Government Operations Committee on Dec. 2nd, 2014

[The Chair, NDP, Pierre-Luc Dusseault]

Good morning.

As it is 8:45, we will begin the 38^th meeting of the Standing Committee on Government Operations and Estimates immediately.

Today, we will hear from several witnesses who will speak about Bill C-21.

During our last meeting, we heard from the President of Treasury Board. Today, we will hear from experts who will provide some clarification on the issue of administrative red tape that burdens businesses. Each witness will have 10 minutes to present.

We will begin with Ms. Jones and Ms. Moreau, who are here on behalf of the Canadian Federation of Independent Business. We will then move on to Ms. Coombs, from the Canadian Consumer Specialty Products Association, then to Mr. Aylward and Mr. West, for the Public Service Alliance of Canada. Following the three presentations, committee members will ask questions of the witnesses, until 9:45.

Without further ado, I give the floor to Ms. Jones and Ms. Moreau.

Thank you so much for being with us this morning.

[Laura Jones, Executive Vice-President, Canadian Federation of Independent Business]

Thank you very much. It's a real pleasure to be in Ottawa this morning, despite the cold weather.

My name is Laura Jones. I am the executive vice-president of the Canadian Federation of Independent Business. I am based in Vancouver.

Before I start, here are a couple of notes about CFIB. We are a group that represents small and mid-sized companies in Canada. We have 109,000 independently owned and operated businesses that are our members from coast to coast, across a number of different sectors of the economy. We are completely funded by those members, so we don't take any government funding. We are a non-profit organization. We take our policy direction from our small business members, so the positions that I present to you here today are reflective of those members.

If you turn to slide 3 on the deck, there is a little cartoon. We put this in because I think it captures beautifully the way small business owners often feel about red tape. They can certainly feel that they have more regulators than employees. Remember that most businesses in Canada have fewer than five employees. I think that sometimes, with the tough economy in some parts of the country, small businesses are feeling as if they have more regulators than customers.

This is really important, and it is a pleasure to be here to represent their 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, 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. That means they're telling us that between two-thirds and three-quarters of the rules in the system are legitimate, necessary rules that they support.

However, red tape is extremely challenging for small business. That's where regulation becomes overly complicated or difficult to understand, or there is poor government customer service. This can come from legislation; it can come from regulation; it can come from related policies; it can come from the service around those policies.

We've done a number of studies looking at the cost of regulation. The next slide shows you that this is the second-highest priority for small business owners, right behind the total tax burden. We think of red tape as a kind of hidden, regressive tax. If you look at the next slide, you'll see that we've done an estimate of the total cost, which is $30 billion annually in Canada. I will tell you that this is a very, very conservative estimate of the cost.

We have broken that down by business size. Those businesses with the fewest employees pay the highest cost per employee. That makes sense because bigger businesses have more employees over whom they spread the burden. Big businesses often have whole departments, in fact, dedicated to regulatory compliance, whereas if you are a small business, you are doing a lot of that compliance yourself.

There are just a couple of other survey results to show you that excessive regulations add significant stress and take time away from family. I could show you a whole bevy of other results which show that they reduce productivity and cause people to think twice about starting businesses and about staying in business.

I do want to get to the next slide, because this is the one that shows that business owners are in general very, very supportive of the government's red tape action plan. In fact, as the action plan was developed, there were 15 consultations across Canada with small business owners. Many of our members participated in those consultations and made recommendations to the commission.

I think one of the great things about that commission was that, when you look at the reports it produced, it was in the words of small business owners. There was a “what was heard” report that was in their own words. There were a number of commitments made in that action plan; one of them was moving on the one-for-one rule and making it legislation. That's something that 83% of small businesses support. As you can see, many of them are very supportive of that initiative.

One of the things that CFIB often talks about with respect to regulatory reform when we are giving advice to governments in Canada, and we've also been asked for our advice outside of Canada, based on some of the work that's been done in jurisdictions such as British Columbia.... We see three key ingredients to effective reform: political leadership; accountability, which means measuring and reporting regularly; and constraints on regulators. One of the reasons we're very supportive of this bill is that we see it does touch on all three of those essential ingredients.

