Evidence of meeting #147 for Industry, Science and Technology in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was regulations.
A video is available from Parliament.
Executive Vice-President, Canadian Federation of Independent Business
Yes, we regularly survey our members, and I would say we're pretty good at it.
Having said that, on the survey on the cost of regulation, again, we've always been clear that it is an estimate. It came out of our frustration that governments themselves weren't measuring or doing anything about it. In an ideal world, we would be doing a simple regulatory count, but it does take some resources, and it's beyond the resources we have to do that, which is why we're encouraging governments to measure.
Liberal
Terry Sheehan Liberal Sault Ste. Marie, ON
It was good. In one of your slides you mentioned that even the perception of regulatory burdens prevents some people from starting small businesses. It just seems like a big mountain to climb. I get that and that all governments need to work together to help people get there.
The Canadian Federation obviously has been at this for a very long time, and they analyze this federally, provincially and municipally. As a former councillor, I know that. You put the axe down, but you also hand out the Golden Scissors Award. I was pleased to see this year that it was Scott Brison and the Treasury Board who won the golden scissors, so I want to applaud you for pointing out that you also give people check marks on stuff.
Could you explain just what the golden scissors program is and how the Treasury Board received those golden scissors?
Executive Vice-President, Canadian Federation of Independent Business
The Golden Scissors Award is something we started a number of years ago to recognize good work in the area of cutting red tape. It's not politically all that glamorous to cut red tape, which is one of the reasons we don't always see a lot of action in this area, so a number of years ago we thought that it's one thing to point out the problems—of course, we're good at that, and we like to do that, too—but that we also needed to start rewarding people who are doing good work.
That's really what the golden scissors is about. We're pleased with a number of elements of the regulatory modernization work that's going on, including one of the recommendations that I think everyone here is making, which is to set up an external advisory committee. That's something we've been wanting to see, as well as some of the other structural pieces that are happening under regulatory modernization, including the omnibus bill. We're very pleased with that as part of the solution, but we also believe that more needs to be done in this space.
Canada is a bit of a leader. We're really at the beginning of the beginning of the work that we need to do, but many developed countries aren't even at the beginning of the beginning. Canada has been a leader, and I think we should all be really proud, too, of the non-partisan nature of a lot of this work, the passing of the one-for-one requirement with all-party support, and committees like this looking at the issue. When I go down and talk about this in the United States, that is certainly something they are really envious of, and the Golden Scissors Award is part of that.
Central Okanagan—Similkameen—Nicola, CPC
I just want to put on the record that I believe Mr. Baylis has raised a very good point. I have heard politician after politician telling businesses they need to innovate, yet businesses innovate every day. It's government oftentimes that doesn't look at its own processes to see if there are better ways to do things. I certainly agree with my colleague that that's one area where I think we can do better.
Moving on to other items, Mr. Greer, you mentioned the Canadian Free Trade Agreement. I think it's absolutely ridiculous that we would say we have a free trade agreement within Canada, given the large number of exemptions in it. Have your members seen any significant movement in terms of reduced red tape right across the country directly from that agreement?
Senior Director, Transportation and Infrastructure Policy, Canadian Chamber of Commerce
Our members haven't seen much. A big problem with the CFTA, compared with a traditional international trade agreement, is that the CFTA is not an end state. An international trade agreement spells out what the agreement is, whereas the CFTA is a sort of promise of new processes and new ways to help reduce the burden.
We're a little less concerned about the exemptions. They're there; they're public. We have the ability and other stakeholders have the ability to question governments and ask why a particular exemption is there and push them to try to get rid of them.
