Industry Committee on April 13th, 2021

[Laura Jones]

Thank you.

It's a very good question, and it's a question we often get asked: Give me the top five things we can do to make life easier for a small business.

It's a difficult question to answer because it isn't any one thing. It's hundreds of things, thousands of things, that businesses have to comply with. That is why one of the things we're recommending is that, in order for businesses to better communicate with government departments, there be portal, a kind of a consultation, wide open like a suggestion box, where businesses can go and say, “There's a broken link on this page,” or “[Technical difficulties—Editor] difficult to understand,” or “This regulation conflicts with this other regulation, and I don't know what you want me to do,” or “I phoned your helpline 10 times, and I got different answers, and I was waiting for five hours to get those answers.”

These are the kinds of things that I think deputies across government need to hear, so they can focus on not just fixing the big things but fixing the hundreds of thousands of small things that cumulatively add up to a very big burden, not just for small business owners but for citizens. You know we hear these things whether you're applying for welfare or maternity leave. The forms are difficult to understand. Imagine the time savings we would give back to Canadians and the improvement in the relationship between government and the citizens it serves. I think that kind of accountability and transparency is very important.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

The example of the digital portal is quite useful. I'd like to explore this issue further.

In your opinion, what steps should be taken to promote better co-operation among the various government and business players and to establish a better game plan?

[Laura Jones]

That's another very interesting question and a very good one.

One thing I've heard over and over, from those both inside and outside of government, is that COVID-19 has changed the world in terms of the openness with respect to the dialogue between those outside and inside of government. I think we need to build on that foundation. There's a lot more work to be done.

Consulting with those outside of government early in the process—not once the regulation is such that there's only some tweaking to do concerning how the regulation might be implemented, but very early in the process, when the policy ideas are being developed—is something that we on the external advisory committee heard loudly and clearly from those outside of government. That would be one important suggestion.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

What's the best way to work together to create a consistent approach to the regulatory burden and to establish a common benchmark for government and business players? Can this be done?

[Laura Jones]

You're asking a question that brings us back to one of the big challenges when it comes to regulation. There's very little data available with which to evaluate what is happening. There are some individual studies, but within government there's very little. You can't answer, with government data, the question of how big the cumulative regulatory burden is. You don't have the data to answer that question.

You don't have the data to answer the question of whether we are making progress in reducing that burden. You don't have the data for that. It brings us back to a very fundamental problem with this file. Contrast that with the data we have available concerning taxes.

It's unbelievable that we don't have this data.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

How do you feel about the federal government's past and present efforts to reduce the administrative burden?

[Laura Jones]

This has been a long-standing issue for small businesses, and I think a growing issue for Canadians, as we heard concerning the cost of housing and other frustrations that Canadians have had—big businesses have their own issues—for decades and decades. I think it's becoming less and less affordable for Canadians.

The external advisory committee that I chaired until it recently came to an end was a good start, but it's really just the beginning of what we need to do.

One good thing in Canada, I'll say, is that it has been non-partisan, in the sense that all government parties seem to understand, at least, the definition of regulatory excellence that I put forward: reducing red tape while maintaining health and safety protection and also empowering innovation.

The heads seem to be nodding. We're fortunate here that this is the case.

[The Chair, Liberal, Sherry Romanado]

Thank you.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Our next round of questions goes to MP Masse.

You have six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

I'm going to start by returning to the Competition Bureau issues that we have, with Ms. Larkin and Mr. Vaillancourt.

The problem we're faced with right now is that there was a review of the Competition Bureau. I was around. It didn't really do a lot, although we did some.

Is there anything you would identify as being the top three things we could do right now, if there were consensus in Parliament? I think an extensive review is more than warranted, by all means, but are there some low-hanging fruit items that you would suggest right now that might find all-party support?

I think this is the biggest problem we have in competition in our country, and with a Competition Bureau that doesn't have the powers that even match, as you've identified, those in the United States or in Europe in several formats.

I'll go over to you, Ms. Larkin, to start, and then to Mr. Vaillancourt, to see whether there are some things you can identify that might find all-party support.

[Dr. Yelena Larkin]

Thank you so much.

I think the broad framework within which the Competition Bureau operates is correct. Every merger, for example, has its benefits and its costs, so you evaluate the net benefits to the consumer, and this is what you go with.

What I feel is happening is that the translation of this broad framework into the action that we end up seeing.... For example, there's this idea of evaluating efficiency gains against market power. It seems that, in many mergers that clearly seem to increase market power, the resolution is still to go ahead with the merger because there are some efficiency gains to be achieved. This may be correct; however, it is difficult for me to evaluate in many instances to what extent efficiency benefits outweigh market power.

Moreover, with the idea of efficiency gains, I want to mention that it is important to maybe redefine who the focus is of these efficiency gains, because if a company, as a result of the merger, can produce at lower cost, it definitely benefits the company—that is, the shareholders of the firm. However, it is not clear who else ends up winning from that. If prices go up, consumers are definitely hurt.

Moreover, improvements in efficiency often come at the expense of removing duplicate operations, which automatically leads to layoffs. This is another important aspect that I think is important to keep in mind, and I didn't see it fleshed out enough in the decisions of the Competition Bureau.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

Go ahead, Mr. Vaillancourt.