Before I open it up to questions, there are basically three messages that I want to leave you with today.

The first is that small businesses support necessary regulation and are very, very challenged by red tape. This is a very serious hidden regressive tax on small businesses.

The second message I want to leave you with today is that small businesses are strongly supportive of the one-for-one rule. Making it permanent or more permanent through legislation is something for which heads nod around small business tables.

The third thing I want to leave you with is this last cartoon. I think really the most important thing about regulatory reforms is the ultimate test as to whether they make a difference on the ground. It's way too early to tell whether some of the reforms that had been initiated are going to—we're very optimistic—have an impact on the ground. That's what we need to keep our eye on, and I think for the reforms to have a real impact on the ground, this is really the beginning of the beginning. We do need to continue to push. We need to continue to make progress and that will be something that small business owners will be cheerleading.

With that, I'll open it up to any questions you might have for me on the small business perspective of the bill, or red tape more generally.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you for your presentation.

Since our question period will take place after the three presentations, I will yield the floor immediately to Ms. Coombs, who represents the Canadian Consumer Specialty Products Association.

[Shannon Coombs, President, Canadian Consumer Specialty Products Association]

Good morning, Mr. Chair and honourable members of the committee.

It's a pleasure to be here today to provide CCSPA's perspective on your review of the proposed legislation, Bill C-21.

My name is Shannon Coombs and I'm the president of the Canadian Consumer Specialty Products Association. I have proudly represented the industry for the last 16 years and our many accomplishments as a proactive and responsible industry.

CCSPA is a national trade association that represents 35 member companies across Canada. We're collectively a $20 billion industry and employ 12,000 people in over 100 facilities.

Our companies manufacture, process, package, and distribute consumer, industrial, and institutional specialty products such as soaps, detergents, domestic pest control products, aerosols, hard surface disinfectants, deodorizers, and automotive chemicals, or as I call it everything under the kitchen sink. I have provided the clerk with copies of our one-pager, which has a picture of the products, and I'm sure many of you have used them today. Also, you would have received our goody bags in the spring, that is, of course assuming that your staff decided to share them with you.

Why are we here? CCSPA member companies are regulated. The ingredients in our products, the bottle, at times the end use—ant traps and disinfectants, for example—and all the labelling are regulated under the respective regulations and legislation. This is both for consumer and workplace use.

We support Bill C-21 because it adds the necessary checks and balances for regulation development, which in turn adds complexity and costs to doing business in Canada. The bill tackles the issue of administrative burden, which is very important to industry. While it may be very narrow in scope in only addressing regulatory burden brought on by paperwork, it is a positive step in the right direction.

It causes regulators to reflect on the costs to industry prior to the development and implementation of a regulation. Could the scope, the net, be bigger? Yes, we would argue that the scope could have included regulations that modernize labelling laws or ingredient regulations, which are very costly to industry.

We are currently faced with the implementation of the globally harmonized system of classification and labelling of chemicals for workplace chemicals. Industry will be changing all of its safety data sheets and labels to adopt the UN's globally harmonized system, GHS, which the U.S. recently adopted. This will be a significant cost to industry and the one-for-one rule does not apply. However, the spirit of the one-for-one rule was considered in the development of the regulation, and as Health Canada worked with officials from the U.S. Occupational Safety and Health Administration, OSHA, they reduced regulatory barriers so that industry could use one safety data sheet and one label within North America.

As per the RIAS, the Regulatory Impact Analysis Statement for GHS, it is “proposing to revise the classification and hazard communication requirements related to workplace hazardous chemicals in order to align the current system with that of the United States ... it is expected to reduce costs for industry while simultaneously enhancing the health and safety of Canadian workers.”

We support the GHS initiative and the intent to streamline regulations for the classification and labelling of workplace chemicals. We see Bill C-21 as a catalyst for change within regulatory development. It is the first in a stepwise approach to changing Canadian regulatory development processes and the culture that creates it, and it provides a rigorous check and balance function by Treasury Board.

