Bill C-21 (Historical)

Red Tape Reduction Act

An Act to control the administrative burden that regulations impose on businesses

This enactment enacts the Red Tape Reduction Act, which establishes controls on the amount of administrative burden that regulations impose on businesses.

Red Tape Reduction Act

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I would like to thank my hon. colleague for his speech and the work he does in his community. We know that he cares about the people in his community and he works very hard.

There are always questions that come to my mind. As the environment critic and a member of the Standing Committee on Environment and Sustainable Development, I know how much the Conservatives like to reduce environmental protections.

It would seem that they want to again reduce environmental protections with this bill. Of course, no one is opposed to cutting red tape. We all support that.

However, some regulations are useful and in the public interest. They must not be cut. I am also thinking of some controls that are really beneficial for Canadians and some specific measures that help small businesses and protect the environment and people's safety. These protections must not be reduced.

Does my colleague believe that we really need to cut red tape because it will be beneficial for SMEs, but that we must also ensure that we keep those measures that protect the environment and people's safety?

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Mr. Speaker, my colleague from Drummond is absolutely right. As the official opposition critic for the Department of Fisheries and Oceans, I have been concerned with some of the changes that have happened since the Fisheries Act was amended back in 2012. These changes have affected our ability to protect the ecosystem of our lakes and rivers in Dartmouth—Cole Harbour and across the country.

These are areas where, as I said before, regulations serve an important public interest. The concern is that with the government's gimmicky one-for-one approach and the fact that it is giving sole responsibility for doing this to the President of the Treasury Board is a matter that concerns me and our caucus a great deal.

The government needs to do a better job. Then there will be no need for gimmicky legislation like this.

[Dennis Bevington, NDP, Northwest Territories, NT]

Mr. Speaker, I am here today to talk about Bill C-21, an act to control the administrative burden that regulations impose on businesses. It is a good bumper sticker for Conservative politics later on in this year. It is also a bill that is in some ways very confusing.

If we take the basic premise that we will get rid of a regulation for every regulation we create, that logically says there are quite a number of regulations that do not need to be on the books right now. Why does the government not do some homework and identify the regulations that are not important to the Canadian public, to businesses and to the happiness of the Canadian state and simply eliminate those regulations? Would that not make more sense than tying up the time of the House of Commons with a bill that really does not nail anything down? It simply lays out a pattern that can or cannot be obeyed. It is sort of like the elections limits law earlier in my time in Parliament. People could follow it if they wanted or they did not have to follow it

The President of the Treasury Board may establish policy or issue directives respecting the manner in which the rules can be applied. We have another law that is really for public consumption. It really will not affect too much in the way that business regulations are set or not set in Parliament.

For instance, it says in the preamble of the bill that the one-for-one rule may not compromise public health, public safety or the Canadian economy. It is in the part of the bill that is not law. It simply talks about the bill. Where Conservatives outline their concerns about where we should not touch regulations on a one-to-one basis, it really is inappropriate, it does not work and it is not part of any requirement of government to follow.

Environment, immigration or human rights are not mentioned. A whole number of things are not mentioned. The Conservatives' thoughts are very different from their thoughts about foreign regulation or how to sell the Canadian public on the idea they are taking care of the economy, the economy being a very complex organism which has social, cultural and environmental aspects to it at all times.

I was a small businessman for many years in the Northwest Territories. I dealt with small businesses in limited markets under very difficult conditions. Regulations set out a pathway for businesses in many cases. They provide, and should provide, a mechanism by which business people can conduct their business in a good and proper fashion. That is the purpose of regulation. Regulations put everyone on a level playing field. Everyone is required to abide by regulations.

Within the economy, there are some rules and conduct that can make business work. Therefore, regulations are very important. To simply deal with regulations in this rather cavalier fashion, saying that for every new regulation we create we are going to take one away, is patently absurd.

