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.