Most governments in Canada are taking red tape reduction seriously, according to the Canadian Federation of Independent Business.
The federation, which represents more than 97,000 small and medium-sized businesses, started producing its annual Red Tape Report Card more than a decade ago to encourage improved government accountability.
“At the time, the grades were low as only a few governments were tracking and reporting the regulatory burden they impose,” said Keyli Loeppky, the federation’s director of interprovincial affairs.
Red tape is a catch-all phrase that refers to bureaucratic obstacles, excessive regulations or unnecessary paperwork, sources say.
Last month, the federation released its 2024 report card.
“Today’s grades are much improved,” Loeppky said.
Alberta and Nova Scotia led the pack — both receiving an A overall — while Newfoundland and Labrador finished last, the only province to receive an F. The federal government received a C.
In recent years, Ontario, Alberta and British Columbia have all created ministries dedicated solely or in part to red tape reduction. All the other provinces have some kind of initiative or office dedicated to this file as well.
These efforts have allowed provinces to make significant progress on red tape reduction, Loeppky says.
But recent government action — and blustering — about red tape reduction is part of a cyclical pattern, says Patrice Dutil, a senior fellow at the Macdonald Laurier Institute, a think tank.
“Inevitably, these exercises find that there is a lot less really obstructive red tape than what was anticipated and politicians — even right-wing politicians — tire of the initiative,” said Dutil, who is also a professor in the Toronto Metropolitan University Department of Politics and Public Administration.
“In the past, these [initiatives] simply got dropped over time. The politicians had their virtue signalling and the initiative lost momentum,” he said.
Twenty years ago, Dutil led an initiative called “Red Tape to Smart Tape” at the Institute of Public Administration of Canada, a think tank.
“I’m afraid we’re up for another round of posing, prompting me to sigh,” he said.
Regulatory accountability
The federation grades the provinces in three key areas on its report card. The first is a measure of regulatory accountability, which is based on criteria such as the existence of a regulatory budget.
Regulatory budgeting works in a similar fashion to fiscal budgeting and can take many forms, such as a ‘one-for-one’ rule that “requires additional regulatory requirements to be counterbalanced with an equal reduction in [regulatory] burden,” the report says.
Another form of regulatory budgeting could be setting reduction targets for the overall number of regulatory requirements.
Alberta, Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia received full points — 10/10 — in the regulatory budgeting category.
In 2020, Ontario passed the Modernizing Ontario for People and Businesses Act, requiring that “for every $1 of increased compliance costs resulting from new programs, policies, or regulations, there must be an offset of $1.25 in compliance cost savings.”
In 2019, Alberta made a commitment to reduce the province’s regulatory burden by one third. The province has now reached that target, says Nicky Gocuan, press secretary at Alberta’s Ministry of Service Alberta and Red Tape Reduction.
The federal government has regulatory budgeting mechanisms in place, but the federation docked three points off its score because that budgeting does not apply to the Canada Revenue Agency.
Business owners frequently cite core functions of that agency as their top federal regulatory burden, the federation states.
Regulatory burden
The federation measures regulatory burden based on criteria such as the total number of regulatory requirements in place, and a “regular window for regulatory change.”
The more regulations, the worse the score. Ontario finished last in this section with 144,677 regulatory requirements. The slimmest government, meanwhile, was Prince Edward Island, with 35,931 regulatory requirements.
The provincial average is 74,689, according to the federation’s report.
A regular window for regulatory change means a regular time for reviewing and changing regulations. Jurisdictions that have recurring formal structures in place to conduct those reviews, whether legislated or not, received higher scores on the federation’s report card.
Saskatchewan earned full points in this category for the work done by its Red Tape Reduction Committee, which reviews all business-related regulations at least once every 10 years. According to the committee’s website, it reviewed 2,480 compliance requirements in 2022-2023.
Nova Scotia also received full points for the work of its chief regulatory officer, who “independently assesses every proposed regulatory, legislative, and process change with a business impact before submitting its review to Cabinet.”
The officer leads Nova Scotia’s Office of Regulatory Affairs and Service Effectiveness and reports directly to the cabinet and premier.
“This is a file that the premier [Tim Houston] is very passionate about. They’re getting a lot done because the premier is driving it. For many provinces, that political leadership piece is missing,” Loeppky said.
Political priority
The federation’s last major category on the report card is political priority.
“Before the [Jason] Kenney government, Alberta had no ministry of red tape reduction and was getting a series of Fs on the report card. With the introduction of that ministry, they really took on a lot of work to establish themselves as a leader,” Loeppky said.
By modernizing regulations and reducing administrative burden, the Alberta government has saved Albertans and Alberta businesses more than $2.75 billion since 2019, says Guocan, the ministry’s press secretary.
Since 2018, Ontario has saved businesses, not-for-profit organizations and the broader public sector more than $939 million in gross annual regulatory compliance costs, Parm Gill, Ontario’s former minister of red tape reduction said in a statement.
But concentrating red tape reduction efforts in a ministry “seldom works,” says Dutil of the Macdonald Laurier Institute.
Instead, it is the ministries or departments that are directly responsible for and intimately familiar with a given problem that are in the best position to know which red tape is effective and which is not.
“The drive to reduce needless procedures necessarily has to come from the line ministry. The managers and the front-line workers will tell you where they waste time at a drop of a hat,” Dutil said.