Let us go back to the environment. The Conservatives have been changing environmental laws to help large resource developers to effect their businesses better in the three northern territories. That has not worked very well for them. With the changes to the NWT environmental legislation that occurred last year along with devolution, they are now in court with first nations over those changes.

Now we have uncertainty in the Northwest Territories about how development is going to proceed because of those changes. Now the government has decided to do a somewhat similar thing in Yukon with Bill S-6. It would make changes to the Yukon environmental legislation.

The bill has created a firestorm among first nations and ordinary Yukon citizens right across the territory. The people of Yukon understand that the best way for developers to proceed is with the full understanding and co-operation of first nations.

What the government has done in both territories is created this chasm and brought legislation forward which has the exact opposite effect of what it says it is trying to do. I think this bill will probably be similar in some ways.

As I said earlier, if regulations are not appropriate, they should be taken down. We should not wait until another regulation comes along to decide that a regulation is not appropriate anymore. That really is an unbelievably inane way of conducting government.

The NDP has some sensible suggestions for small business. What are we going through right now in Canada? We have a dollar that has dropped by about 20%. What does that do for small businesses that want to innovate and expand their production base, much of which would be imported machinery?

What we need is an innovation tax credit to encourage investments in machinery, especially at this time when we are dealing with 80¢ dollars that have to buy equipment from countries that have a better exchange rate, like the United States.

The NDP tax innovation credit is a good idea. It is an idea for 2015, for the situation in which we exist today. The New Democrats would also extend the accelerated capital cost allowance, which would allow businesses to quickly write off the cost of processing equipment and machinery. This allowance is set to expire this year. At the very time it is needed most, it is going to expire.

Hopefully over the course of this year, as the government changes, we will be able to put some of these things into effect.

As well, cutting the small business tax rate from 11% to 10% and then to 9% is a good solid idea. Small businesses create jobs, they grow communities and they provide services to those who would not have them otherwise.

We do not see multinational corporations investing in small business in my communities in the Northwest Territories. We see the average Joe, the person who has a few dollars and wants to make a difference putting that to work in his community. A lower tax rate for those people ensures that the money will circulate within the economy.

Lowering the tax rate for multinational corporations with multitudinous shareholders all over the world means that the money is dispersed to other sources, dead money in many cases, sitting in banks, good to no one at all. Perhaps we should have a look at other ways to activate that money. That is something the NDP government can look at as it moves into the future.

I have a minute left, and that is probably all the bill deserves. It is really does nothing. The way it is set up it will be meaningless in the future. It is just another wasted effort on the part of the Conservative government to try to show how it can use symbols rather than real work to persuade Canadians that it is on their side.

[Mark Strahl, Conservative, Parliamentary Secretary to the Minister of Aboriginal Affairs and Northern Development]

Mr. Speaker, I listened with some interest to the member's speech. I want to know how many times he has voted against the accelerated capital cost allowance? I think it was in several budgets in a row, and the NDP voted against it. Suddenly, it is a great manufacturing job-saving idea, because it was in a press released issued by the NDP. We issued it in a budget.

How many times did the member vote against cutting the small business tax rate? Again, several times over several budgets, I recall the member standing and voting against decreasing the small business tax rate.

If those are such great ideas going into the next election, why did the member and his party vote against them for the last three years?

[Dennis Bevington, NDP, Northwest Territories, NT]

Mr. Speaker, I want to thank my colleague, the parliamentary secretary, for his question. Of course, it is an interesting question. I think, perhaps, that as a rookie member of Parliament, he might not yet understand how Parliament actually works.

There is the government, and there is the opposition. The opposition opposes the government. It is an adversarial system we work in. For the Conservatives to continue to talk about our voting record on their budgets is facetious, because this is the system we live in and work in.

If we lived and worked in a different parliamentary system, where every person voted on every particular issue as they saw fit, then the Conservatives might have an argument, but they do not. They just have hot air.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, small businesses have a great sense of frustration. Whether it is the municipal, provincial, or national government, they want to see government look at ways it can become more efficient. We need to recognize that there are regulations that are redundant and are no longer necessary.

