Politics

‘Regulatory whack-a-mole:’ Chamber of Commerce casts doubt on Liberal efforts to cut red tape as investment worries mount

OTTAWA — The Canadian Chamber of Commerce gives the Liberal government a lukewarm grade on its efforts to cut the roughly 130,000 regulations imposed on Canadian businesses, amid worries that an endless layering of administrative rules is increasingly crimping private-sector investment.

In a review of the Trudeau government’s promise to cut red tape, published Thursday, the Chamber praised parts of the Liberal track record while also raising doubts over whether it would fully follow through on the most critical parts of its efforts. Business lobby groups and others have long said that a structural reform of the regulatory regime would be needed in order to attract new investment to Canada.

‘It’s regulatory whack-a-mole,” said Ryan Greer, senior director of transportation and infrastructure policy for the Chamber and author of the report. “If you don’t fix the underlying cause of the symptoms, you’ll never address the real problem in terms of how regulations are crafted.”

The private sector has been warning that the complicated patchwork of regulations in Canada has caused delays to major infrastructure projects such as seaports and pipelines, and also restricted the flow of foreign investment into the country.

These somewhat arcane regulations, which stipulate everything from the volume of vinegar in pickle jars to the manufacturing specs for back-up cameras in cars and trucks, are quickly growing in number. In 2015, Ottawa counted a total of 131,754 federal regulations that are imposed upon businesses in Canada, up from 129,860 the year before.

The Treasury Board, first under Scott Brison and now Joyce Murray, has aimed to cut back the total number of regulations imposed by the federal government, but has so far removed just 458 over the Liberal mandate, according to Treasury Board data.

We’re committed to building a smarter regulatory system that unleashes business productivity and innovation, while also protecting the health, safety, and environment of Canadians,” Murray spokesperson Farees Nathoo said in a written statement. 

In November 2018, Finance Minister Bill Morneau announced a sweeping review of the regulatory regime that would call on regulators to consider “efficiency and economic growth” when crafting new rules.

Business groups applauded the move as a way to avoid regulations that needlessly stifle investment or slow infrastructure developments. But the Chamber report found that those efforts have “languished” and said Ottawa is unlikely to follow through until well after the general election, if at all.

“We’re disappointed it’s not going to be implemented anytime before 2020,” Greer said in an interview.

In his report, Greer gave the Liberals an overall B-grade, with positive marks in the area of “modernization of regulatory frameworks” and in its establishment of various “working groups.” He gave Ottawa an F-grade on its promise to improve consultations between industry and regulators, writing that there is “evidence that regulators will continue to use consultation as an exercise to justify their preferred regulatory options rather than trying to improve them.”

If you don’t fix the underlying cause of the symptoms, you’ll never address the real problem in terms of how regulations are crafted

As an example, Greer cited Bill C-69, the contentious environmental assessment bill that passed into legislation in the late spring, in which regulators consulted heavily with industry but ultimately ignored many of their requests.

Observers say the absence of a meaningful regulatory review has already weakened Canadian competitiveness compared with other countries, as foreign governments become increasingly clever in crafting administrative rules that incentivize business investment.

“No government is doing this well, but Canada seems to be behind the pack,” said Craig Alexander, chief economist at Deloitte Canada, in an interview Monday.

Deloitte considers regulatory worries the biggest problem facing Canadian competitiveness, he said, ranking even higher than the country’s inefficient tax code or lacklustre ability to spur innovation. Such shortfalls are particularly acute in the investment space.

“Canada actually has the most restrictive policies on foreign investment — and yet Canada is a very small economy,” Alexander said.

In May, the Treasury Board announced the creation of an advisory committee on regulatory competitiveness, chaired by Laura Jones of the Canadian Federation of Independent Business, to consult with regulators about how to improve Canada’s regulatory regime. 

• Email: jsnyder@postmedia.com | Twitter: jesse_snyder

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