From the Globe and Mail:
Ontario Premier Dalton Mcguinty unveiled a mini cabinet shuffle Monday morning following the surprise resignation of veteran MPP Joe Cordiano, Minister of Economic Development and Trade.
A subdued-sounding Mr. Cordiano, an MPP for 21 years, said at a news conference that he was leaving for personal reasons.
"Let me begin by saying I'm standing here with very mixed emotions," Mr. Cordiano said. "After a great deal of reflection, I've decided my time here should come to an end."
You can read the rest.
My concern is this: If there was a cabinet shuffle, why not address the long-standing problem of Greg Sorbara?
Greg Sorbara is the Minister of Finance. But when he took over the portfolio in 2003, a problem immediately surfaced with regards to his oversight of one of the most powerful entities in the province, the Ontario Securities Commission:
[Finance Minister Greg] Sorbara became involved in a potentially serious conflict-of-interest controversy not long after his appointment. In late 2003, the Ontario Securities Commission informed the Finance Minister's office that Royal Group Technologies would be announcing they were under investigation by the OSC. As a former director of Royal Group, this placed Sorbara in a conflict of interest as he also oversaw the OSC. Sorbara could not consult the Premier concerning the conflict of interest as he was restricted by the province's Securities Act from informing anyone else of the impending announcement by the company. Royal Group did not announce the investigation for almost two months.
Instead of firing Sorbara (who did not offer a resignation, as far as I can tell), Premier Dalton McGuinty decided it was better to keep Sorbara as Finance Minister. If he could not fulfill all the duties of Finance Minister, then the solution was to reduce the number of duties he had to fulfill:
Due to possible perceptions of conflict of interest, oversight of the Ontario Securities Commission was transferred from Finance Minister Greg Sorbara to [Management Board President Gerry] Phillips in the winter of 2004.
So how is the Management Board qualified to draft legislation concernng the complex world of securities?
The Management Board of Cabinet is a sub-committee of Cabinet Ministers and Parliamentary Assistants who manage the fiscal plan of the government including controlling all government spending, approving labour agreements and workforce planning, manage the provincial contingency fund and oversee the procedures and directives that guide the operation of the Ontario Public Service.
These are the people who are supporting Phillips in managing the OSC? Labour bureaucrats?
But then in June 2005 Sorbara took over the Management Board as well as Finance, and the OSC had to be moved away...again. It followed Phillips to the new Ministry of Government Services:
The OSC is a self-funded Crown Corporation responsible to the Ontario Legislature through the Minister of Government Services.
This ministry is focused on how to deliver government services to individuals and businesses -- online, kiosks, by phone, etc. The bureaucrats are retailing experts, not financiers.
You would think that when Sorbara finally resigned from Finance, the OSC would go back home. It was not to be, because like that cat from the cartoon, Sorbara came back:
There are "reasonable grounds" that Greg Sorbara committed a crime in relation to two Ontario land deals in 1996 and 1997 involving Royal Group Technologies Ltd. and a private firm headed by his brothers, the RCMP alleged in documents released yesterday.
Mr. Sorbara, the Ontario Liberal who resigned in October as finance minister, was a Royal Group director from 1994 and 2003 and sat on its audit committee when the land deals -- worth $2.5-million -- took place.
Royal Group bought two plots of land in Brampton, Ont., northwest of Toronto, from a company named Sam-Sor, part of Sorbara Group. The firm is partly owned by Mr. Sorbara, as well as his brothers, Edward and Joseph.
"Greg Sorbara failed to notify [Royal Group's] external auditors, KPMG, about ownership in a company involved in the transaction and this failure also supports my reasonable grounds that he committed a criminal offence," RCMP Staff Sgt. Mel Young wrote in documents filed in court in late September and made public yesterday.
Sorbara resigned as Finance Minister on October 11, 2005, and Dwight Duncan took over. Sorbara won his fight to get his name off the warrants, and Dalton McGuinty reinstated Sorbara as Finance Minister this past May, even though the cloud has remained.
The OSC has remained with Government Services, instead of putting it with Finance under a new minister. Even when the opportunity presented itself, McGuinty prefered to keep Finance ready in case Sorbara came back. Which he did.
Now some would say that the conflict of interest has been resolved by keeping the OSC out of Finance. Perhaps, but remember that the Minister of Finance is the second most powerful man in the province. Every ministry depends on the good graces of the finance minister to set the budget. If Sorbara could not be trusted to manage the OSC directly, why is it that he can be trusted to set the budget of the ministry that oversees that OSC?
Responsibility goes up a chain. Though the reporting structure is such that the Minister of Finance and the Minister of Government Services both report to the premier separately, the budget setting power of the Minister of Finance makes him a first among equals.
Why should this matter? The OSC is pursuing a harmonization effort with other Canadian securities commissions. For instance, there is an effort to harmonize the rules for takeover bids:
The Instrument is designed to harmonize most of the requirements and restrictions governing take-over bids and issuer bids and related early warning requirements across all Canadian jurisdictions, including the four jurisdictions that do not currently regulate bids.
That means meetings between Finance Ministers and their senior bureaucrats, people who have been working together for years on budget and securities issues, to discuss goals and timetables and legislative changes. Well, except for Ontario, by far the largest securities market in Canada, who sends the Minister of Government Services and the government retail bureaucrats to the table.
If the OSC demands a particular change that might not be in the best interest of investors, for example, is Government Services going to say no? Likewise, is Ontario going to follow the lead of Alberta's or British Columbia's Finance Ministers on these discussions, simply for lack of clout because Ontario's Finance Minister is not allowed to get involved?
Phillips is not allowed to even ask Sorbara for his opinion on OSC matters as they might related to Finance, for crying out loud. You think other provinces and securities commissions might want to take advantage of that? Hey, if I were the OSC, I would be taking advantage of that.
By all accounts, Phillips is an excellent economist, and would make a fine Finance Minister. Why Dalton McGuinty insists on this strange splitting of responsibilities instead of just swapping ministers has got me scratching my head.
Maybe there is more to this. I'll keep looking.