The bill before us is not earth shattering. It is a small step, and there is a bit of a commitment to deal with regulations.

I listened to today's question period, when the New Democratic Party tried to come across as wanting to be sympathetic to small business. My understanding is that the small business community in Canada supports this proposed legislation, so why would the NDP not support the legislation?

[Dennis Bevington, NDP, Northwest Territories, NT]

Mr. Speaker, I want to thank my colleague for that question, and I will repeat something from my speech that will answer it.

I said at the time that if there are regulations that are inappropriate that are within the purview of the government to change, well then it should change them, and do a decent job. It should do a review of regulations in one sector or another and get rid of the ones that are not required. However, to put forward a bill that says that if we put a new regulation here we will have to pull another one out there, willy-nilly, is really not the way government should operate.

We should operate from the basis of review, understanding, research, and conclusions, not from a point of view of putting up one and taking away another. It is really ridiculous and inappropriate for the way for the government should operate.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Mr. Speaker, I appreciated the member's intervention, as a businessman himself.

Does the member not think it is somewhat ironic that the bill proposes to introduce new regulations in order to set up the one-for-one process and that it would all be under the responsibility of the President of the Treasury Board? He would decide what would qualify for the one-for-one, and it would be after he had established a whole bunch of additional regulations. Would the member not agree that it is a bit of a waste of money?

[Dennis Bevington, NDP, Northwest Territories, NT]

Mr. Speaker, I hate to think what the cost of putting the bill through this process has been. It is expensive, and it takes away from other more important things that could be done within the current Parliament. For that matter, whether we vote on it today or tomorrow, the vote for us will be the same: we do not think it is necessary, and we are not going to vote for it.

[Michelle Rempel, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, I will start by saying that I will be splitting my time with the esteemed member for Peace River.

I just love this bill. It is a common-sense bill that is applauded by small business.

I will walk the House through what regulatory burden is, why this bill is necessary and important, some of the key points the bill covers, and some of the potential improvements small business would see because of it.

This was one of the key recommendations of the red tape reduction action plan.

For the information of hon. members, regulatory burden is essentially government burden. I will read a bit from a posting on the Industry Canada website under “SME Research and Statistics”. It states:

The burden of government is the intervention and interference of government in the operations of a business..... It is the cost involved in complying with regulatory requirements, collecting taxes and responding to information demands from government.... it is the administrative hurdles...the delays, the uncertainties and the frustration involved in dealing with public bureaucracy.

The above definition recognizes that government burden goes beyond regulations to administrative practices such as policies, guidelines and other requirements imposed by a government department.

The article goes on to talk about some of the components of the administrative burden of regulatory oversight as it relates to small business, because there is actually a quantifiable cost. That is what is at the core of this bill.

If we argue that government regulations are a burden on small business and on business in general, why have them at all? We have talked a bit in the House about why regulations are important. I agree that there is definitely a role for government to ensure the health and safety of Canadians. Regulations also ensure that public funds are spent appropriately. They also help to ensure that there is public confidence built into things like the build-out of major natural resources projects, because we will know that the government is there to ensure that the health and safety component is there.

Certainly regulations are important, but there is a cost to having them. If there is a cost to regulations, and it is important for regulations to exist, what is the sweet spot between the two? To me it is ensuring that public safety and the health of Canadians are not compromised, that public funds are used effectively, and that we are evaluating both the positive and negative opportunity costs for business associated with developing a regulation and monitoring on an ongoing basis whether it is effective and efficient, based on the original review.

The question then becomes how we strike this balance. It is important to first define each of the components of that particular opportunity cost calculation.

First of all, does the regulation do what it says it will do? Does it address a need that has been brought forward by Parliament or legislation?

What is the direct cost in terms of staffing hours required by business to comply with the regulation?

What is the cost in terms of the impact on the public service and the public sector? Will we have to employ more bureaucrats? Will we have to put other resources in place to monitor its effectiveness or to ensure that there is compliance?

