Pressures for reform in the area of financial institution regulation and the British Columbia response, 1982-1986
Date
1987
Authors
Ford, Robin Erica
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Abstract
This thesis examines the response of the government of British Columbia to pressures for reform in the area of financial institution regulation from 1982 to 1986. By 1982, most governments in Canada were receiving messages from their regulators and policy advisors and from the financial sector that regulatory reform was long overdue. Until December 1986, most initiatives toward regulatory reform were limited to government or government sponsored studies and reports, green papers and white papers. In order to illustrate the primary lines of policy development in Canada and their rationale, the 1985 federal Green Paper is discussed in some detail along with its predecessors, the 1964 Porter Commission Report, the 1969 Parizeau Report and the 1976 Economic Council of Canada Report. The thesis also examines the major reports published after the Green Paper up to the publication of the December 1986 federal White Paper. These reports demonstrate the complexity of this regulatory area and the difficulties raised by the federalĀ-provincial division of powers.
All government policy responses were conditioned by the constitutional division of powers and the thesis outlines the relevant provisions of the Constitution Act, 1867 and their judicial interpretation. The responses were also conditioned by the existing regulatory framework in each jurisdiction and the British Columbia and federal systems are outlined.
The British Columbia response up to November 1986 was minimal compared to that of the provinces of Ontario and Quebec and the federal government. The difference is explained in terms of the theories of Trebilcock and others concerning the vote maximizing behaviour of the politicians. The writer finds that the British Columbia Cabinet saw no need to take any significant action toward regulatory reform for several reasons including the lower pressures for change (compared to those in Ontario, Quebec and Ottawa), lack of expertise in Cabinet and the bureaucracy, Cabinet orientation toward laissez-faire government and less regulation, the Cabinet priority of economic development, the de facto regulatory power of Ontario and Ottawa and the existence of a system of policy formulation which was not conducive to complex decision making. This system of policy making is described in terms of the elite accommodation model of Presthus.
The examination of the British Columbia response was also conducted in the light of the theories of Schultz and Alexandroff, Thorburn and others which hold that decision making about regulatory policy will be made much more difficult when governments adopt regulatory goals which do more than "police" the regulated area and also act to more directly interfere in the economy by "promoting" the regulated sector or by using the regulated sector to achieve exogenous "planning" goals. These broader goals make it harder to aggregate interest group demands and complicate federal-provincial (and interprovincial) relations. Patterns of interest group representation and the "politics of regulation" may change. Schultz and Alexandroff have applied these hypotheses to securities regulation in Ontario and the hypotheses assist in an explanation of policy initiatives in that and other provinces and at the federal level. The writer concludes, however, that the theories were of less assistance 1n British Columbia where Cabinet had not adopted expanded regulatory goals. The politics of regulation had changed to some degree in British Columbia, but this had more to do with the blurring of functions among the "four pillars" and the expanded interest group representations that this produced as discrete regulatory areas became increasingly interdependent.