For us, it's actually all the small regulatory differences that aren't talked about in the agreement, which are supposed to be negotiated through the Regulatory Reconciliation and Cooperation Table. That table is staffed by mid-level and senior-level officials from all governments, who have a great amount of good will, but there are all kinds of loopholes built into that exact process. This was the only way, I guess, that they could reach an agreement, but there was nothing to mandate regulatory alignment when it was being negotiated. There's nothing that mandates, to go to the example of autonomous vehicles, that new areas of regulation should be aligned. Governments can thus decide at any time that it's not in their interests to do so. The level of justification needed from any jurisdiction to say that they don't want to align is just that they believe it not to be desirable for their jurisdiction. That's a pretty low threshold: “desirable” is whatever the minister or the premier thinks it may be at a given time.
In our mind, in many ways the regulatory reconciliation table has the opportunity to be the linchpin to the deal. It can be like the old agreement on internal trade, which was negotiating a slow incremental process that isn't meeting anybody's needs, or it can be an opportunity for there to be a great deal of political will between the Prime Minister and the premiers and senior-level officials to drive for regulatory alignment.
In our mind, the best way to do this is to commit to mutual recognition. This is what Australia did in the early 1990s when Canada decided to go the route of the AIT. There's no reason that in most areas of regulation the provinces can't say, we will agree to recognize the other standards as if they were our own. after you've done that, you can then take on the long work of trying to actually harmonize some of those standards.
There are very few instances in this country in which a regulatory standard in one province would not be sufficient in another. I recognize that a trucking standard to get through the mountains in Alberta might be different from trucking standards in Saskatchewan, and there will always be legitimate health and safety reasons to have differences. The current high degree of small differences across almost every area of regulation, however, is unnecessary.
As currently constructed, we're not confident that the CFTA is going to make sufficient progress on those differences.
Central Okanagan—Similkameen—Nicola, CPC
The process in place, then, has a number of loopholes that allow provinces basically a “get out of Confederation” card when it comes to having joint standards that apply across—
Senior Director, Transportation and Infrastructure Policy, Canadian Chamber of Commerce
Yes, there are opt-outs built in to say that if a province believes it's not desirable, they can opt out of a joint reconciliation process—or even a process to develop common standards in a new area of regulation.
Central Okanagan—Similkameen—Nicola, CPC
Bill C-21 was the Red Tape Reduction Act in the last parliament. Obviously, I strongly supported that bill.
There is a difference, though, between what Mr. Masse was referring to, in terms of regulations, and administrative compliance. The way the Red Tape Reduction Act works, at least at the federal level, is that it actually will find out how much time and energy....
For example, if it takes x amount of time by a professional to submit paperwork, it monetizes it, rather than using a straight-up one-for one substitution, whereby we would say, “Here's one new piece of paper on the books; we need to take one piece of paper out.”
Ms. Jones, can you explain whether there's a difference between British Columbia's system and the federal system, and also the American system? I'd like to hear what your views are and which one is the most desirable and effective. I imagine that two-for-one sounds better than one-for-one, but if it's simply a case that we'll shrink the font size and say we've reduced the red tape provisions, I don't think it's what business owners are looking for.
Liberal
Executive Vice-President, Canadian Federation of Independent Business
Okay.
You're absolutely right that what you measure matters. Let me give you a very high-level overview.
The American one-for-one is super-narrow. Literally, less than 1% of the regulations—actually, government rules come from many other sources—are technically eligible for it, so the American one-for-one is not a recipe to follow. I know it gets a lot of attention, but it's not a recipe to follow.
The Canadian one-for-one is significantly better than the American one-for-one, but is still in our view too narrow and needs to be expanded.
B.C.'s one-for-one is the broadest one-for-one you have, because they literally look at regulatory requirements, so that such things as having to put your name on a piece of paper counts as one; if you have to have a safety committee, that counts as one. It's any kind of regulatory requirements. It's quite comprehensive and quite broad. If you want to go to something even broader than that, look at Manitoba.
Celina Caesar-Chavannes Whitby, Lib.
Thank you very much to each of our witnesses.
In previous slides it was mentioned that we should set a target for reducing red tape at 25% over three years. I'm wondering if that leads really to another metric, perhaps regulations that are more costly or that take more time, impede growth or exports, or wherein there is a correlation between business size and the costs of compliance, as opposed to the rate of progression that we saw on the slide. Is the 25% what we should be looking at, or should we be looking at another metric?