What about the certainty to business? For example, certainty of regulations often becomes a determinant of investments, especially major capital infrastructure investments, like some of our natural resources projects and whatnot. When a company is looking at putting billions of dollars into a capital investment or having an ongoing operation over a 25-year period, certainty with regard to regulations is also a determinant of investment, because it impacts the decision-making process in terms of investment or long-term spending.

Also, does this create any redundancies? What is the cost in terms of overlap with other regulations?

I think it is important to first define these areas and then to use those definitions to actually monetize and calculate the costs.

I read some of the committee testimony, and it was interesting.

I am sure my colleagues on the other side of the House would agree that sometimes regulations can create an incentive to innovate. When we have a policy question that needs to be addressed, can we put a regulation in place that incentivizes behaviour in a certain way that can create growth? More often than not, the monetary impact will probably be detrimental, but these are certainly the sorts of opportunity cost calculation factors we need to be looking at when talking about regulations.

The last component is ensuring that after we have defined them, we can actually measure these costs in the long run. We would not only measure the effectiveness of the regulation but also the costs, both pros and cons, to businesses, the public, et cetera. My colleague who spoke earlier asked why we would have this bill. It is because it would enshrine these principles in legislation and in the operating practices of government, and that is a very good thing.

Why should we have this law? I am so glad the member brought this up. The first reason is that businesses are telling us that they need this. I read through some of the committee testimony, and I want to share with the House something I thought was very impactful. Laura Jones is the executive vice-president of the Canadian Federation of Independent Business, and in committee she said:

...it is a pleasure to be here to represent [the small business] perspective on red tape. I want to be clear about one thing, though, and that is that small businesses absolutely support necessary and important regulations,...

There is an acknowledgement that regulations need to exist.

...those regulations that protect human health, safety, and the environment. In fact, it might surprise some people to know that when we ask small businesses how much of the regulatory burden they think could be cut without sacrificing those important goals, they are saying between 25% and one third. It depends on whom you ask and how you ask the question, but it's roughly in that range.... they're telling us that between two-thirds and three-quarters of the rules in the system are legitimate, necessary rules that they support.

She went on to talk about how while there is support for regulation and acknowledgement that yes, it can incent innovation, there is also a significant and disproportionate impact on small business, because the cost of regulations and the administrative burden on a per-employee basis affects small business the most. We are hearing from industry and industry groups that this particular piece of legislation would ensure that there would be certainty and monetization of the opportunity cost calculation associated with regulatory decisions.

I love that the Prime Minister said, with regard to the regulatory burden, that it is a hidden tax and a killer of jobs. I actually could not agree more. I have personally been impacted by the regulatory burden, though not in a small-business sense. I managed a significant portion of the University of Calgary's research compliance process, and I saw the burden of compliance on government-funded researchers.

It is incumbent upon us to ask how we can ensure that we still have compliance but do it in such an effective way that it is not actually impeding business from being done.

I have to give my colleague, the Minister of State for Science and Technology, a nod for acknowledging a review of that particular problem in the science and technology strategy.

I will close by talking about how this act would achieve some of these balance points we have talked about. Again, the one-for-one rule is a cornerstone of the red tape action plan and would impose new discipline across the regulatory system. It would maintain the current protection of health and safety as it controls both the number of regulations and the growth of the administrative burden for businesses.

What I want to emphasize is that the reason this is effective and necessary is that it would enshrine in our business processes the calculation of costs associated with putting a regulation in place and would ensure that it is reviewed on a regular basis. Under this particular system, it would be incumbent on the public service and on us as legislators to look at the costs that could be incurred through regulation, to be transparent about them, and to talk to people during the consultation process about the assumptions we are making in terms of costing.

By the way, I also read in committee testimony that there was some question about the consultation process when it came to regulatory review. The Canada Gazette process has been in place for a very long time and certainly supports that.

