Industry Committee on Feb. 5th, 2019

[Laura Jones]

But that's the beauty of having a very simple measure with a constraint in the system, because all of a sudden it's the regulators themselves who are looking for those opportunities. So, instead of our always having to be pounding on the door asking why you don't increase the threshold or change it to having to file it annually instead of quarterly, the regulators themselves start looking for those things and being rewarded for them. That starts to change the culture in government.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Let's talk about that then. I will give you an example. You remember that in China 10 years ago they had a tainted milk scandal. A couple of people were executed. The head of their regulatory agency for food and drugs was fired. After that it got a lot harder, obviously, to get things approved in China—not easier.

That goes to the incentive of the actual regulators. We sit outside and say, why don't you be more effective? Why don't you be more efficient? When you win that balance of risk award, why don't you take a little more risk so we can have more innovation? Do you know what they say? Why? Why would I do that?

The only thing I've seen here is your concept of two-for-one that would mandate them to say, you have to do it. But in terms of saying that they want to change your attitude or your approach, why would they do that?

[Laura Jones]

I think currently the system rewards regulators for being regulation makers, to add to the pile of regulation. That's what you get acknowledged for, that's what you get recognized for. I've talked to regulators who say that when you help get a big regulation, that's when you get your certification. You get something nice, a reward, a thank you.

I think ideally what we want to shift to is regulation makers turning into regulation managers, where they are doing a good job of protecting and keeping the important rules, but identifying red tape.

When you look at what happened in British Columbia, you see that it is a very powerful model. They've cut their rules in half, and they still have high levels of health and safety and environmental outcomes. In fact, in some areas, the outcomes are better.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

From your surveys, have you seen a change? Do you break it up by province? Let's say they have cut it in half. They could have easily cut it in half by taking two regulations and merging them and saying now they are one.

Have your people said that it's going better?

[Laura Jones]

Yes, they have. To your point about two and merging it into one, that's why it's important that the measure be simple, comprehensive, and fairly granular so it can't be messed with. There are always going to be some games that can be played, but they did a good job of coming up with a good, simple measure that was granular enough that you couldn't play those two-for-one kinds of games.

[The Chair, Liberal, Dan Ruimy]

Thank you.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Sorry. I'm done.

[The Chair, Liberal, Dan Ruimy]

We're going to move to Mr. Lloyd.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

I'm going to follow up on some of the questions my colleague Mr. Albas was asking you, Mr. Greer.

Back in 2015 we had a provincial and a federal election in Alberta. One of the key themes was that we needed to buy the social licence so that we could get pipelines built in this country. A part of that social licence was a carbon pricing regime.

I see here from the data the analysts provided us with that since 2014 we have seen nearly 3,000 regulations added to the National Energy Board, and about 2,000 new regulations for Environment and Climate Change Canada.

Can you comment on whether you feel like the social licence has been bought in this country, or does it feel like we're getting the regulation and the pricing altogether?

[Ryan Greer]

I think if any of us felt like the social licence had been bought, we would be building pipe right now, and we're not. Listen, regulatory problems are very different across all of the different departments and agencies, but certainly our inability to get oil to tidewater is one of the biggest regulatory problems in this country with some of the greatest economic impact.

While we are sympathetic to the challenge of trying to set up a regulator that has the ability to go out and undertake the right amount of consultations with the right impact on communities to do these things, that work needs to be focused. The idea that anybody, whether they are impacted by a project or not, could potentially be funded by foreign interests and be able to intervene to their heart's desire in a project creates challenges.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Are you saying that the new standing test requirements under Bill C-69 could open us up to foreign interests interfering in our regulator?

[Ryan Greer]

I think that consultation processes in general through the NEB looking backwards and forwards have provided an opportunity where instead of focusing on the project, we are instead focusing on the policy. Policy consultations and project consultations are two very different things, but over the last several years they have been merged into one.

We think there's room to continue to work on how the NEB is set up and how consultations under new Bill C-69 will work, because we need to find a way to get oil to tidewater.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

One of the thing I noticed in here is that while provinces obviously have their jurisdictions and are creating a lot of burdens, that's not necessarily the federal government's fault, and I think it it is really incumbent upon the federal government to look for ways we can harmonize regulations.

I want to get your comment on one particular thing that was in the report, the inclusion of upstream emissions in the National Energy Board process. That is traditionally a provincial area of jurisdiction but now that that's been included in the NEB, are we not creating more regulations? And what is the impact of those increased regulations on our energy sector?

[Ryan Greer]

I think you're right. Having regulatory overlaps is a problem. When we have jurisdictions competing to set rules where previously there were thought to be jurisdictional boundaries and those no longer exist, that just creates extra uncertainty for industry, extra layers of burden. Yes, harmonizing but respecting jurisdictions where they exist is an important way to do that because it's very challenging for business. In your case, when you are referring to oil and gas, whereas traditionally the Alberta Energy Regulator was tackling upstream emissions, that's now being considered through the federal lens, which certainly creates uncertainty.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Can you give any tangible evidence of these impacts that the particular legislation or change has cost?

[Ryan Greer]

Our members have been heavily engaged in consultations on the legislation, on the changes. I don't have any sort of anecdotes in front of me directly from our members on that one.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Okay. I also note in your report that back in 2009 or 2010, Canada was ranked about 9th in global competitiveness in terms of regulations, and now we're ranked 14th. Can you elaborate on what has changed and why we have dropped five places?

[Ryan Greer]

That's the World Economic Forum Global Competitiveness Index. This is a relative measure, so it's difficult to determine.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Countries change things.

[Ryan Greer]

Other countries have changed. The thing that means the most to us, whether Canada is 9th or 14th or somewhere in-between, behind a few developed countries but generally doing okay, is that in the sub-ranking on the burden of government regulation, we are in 38th place. That means that if we want to improve our global competitiveness, this is clearly an area that we need to work on. I think the reason this committee's study is so important is that this is a problem not just for our members in Canada, but also for investors and those looking to move in and do business in this country. They're looking and saying that it's not as attractive a business environment as it should be.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

How much time do I have left?

[The Chair, Liberal, Dan Ruimy]

You have five seconds.

Mr. Sheehan, you have five minutes.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you again for your presentations. It's nice to see you all again. Obviously, your input is always welcome. I've seen you at a few committees that I attend, so thank you again.

I was reading about the methodology in appendix B. You surveyed some 7,823 small and medium-sized businesses across Canada. Do you also track regions, where this data would come from, say a coastal area, the Prairies, rural versus urban area, and northern border communities, not just by province or maybe by province.

Would you care to elaborate on your methodology?

[Laura Jones]

We can do breakouts by province, and where the sample sizes are big enough, we can do some of the other breakouts you're talking about, including coastal regions and other things.

For the purposes of the report we put together, we've always been very clear that it is not an exact science when we put together the cost of regulation and that it is really an estimate that we put together so that we could get a rough ballpark sense of what these costs might look like and track them over time and by size of business. You'll notice that most of our breakouts are by size of business. Our study showing the regressive nature of the regulatory burden is consistent with OECD work that has also shown how the smallest businesses pay the highest per-employee costs.

We feel fairly confident that we have a ballpark sense of these things and also that the smaller businesses pay higher per-employee costs, which makes sense. They don't have the same number of employees to spread the costs over.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

With surveys as with anything.... I used to manage an enterprise centre with a small business arm and the economic development agencies in Ontario. Small businesses, rightfully so, being as busy as they are doing what they do, have always said that they have a hard time filling out surveys or whatnot. Do you undertake to engage with them, to sit and talk with them, and that kind of stuff?