A national securities regulator? Full speed ahead, Ottawa

Bourse - Québec inc. vs Toronto inc.

A passport is a government-issued document that facilitates travel from one country to another. Within Canada, it's inconceivable that anyone would need a passport to move or do business inside the country. After all, we are one country. But in the fractured world of securities regulations, we have passports. And these passports, their defenders say, are just fine.
What we have in Canada is one banking system, one currency, one national economy and 13 securities regulators. Why? Because some provinces insist they must regulate everything to do with such transactions - within one country and in a globalized economy.
This patchwork has been the height of petty parochialism for years. It has defied suggestions to create a national securities regulator, such as exists in other major industrialized countries. It has also defied advice to Canada to create a national regulator from the International Monetary Fund and the Organization for Economic Co-operation and Development.
Federal governments have come and gone, each asking "experts" for their advice. Task forces and commissions have been established. And the advice has always been the same: Get with the program. Create a national regulator. End this business of 13 mini-empires.

But the mini-empires have struck back - with passports. Get a passport from one provincial regulator, and the passport will deem that you have complied with the requirements of regulators in other provinces - for some, but not all, kinds of transactions.
Quebec, Alberta, Manitoba and British Columbia have opposed a national regulator, and so the idea went nowhere. Now, the international economic crisis has changed the B.C. government's mind. That same crisis (plus the logic of the argument) might, just might, change Manitoba's mind. Quebec and Alberta remain obdurate.
Fine, let them stay outside the national regulator and see how long they like their splendid isolation. They will be little enclaves with limited futures, just like Alberta's proposed province-only cap-and-trade carbon emissions market that will collapse when a North American system is implemented.
This week, the latest in a series of reports recommended a national securities system. It was an intelligent report that, while proposing a national regulator, nonetheless took into account regional sensitivities. But the report's bottom line was imperative: Proceed. If recalcitrant provinces want to remain on their own, let them.
The Harper government should grab this advice, but whether it will remains unclear. Finance Minister Jim Flaherty has endorsed a national regulator, but this is the government of "open federalism" and "respect" for provincial jurisdiction - a government rooted in Alberta that has mollycoddled Quebec to no discernible political gain or reinforcement of national unity.
The creation of a national regulator might well provoke a constitutional battle between Ottawa and the dissident provinces. If so, bring it on.
Canada needs a strong internal economic market in all of its dimensions. For that to happen, the federal government's jurisdiction in economic matters needs to be affirmed and, where possible, widened.
The provinces recently have made significant strides toward eliminating interprovincial barriers to trade. Good for them. But how many decades and how many false starts did that take? These days, the world doesn't move as slowly as interprovincial negotiators might like.
Who knows how the Supreme Court of Canada would rule in a case that pitted provinces' control over "property and civil rights" with the federal government's need to consider the national interest? In the United States, the Supreme Court breathed life into the interstate commerce clause decades ago in rulings that helped to shape that country's federation and internal market, blowing away states' rights arguments.
Maybe our Supreme Court would uphold the narrow provincialists, in which case Canada would remain in this, as in other areas, a country of fiefs, each angry at some other part of Canada and each defiantly protective of its own little jurisdictional territory. Canada would be, quite properly, a diminished little country, with no one to blame but itself.
If the court took a larger view of Canada, of the need for Canada to compete internationally and to bring itself more into line with international practices, it would strike a blow for the country and, incidentally, for a more competitive economy.

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