I just think that this particular piece of legislation would enshrine in legislation that practice, which would ensure the efficacy, predictability, and stability of our regulatory system for a long time to come.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, although she attempts to make great points on this issue, the reality is that when we look at regulations and how the current government and the previous Liberal government have actually handled regulations, the record is quite contrary to what they are saying they are trying to achieve. The Conservatives do not have a good track record when it comes to safeguarding regulations and standards that protect the health and safety of Canadians.

When we look back at 2013, we see that the former transport minister granted WestJet an exemption on flight attendant requirements under the Canadian aviation regulations, thereby allowing WestJet planes to fly with one flight attendant for every 50 passengers. We tried to have that reversed to ensure that the ratio of 1.4 was maintained, but the current government certainly went the other way.

Then in 1999, the Liberals further deregulated rail safety by continuing to implement the safety management systems approach adopted by the Mulroney Conservative government.

As I have indicated before, when it comes to regulation these are not people that Canadians can trust.

The Conservatives promised to reduce exorbitant transaction fees, but if they really want to make a difference, why will they not pressure Visa and MasterCard about transaction fees? That is what would actually make a difference for small business.

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

Mr. Speaker, with respect to my colleague's question about track records, I will speak specifically to the subject matter of this bill, the government's ability to ensure the health and safety of Canadians while reducing the compliance burden on small business.

The one-for-one regulatory plan, as of June 14, 2014, has resulted in a net annual reduction of over $22 million in the administrative burden on businesses, and is estimated to have saved about 290,000 hours annually in time spent dealing with regulatory red tape, and has seen a net 19 federal regulations taken off the books.

As someone with a small business background and who has seen what small business needs to survive, I think this particular piece of legislation, which says “We're going to put stability, predictability, and efficacy at the core of how we approach regulations”, is something that small businesses across Canada can cheer for.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I appreciate the comments made by the member across the way. One of the concerns that I suspect many Canadians have is a sense that we need to get a comprehensive approach dealing with regulations. It does cause a great deal of frustration. All one has to look at is the amount of paperwork involved in income tax. There is a sense that the government needs to show stronger leadership in working with other levels of government in dealing with regulations, especially for our small business community.

When we talk about enhancing and seeing our small businesses grow in Canada, thereby creating critically important jobs, one of the issues that needs to be addressed is having an overall, comprehensive approach dealing with regulations at different levels of government.

To what degree does she believe the federal government needs to play a stronger leadership role?

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

Mr. Speaker, that is a great question because I can give a specific example in response. In economic action plan 2012, when we put forward the responsible resource development regulatory framework, the principle of reducing barriers for business in environmental reviews was enshrined. It acknowledged that where we can harmonize review processes in that particular subject matter, we should do so.

Certainly, this was cheered not only because it protected the environment and ensured a stronger review system, but also because it harmonized the time and effort it took to go through these types of processes. I think that is a fantastic example. However, I am not sure my colleague opposite supported it, so I will have to leave it at that.

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, it is a privilege to stand in the House and follow the minister. We definitely want to thank her for all of her work at WED and for her commitment to small business. It is a privilege for me to share a province with the member, where we are proud of the work that she has done.

The red tape reduction act is one that is very close to me. I have the privilege of serving on the Red Tape Reduction Commission, and what we have heard again and again from small businesses from coast to coast is the need for the government to get a handle on the amount of red tape that is developed. This one-for-one rule is really moving the goalpost further down the field to ensure that we get to a place where we can address some of the concerns of small businesses and other businesses across the country.

As members know, this legislation would fulfill a commitment that we made as a government. In October, 2012, we brought forward the red tape reduction action plan in response to the commission's recommendations. With this legislation, we hope to make it the law of the land that regulators strictly control the administrative burden they impose upon businesses. Under the one-for-one rule, for every new regulation that adds an administrative burden on businesses, one must be removed.

This is smart legislation. It would help Canadian businesses become more productive and help them succeed in an increasingly global and competitive marketplace.

