Government Operations Committee on May 27th, 2024

[The Chair, Conservative, Kelly McCauley]

I call this meeting to order.

Good morning, everyone. Welcome to meeting number 124 of the House of Commons Standing Committee on Government Operations and Estimates, also known as the mighty OGGO.

Before we start, please read the rules regarding keeping your earpiece away from your mic to protect our very valued interpreters. Try to keep it face down on the sticker. Thank you for your co-operation.

Colleagues, quickly, I have heard rumours that there may be a closure vote, so we might have bells around 12:30. Can we have UC right now to continue until, say, about seven minutes before the actual vote so that we can get the meeting in if there is a vote?

We have four groups of witnesses. One of them is trying to restart their computer right now, and the other one might be joining us later, so we are going to start with opening statements. If the others are able to join in, we'll get to their opening statements.

We'll start with—

[Jenica Atwin, Liberal, Fredericton, NB]

I have a point of order, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

Mrs. Atwin, please go ahead.

[Jenica Atwin, Liberal, Fredericton, NB]

I'm sorry, but there's only audio coming through and no video of the committee room.

[The Chair, Conservative, Kelly McCauley]

Oh, that's odd. We can see you clearly.

[Jenica Atwin, Liberal, Fredericton, NB]

I can't see anyone in the room.

[The Chair, Conservative, Kelly McCauley]

Is it the same for Ms. Kozhaya?

[Norma Kozhaya, Vice-President of Research and Chief Economist, Quebec Employers' Council]

I can't see anyone either.

[The Chair, Conservative, Kelly McCauley]

Thanks, Mrs. Atwin, for letting us know.

Bear with us for one second.

We'll start with Mr. Girard for five minutes.

Welcome to OGGO. The floor is yours for five minutes, please, sir.

[Michel Girard, Senior Fellow, Centre for International Governance Innovation]

Thank you very much, Mr. Chair.

I'm delighted to have been invited this morning to present to you the key features of a paper that CIGI published in July of last year. The title of the paper—“Canada Needs Its 'New Approach' to Streamline Digital Rulemaking”—is squarely framed in the modernization of our regulatory framework in Canada.

I also want to thank the committee for using its resources to translate the document so you can access it in English and French. It's an excellent translation, by the way. I'm very happy to have it.

The paper's focus is about managing safety and innovation in a new world. We now have digital technologies that are clearly outpacing our ability to manage harms through regulations. The paper is about keeping Canadians safe.

The approach we propose in the paper is to modernize the Statutory Instruments Act. We recommend to formally recognize standards as statutory instruments alongside regulations, creating a completely new separate track to achieve compliance with laws, alongside regulations.

The way we look at this is that a law or legislation is about what you need to do and what the consequences are—the penalties—of not complying with the law. Regulations are about how to achieve compliance, and we argue that standards developed by accredited organizations are as efficient as regulations in achieving compliance with the law.

Today, standards are merely a footnote in the Statutory Instruments Act. They are mentioned as one category of documents that can be incorporated in a regulation. If you were to establish a separate standards track, you would give parliamentarians a power tool. You would give them the ability to force standard-setting as soon as a new technology is introduced in the marketplace. It would allow ministers to make standardization requests to the Standards Council of Canada, not for voluntary standards but for mandatory standards, standards that would have force of law once they were developed.

Now, let us be clear. It's not about prohibiting the use of new technologies, but about establishing clear requirements with industry and other stakeholders, through a credible process, to make them safe for use. When you look at the paper, you will see that we spend about 10 pages describing the standardization system, because it's operating under the radar for many of us, including legislators and regulators.

In the paper, you'll find there are more than 6,000 standards referencing federal, provincial and territorial regulations, standards that have been used by regulators since 1927, with the introduction of the Canadian electrical code. They're being used to keep Canadians safe when it comes to tangible products.

If you think about electrical safety, plumbing safety and building safety, it's all safety codes. It's all standards. If you add standards to the mandatory codes that are adopted by provinces and territories as well as by the federal government, you're looking at more than 10,000 standards that are used to keep Canadians safe. It's a parallel system, but it's an invisible system.

