Death by 130,000 Cuts: Improving Canada’s Regulatory Competitiveness
On May 31, 2018 the Greater Sudbury Chamber of Commerce, in partnership with the Canadian Chamber of Commerce and the wider Chamber Network, released a report on Canada’s regulatory framework entitled Death by 130,000 Cuts: Improving Canada’s Regulatory Competitiveness. The report calls on Canada’s federal and provincial governments to modernize their regulatory frameworks and give businesses in Canada room to thrive.
The report identifies opportunities to increase public and investor confidence in Canada’s regulatory systems and provides seven clear recommendations to government on how it should be done.
The report is available online at www.regulatesmarter.ca.
Why is Canada Falling Behind?
Canada’s regulatory institutions have a history of good governance, strong institutions, science-based systems, and consultations with stakeholders and Canadians. Despite these strengths, the advantages of these systems are becoming less apparent. The chamber report identified the following key reasons for the declining competitiveness of Canada’s regulatory systems:
- Regulatory overlap
- Inter-provincial regulatory differences
- International regulatory differences
- Cumulative regulatory burden
- Regulatory mandates
- Inconsistent regulatory processes
- Inconsistent regulatory consultations
- Regulatory independence
- Regulating in an era of accelerating technological change
One of the federal government’s responses to declining foreign investment has been to create Invest in Canada, a “concierge-like” window meant to guide investors through Canada’s regulatory processes. While Invest in Canada is a useful tool, a more sustainable solution to Canada’s complex investment environment is to make that environment less complex.
The Costs of Regulation
Canadian companies are subject to regulations enabled by federal and provincial laws, with regulatory development and enforcement delegated to hundreds of different regulatory authorities.
Canada’s high burden of government regulation compared to other countries is reinforced by a survey of business leaders for the Global Competitiveness Index that identified“inefficient government bureaucracy” as the single most problematic factor for doing business in Canada. As an export-dependent country next door to the world’s largest economy, the cost of doing business in Canada relative to the United States is an important factor in Canadian firms’ competitiveness.
While economic models can measure or predict the impacts of individual regulations, it is much more difficult to measure the aggregate and unintended effects of all regulations on businesses and the economy. The differing levels of regulatory intervention between countries can significantly influence their economic growth relative to one another. One OECD working paper examining 23 industries in 18 countries concluded that regulatory differences explain a significant part of inter-country variances in innovation and productivity, both of which are key drivers of competitiveness.
Recommendations
The report offers seven recommendations to counter the deficiencies present in Canada’s regulatory systems. While these recommendations focus on the federal government, the principles apply to regulators at all levels of government who must work together to implement efficient, modern regulatory frameworks that balance the absolute need to protect without sacrificing economic growth and prosperity.
- Establish a government-business regulatory competitiveness working group
- Give regulators economic growth and competitiveness mandates
- Increase federal leadership eliminating inter-provincial trade barriers
- Rebuild stakeholder confidence in cost-benefit analysis
- Improve regulatory consultations
- Increase efforts to modernize individual regulatory frameworks
- Increase international alignment, especially in new areas of regulation
For more detail on these recommendations, see pages 41-43 of the report.