Since the one-for-one rule has been introduced, we've seen officials within government open to ideas of harmonization to reduce regulatory burden with Treasury Board officials providing oversight and guidance to departments to ensure adherence to the policy. Both have been refreshing and effective.

For the proposed legislation to be successful, CCSPA would ask that the committee also undertake a review or accountability function to assess the successes and possible improvements by reviewing the scorecard and the metrics to develop that scorecard; by reviewing the successes not captured in the report, which I'm sure stakeholders could provide to you—I certainly can; by reviewing each of the departments forward regulatory plans; and also by ensuring departments publish and deliver on those plans and that the small business lens is being utilized within the departments.

Mr. Chair, thank you very much for the opportunity to comment on this important piece of legislation and provide our perspective. We support this legislation and will work with you and the officials to ensure the intent of the legislation is fulfilled.

I'd be happy to take any questions.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you for your presentation.

I would now ask Mr. Aylward, who represents the Public Service Alliance of Canada, to present us with what maybe a different point of view.

You have the floor, Mr. Aylward.

[Chris Aylward, National Executive Vice-President, Public Service Alliance of Canada]

Thank you, Mr. Chair, and members of the committee for allowing representatives of the Public Service Alliance of Canada to appear before you this morning.

My name is Chris Aylward. I'm the national executive vice-president for PSAC.

PSAC represents public service workers who provide a broad range of regulatory, inspection, and enforcement services for Canadians. Our members protect Canadian consumers, and work in the fields of health and safety, food safety, transportation safety, and environmental protection, among others. They are proud of the work they do to protect Canadians.

Our major issue with Bill C-21, an act to control the administrative burden that regulations impose on businesses, is that it is completely unnecessary. If members of Parliament and senators have passed laws and created regulations, we have to assume that they believed those laws and regulations were created in the public interest. The stated purpose of Bill C-21, the so-called red tape reduction act, is to eliminate one regulation for every regulation created, the one-for-one rule. If regulations are no longer deemed to be in the public interest after due consideration and consultation, the regulators have always had the ability to amend or delete them. In fact, they have done so on a regular basis. There is absolutely no need for the one-for-one rule. Everything that it claims to do can already be done.

Bill C-21 is filled with loaded terms like “red tape” and “administrative burden”. Laws and their accompanying regulations are important safeguards to balance rights in a democratic society. We should be proud that they exist and not paint them as red tape.

Administrative burden means anything that is necessary to demonstrate compliance with a regulation, including the collecting, processing, reporting and retaining of information and the completing of forms.

Why should it be a burden to obey the laws of the land? Why should it be a burden to make sure our citizens are protected?

Regulations in Canada have helped make this country one of the safest and best places to live. Canadians depend on regulations to protect our water, food, health, and consumer goods. Regulations ensure the safety of the roads we drive on and the environment we live in. They keep financial institutions, telecom companies, and other businesses in check. In the case of financial regulation, Canada's economy was sheltered from the worst of the 2008 global economic meltdown because our bank regulations were tougher than those in jurisdictions like the United States. Those regulations paid off and protected Canadians from the economic devastation that almost ruined some other countries.

Canadians also rely on their governments to enforce those regulations. Today, that reliance is in jeopardy. Not only are regulations on the chopping block, so are the people who enforce them. Federal inspectors in all sectors have seen their numbers and enforcement power reduced through successive budget cuts and freezes. For the past two years, for example, regulatory positions have been eliminated in beef research, aircraft service and maintenance, food-borne pathogen research, microbiological and viral disease research, civil aviation programs and road safety, cereal analysis, and aquatic ecosystem management and biosphere analysis. We are relying more and more on corporate self-regulation to the detriment of Canadians' health and safety.