The red tape reduction act would require that regulators take seriously the requirement to control the amount of red tape imposed upon businesses and the related costs. The legislation is designed to be tough. It would challenge regulators to think through how regulations could be designed and implemented in ways that do not impose unnecessary red tape upon businesses.

It is tough, but it is also quite flexible. The government's commitment to maintaining Canada's high health and safety standards is unwavering. The one-for-one rule would be applied without compromising the protection of the health and safety of Canadians.

This legislation is very timely. As we know, one of the government's top priorities is creating a climate in which business can innovate, invest in the future, and create economic growth and jobs. Too often, red tape gets in the way by tying up a company's time, energy, and production resources. The red tape reduction act would allow businesses to use their resources to become more productive by eliminating unnecessary regulatory red tape.

Given what is happening in the global economy today, we know that Canadian businesses have to be at the top of their game to succeed. The good news is that the Canadian economy has come through a global economic downturn, that recovery is happening, and the economy is in relatively good shape. Canada is positioned for sustainable economic growth.

It is worth remembering that when the hard times arrived in 2008, Canada was in a position of economic strength compared to its international partners. This allowed us to put in place one of the most comprehensive stimulus packages in the world. At the time, international observers, such as the International Monetary Fund, were predicting that Canada would be one of the fastest countries to recover. I am proud to say that these predictions have come true, given our relative economic and fiscal strength.

Since we introduced the economic action plan to respond to the global recession, Canada has recovered more than all of the output and jobs lost during the recession. The Canadian economy has boasted one of the strongest job creation records in the G7 over the recovery, with nearly 1.2 million jobs created since June, 2009. Over 90% of the jobs created since June 2009 are full-time positions, 80% of those in the private sector, and over two thirds in high wage industries.

What is more is that the real GDP is significantly above pre-recession levels, the best performance in the G7. Not only has Canada weathered the economic storm well, but the world has also noticed. Both the International Monetary Fund and the Organisation for Economic Co-operation and Development expect that Canada will be among the strongest growing economies in the G7 over this year and next. The World Economic Forum rated Canada's banking system as the soundest in the world for the seventh year in a row in its annual Global Competitiveness Report. According to KPMG, total business tax costs in Canada are the lowest in the G7, and 46% lower than those in the United States.

In addition, four credit rating agencies, Moody's Investors Service, Fitch Ratings, Standard and Poors, and DBRS, have reaffirmed their top rating for Canada and expect Canada to maintain its AAA rating in the year ahead.

However, we cannot rest on this record of success. Despite solid job creation since 2009, too many Canadians remain unemployed. That is why the government's economic action plan focuses on the drivers of growth and job creation—innovation, investment, education, skills and communities—underpinned by our ongoing commitment to keeping taxes low and returning a balanced budget by 2015.

Clearly, responsible fiscal management has to be in place for us to succeed. Canada is one of the few countries that can now boast of having a declining tax rate and a low debt. That is why we remain committed to eliminating the deficit. Reducing debt helps to keep interest rates low and encourages businesses to invest and create jobs.

Reducing debt signals that the public services are sustainable over the long run. The gains that we saw as a result of Canada's low-tax plan are fostering long-term growth that will continue to generate high wage jobs in Canada into the future. It strengthens the country's ability to respond to economic shocks, such as the global financial crisis that we witnessed in 2009, and it will ensure that Canada keeps its economic advantage now and for generations to come.

Helping Canadian companies succeed in the global economy has clearly been a priority of this government and we certainly have seen the success of that. By taking action such as enshrining the one-to-one rule in law, we are making the regulatory system more conducive to business success and to economic growth. We are creating a more predictable environment for businesses, particularly for small and medium-size businesses, and we are freeing entrepreneurs from the burden of regulatory red tape.

It is all part of our plan for Canada. I certainly invite hon. members across the way to join me in supporting the bill we are speaking about today. It will help us to further eliminate unnecessary rules and costs that have been the source of frustration for business people and entrepreneurs across this country, and it will bolster Canada's strong reputation as one of the best countries in the world in which to do business and to invest.