Government Operations Committee on Nov. 26th, 2014

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Yes, and perhaps Mr. Vandergrift can speak in more detail, but we do have a scorecard that goes to the Treasury Board every week on the regulations that are going in and the regulations that are coming out, so we keep track of this department by department.

[Mathieu Ravignat, NDP, Pontiac, QC]

Have challenges during that process been brought up and addressed, and what are some of those challenges?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Yes, this is a fair question. I think part of what we have been able to do better over time is to monetize the burden. I think we have the most sophisticated monetization of administrative burden in the world, and it has become something of interest to the OECD, for instance. They want to study what we are doing in Canada for broader international applications, so I think we've made great progress on that.

Mr. Vandergrift, are there other things that we've made progress on?

[Michael Vandergrift, Assistant Secretary, Regulatory Affairs, Treasury Board Secretariat]

I'd say, as introduced in your reforms, there's time for culture change in departments to learn how to implement it. We've done a lot of work with departments providing them with tools and training to help them.

[Mathieu Ravignat, NDP, Pontiac, QC]

Has that come with additional resources, such as human resources?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Not really. Mr. Vandergrift here serves at the Treasury Board Secretariat. He's a busy guy, I would have to say, and his predecessor, another Michael, was busy too, but I think they've been doing a good job.

[Mathieu Ravignat, NDP, Pontiac, QC]

The next question won't surprise you.

In the preamble, health and safety is referred to, environment as well, but it's not in the bill per se. Canadians are concerned about the power you'll be giving yourself as minister to gut regulations, and potentially gut regulations that are going to affect the safety of Canadians, affect the environment we live in. Can you reassure us as to what criteria you are going to put in place, how you are going to go about making sure that when it comes to one-on-one rule, which basically obligates you to get rid of certain red tape or regulations...? In that context, how are you going to do it?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Let me quickly respond with two things.

First of all, the requirement to not compromise public health or public safety or the economy is actually in the preamble to the bill. I want to make that clear. I would draw the distinction between administrative burden and compliance burden. Usually, regulations that deal with health or safety concerns are forcing an entity to comply. That is not what this is about. This is about the administrative burden of all of the paperwork associated with demands from governments. So in no way could we affect the compliance burden, which of course is necessary in our society for health and safety requirements. That is not the subject of this bill.

[Mathieu Ravignat, NDP, Pontiac, QC]

Okay, that's helpful.

One thing that has concerned a lot of small business, at least small business trying to get into government procurement, is the issue of how we define small and medium-sized businesses. There is red tape in dealing with government procurement.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

You don't say.

[Mathieu Ravignat, NDP, Pontiac, QC]

Just a little bit, right? That's not part of this bill, but it brings up that issue. When we define a small and medium-sized business, it's 500 employees or less. You're not creating a fair level playing field—

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

We use the income tax definition.

[Mathieu Ravignat, NDP, Pontiac, QC]

There are problems with the income tax definition as well. In any case, is there something planned with regard to reducing red tape for public procurement contracts?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I guess the one thing I can speak to from past experience and knowledge is that there is a pilot project that assists smaller businesses to get into the procurement stream, a preferential stream, that started, I think, about three or four years ago now. Certainly, that is common among most advanced countries with procurement to help their small businesses procure and get the experience in procurement.

I think that's a very positive step that we have taken.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you. That is the end of your time.

I now give the floor to Mr. Albas for five minutes.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

I want thank the President of the Treasury Board and, obviously, Mr. Vandergrift for coming in today to talk about the merits of Bill C-21.

Before I get into Bill C-21, pertaining to Ms. Day's comments that this particular bill doesn't address anything to do with red tape, if I heard you correctly you said that as of June 2014 the rules resulted in a net annual reduction of more than $22 million of administrative burden on businesses and an estimated annual savings of 290,000 hours dealing with regulatory red tape. To me, that sounds like the one-for-one rule has already had an impact on businesses right across this country.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I would agree. As I say, I believe we have the most sophisticated measurement in the world in advanced countries when it comes to red tape and its impact on small businesses. We're very proud of that. We assess how much time a person has to sit down and work through the paperwork and how much that takes away from their business activity. We monetize the value of that. It's not just that this is a 40-page regulation and this is 40 pages of red tape, or this is a one-page regulation and this is one page of red tape. The monetization makes it, I think, a lot more evidence-based, and I think that's a valid number.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

You made reference in response to a previous question that there is a big difference between the compliance burden, which is in effect the actual regulations for health and safety of Canadians, and the administrative burden. Can you please define what the administrative burden is, and how that affects many of our small and medium-sized businesses right across the country?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I started to do that in answer to the previous question.

If I can use a definition here, it is the effort required for Canadians or businesses to demonstrate compliance with a federal regulation. That could be planning. It could be collecting. It could be processing. It could be reporting information. As I said, it could be completing the forms, retaining the data required by the federal government—that's a cost—filling out licence applications—that's another burden. It could be finding and compiling data for audits, and also the learning curve to learn about the requirements. I think we've been very comprehensive in our terminology for administrative burden, and that's where the monetization comes in with all those categories.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Before I pass my time over to MP Smith, Mr. Chair, I have just one further question. How is the cost of that administrative burden calculated under the rule?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I'm going to pass the baton over to Michael here. He's an expert in that. Michael, could you talk about the monetization?

[Michael Vandergrift]

Yes.

It uses a standard cost model, which is an internationally accepted and recognized model for calculating administrative burden. Essentially it looks at the time required to complete the forms, who's doing it, the salary cost of the individual doing it, and the number of times they have to do it. Then they get basically a firm picture at a firm level. Then you multiply it by the number of firms in the economy that have to comply by it and, by that basis, you come up with a total amount of administrative burden.

We provide tools for departments to assist them in making those calculations. Departments, as part of our guide, are also to work with and consult with the regulated parties to make sure that those numbers make sense. The summaries of these calculations are also made public as part of the regulatory impact assessment statement that accompanies every regulation.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you.

Ms. Smith, the floor is yours.

[Joy Smith, Conservative, Kildonan—St. Paul, MB]

Thank you, Mr. Chair.

I have to say, Minister, it's just amazing. This is a problem that has presented itself in many businesses, and we know that $22 million in administration has been reduced and an estimated 290,000 hours. That's phenomenal. We've talked about the one-for-one concept, but our government has put in many other mechanisms that cut down on red tape. Could you perhaps talk about some of those as well?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Sure. Let me talk a little bit about the forward regulatory plans because I think that's really important for small business as well.

I talked about getting blindsided by government, and this is a common complaint that we had heard. By requiring regulatory departments and agencies to post available publicly their plans for the future on regulation does two things, in my estimation. Number one, it provides the small business the time required to get ready for that regulation, but it also creates a dialogue between the regulator and the regulated on the proposed regulation. If you know that something is coming up in two years, you can actually start the dialogue and say, “Look, I'm sure you didn't plan this, but this is going to have this kind of impact on a small business. Let's work to make sure that you can achieve the public policy goal without creating a hit for small business.” I think that's a really important concept that we have added.

The small business lens is again about requiring the regulators to assess the impact on small business, not just on Canadian society or how this means that something will be better, but on the small business as well. I think it is critically important in terms of a change of attitude.