclosure rules and less regulation. This means that we should be able to negotiate directly with firms over what the disclosure requirements should be. Different industries could easily set up associations to make this happen. That way, the buy side would actually get a say in the way things are done. You also wouldn't get bureaucrats listening to accountants and creating disclosure requirements which only benefits the accountants.
Posted by: Charles | 2009-12-21 1:56:10 PM
If Albertans really want economic sovereignty we should be lobbying for our own currency and an end to national equalization.
Posted by: Brian Dell | 2009-12-21 1:34:38 PM
Bwahahahahahaha. Canada has had two bank failures since 1932, both were in Alberta, Northland Bank and Canadian Commercial Bank. To suggest that Alberta should issue any form of currency when it can't even run one successful bank is laughable. In 2008 the World Economic Forum ranked Canada as the best banking system in the world. We should be proud of that and make sure no Alberta banks get chartered as they will inevitably fail.
Posted by: The Stig | 2009-12-21 4:15:39 PM
True, 2 of the more recent bank failures were in Aberta....courtesy of Pierre Trudeau's National Energy Policy. That bit of legislation had deveastating and lasting effects on this province. Fast forward to the present and see that Canadian Western Bank is the fastest growing and most profitable (based on ROI) bank in Canada - headquartered in.....Edmonton. WHat of the success attained at ATB Financial? Here you have what may be the largest financial services IPO in the past decade if and when the ALberta government decides to finally sell the asset.
I would advise that you don't post such foolish and divisive comments and if you the real facts don't back it up. Just a guess but I imagine you are a staunch supporter of Al Gore and the AGW crowd??? They don't let facts influence their beliefs either.
Posted by: Hornetdriver | 2009-12-21 6:14:37 PM
True, 2 of the more recent bank failures were in Aberta....courtesy of Pierre Trudeau's National Energy Policy.
Posted by: Hornetdriver | 2009-12-21 6:14:37 PM
Untrue. Both banks failed due to the worldwide collapse of oil prices and very, very bad loans.
Fast forward to the present and see that Canadian Western Bank is the fastest growing and most profitable (based on ROI) bank in Canada
Posted by: Hornetdriver | 2009-12-21 6:14:37 PM
RBC net profit for the last quarter $1.2 billion.
Canadian Western Bank profit for the last quarter $30 million. While RBC, BMO, BNS are world class banks, Canadian Western Bank is in the flyweight division.
WHat of the success attained at ATB Financial? Here you have what may be the largest financial services IPO in the past decade if and when the ALberta government decides to finally sell the asset.
Posted by: Hornetdriver | 2009-12-21 6:14:37 PM
Is ATB still making loans to friends of the government? Is the board of governors still selected by the government? RBC assets $750 billion. ATB assets $26 billion, another flyweight.
Posted by: The Stig | 2009-12-21 7:00:05 PM
Stig,
You should really stay away from commenting on financial and business issues. Since when is bigger necessarily better? CWB is an excellent bank regardless of its size. As for the currency issue, how much as the Canadian dollar depreciated over the last 80 years? You call that success?
Posted by: Charles | 2009-12-22 1:31:41 PM
Oh ... and as anyone financially competent will tell you, the big banks have someone to bail them out where the smaller banks do not. That someone is the central bank.
For example, in this crisis, the large Canadian banks were being lent money at 0.25% by the BoC. Essentially, this money will probably never be repaid. The banks then bought bonds with all this cash. At 3% or even 4%, the spreads were massive. Of course, since there is no free ride in life, guess who'll have to pay for all these gains?
Posted by: Charles | 2009-12-22 2:10:27 PM
The comments to this entry are closed.