In Canada, we have more than 10,000 Canadians participating in the development and maintenance of standards. That's a lot of people. I would argue that there are more Canadians developing and maintaining standards in this country than there are regulators.

We're seeing the same thing when it comes to digital technologies. Here in Ottawa, we have an organization called the Digital Governance Standards Institute. They develop standards for digital technologies. Whether it's AI, electronic wallets or face recognition technologies, you have them everywhere, and we have thousands of Canadians participating in this. The paper shows as well that in Europe, in the U.S. and in the U.K., there are processes in place to direct the development of standards.

Do you want me to—

[The Chair, Conservative, Kelly McCauley]

You're past your five minutes. Can I can get you to wrap up?

[Michel Girard]

I am past my five minutes, but I'm so excited to be here.

[Some hon. members]

Oh, oh!

[Michel Girard]

To conclude, then, we think that establishing this separate track would make sense for Canada. It would improve safety. It would give you a tool that you need in order to keep pace with digital technologies.

Thank you. I am done.

[The Chair, Conservative, Kelly McCauley]

Thank you.

I'm sure you'll get a chance to answer or explain a few other things in other rounds.

We'll now go to Ms. Kozhaya. If I'm pronouncing that wrong, please let me know the correct pronunciation.

Go ahead for five minutes, please.

[Norma Kozhaya]

Thank you very much, Mr. Chair. The pronunciation was very good.

Good morning, everyone.

The Quebec Employers' Council, the CPQ, would like to thank the committee for the opportunity to comment in the context of its study on federal regulatory modernization.

Reducing the regulatory and administrative burden is a major concern for Quebec employers. The CPQ believes that an overly rigid regulatory regime can interfere with businesses' ability to boost their performance and productivity and create wealth. It's clear that, in many cases, well-intentioned regulations can lead to unintended and undesirable consequences.

In addition, administrative tasks and paperwork consume a significant amount of managers' and business owners' time, and that directly impacts operations. Long wait times for project approvals, duplication and complex processes are all irritants and barriers to investment. Streamlined procedures and more efficient regulations would encourage investment and improve business productivity and competitiveness at no cost to the government. That's why the work you're doing here is so important.

If we look at any single bill or set of regulations, the procedures and their impact may seem reasonable. Taken together, however, they're a heavy burden for businesses. That's why a big-picture perspective is essential. It's important to consider the cumulative effects of the entire administrative burden on businesses, especially small and medium-sized businesses, or SMEs, and to do everything possible to lighten that burden. Regulatory regimes must prioritize efficiency, results and predictability. I have a few specific recommendations along those lines.

For starters, the government's approach to developing regulations must be improved by ensuring consultation periods and timelines that optimize stakeholder participation and involve independent experts.

Once new regulatory and administrative requirements and laws passed by the government are implemented, there must be thorough and continuous analysis of their actual impact on businesses and a mechanism to put forward suggestions for necessary reductions to the regulatory and administrative burden.

In addition, impact studies that accompany new legislative or regulatory provisions must be based on input from the sectors concerned and on-the-ground realities.

The government must also provide businesses with basic guidelines to facilitate compliance and consistency and ensure greater predictability.

Harmonization and avoiding duplication among departments and agencies and between multiple levels of government is essential. In budget 2023, the federal government said it was prepared to work with the provinces and territories to enhance federal-provincial co-operation to achieve the “one project, one assessment” objective, but that has not yet materialized.

The government should also eliminate the need to repeat certain applications and procedures for identical situations or when a company has demonstrated exemplary compliance in the past.

The federal government must also work with the provinces to remove more interprovincial trade barriers by facilitating mutual recognition of standards and regulatory harmonization. It should follow the example set by the Government of Quebec, which committed to introducing a specific bill every year in favour of regulatory and administrative relief and adopted an ambitious action plan to reduce this burden. The plan includes quantifiable red tape and cost control targets.

