Although a june federal election would nullify the measures introduced in the recent federal budget, financial advisors and investors can be pretty confident that the elimination of the foreign-content ceiling and the increase in RRSP contribution limits will be effective for 2004, regardless of which party forms the government.

The industry can also expect that, whether a Liberal or Conservative government is in place, the pursuit of a national securities commission and the process toward allowing banks to merge will continue. Both parties also favour corporate tax cuts when affordable, and would give serious consideration to eliminating double-taxation of dividends. One point of departure: the Tories favour tax pre-paid savings plans, while the Liberals have decided not to pursue it.

Monty Solberg, Conservative finance critic, says that if his party wins the election it would quickly pass similar RRSP legislation. Even if the Tories form a minority government, it would almost certainly muster sufficient support for its budget. The Liberals obviously support the measures and, as an opposition party, it would not be willing to enrage the electorate with another election. If the Liberals win, they would simply proceed as planned. Another budget might be introduced but it would certainly include the RRSP measures.

This is critical because investors who exceed the foreign content limits will face financial penalties. In addition, a number of mutual fund manufacturers have already started the process of dismantling RRSP clone funds.

Both Liberals and Conservatives are on the record supporting a national securities commission. In an interview with Investment Executive, Finance Minister Ralph Goodale explained: “[This is] of sufficient importance that we can’t wait forever. Raising capital is critical to economic well-being. Others have improved their financial sectors and regulations. Participants here want a world-class system.”

Certainly the wise persons’ committee said in its December 2003 report that its extensive consultations with investors, issuers, financial intermediaries, industry associations, regulators and others indicated there was an “unprecedented consensus on the need for change.” It recommended a new structure, cooperatively created and overseen by the federal and provincial governments, made up of a single regulator administering a single code.

Goodale plans to push ahead — unless there’s an election. “It’s possible to assemble a team of like-minded governments of sufficient size and importance to make progress,” he says. A conference call with deputy ministers on this subject, has already taken place.

If a full national securities commission is not possible, Goodale would go for a partial or a dual system, but not the “passport” system proposed by some provinces. “[The government] has heard from virtually all capital market participants that the present system, and even the passport model, is not good enough,” he says.

If the government can’t get unanimity among the provinces by the end of the year, it will look for another model. One option is that of the Canada Pension Plan and the Quebec Pension Plan. “There are interesting parallels,” he says. A dual system would not be “ideal,” but he clearly feels it would be better than the current patchwork.

Solberg agrees that a common set of rules — “one-stop shopping for capital” — is the ideal. If the Conservatives win, he says, the party would use its influence with the provinces to work toward a national securities commission. Although it understands that Alberta and Quebec feel strongly about “not being swamped” by Ontario, he maintains it’s in everyone’s best interest “to make it as easy as possible to raise money.”

Conspicuously missing in the Goodale budget was TPSPs, which had been mentioned in the previous two budgets as a measure under consideration. Versions of TPSPs already exist in the U.S. and Britain, where they have been very successful. The Investment Funds Institute of Canada has recommended TPSPs and the Conservatives included them in their last election platform.

They are still under examination, Goodale says: “But after a thorough discussion, we decided upgrading the RRSP and RSP was the most efficient and proven way [to encourage retirement savings.]” Certainly, that was what the Conference for Advanced Life Underwriting and IFIC wanted.

Goodale adds that the value of TPSPs is not clear: “Some say low-income earners will use an RRSP first, while others see it the other way around.” As well, “we would have to sort out how TPSP investment income would be treated for income-tested benefits and credits.”