We want to start by thanking the committee for inviting us to present today. We appreciate the opportunity to share the perspective of small business on the impact of Canada's regulatory structure. Regulation is among the most important issues we hear about from our 110,000 small business members across Canada.
There's much about Canada's regulatory structure that works well. Important government rules are in place to allow for the exchange of goods and services, and to ensure high outcomes in the areas of health, safety and environmental protection. However, we all know that regulation is not free. It takes time and money to comply with government rules, which is why we have to guard against over-regulation, or what we call “red tape”.
Excessive regulation leads to a host of bad consequences, not just for small business but also for society. Some of these consequences include things like reduced incomes, higher prices, less entrepreneurship and fewer jobs, and there are some interesting new studies now connecting excessive regulation with increased income inequality and poverty. Any strategy to support the middle class in this country must have a strong focus on keeping government rules manageable.
How much red tape is there in Canada? Well, small businesses will tell you they think roughly 30% of the regulatory burden can be reduced without undermining the legitimate objectives of regulating. This may be a conservative estimate, if you look at what happened in the province of British Columbia. Ryan mentioned the 36% reduction between 2001 and 2004. Even more impressive, they've continued to make gains since then with their one in, one out policy, and they have currently cut their rules nearly in half—a 49% reduction—relative to 2001 levels. This is probably the most successful model of regulatory reform that exists in North America. They've done that while maintaining high levels of health, safety and environmental protection. I think that's important to say.
Our first point is that we believe there is room to reduce regulatory requirements in Canada. Our advice would be to set a reduction target of 25% to be accomplished in three years. I think this is a very conservative estimate of what can be reduced. As part of meeting this target, it will be critically important to engage and empower regulators to be part of the solution. While the private sector and business associations can help identify things to fix, regulators across the system are also in an excellent position to help with this while preserving important rules. I think that's one of the most important lessons that come from what happened in British Columbia.
This brings us to our second main point about the regulatory structure in Canada: we don't yet have enough accountability. For example, there are no comprehensive measures available on the total number of federal regulatory requirements. Ryan mentioned 130,000, but that doesn't cover all government departments and agencies. It certainly doesn't cover all of the requirements coming even from the departments and agencies that it does apply to. This means that even if we all agreed that the total regulatory burden should, as we recommend, be reduced by 25%, we would have no way of monitoring this. When it comes to other ways government affects our lives, like taxation and spending, we have lots of reporting and accountability. When it comes to regulatory measurement and accountability, we have very, very little.
I'll now turn things over to my colleague, Corinne, who will walk you through some of the data we have from small businesses that supports our recommendations.