The national power struggle over who polices Canada's securities markets is coming to a boil as Alberta moves to side with a Quebec legal challenge. Government officials in Ontario fear it's all part of a plan to pressure Ottawa to base its proposed national securities regulator outside Toronto, the country's financial capital.
The Alberta government plans to announce as early as Tuesday that it is joining Quebec, which is seeking a court ruling that Ottawa is overstepping its bounds by creating a single regulator, according to government and industry sources. Officials in Quebec said yesterday that having the two provinces work together to staunchly oppose ceding control to Ottawa sends a clear message that Quebec is not alone in arguing that Ottawa is encroaching on its turf.
Alberta plans to use the court action as a negotiating ploy to persuade the Harper government to make Calgary or Edmonton the home of the proposed national regulator, an industry source close to the situation said. That would not sit well with officials in the Ontario government, Ottawa's strongest ally in creating a single regulator. The officials insist that the head office must be in Toronto, the heart of Canada's securities markets.
A senior Ontario government source who asked not to be named said his "big fear" is that Finance Minister Jim Flaherty will give in to Alberta's demands and locate the regulator in that province.
"We would see that as a real slap to Ontario and to our industry," he said.
Ontario Premier Dalton McGuinty has also insisted the regulator must be based in Toronto.
"We just do it really, really well," he told reporters. "It only makes sense that we assume that additional responsibility here."
B.C. Finance Minister Colin Hansen said in a recent interview he is unaware any provinces have been wooed with offers of getting the headquarters of the new regulator.
"I would argue Vancouver is a great location," Mr. Hansen said.
Alberta has until Dec. 18 to intervene in the Quebec court case. Robyn Cochrane, a spokeswoman for Alberta Finance Minister Iris Evans, would only say, "We're still considering it."
But she did confirm that Alberta had lawyers in the Quebec Court of Appeal as observers on Dec. 3.
Alberta and Quebec are turning up the heat in an anticipated constitutional showdown with Ottawa. The Harper government announced last October that it is asking the Supreme Court to rule on whether Ottawa has the power to create a national regulator.
Ottawa is drafting legislation for the spring to create a national securities commission that would replace the country's 13 provincial and territorial regulators.
Mr. Flaherty has long argued that having a patchwork of different regulators police the country's capital markets leaves Canada at a competitive disadvantage on the world stage. He reiterated the need for a national regulator in Quebec City yesterday.
"We have a solid financial system in Canada, but this would help to reinforce our federal system," he said.
The topic of a national regulator has been on and off the political agenda for the past 40 years. But it is taking on renewed urgency as Canada prepares to host the Group of Eight economic gathering next June.
With files from reporter Janet McFarland
Karen Howlett
Rhéal Séguin