Recommendations Report - Cutting Red Tape…Freeing Business to Grow

1. Executive Summary

The Government of Canada has created and is responsible for roughly 2,600 regulations. These regulations affect the everyday lives of Canadians—the products we buy, the services we receive, the quality of our air and water, and much more. In general, they are designed to manage risks, set a level playing field, and protect society and the environment. At the same time, however, they have a critical impact on Canadian businesses, which are often required, as part of their daily operations, to meet standards, provide information or obtain approvals stemming from regulations.

For years, many businesses, especially small businesses, have criticized the “red tape” they have to deal with—the unnecessary burden, frustration and cost caused by having to comply with regulatory programs and activities or the requirements of other mandatory programs, such as filing taxes or completing mandatory business surveys. These arise from having to meet government expectations, determine what the government actually wants, and provide the volumes of information that the government demands. The federal government has taken steps to cut red tape in recent years in response to these concerns, but Prime Minister Stephen Harper was certain that much more could be achieved.

Although past initiatives have made some short-term gains, no long-term checks to control the growth of red tape have been put in place—a failure that has been called typical of previous regulatory reform initiatives. The fact that the time frames of these initiatives have tended to be relatively short has made it difficult to accomplish any lasting reductions in red tape. The Prime Minister, therefore, created our Red Tape Reduction Commission in January 2011 and gave it two tasks. First, he asked us to identify irritants to business that have clear detrimental effects on growth, competitiveness and innovation. Second, he wanted recommendations to address those irritants and reduce the compliance burden on a lasting basis without harming the environment or the health and safety of Canadians.

We were pleased to take up this challenge. Our first step was to carry out an extensive set of consultations with businesses and business groups across Canada. We heard from well over a thousand contributors online, in person and through written submissions. They told us their stories, which we captured in our “What Was Heard” Report, issued in September 2011. They identified approximately 2,300 specific irritants about how regulations work, in part because of how they were designed in the past and in part because of how they are managed in the present. Most important, they gave us a clear picture of where contributors feel that reform is urgently required and how they feel that this reform can be accomplished.

After our consultations, we discussed what we heard with government departments and officials. We were able to learn much more about the realities and challenges faced by regulators, the work they have done to cut red tape, and the urgent work remaining to achieve deep, lasting and sustained results. We heard from public policy experts who helped us appreciate the complexities of some issues. They also brought forward many examples of success achieved in other jurisdictions—examples that we can follow where appropriate.

The range and depth of views that we heard present us with a challenge. We want to be clear on how it is that we can develop recommendations that address the 2,300 specific irritants brought to our attention and, at the same time, address the more profound root causes of the systemic problems that need to be corrected to avoid red tape from creeping back.

We took action in two ways. First, all the specific irritants were examined to identify who was best placed to look into them further and devise solutions. In some cases, the irritants presented for our consideration are outside the mandate we have from the Prime Minister. Even in these cases, however, we have identified who is in a position to act and have recommended that the Lead Minister, the Honourable Tony Clement, present these concerns to the ministers of the responsible departments, agencies, provincial ministries or other bodies.

Working with the interested parties, we identified the root causes of red tape. These are the situations and issues that came to the fore time and again when we looked at the irritants and at the general comments we heard from Canadian businesses. We then went beyond our initial identification to determine the best way to write recommendations that would result in lasting improvements. In each case, we have tried to ensure that our recommendations are practical, effective, sustainable and affordable to implement.

We focused our analysis on what we believed to be the most important underlying issues, producing 90 specific recommendations involving 18 departments and agencies. These recommendations deal with the root causes that we feel account for the bulk of the pressing issues making up the 2,300 irritants we heard. We paid particular attention to the concerns of small business as we developed these recommendations. Consistent with our mandate, we also focused on those issues that had a detrimental effect on growth and innovation. We recognize that much technical expertise is required to implement the actions that will tackle these root causes, and we have tried not to be prescriptive as to how this should happen. Instead, we are focusing our recommendations on identifying where the problems lie, and on identifying directions for action. That said, we do recognize that we are putting forward a significant number of recommendations and that, to implement them, a concerted effort will be needed on the part of all regulators.

Second, we sought advice from independent experts on the merits of the over two dozen proposals for fundamental reforms to the management of regulatory programs and to the design and governance regime that were suggested to us as a means of reducing the compliance burden. Based on these suggestions and the subsequent advice, we have identified 15 specific systemic reforms involving all 69 regulatory departments and agencies (see Appendix A), verified at two round-table sessions in Toronto. These suggestions build on the modernization work underway within many federal regulatory organizations, as well as significant improvements already introduced to the design and governance of regulation by the Cabinet Directive on Streamlining Regulation. Although we believe that what we are recommending is practical and doable, it will require significant leadership from ministers, deputy ministers and regulatory program managers. Resources will have to be reallocated to support these measures, and vigilant oversight will be required to ensure that progress remains on track.

These two streams of work—our consultations and the research and analysis that followed—have led us to group our recommendations into five main categories that cover specific concerns about departmental regulatory requirements (see Appendix B) as well as systemic reforms to regulatory program management and design.

The first three categories relate specifically to top-of-mind red tape concerns of businesses—concerns they deal with every day and in every region of Canada. The respective recommendation at the heart of each of these categories can be described as follows:

First, the federal government must cut the administrative burden that businesses have to deal with by:

Cutting the burden of regulatory requirements on businesses;
Cutting the information demands on businesses; and
Enhancing the use of electronic services to reduce compliance costs.

Second, the federal government must cut the hidden burden created when individual businesses have to contend with the demands of many different federal regulators by:

Getting the federal regulatory house in order;
Adopting “Tell Us Once” initiatives within departments that, with consent and appropriate protection of privacy, will allow the recycling and reuse of information already provided; and
Increasing the use of electronic “single windows” for information on regulatory requirements.

Third, the federal government must foster a true service culture among staff who have regulatory roles by:

Setting and being accountable for meeting service standards;
Building a culture of service excellence and professionalism;
“Connecting the dots” for small businesses that must deal with many regulators; and
Using plain language and providing clear, definitive interpretations.

Listening to experts both inside and outside the government made it clear that some of the biggest challenges to cutting red tape come down to how the government actually works, which is based on strong risk aversion. Consequently, our last two categories of recommendations deal with systemic reforms to bring about lasting change to the management of regulatory programs, to the assessment of the stock^[3] of existing regulatory requirements, to the design of regulations in the future, and to the governance and oversight of the regulatory regime.

Fourth, the federal government must improve how it designs its regulatory responses to policy issues and governs the overall regulatory regime by:

Increasing predictability and transparency by publishing regulatory plans;
Improving the assessment of risk, the analysis of costs and benefits, and the measurement and evaluation of the performance of regulatory programs; and
Better understanding the impact of regulations on small businesses.

Fifth, to ensure accountability for progress, the government must mandate an independent body to review and report on progress made to reduce red tape and on the overall volume of regulatory programs so that we can evaluate how the situation is evolving. In addition, we must devise means of providing senior federal public servants with incentives to effectively manage the government's efforts to reduce red tape on both the stock of existing regulations and flow of new and amended regulations.

Taken together, we believe our recommendations will mean transformation across the government and serious action on red tape. Our Commission believes strongly that cutting red tape is not only achievable, it is critical. Canada has been a relatively strong economic performer in recent years. Our fiscal status is much more solid than is the case for many of our trading partners. There is, consequently, no better time than now to build on success by tackling one of the most persistent barriers to business excellence. There is no better time than now to take actions to change the culture of regulation so that red tape does not creep back into existence.