Not only is Bill C-21 unnecessary, it will not adequately protect Canadians. While the bill says that the one-for-one rule must not compromise public health, public safety, or the Canadian economy, this is insufficient. It compromises a broader category of issues that concern Canadians, such as consumer protection and environmental protection. It could mean, for example, that our current strong financial regulations won't be there to protect Canadians in the event of future economic crises.

The immunity clause, clause 8, while absolutely essential if this bill becomes law, makes us wonder again why this bill is even necessary in the first place. This clause says that no action will be taken if this legislation isn't applied and that no regulation is invalid by reason only of a failure to comply with the act. As we understand it, the proposed legislation foresees that there will be occasions when the government will decide that the act can't and won't apply. If that's the case, and regulations can already be amended or deleted, what is the point of Bill C-21?

We believe there must be transparency around which current regulations will be traded away for new regulations. This is suggested in clause 9. However, clause 9 doesn't meet the test of transparency. Public or stakeholder consultation must occur openly before regulations are scrapped, not simply contained in a report after the fact. Our members believe that it is more important to the Canadian people that they spend time to actually inspect and enforce non-compliance.

For instance, in February of this year, in the case of Western Canada Wilderness Committee v. Canada (Fisheries and Oceans), the Federal Court declared that the Minister of the Environment and the Minister of Fisheries and Oceans acted unlawfully in delaying, for several years, the production of recovery strategies for four at-risk species. These species were threatened by industrial development, including the proposed northern gateway pipeline and tanker route.

The department's reasons for not meeting their legal obligations were staff shortages and not enough capacity. Yet between 2010 and 2017, Environment Canada will have cut, or plan to cut 21% of their staff, some 338 employees from the climate change division alone. At Fisheries and Oceans, there has been a further 30% cut of the staff who were responsible for the Species at Risk Act and the recovery and protection of all aquatic species in Canada.

ln 2014 there will be 60% fewer ground meat inspections than there were in 2013 at CFIA. This means that there will be less checking of fat content, filler, and fraudulent species claims. There will be no inspection of cooking oils. Less than half of the independent food retailers inspected in 2013 will be inspected this year.

Just last week the Transportation Safety Board said that the federal government isn't doing enough to enforce proper safety practices by Canada's railways, airlines, and marine operations. The board also said that there was an imbalance between auditing processes versus traditional inspections.

We agree with the Transportation Safety Board, and we believe that the Canadian public would agree. There needs to be more emphasis on real inspection and enforcement, not just on safety management systems. We certainly don't believe it's in anyone's interest to have public service regulators spending their time looking for regulations to cut just to meet the terms of this unnecessary bill. That would really be an administrative burden.

Bill C-21 is just one aspect of how regulations to protect Canadians are being undermined. First you eliminate the people who enforce the regulations, and then when you can no longer enforce them, you eliminate the regulations.

ln summary, we believe that Bill C-21 is unnecessary. At worst it is a make-work project that will mean regulatory and enforcement officers will have to spend their valuable time within a context of shrinking resources aimlessly looking for regulations to cut.

Thank you for your time.

[The Chair, NDP, Pierre-Luc Dusseault]

I'd like to thank all the witnesses for being here today.

So that we may benefit further from your expertise, I give the floor to committee members who will no doubt have some questions for you, beginning with Mr. Ravignat who has five minutes.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you, Mr. Chair.

I would like to thank all the witnesses for being here today.

It's most kind of you to travel in order to appear before the committee.

My first question is for Ms. Jones and Ms. Coombs.

Essentially, when I'm discussing red tape with small and medium-sized business owners in my riding, they mainly mention tax-related red tape. That is the biggest challenge when it comes to paperwork. Obviously, the bill we are currently studying makes no mention of tax-related paperwork.

Could you share with us the frustration experienced by your organization's members when it comes to tax related paperwork? What can we do to make this task easier for them?

[Laura Jones]

Thank you. It's an excellent question.

