Jobs threatened

A single national securities regulator threatens thousands of Quebec jobs and weakens the province’s economic development, a newly formed coalition of Quebec’s business leaders warned Monday.

MONTREAL — A single national securities regulator threatens thousands of Quebec jobs and weakens the province’s economic development, a newly formed coalition of Quebec’s business leaders warned Monday.

They urged Ottawa to back down on its plans as Finance Minister Jim Flaherty said he was just weeks away from completing the legislation creating the new entity.

“There’s still time for Flaherty and (Prime Minister Stephen) Harper to change their minds,” Quebec Finance Minister Raymond Bachand said at a news conference.

“What the Quebec business community is telling Ottawa today and the rest of the country is that this is not a decision in the interest of the country.”

Quebec’s fight against the federal proposal has received the backing of Quebec-based companies Cascades Inc. (TSX:CAS), Jean Coutu (TSX:PJC.A) and Quebecor (TSX:QBR.B), along with the Caisse de depot et placements du Quebec, the chamber of commerce and the Conseil du patronat, the province’s main employers’ group.

The Desjardins Group, Quebec’s largest financial group, isn’t an official member of the coalition, but said it supports its objectives and hopes further discussions can lead to a workable compromise.

Bachand said centralizing decisions would immediately shift 500 to 1,000 high-level jobs to Toronto. It would be followed by a gradual move of supporting lawyers, accountants and tax specialists.

A study prepared by consulting firm Secor said there are 300,000 direct and indirect financial sector jobs in Quebec, about half in Montreal.

It found that creating a national securities regulator with headquarters in Toronto would “deprive Quebec of an important support for its economic development.”

In Halifax, Flaherty said he’s aware of Quebec’s concerns, but that studies have consistently shown that having 13 regulators instead of one adds to costs.

Canada is the only country in the G20 without a national securities regulator, something he described as “an international embarrassment to Canada which otherwise has a very strong brand in financial institutions and regulation around the world.”

“You know, sometimes as a country you have to look at the big picture,” Flaherty said later in a interview with the CBC.

“The only weakness in the Canadian financial system, and this is seen internationally as a Canadian weakness, is our securities regulation. We have a country of 34 million people with 13 regulators.”

Flaherty said it costs extra millions of dollars every year for business who want sell securities, do IPOs and the like. “And, in fact, many skip Canada or skip certain provinces in Canada because its not worth it to them,” he said.

Flaherty said it has been estimated in a Columbia University study that Canada is losing about 65,000 jobs a year because of the fact that the country has a broken up securities regulation system.

“So its important for our country in the long run and, if Quebec or some other province were to choose not to join, at least at the outset, that’s their right,” he said.

But the Alberta Securities Commission and the province’s Finance Department called criticisms of the current system unfounded.

Alberta Finance spokesman Bart Johnson said a provincial regulator has a better understanding of Alberta’s businesses, particularly junior players in the oil and gas sector.

“We do think that it would have an effect both on the economy and on jobs in the province,” he said in an interview.

Johnson said Alberta’s economy is different from Quebec’s, but the general concerns of both are the same, including a potential loss of skilled finance sector specialists.

Bachand said a centralized regulator would weaken Quebec’s financial sector and eventually encourage a further movement of corporate head offices to Toronto. Montreal suffered a dramatic shift in the late 1970s after the Parti Quebecois first came to power.

The minister said all big regulatory decisions would be made outside Quebec by people who won’t be “sensitive to the particularities of Quebec companies.”

“It’s project that is for Toronto, done for Ontario and in the interest of Toronto,” Bachand added, noting that Canada’s five largest banks are located the country’s largest city.

The Canadian Bankers’ Association said Monday that Canada’s system is out of synch with other countries around the world, which puts Canadian businesses at a disadvantage.

Supporters of one national regulatory body also say it would be a better watchdog against white collar crime because it would have more resources.

But Jean St-Gelais, head of the province’s securities regulator, countered that a centralized regulator wouldn’t do any better job of investigating or prosecuting cases.

He also questioned whether a centralized system would have ensured that Montreal be the centre for Canadian derivatives during the merger between the Toronto and Montreal stock exchanges.

Flaherty reiterated in the CBC interview his remarks of last week that legislation creating a regulator would be ready shortly weeks and the regulator could be running in three years. The legislation will be referred to the Supreme Court for an opinion on whether Ottawa has the constitutional power to enact such legislation despite provincial objections.

Holdouts such as Quebec and Alberta would be able to retain their existing systems.

The issue will also be heard by courts in Alberta and Quebec, where the provinces have challenged Ottawa’s authority to intervene on what they believe is provincial jurisdiction.

In Ottawa, the Bloc Quebecois lambasted the idea of a single regulator.

”This is predatory federalism,” said Daniel Paille, the party’s finance critic. ”Quebec is getting bulldozed and its nation is being stripped of an essential economic and financial tool.”