Finance Committee on May 8th, 2018

[Jeannine Ritchot]

The title they have to remove has to contain admin burden within it. They have been able to take credit for some that maybe have been spent, or that were no longer relevant, but from a monetary perspective it has always had to be dollar for dollar. They have always had to remove the commensurate amount.

[Pierre Poilievre, Conservative, Carleton, ON]

Since the act took effect, what has been the dollar value reduction in administrative burden?

[Jeannine Ritchot]

It's $31.1 million net annual.

[Pierre Poilievre, Conservative, Carleton, ON]

To clarify the change in the proposed budget bill, if a foreign government with which we have regulatory co-operation reduces burden on Canadian businesses, for the relevant department to get credit, must the Canadian government have made a corresponding reduction, or must it simply be a lighter burden on the Canadian business doing commerce in the foreign jurisdiction that originated the change?

[Jeannine Ritchot]

There is no requirement for the Canadian government to do a commensurate with the.... Let's use the U.S. as an example. In these amendments, there would be no requirement for the Canadian government to do a commensurate reduction.

I would note that in the implementation of the two-for-one currently being brought into force in the U.S., our counterpart, the Office of Information and Regulatory Affairs, in the policy guidance they issued to U.S. regulators, noted to U.S. regulators that if Canadian regulators through regulatory co-operation decreased burden quantifiably on American business, then they could count that in their two-for-one regime.

There is a bit of reciprocity in that both Canada and the U.S., probably because of the Canada-United States regulatory co-operation council, which has been quite successful since 2011, have recognized that burden reductions in one jurisdiction are positive for the other jurisdiction because we're really a very similar common marketplace.

[Pierre Poilievre, Conservative, Carleton, ON]

I could understand the rationale in giving a Canadian department credit for a burden reduction that it instituted as part of cross-border co-operation. However, I'm having a hard time understanding why that department would get credit for what its foreign counterpart does. I don't understand that. Can you give me the rationale?

[Jeannine Ritchot]

They get credit because they have been working formally under a regulatory co-operation arrangement with their counterpart. In other words, that reduction is really the result of work that this regulator has been doing. Generally speaking, formal regulatory co-operation initiatives have regulators work together to develop work plans. Those work plans are meant to reduce burden on business in both jurisdictions.

The rationale is that the Canadian regulator is not doing nothing in this scenario. They are actively working with their partner in the U.S., and together they have come up with a regulatory co-operation work plan, the output of which may just require a change in one jurisdiction, but that still reduces burden here at home, and it is the result of a co-operative arrangement.

[Pierre Poilievre, Conservative, Carleton, ON]

What documentation would a department need to have, to claim credit for a foreign reduction in paper burden?

[Jeannine Ritchot]

They would have to be able to quantify, similar to how they would have to quantify here in Canada. We would likely be applying the same costing that we apply to the Canadian—

[Pierre Poilievre, Conservative, Carleton, ON]

That's not my question. My question is what would they have to do to prove that they had any role whatsoever in reducing the foreign government's—

[Jeannine Ritchot]

Sorry, I misunderstood the question.

There would be a formal work plan under either the Canada-U.S. regulatory co-operation council or the regulatory co-operation forum with the EU, or the Canadian Free Trade Agreement reconciliation and co-operation table. That would be the demonstration.

[Pierre Poilievre, Conservative, Carleton, ON]

I still have a really hard time understanding why a Canadian government department, whether it's holding meetings with foreign governments or not, should take credit for regulatory reductions in those foreign jurisdictions. I understand that we're in a global economy and we're an open economy and all of that, but I don't understand how the public is served by empowering our departments to add new regulations just because foreign governments get rid of old ones.

[The Chair, Liberal, Wayne Easter]

Does it not mean that when the regulatory change is made in say, the United States, it lessens the amount of administrative burden for a business here?

Is that not how it works?

[Jeannine Ritchot]

Yes, that's right.

[Pierre Poilievre, Conservative, Carleton, ON]

I totally understand that. That's absolutely terrific, if it happens. However, just because something good happens to Canadians outside of Canada doesn't mean something bad has to happen to them within Canada.

The Trump administration is insisting on massive reduction in regulations, and that will obviously reduce the burden on Canadian businesses who operate there. I don't understand why the Canadian government should then be empowered to impose new regulations here at home. Even if they've been having working groups, I still don't see how that changes anything.

[Jeannine Ritchot]

Certainly the objective is not to empower new regulations without taking into account the burden. I would say that the government, through this budget, has also proposed a number of other initiatives.

This is one component of a regulatory agenda that's being pursued at this moment. There are also stock reviews in key sectors that were announced in the budget. There is also some money that was set aside for an e-portal. Globally, there's quite a lot of effort in my shop to look at other ways to foster innovation, agility, and reduce burden on business.

I would say that this is one piece of a larger regulatory puzzle.

[Pierre Poilievre, Conservative, Carleton, ON]

I appreciate it, but even if those other pieces do good work, I am not seeing why we want to weaken the Red Tape Reduction Act by giving Canadian departments the legal authority to add new red tape, just because some foreign government got rid of some red tape and we attended working group meetings with them before they did.

[Jeannine Ritchot]

I understand the concern you're raising. I would say that regulatory co-operation is....

In a world where tariffs have been significantly reduced, perhaps notwithstanding some of the most recent events in the U.S., the biggest barriers to trade are these technical barriers that come from regulation. What we have seen is that regulators require incentives in order to embark on some of these regulatory co-operation initiatives. They ultimately have the same goal, which is to reduce burden on Canadian businesses as well as increase choice of goods in the marketplace for Canadian consumers.

The regulatory co-operation agenda is one that is meant, overall, to reduce unnecessary burdens that are the result of duplicative requirements. This is one tool in the tool kit that the government is trying to give itself.

[Pierre Poilievre, Conservative, Carleton, ON]

It sounds like a tool, to me, that will do more damage than repair.

I worry that it could be really damaging. The American government is massively reducing its regulatory burden. Obviously, that will reduce the burden on Canadian businesses operating there. If the federal government takes that as a signal that it can add regulations by taking credit for the reductions south of the border, then we could be in a situation where, ironically, we are not only falling behind competitively on taxes, but moving in a deliberate and diametrically opposite direction on regulation as well. We're adding a regulation because they cut one.

[The Chair, Liberal, Wayne Easter]

But we don't necessarily have to add one, correct?

[Pierre Poilievre, Conservative, Carleton, ON]

No, but you're giving departments legal authority to add regulations, which they would not otherwise have without this amendment.

[The Chair, Liberal, Wayne Easter]

I expect you would be able to outline that point to the minister in the speech on the final reading. If he can get the message—

[Pierre Poilievre, Conservative, Carleton, ON]

But would it not? If the government in the United States of America massively reduces the regulatory burden, as it has begun to already, all your departments would have to do to have the legal authority to add new ones is to say, “We had a working group with the commerce department in the States, so if they cut a regulation, we get to add one over here”, or “The EPA in the States has made it easier to develop natural resources, so that will help Canadian companies doing business down there.”

[The Chair, Liberal, Wayne Easter]

I think, Mr. Poilievre, we're getting into the political arena, the decision—

[Pierre Poilievre, Conservative, Carleton, ON]

No, Mr. Chair, we're not.