You're right in saying that many of the frustrations are tax related. When we survey our members we know that GST is top of the list. Second is payroll taxes, such as CPP and EI—I'm talking about the administration of these taxes now, obviously—and income taxes are number three. They are very important and it is for that reason it is very critical to understand that while the one-for-one rule is an important part of the strategy to address the red tape burden, it is only one piece of the puzzle. There are things about the one-for-one rule that are very good. It does put a cap on the amount of regulatory activity, but there are burdens that come outside of, strictly what I think the government uses, the term regulatory red tape. From a private sector perspective a piece of red tape comes from regulatory red tape, but then there are things that are outside of that and many of them have to do with the Canada Revenue Agency.

It is also important that we get a handle on measuring those things and on setting the targets for reduction and maintenance, preferably reduction from the small business perspective. From a small business perspective even keeping a lid on the growth of regulation and red tape would be a huge step forward.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you.

Ms. Coombs, I will move on to another question, as I have very little time.

You both mentioned the importance of receiving good service from the government. Personally, I have spoken with representatives of small and medium-sized businesses. I must say they are quite frustrated by the services they receive as small and medium-sized businesses from various government officials and various departments.

What can you tell us about the challenges your members face when it comes to obtaining basic services? Unfortunately, there have been massive cutbacks, which has diminished the government's capacity to help you.

[Shannon Coombs]

Thank you for the question, Mr. Chair.

With respect to what our members are challenged with, some of it centres around the one window and trying to find a single window for your submissions to be sent to the government with respect to pre-market notification or pre-market assessments of our products. The one-for-one rule policy brought that to light and has allowed the government to be able to move forward with some of those initiatives. We've also seen a willingness to focus on our guidance documents so that the guidance documents provide clear direction on how industry makes submissions, which also ensures we have the criteria that we need to make a complete submission and that it meets the timeline. We're looking for transparency and predictability.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you. That is very helpful and has enlightened me a great deal.

To summarize...

[The Chair, NDP, Pierre-Luc Dusseault]

You have 15 seconds left.

[Mathieu Ravignat, NDP, Pontiac, QC]

All right, thank you.

The challenges go beyond this bill. Furthermore, the bill before us will not fundamentally change the challenges faced by small and medium-sized businesses, whether those challenges are associated with the government or its services.

I want to ask Mr. Aylward quickly, why do this through this bill as opposed to studying and relying on the expertise of those offering these services and these regulations, and identifying regulations that might be redundant? Why not simply go about with that natural vision and elimination?

[The Chair, NDP, Pierre-Luc Dusseault]

Your answer will have to be brief, please.

[Chris Aylward]

That's what we'd like to see. As I said in my submission, that exists today. There is no need for this bill when the regulators have the right, and government has the right now to deem any regulations inadequate or unnecessary and simply delete them. That's what we believe. The people who are on the ground doing that work and consulting with stakeholders are in a far better position to do that than those sitting at a desk and asking, “Okay which one now? They want to introduce a new regulation, which one should be cut?“

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you.

Thanks to you as well, Mr. Ravignat.

Mr. Albas, you now have the floor, and you have five minutes.

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

I want to thank all of our witnesses for their testimonies today. This is an important subject for me. I was a small business owner for 15 years before being elected as a member of Parliament, and I also worked for the B.C. Chamber of Commerce, so red tape has been an issue that I've heard about for a long time.

In regard to the comments made by the member opposite, we heard at committee last week, by Minister Clement, that 19 regulations had been taken away. That's well over $20 million in savings for business, not to mention the time savings.

Could you expound a little bit on how the one-for-one rule might impact some of your members? I'm speaking particularly to Ms. Coombs and Ms. Jones. Has it had a positive effect? What further things do you think you'll see as this policy becomes law? As the law continues to work would there be a benefit for your members?

[Shannon Coombs]

With respect to the benefits that we're seeing, the scorecard is a very good first step to reflecting some of the first wave of regulations that the government was looking at to assess. From a metric standpoint, it's a really good review indicator of the potential that we have with respect to the policy.

It's a very transparent paper, and the way that the government has gone about it is very open and helpful to the industry. It sets the tone, and that's what I was talking about in my comments around the culture.