Equally important is following the one-for-one rule, which states that regulators must remove a regulation every time they introduce a new one. This rule covers regulation only, but laws, policies and guidelines are having an increasingly significant impact on both businesses and individuals.

Finally, we must avoid new counterproductive regulations that are not based on a proven need.

Consider Bill C‑58 on replacement workers. This may not be part of the committee's mandate, but we still wanted to bring it up.

My colleague and I would be pleased to answer any questions you may have. We may also have a few examples to share about temporary foreign workers or child labour in supply chains.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

Unfortunately, our other witnesses haven't been able to log in yet, so we're going to start our opening round.

Ms. Furlong, if you're ready, we'll go ahead with you for five minutes.

[Shaena Furlong, President and Chief Executive Officer, Richmond Chamber of Commerce]

Thank you so much, Mr. Chair and honourable members of the committee, for allowing me to be here today.

My name is Shaena Furlong. I'm the President and CEO of the Richmond Chamber of Commerce in British Columbia, situated on the traditional territory of the Musqueam Nation. The Richmond chamber, celebrating its 100th year in 2025, is the longest-standing business organization in our community.

As MP Bains will know, Richmond is a tremendously diverse community. It's home to Vancouver International Airport, which brings in visitors and newcomers to Canada from around the globe. Richmond's diversity extends beyond demographics to our employers, with over 13,000 businesses employing nearly 130,000 workers. The agri-food sector is significant, given that 39% of Richmond's land mass is dedicated to agriculture. Additionally, our proximity to the U.S. border, the airport and the Vancouver Fraser Port Authority make Richmond a major west coast hub for intermodal transportation and distribution. We also boast an emerging clean tech sector, key local manufacturers and a significant tourism economy.

Today I'll be highlighting some challenges faced by our employers and suggesting potential solutions identified by our chamber network.

Regulation and red tape remain a major concern. While we share the goal of making Canada attractive for investment and entrepreneurs, the regulatory burden often acts as a disincentive. In 2006, Canada ranked fourth in the World Bank's “ease of doing business” list but fell to 23rd in just 14 years, largely attributed to a challenging regulatory environment. Postpandemic, national productivity has lagged. Reforming Canada's regulatory framework is crucial to our economic competitiveness.

In 2023, the Toronto Stock Exchange saw the record net sell-off of $48.7 billion in Canadian equities, indicating a loss of investor confidence. At the same time, Canadian investment abroad has grown significantly, while foreign direct investment in Canada lags, resulting in a net direct investment position of nearly $811 billion, which is nearly an order of magnitude greater than 10 years prior.

As investment dwindles, so too does our GDP per capita. Real GDP growth was only 1.1% in 2023—the lowest since 2016—with GDP per capita now 2.5% below prepandemic levels, equating to a decline of about $4,200 per person.

Despite these challenges, there is great opportunity within Canada for major projects and emerging industries. The clean energy sector, for example, is crucial. According to the Canadian Climate Institute, achieving net zero will require electricity production to increase by 1.6 to 2.1 times. This necessitates significant growth in generation facilities, transmission infrastructure and distribution networks, requiring public support and streamlined approvals processes. The federal government's own estimates are that we currently have an investment gap of $115 billion annually in clean tech.

Unfortunately, Canada's reputation for enabling that necessary investment is a bit challenged. For instance, the Parkland Corporation recently abandoned plans for a $600-million renewable diesel complex in Burnaby, B.C., due to rising project costs, market uncertainty and the competitive advantage of the U.S. Inflation Reduction Act. The resources sector also faces long timelines and overlapping review processes. However, the 2022 critical minerals strategy's "one project, one assessment" commitment is promising and could be applied across all major projects.

The Western Transportation Advisory Council's 2024 “Compass Report” highlights the deteriorating business climate. Over half of respondents rated the regulatory environment as poor, with concerns centred on restrictive regulations and long approval processes. One respondent to that survey, representing a railway operator, said, “It is tough to invest in a geography that has unpredictable rules. At any minute, things could change, and it never seems like they change to help business.”

