ARCHIVED - Recommendations Report - Cutting Red Tape…Freeing Business to Grow

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2. Transforming—Not Just Fixing

2.1 Defining Our Mandate

When Prime Minister Harper created our Commission, he pointed out that red tape has a negative impact on Canadian business success. As we travelled across the country, we heard those concerns echoed by entrepreneurs from Vancouver to St. John's. Unnecessary and unjustified regulatory demands force owners, managers and workers away from what they need to do first—focus on their customers in a very competitive world.

Because red tape is “a hidden tax and silent killer of jobs,”^[4], the Prime Minister gave us two tasks (see Appendix C for the Commission's Terms of Reference):

To identify irritants to business stemming from federal regulatory requirements. The focus is on irritants that have a clear detrimental effect on growth, competitiveness and innovation; and
To recommend options to address the irritants, and control and reduce compliance burden on a long-term basis while ensuring that the environment and the health and safety of Canadians are not compromised in the process.

Specifically, we have been asked to recommend how:

Regulatory requirements can better reflect government goals and priorities, including reducing undue costs of compliance for business;
Regulatory burdens that inhibit growth, productivity and innovation can be reduced, including through the elimination or amalgamation of regulations, or the use of alternative mechanisms;
The cost and burden of regulation to business can be reduced through streamlining requirements related to compliance, administration and reporting;
Regulatory duplication and overlap can be reduced or eliminated within the federal jurisdiction;
Government can benchmark and measure progress on these objectives; and
Protection of the environment and the health and safety of Canadians is not compromised by the reduction of regulatory requirements.

2.2 Our Vision: Protecting the Public Interest and Enabling Innovation and Growth

We are focused on how regulations must change to deliver better results for the public with less frustration and lower costs for business. Red tape should be minimized because it is costly for all Canadians, impedes economic productivity, and gets in the way of voluntary compliance by undermining the trust between a government and its citizens. The regulatory environment that we seek is one in which the government makes the right requests of business to achieve sound public policy goals. It is one that makes it easier for businesses to comply fully with legitimate requirements that they have had a fair and transparent opportunity to help shape. It is also one that focuses on what is really important.

The government should ensure that the rules are reasonable, the total compliance burden is manageable, requirements are spelled out in plain language, officials are available to answer questions, people are treated respectfully, and the government holds itself accountable for the knowledge of its rules and the services it delivers. Meeting these objectives will result in lower costs to businesses so they can focus on their own “keys to success.” It will provide them with a level playing field in a competitive national and international environment, and it will provide citizens with the security of knowing that the rules are being followed. It means lower costs for the federal government when it manages its programs efficiently and focuses its efforts where they are most needed.

2.3 Regulation and Business Innovation and Productivity: Finding the Balance

One of the most important ways for us to create economic prosperity is to maintain high productivity, i.e., the amount of economic benefit that each worker is able to generate. According to Statistics Canada, in 2004, gross domestic product per person in Canada was almost 300 per cent higher than in 1961, with labour productivity accounting for 80 per cent of that increase.

A key responsibility of government is to set the conditions in which productivity can grow. This has never been truer than it is now, given that world economic balances are shifting to the east and south, and that the economic efforts of all nations are increasingly global. Every effort must be made to increase the competitiveness of our firms and enable them to compete for markets, production inputs, access to supply and distribution chains, and jobs for both skilled and unskilled labour, as well as the workers to fill them.

The Canadian Federation of Independent Business, in its 2010 report Prosperity Restricted by Red Tape,^[5], noted that government regulation and paper burden is the second most important issue facing small business, after total tax burden. Cutting red tape, then, is a critically important way in which the government can support innovative firms and increase productivity.

As part of its Paperwork Burden Reduction Initiative (PBRI), the government asked Statistics Canada, in 2005, to survey small and medium-sized enterprises on paperwork burden. One question concerned what businesses had done with the cash freed up as a result of reductions made to that point through the PBRI initiative. A full 40 per cent indicated that they had hired people; invested in education and training for their employees; lowered their prices; purchased or developed structures, machines and equipment; and increased employee compensation. We believe that this is a trend that should continue and that we can help ensure that it does.

Our goal, then, is to provide recommendations that find the right balance in managing and designing regulations—a balance that encourages innovation in Canadian business and promotes productivity, while providing the necessary protection for health, safety and the environment in this country.

We believe that any model that aims to accomplish these goals should have political accountability, regular tracking and reporting of red tape metrics, and a clear emphasis on minimizing unnecessary burdens for entrepreneurs. Moreover, it will have to be permanent. The challenge for government is to institutionalize red tape oversight, thereby strengthening the central agencies, the roles of ministers, and the machinery of government that oversees the approval of regulations and the performance of regulatory programs.