We're seeing a real willingness from the departments to look at the impacts on industry. From where I sit, and the number of companies that make soaps, detergents, and disinfectants, we're heavily regulated. We spend a lot of time with Health Canada and Environment Canada. I think there's a way that you can balance both the health and safety and environmental issues with looking at the cost to industry and keeping things competitive.

From a culture standpoint, we've seen a willingness from the departments to look at reviewing not just regulations but also guidance documents, which are very important to companies that are making free market submissions to the department and are able to have clear, predictable timelines, and information that they need to provide to the government for the review and approval of the products, so that we can bring new and innovative products to Canada.

[Laura Jones]

I support what Shannon says about culture.

The one-for-one rule in British Columbia really had a huge impact on the culture of government. I've talked to civil servants there who have said they used to think of themselves as regulation makers. Now they think of themselves as regulation managers.

It is important that we all get serious about reducing the regulatory burden, because it continues to grow. This is what we hear from our members. Their capacity to deal with it is not growing.

If we are serious about protecting the environment, human health and safety, we have to encourage businesses to focus on the most important regulations. That culture change is enormous.

It also sends a very positive message to the business community around starting to get real about measuring this hidden tax. We should be serious about it. We should be as serious as we are about measuring the other fiscal taxes.

Those are two critical things that it does and many small businesses feel a bit like regulatory reform can be here today, gone tomorrow. Legislating sends a very different message.

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

I appreciate your saying in your presentation that political leadership is important as well as having accountability measures and constraints on regulators.

Both of you mentioned that there is a culture shift happening. Last week, Minister Clement said that he felt the implementation rules are leading to a positive cultural shift within the government. Now, particularly, the departments are more active in seeking solutions, so that again....

There's still compliance, Mr. Chair. I just want to make sure that people at home understand that regulations are going to be there, but it's looking at how we ask businesses to deal with the administrative burden and to report to government.

Ms. Jones, you mentioned earlier that there are other types of red tape, etc. Obviously, the government's action plan on red tape, and the commission that actually created it, did point out that there were other measures. I know the government is also working on another measure called the administrative baseline or burden baseline.

Do you think that, along with the one-for-one rule, is going to help to really identify and show accountability and report publicly, so that businesses can get an effective handle on how much they are being regulated?

[Laura Jones]

Measuring the burden of regulation, we should be under no illusion that's an easy thing to do. Red tape, and more broadly regulation, is a hidden tax on business, so it is hard to make that tax visible because most of the cost is compliance. It's not the administrative burden that government faces but it's the compliance of the private sector.

We are making some progress, but I also think there's more to do because right now even the administrative baseline is still more narrowly focused on regulatory red tape and the private sector definition of red tape is broader than that, and it encompasses some other things.

In 2007, the government did a measure that was broader. I'm hopeful that this administrative baseline burden is the first step to getting back to a broader measure. Those two things together, the one-for-one rule and a broadly based administrative baseline count, would be extremely powerful in helping us understand the burden of regulation and then continue to control it.

If you don't measure it, you don't know whether it's growing, whether it's staying the same, or whether you're making progress at reducing it. You need to measure it and you need to have good measures.

[The Chair, NDP, Pierre-Luc Dusseault]

I must interrupt you now as your time is up. Thank you.

We will now move to Ms. Day for five minutes.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

I would like to thank the witnesses for being here.

Ms. Jones, my first question is for you.

In your speech, you mentioned certain aspects of this bill, which states that “the one-for-one rule must not compromise public health, public safety or the Canadian economy”, but to this you have added the environment.

Approximately 109,000 businesses are members of your federation. During these consultations, these businesses mentioned the environment as being an important aspect. Have I correctly understood you?

[Laura Jones]

Yes, it's correct that small businesses would make a distinction between red tape and necessary regulation. Now, different businesses might have a different line for where that distinction falls, but in general when we survey our membership they're supportive of a regulation that is important to protect human health and safety and the environment. What they're not supportive of are rules that either duplicate or are confusing and difficult to understand, or whose benefits are very small relative to their cost.