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Flaherty pushes draft law for single regulator

May 26, 2008 at 9:13 PM EDT

TORONTO — The federal Finance Minister has tapped Bay Street lawyer Ed Waitzer to draft legislation for a proposed national securities regulator, and will put the project before his provincial and territorial counterparts in Montreal this week.

Mr. Waitzer, a securities lawyer at Stikeman Elliott LLP, would not comment yesterday beyond confirming that he and his firm have been hired by a government-appointed panel to draft legislation that would replace Canada's 13 provincial and territorial regulators with a single agency. Mr. Waitzer is a former chairman of the Ontario Securities Commission (OSC).

The panel is led by Tom Hockin, a former federal cabinet minister who helped create Canada's federal banking regulator. It has until the end of the year to table a report.

The contentious topic of a single regulator will be on the agenda at a two-day meeting, beginning Thursday, between Finance Minister Jim Flaherty and his provincial and territorial counterparts .

Mr. Flaherty said yesterday that he plans to raise “economic union” issues at the meeting. These include interprovincial barriers that restrict the movement of goods and services in Canada and a common regulator, he said.

“These are areas that harm the Canadian economy and they harm our economic union,” he told reporters in Ottawa. “They harm our economic growth.”

Mr. Flaherty has long argued that having 13 separate regulators police the country's capital markets leaves Canada at a competitive disadvantage on the world stage.

But three of the provinces – British Columbia, Manitoba and Quebec – remain staunchly opposed to ceding their control over the securities industry to Ottawa. Ontario is the only province that has openly supported the federal government's initiative.

Peter Dey, also a former chairman of the OSC, described the proposed draft legislation as a constructive initiative.

“One of the problems is that people have not had a template in front of them against which they can react,” Mr. Dey said in an interview yesterday.

Mr. Flaherty is by no means the first federal minister to attempt to overhaul Canada's regulatory system.

The topic has been on and off the political agenda for the past 40 years, with successive finance ministers saying the time has come to create a single regulator.

As recently as 2003, a committee appointed by the former Liberal government recommended creating a national body based in Ottawa.

The so-called “wise persons” committee, set up by former Liberal finance minister John Manley and headed by Vancouver energy executive Michael Phelps, recommended that the federal government work with the provinces and territories to create a national regulator.

That initiative, like those before it, went nowhere. However, the wise persons committee obtained legal opinions from constitutional experts saying Ottawa could act unilaterally if some of the regions persist in resisting such a move. The thinking this time around is that the federal government can avoid appearing to pre-empt provincial jurisdiction by drafting a model statute that the provinces could opt into.

This is the first time the federal government has gone so far as to draft proposed legislation that would hand over responsibility for securities regulation to a single body.

Mr. Flaherty has said a single regulator could save Canadian businesses at least $59-million a year.