Thank you, Mr. Chair and members, for inviting me to join you today.
My remarks will focus on how Canada's federal regulatory policy and modernization agenda responds to the needs and concerns of Canadian small and medium-sized enterprises. I'd also like to share some of the key policy challenges we are seeing in this space.
The Government of Canada policy that sets out how regulatory departments and agencies must develop, manage and review federal regulations is called the “Cabinet Directive on Regulation”. The directive asks regulators to:
...consider the impact of proposed regulations...on small businesses to ensure that [they] do not unnecessarily bear a disproportionate burden when complying with regulations.
To determine whether there are impacts on small businesses, regulators must apply what we refer to as the small business lens. If there are impacts, they must explain how they were factored into the regulatory design, as well as any flexibility that responds to small businesses' needs within the regulation. Flexibility can come in the form of delaying implementation, offering exemptions, reducing reporting frequency, etc. We find that about 20% of the time, there are impacts on small businesses when departments come forward with new regulatory proposals.
There is also a rule within the federal regulatory system that controls the administrative burden on businesses, known as the one-for-one rule. Established in policy in 2012 and under the Red Tape Reduction Act in 2015, this rule requires that, for every new dollar of administrative burden imposed on businesses, a dollar must be removed. It also requires that for every new regulation that imposes a new administrative burden on businesses, a regulation must be repealed from the books. As of March 31, 2021, $60.5 million in net annualized reductions have been observed under the rule. There's also been a net reduction of 185 regulations.
Part of our role at TBS is to ensure that regulators are complying with these rules and to report annually on the application of the one-for-one rule. In addition, TBS leads the government's regulatory modernization effort to facilitate competitiveness, agility and innovation within the Canadian regulatory system and address inefficiency, while ensuring important protections for Canadians and the environment.
We have regulatory co-operation fora with the United States, the European Union and provinces and territories in order to reduce the regulatory differences across jurisdictions and remove barriers to trade. We lead thematic regulatory reviews to identify rules and practices that are creating bottlenecks to growth and innovation, and develop plans to address them. We host a centre for regulatory innovation that focuses on building capacity for regulators to design flexible regulations that enable new and innovative products to come to market. We have a regular TBS-sponsored legislative initiative that removes requirements that stand in the way of modernizing regulations.
In support of this agenda, a committee of stakeholders external to government advises the Treasury Board on ways to improve regulatory competitiveness in Canada and promote excellence, growth and innovation. The committee most recently recommended that the government take a practical approach to help regulators assess the impact of regulations on competitiveness. We commissioned the OECD to learn about what other countries are doing to understand these impacts. The OECD report was clear. Each country has its own approach, and there is no standardized way to measure regulatory competitiveness.
Following on this, we've taken our external advisory committee's approach and are consulting with stakeholders on a draft tool designed to be a practical self-assessment checklist to help unearth potential competitiveness impacts that are top of mind to Canadian businesses as regulatory proposals come forward.
The recommendations made by the external committee are consistent with what we have learned from the COVID-19 pandemic and by monitoring how our regulatory policy compares to other top countries, exposing key opportunities and challenges.
First, while we rank third in the OECD, stakeholder engagement isn't working for everyone. Modernization requires more frequent and meaningful consultation with stakeholders. However, we are hearing that many stakeholders are experiencing consultation fatigue and lack the capacity, knowledge and resources necessary to contribute effectively. This challenge also contributes to a lack of diverse representation.
Second, businesses are concerned with the impact of the cumulative regulatory burden on competitiveness. This issue is significant, yet complex. It implicates the federal government, provinces, municipalities and international regulations. There are no recognized ways to objectively measure cumulative burden or to compare it across jurisdictions. There's a real need for better regulatory data to help search for, identify and address this cumulative burden efficiently.
Third, regulators could make better use of digital solutions and embrace user-centred approaches to improve service delivery. Simply put, being responsive to Canadians demands new ways of working with a focus on digitalization.
Fourth, while the one-for-one rule controls the creation of new burdens, the burden that lies in existing regulations is not getting enough attention. Canada ranks sixth place in the OECD's regulatory policy ranking on post-implementation review, a fact that reinforces the need to improve the way we examine the existing regulatory stock to ensure it is relevant and performing as intended.
Finally, while there is greater demand for agility in regulation, for example, by incorporating standards by reference, stakeholders also require predictable regulatory regimes in which to operate, and there is a tension in finding the right balance between these opposing objectives, agility and predictability.
As we look to address these challenges, I welcome the insights this committee can offer about ways the regulatory system can be more responsive to small and medium-sized enterprises, and support regulatory efficiency and competitiveness more broadly while maintaining Canada's high standards for health, safety, security and environmental stewardship.
I would be pleased to expand upon these points I've raised and to answer your questions, Mr. Chair.