To address these issues, we need to take decisive, bold steps as a nation. We believe Canada can absolutely once again attract much private sector investment, domestically and from abroad, by implementing an economic competitive mandate for all federal regulators; leveraging new technologies for regulatory design and review with a focus on efficient implementation; and identifying areas of regulatory overlap. We agree that a firm grasp on the one-for-one rule, with an eye to reducing time to project approvals, is necessary.

Canada's regulatory environment presents some significant challenges to economic prosperity and our global investment reputation. However, by adopting a balanced approach to regulation that protects public interests while promoting economic competitiveness, Canada can reverse its declining productivity and investment trends.

Thank you so much for your time and consideration.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

Our final witness, Mr. De Thomasis, is still trying to log in. He won't have a camera. If he's able to log in, I'll let everyone know that it will be audio only for that witness.

We'll start with Mrs. Kusie, please, for six minutes.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much, Mr. Chair.

Thank you to our witnesses for being here today.

Ms. Furlong, the border officers at the CBSA voted last week in favour of strike action due to the lack of a contract for the last two years. Their demands include wage parity, protection from management retaliation, access to telework and protections from CBSA's obsessive reliance on contracting out.

How concerned are you and the businesses you represent that this border disruption will cause a massive impact on Canadian business?

[Shaena Furlong]

Thank you so much for the question. It's much appreciated.

While I cannot comment on the specific labour negotiations of this union, we saw the huge impact that our west coast port strikes had on the economy as a whole last year. It was measured in the billions of dollars.

CBSA is absolutely critical to the movement of goods and people across the border and into our ports. It is unfathomable that we would see another shutdown within a short period of time. I think this committee knows how critical it is that Canada regain its reputation as a reliable trading partner.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Very well said.

What would be the impact on Canada's economy if this strike were to occur? You mentioned the previous incident and the damage being in the billions. Would you like to make any further comment as to the impact on Canada's economy, were this to occur?

[Shaena Furlong]

Thank you so much.

Unfortunately, I don't have an estimate right now as to the full impact on the economy. I would be happy to do some research and provide that following the meeting.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

That would be very much appreciated, Ms. Furlong. Thank you very much.

Mr. Chair, one doesn't have to look deeply into recent headlines to see that Canada's economic conditions are declining and consequently eroding the prosperity and living standards of Canadians.

Between 2009 and 2018, the number of regulations in Canada grew from 66,000 to 72,000. These regulations restrict business activity, impose costs on firms and reduce economic productivity.

According to a recent red tape study published by the Canadian Federation of Independent Business, the cost of regulation from all three levels of government to Canadian businesses totalled $38.8 billion in 2020, for a total of 731 million hours, the equivalent of nearly 375,000 full-time jobs.

If we apply a $16.65 per hour cost—the federal minimum wage in Canada for 2023—$12.2 billion annually is lost to regulatory compliance, and, as our witnesses here today know, Canada's smallest businesses bear a disproportionately high burden of the cost, paying up to five times more for regulatory compliance per employee than larger businesses. The smallest businesses pay $7,223 per employee annually to comply with government regulation, while larger businesses pay a much lower $1,237 per employee for regulatory compliance. Those are certainly not small numbers, Mr. Chair.

Monsieur Girard, although federal departments and agencies are meant to annually report the regulatory burden they impose on Canadians, this is not legislated and is extremely difficult to access. Why do you think the government, unlike many of its other provincial counterparts, is trying to hide this information from Canadians?

[Michel Girard]

Well, I don't think I'm able to answer that question directly in terms of the regulatory costs. I think there is a need to understand a lot better how we frame compliance, both through standards and through regulations, and what the impacts are of creating new regulations.

I don't see a lot of reports on outcomes. That would be my interest: figuring out the expectations that we have when we pass new laws and how we measure whether we're getting there. I'm not seeing that, unfortunately. We're focusing on the process; we're not really focusing on the outcomes.