[David Vaillancourt]

The main one is the one that I've appeared on today, the private access for abuse of dominance, which not only, I think, would have broad cross-party support, but it's also pretty widely supported within the competition bar itself. The C.D. Howe Institute put out a paper a couple years ago on private access to abuse of dominance, and the members of that panel are senior economists and senior members of big, downtown Toronto law firms. The majority of that group thinks there should be access granted for abuse of dominance. I think that's really a no-brainer.

Another one, possibly, is dealing with the leave test itself. Some of the private action components where you can seek leave require that a company show that they've been directly and substantially affected by the conduct in question, and we have some tribunal jurisprudence where 22% impact on a competitor was found to not be enough of an effect to bring a case before the tribunal. I think that really hampers the effectiveness of private access to the tribunal.

Those are the two main ones that I see off the top of my head.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

I'm going to quickly move over Ms. Jones.

You mentioned, Ms. Jones, the length of time for members to get access to things, and it's interesting, because many of the regulations we have in place are because of bad actors.

Look at housing, for example. How many people are doing renovations under the table and without permits, affecting everything from insurance cost rates to public safety and so forth? A lot of people think that it doesn't really matter: “I don't have to get that deck permit,” “I don't have to get this,” or “I don't have to get that.” I know in my neighbourhood, on my street, somebody's had to have the municipal building inspector out on a regular basis just because they won't follow the rules. This is a person who owns a business and is very much known in the community who has to have enforcement.

What do we do about those situations? I don't get up any day and come to this job, thinking, “I can't wait to get another regulation in place.” That doesn't do any good for my small business people, but we have to pour in all kinds of money for the public. Is there anything we can do to maybe get the bad actors out of the way?

[Laura Jones]

I think there's a tremendous opportunity with digitalization and the use of AI to better categorize who your high-risk actors are and separate out those low-risk people who are consistently in compliance with the rules, but that does require modernizing the systems. There's a whole lot to say about that as well, but I think that's an important priority.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

We'll now start our second round of questions.

Mr. Généreux, you have the floor for five minutes.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Madam Chair.

I want to thank all the witnesses for being here and for their very insightful presentations.

Ms. Jones, I'll speak to you directly.

I'm an entrepreneur myself. I founded my business with my partner almost 29 years ago. We started out as the only two employees in the business. Now the business has 30 employees. I'm a perfect example of a small business owner whose business has flourished. I say this with all due modesty. We've created good jobs. We entrepreneurs form part of the backbone of the Canadian economy.

In the document that you provided, I saw an absolutely outrageous statistic: 63% of small business owners wouldn't advise their children to start a business. That just blows me away. I believe that 90% of entrepreneurs should encourage their children to take over. In my case, my daughter will take over my business later on. However, the issue of financing won't be straightforward, since my company has increased in value.

By the way, I must tell the committee that I've been a member of your organization for 25 years, lest anyone think that I have a conflict of interest.

The percentage of small business owners who wouldn't advise their children to start a business has increased by 15 percentage points since 2017. That's huge. Based on your observations, what explains this result?

[Laura Jones]

I think there's a bit of a sense of hopelessness around this issue and a feeling that things continue to get worse: Will this ever be a high enough priority for government to turn the tide?

On top of that—and I'm speculating here because you didn't ask why my view has changed—although in the study we explicitly asked survey respondents to put aside COVID-related regulatory challenges so that we could have some data with which we could compare, my strong suspicion is that it was very difficult for business owners to do that, particularly when it comes to questions such as “Would you advise your children to start a business?”

The comment I would make is that, whatever caused it, the state we're in with respect to this is quite worrying from two perspectives. One, we have a number of boomers retiring from their businesses, so we have a generational business succession that we want to go well in Canada, independent of COVID-19. However, the second overlay is, with COVID-19, you have a number of small businesses—we've all seen it in our communities—that have closed their doors.

The economy overall is smaller. The small business economy is much smaller than it was going into COVID. I think we as Canadians want independent businesses to thrive and survive. That's going to require new businesses to start. If they're saying it's not worth it because of the red tape headaches they're going to have to deal with regarding the government, that's a big problem for all Canadians, because they are over half the private sector employment in this country.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I was first elected in 2009, 11 years ago. I was in the penalty box for four years. During that time, I went back to work at my business. I still kept up with federal politics in that period.

When I returned to politics, the administrative burden on businesses seemed to be increasing rather than decreasing. I'm still seeing this today. There seems to be a stream of new barriers to entrepreneurship. You also said that the government doesn't have the data to see the progress year after year in reducing the regulatory burden.

As an entrepreneur and as a parliamentarian, I'm very interested in job creation. Based on what your members are telling you and what you're seeing as an organization, what could the government do quickly and instinctively to change the situation? When 63% of entrepreneurs are telling their children not to go into business, we have a serious issue.

[Laura Jones]

I apologize if I didn't understand the question completely. The translation seems to have—

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I'm talking too fast.

[Laura Jones]

Nevertheless, I understood a little.

I think you're asking what practically we can do to change the situation.

First of all, we have to get serious about measurement. The federal government has for a long time studied it, but we need to be serious about measuring it. I'm going to tell you right now, the measurement won't be perfect.

I think I'm out of time, but I'd love to say more.

[The Chair, Liberal, Sherry Romanado]

I'm pretty good at measuring the time. Unfortunately, that slot is finished.

We will now move to MP Jowhari.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Madam Chair.

Thank you to all the witnesses.

I'm going to go back to you, Madam Jones. In your opening remarks, you talked about a culture shift that needs to take place or that is taking place. Can you expand on that?