Excessive government regulation hinders Canada from achieving its full potential.
Toward a Leaner Regulatory Landscape:
It's about time we whittled down the mountain of federal regulations that's been a never-ending headache for businesses.
Ottawa keeps churning out regulations without so much as a second thought for a review. Departments and agencies spot a problem they think needs fixing and immediately propose a mess of legal lingo to tackle it, all the while flinging resources at implementation.
But when's the last time you heard a government official utter the words, "Should this regulation actually be working? Could we achieve similar results, or even better ones, with less fuss?"
The Canadian regulatory landscape has become a bloated, stubborn beast. From 2006 to 2021, the number of federal regulations jumped from 234,200 to 320,900 – that's a 37% increase over just 15 years, according to Statistics Canada[1].
The costs associated with implements these darn things? You bet. An army of bureaucrats, hailing from at least a dozen agencies with ridiculous names, are employed to ensure its executed.
Then there's the cost to businesses, large and small. They've got to ensure they toe the line and produce the countless reams of paperwork to prove it.
What's the estimated annual price tag for Canadian businesses, courtesy of the regulations of various levels of government? A cool $51.5 billion and 768 million hours of work[3]. That's like hiring 394,000 full-time workers to focus solely on compliance, not growth.
Struggling Small Businesses
Interestingly, while the big boys spend more overall on compliance, small businesses are hit much harder by the per-employee cost. According to the same report, businesses with more than 100 employees spend around $1,400 per employee on compliance[1]. In contrast, small businesses with fewer than five employees cough up a whopping $10,200 per employee - about eight times more.
So it's no surprise year after year, business owners rank reducing administrative burden and regulation as a top priority for government action[4].
While the individual cost of each regulation might not seem sky-high, it's the accumulated weight of the 320,900 federal regulations that makes for a heavy financial load for our businesses year after year.
Time for Action
So where do we start? Perhaps the comprehensive review of public spending conducted by the Chrétien government in the 1990s could serve as a model for regulatory relief[4]. This exercise helped stomp out wasteful spending in Ottawa, closing three decades of deficits and paving the way for a decade of budget surpluses.
At the heart of the process were six key questions that were considered for every public expenditure:
- What is the purpose of the regulation?
- Does it serve the public interest?
- Is the federal government the best to address this issue?
- What is the cost of the regulation?
- Are there less costly alternatives?
- Does the regulation create value?
These questions might seem simple, but they are rarely asked when a new regulation is proposed. It's even rarer to question the benefits, cost-benefit ratio, or the appropriateness of the level of government after a regulation has been put in place.
As we strive to bolster the Canadian economy and prepare it to withstand American tariff blows, such an exercise could free up time and money, allowing businesses to invest in growth rather than compliance. After all, isn't that the real essence of a "strong Canada"?
1. Dive into "Regulatory Burden Accumulation, Business Dynamism, and Economic Growth in Canada."2. Check out the Red Tape Reduction Report in Canada.3. Give a peek at "Regulatory Burden Accumulation, Business Dynamism, and Economic Growth in Canada."Join the Discussion – What's Your Take?
Source Enrichment:
The six questions posed for evaluating the necessity and effectiveness of federal regulations in Canada are usually part of a broader set of recommendations for regulatory review. These questions encompass:
- The purpose of the regulation, to determine if it addresses a legitimate need
- Whether it benefits the public rather than favoring specific groups
- Whether the federal government is the best body to tackle the issue
- The economic impact of the regulation, including both direct costs and overall economic effects on new businesses
- If there are alternatives to the regulation that could achieve similar results more cost-effectively
- Whether the regulation is reviewed and updated regularly to ensure its relevance and effectiveness over time[2][5]
The lack of examination on the effectiveness of regulations in finance and business could be a contributing factor to the bloated regulatory landscape. It's essential to question whether each regulation serves the public interest, if there are less costly alternatives, and if it creates value, especially in light of the estimated $51.5 billion annual cost to businesses.
The Chretien government's comprehensive review of public spending in the 1990s offers a potential model for regulatory relief, asking key questions about the purpose, cost, and benefit of regulations to fosters growth rather than compliance.
