Canadian Chamber Addresses Regulatory Burden on Canadian Businesses Before OGGO Committee

On April 10, the Canadian Chamber of Commerce’s Senior Director, Manufacturing and Value Chains, Alex Greco, appeared before the OGGO Standing Committee on Government Operations and Estimates, to highlight the pressing issue of regulatory burden on Canadian businesses.

While Canada was ranked 4th in the world for ease of doing business in 2006, it has since slipped to 23rd (as of 2020), primarily due to the increasing burden of government regulations. This stifling regulatory environment, now ranked 53rd globally, is impeding economic growth and investment.

We need a more ambitious approach from the government to accelerate modernization and streamline regulatory processes. The current complex and slow-moving regulatory environment is driving up operating costs for businesses, particularly small businesses, which lack the resources to navigate these challenges effectively.

In his remarks, Greco proposed three key recommendations to the committee:

• implementing an economic and competitiveness mandate for federal regulators,
• ensuring regulatory alignment across domestic and international jurisdictions, and
• providing regulatory certainty to businesses through evidence-based regulations.

He emphasized that these measures are crucial to create an environment where businesses can thrive and contribute to Canada’s economic success.

The video recording and full remarks can be seen below.

Mr. Chair, Honourable Members:

It is a pleasure to appear before you on behalf of 400 chambers of commerce and boards of trade and more than 200,000 businesses of all sizes from all sectors of the economy and from every part of the country.

It will come as no surprise that regulatory burden continues to be a growing concern for Canadian business. The World Bank’s “Ease of Doing Business” report ranked Canada as 23rd in 2020—but we were 4th in the world as recently as 2006. A big part of this decline is we’re now ranked 53rd for the burden of government regulation on business. Regulation is literally stifling our economy.

It goes without saying that the right policy environment can help businesses succeed and generate long-term economic growth for the country. Making Canada an attractive destination for business investment that supports economic growth requires getting the fundamentals right.

At a time when inflation is persistent, government and the private sector must look at new ways to make Canada more competitive. Governments in the past have attempted to regulate our industries into a more competitive frame, but this has had the opposite effect, as the costs of starting and growing a business have become a disincentive to investment.

The regulatory burden is troublesome in several ways, but two stand out. First, we can’t continue to move at a snail’s pace – we need the government to be more ambitious. We need the government to accelerate modernization and ensure approvals and permitting can meet our public policy ambition.

Second, the ongoing ability of companies to comply with complex regulations is increasing operating costs. It is consistently one of the biggest barriers to economic growth.

According to the SME Regulatory Compliance Cost report, the total regulatory compliance cost to small businesses was nearly $5 billion in 2011, which at the time was approximately $3,500 per business.
That number has no doubt increased over the past decade along with the regulatory burden overall.

We cannot afford for more private sector investment decisions to be sidelined because of the complex regulatory environment in Canada. Too often, we hear from our members about the investments they have on hold while they wait for direction from the government. Lack of clarity and speed on the new investment tax credits is a good example: while other jurisdictions, such as the United States move quickly to create the conditions for investment, Canada is falling behind. Investment will not wait – it will go where it is wanted.

Many members also cite increased red tape and differing certification and technical standards as major obstacles to doing business within Canada.

Complying with a complex network of overlapping regulations from all levels of government is expensive and time-consuming. When combined with inefficient and unpredictable regulatory processes, this sets businesses up for failure.

All of these issues are especially potent for small businesses, which usually lack the resources of larger companies to manage regulation and compliance.

While I commend the government for pushing a regulatory modernization agenda, we must move more boldly and urgently. We cannot just talk the talk—we need to see real action that will move the needle.
In the time remaining, I would like to focus on three recommendations for the committee.

First, the government must move to implement an economic and competitiveness mandate to federal regulators.

Too often, regulators do not fully consider economic impacts on business when making decisions.

Second is regulatory alignment across domestic and international jurisdictions.

When regulations are more consistent between jurisdictions, businesses are better able to trade within Canada and beyond. Quite simply, we should not require a “Free Trade” agreement within our own country.

Unless the government actively works to improve collaboration and alignment to ensure businesses are not at a disadvantage, we will see less innovation, fewer choices, and higher prices.

An example of this is when each province establishes its own framework for regulating pesticides or rules for the trucking of goods across jurisdictions.

Finally, the government should pledge to provide regulatory certainty to businesses.

Evidence-based regulations can both protect the public interest and promote market success.

And for companies looking to invest billions of dollars in developing new pipelines, new mines, and other large-scale infrastructure projects, this is not a “nice to have”. It is a “must-have.”

In closing, Canada needs smarter regulatory systems, better processes, and well-designed regulations to help minimize the costs to business and unlock economic growth while improving public health and safety outcomes.

Sustained collaboration with all levels of government and our international partners will make it easier for businesses to do what they do best—produce.

Thank you.