Executive Vice-President, Canadian Federation of Independent Business
That's a great question. There are already pretty good checks in place when it comes to some of the bigger regulations, although there are some significant other problems, which Ryan talked about, with respect to confusing policy and project approval. In that space there are some significant challenges, but when it comes to a big, new regulation, typically a cost benefit is required and you have a fair amount of study. It's not that it can't be approved, but when we talk about the 25%, we're actually suggesting that you have a simple, very broad measure that can capture the number of requirements on forms, for example, which you wouldn't do with a cost-benefit analysis.
The reason this is important is that when you have a form that's eight pages long and that could instead be two pages long, while that one example might not be that problematic, when you start multiplying that out across the whole system, then you're getting this kind of death by 130,000 cuts that Ryan was talking about.
Whitby, Lib.
I noted something in figure 7. I don't know which slide it is, but in figure 7, you cite costs of $6,000 per employee for a business with fewer than five employees. Is the bulk of that cost in there the eight pages? I just want to know what that cost is related to.
Executive Vice-President, Canadian Federation of Independent Business
Yes, for smaller businesses it would be anything they might have to comply with, so this would include their records of employment, their tax forms, any—
Executive Vice-President, Canadian Federation of Independent Business
Yes, time, and then we convert that to a dollar cost, but for smaller businesses, there would be a lot of those little compliance forms or records of employment, tax compliance. Statistics Canada surveys would be included in there.
Whitby, Lib.
Of course.
Figure 16 talks about the social cost of regulation. You talked about B.C. They cut their regulations in half and had better outcomes. Did you measure if there were more innovations? We talked about the innovation side of things. How did that play out in B.C. and is there a way to measure that?
Executive Vice-President, Canadian Federation of Independent Business
That would be a great study to do. Actually the Mercatus Center in the U.S. is looking at what happened to economic growth and the kind of economic growth that stimulated in B.C. I'm not going to claim this is causal, but I will say that they cut the rules in half and the economy turned around from one of the worst-performing economies in Canada to one of the best-performing economies in Canada. Again, we can't claim causation because there were a number of other things going on, but that did happen, and health, environmental and safety outcomes were maintained at very high levels in the province.
What that does tell you is that you can have fewer rules with high levels of health and safety and a growing economy.
Whitby, Lib.
I get that. I'm trying to figure out how the innovation side comes into play, because when innovation starts to spur, I'm wondering if you have what you were referring to earlier, where you have these regulations popping up. You could cut them in half, but you want to see that innovation, so it will be a good study to see what happens on the innovation side of things if you cut regulations in half. I'm not assuming that things just get stagnant, but that there is some innovation. How does that play out in terms of the regulations today?
Executive Vice-President, Canadian Federation of Independent Business
It's a great question, and I have two observations. One, unfortunately, is that the state of the data is so bad that we can't yet do that kind of study.
My second observation would be that when we ask small business owners what they would do with the time if it were freed up, there is a host of things we hear from them about, including “More time for my business, more time serving my customers, more time planning and less stress, and I'd be spending more time with my family”, I think also makes us more innovative. When you hear what business owners say they would do, it certainly speaks to innovation being part of that package. It's not the only thing they would do with the extra time, but it certainly suggests you would have more of that.
NDP
Brian Masse NDP Windsor West, ON
I have a couple of quick questions.
I'll go back to your conclusions and recommendations, including that we need to ensure that there is adequate communication of existing and proposed regulation. Have there been any thoughts, as we move to the digital age, about how new regulations might be worked in with that component to be more efficient in whatever model is picked, or whatever we decide? We've all heard about the paperless society. We're still waiting for that. As we move to the digital age, though, and more online services happen within the government, there are issues with broadband and access and so forth.
I'll leave it to both of you to comment on that.
