Finance Minister Jim Flaherty suddenly has an extra $150-million in his pocket thanks to the Supreme Court’s decision to reject his plan for a national securities regulator.
Nearly three years ago, Mr. Flaherty squirrelled away millions of dollars in his 2009 budget, promising it would be used to help the government move “quickly” to create a national securities regulator with willing provinces.
A Finance Canada official confirmed Friday that the money will now be spent elsewhere.
“No payments have been made yet and the planned spending will be reallocated,” spokesman David Barnabe said in an e-mail.
Mr. Flaherty said this week that his government would respect Thursday’s opinion of the Supreme Court of Canada, which declared that Ottawa’s proposed legislation to create a national securities regulator was unconstitutional.
The court said the day-to-day regulation of securities markets is clearly under provincial jurisdiction, and, therefore, the proposed federal law went too far in trying to claim those powers for Ottawa. However, the court did suggest that a co-operative solution could still be reached in which the federal government focuses on systemic risk to the economy while provinces directly manage securities markets.
Only one province, Ontario, supported Ottawa’s plan.
While the $150-million will now be spent elsewhere, Ottawa has spent more than $15-million to date on a Canadian Securities Regulation Regime Transition Office. The office – set up to draft an action plan that would have kicked in had the Supreme Court given Ottawa the green light – built up a staff of 40 people.
The office was created in July, 2009, and spent $9.9-million in its first full year of operations in fiscal 2010-11. It spent $5.4-million in the previous fiscal year. The office has not said how much it will spend this year, but Ottawa said the total cost of the office cannot exceed $33-million.
In January, 2011, the office drew the ire of some provinces with a plan to spend up to $100,000 on a logo and other branding materials. After Manitoba called the planned spending “disrespectful” and Alberta called it “offensive” – in light of the fact that the Supreme Court had not yet ruled on the constitutionality of the transition – the office backed down.
Finance Canada has not yet confirmed whether the office will be shut down.
“As to its future, the federal government will review the Supreme Court of Canada’s decision carefully and act in accordance with it,” Mr. Barnabe said.
Toronto lawyer Philip Anisman, a legal adviser to the transition office, suggested this week that the office could still be used to work out a co-operative new form of national securities regulation between Ottawa and the provinces.
“It seems to me that whatever negotiations [that]have occurred to date can be used in a manner that would simply go forward,” he said Thursday in an interview with Business News Network. “The premise of [the negotiations]has been that a national regulator is a desirable outcome. And once we’ve started down that path, the mechanism for getting there isn’t all that difficult, I don’t think.”