CANADA - Faced with a "demographic timebomb" and intensifying international competition, Canada must look to improve productivity growth, says federal finance minister Ralph Goodale (pictured).
Speaking to the Halifax Chamber of Commerce, Goodale said Canada must look to measures like the removal of the cap on foreign investment, announced in its 2005 Budget, to drive financial market efficiency.
“The fact of the matter is our country is facing a demographic timebomb,” he said. “As members of the baby boom generation begin to retire in large numbers over the next 5 to 10 years, the remaining members of the workforce will be supporting an expanding population of seniors. There will be more and more reliance upon health care, pensions and other social programmes, with fewer people coming along to finance them.”
He added: “We must continue to reduce domestic and international barriers to capital flows because we can be confident in the strength and skill of the Canadian financial services sector and the attractiveness of Canada as an investment destination.”
Goodale pointed to the need to establish a national securities regulator as one way of building a stronger Canadian economic union.
“I believe strongly that our current structure, with its fragmented and costly system of multiple provincial and territorial regulators, is outmoded,” he said. “In an era of global capital, provincial capital markets simply won’t do.”
He said officials at the Department of Finance had begun discussions with their provincial counterparts to find a “reasonable way” of making better progress on the issue.
The securities industry has long pushed for consolidation of the securities regulators, arguing there are significant differences in the treatment of the same pension depending on whether its sold to you by a securities dealer or an insurance company.
Pat Walsh at SEI Investment in Toronto explains the problem this creates: “The regulatory burden on the securities dealer is huge - essentially they treat every member of the plan as if they are a personal investor with that securities dealer. If an insurance company goes to the same employer, sells exactly the same solution and brings that same group of members on board, they don’t have to do any of those things. So for starters, there’s a huge imbalance between the burden for one type of provider versus another.”
Goodale added: “Although provincial and territorial government have made some efforts to better coordinate their situations, their initiatives fall far short of what is truly required to give Canada a world-class system of securities regulation.”
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