A new securities regulator that will oversee two-thirds of Canada's capital markets owes its existence in large part to a relentless campaign by federal Finance Minister Jim Flaherty, who says even fellow Conservative government colleagues at times felt he should shelve the matter.
"I'm a litigator. I just didn't want to give it up," Mr. Flaherty recalled in an interview.
While it's still a work in progress, the new oversight body represents the 63-year-old Finance Minister's efforts to secure a legacy before he leaves politics – a departure he's not expected to make until he achieves his goal of balancing the budget in 2015.
Almost since he was appointed to the finance post back in early 2006, Mr. Flaherty has been cajoling and pushing provinces to agree to a single regulator that would replace a national patchwork of 13 securities commissions in the name of efficiency and more effective market surveillance – even though it wasn't part of the mandate originally handed to him by Prime Minister Stephen Harper.
The regulator announced Thursday is not quite national. Only Ontario and British Columbia have so far joined, but they represent about 65 per cent of the capital markets. Mr. Flaherty said he expects the Atlantic provinces, and the territories, will join in due course.
The timing of the regulator is no coincidence. The Harper Conservatives are looking for opportunities to contrast their government with rival party leaders Justin Trudeau and Thomas Mulcair as they prepare for an expected 2015 election. The return of the Commons in October will leave the Tories facing tough criticism daily over the Senate expenses scandal and they hope to weather the storm by showcasing efforts to bolster the economy.
While it's a pro-business initiative, the regulator is hardly the type of Main Street water-cooler issue the populist-minded Harper government considers a vote-getter. It's also a goal that has eluded federal finance ministers for decades. It threatened to ignite national discord as provinces including Quebec repeatedly resisted what they considered an unwarranted intrusion into their jurisdictional backyard.
Sources say the Prime Minister's Office at times grew antsy about Mr. Flaherty's campaign because it was irritating Quebec, a vote-rich political battleground where the Conservatives have repeatedly hoped to make breakthroughs.
At one point over this seven-year campaign, Mr. Flaherty recalled, even fellow Conservatives thought he should give up.
"We were all disappointed in the Supreme Court decision," he said, referring to a 2011 ruling that found Ottawa could not proceed with a national securities regulator in the manner it had proposed because it would be an unconstitutional intrusion on provincial powers.
"The government, some of my colleagues, had doubts about the wisdom of persisting on this subject," the Finance Minster said.
"But hope springs eternal," he added with a smile.
Tom Hockin, a Mulroney-era cabinet minister who also chaired a panel calling for a common regulator, echoed what one senior federal bureaucrat said privately in an interview Thursday – that Mr. Flaherty's tenacity throughout the years made the difference. "It took his stick-to-it-iveness. Since 1935 there's been at least a dozen efforts to do this."
Mr. Hockin isn't fazed by the fact only two provinces have signed on, saying he expects others will follow up. "Even when Confederation started there were a few provinces missing."
Asked whether he'd ever considering dropping the issue, Mr. Flaherty admits he grew discouraged at times – especially when provinces backed out of a deal. "There were a couple of times when I had indications from one province or another that they would be supportive. And then when it came down to signing an agreement in principle, they were not."
After the court decision, Ottawa embraced a more decentralized model, similar to the Canada Pension Plan Investment Board, where provinces and the federal government delegate their respective constitutional and legislative responsibilities to the regulator.
Asked whether he considers his work done in Ottawa, Mr. Flaherty replies: "We have to balance the budget."