A Foundation for Unleashing Entrepreneurship
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A Foundation for Unleashing Entrepreneurship
Full Report
February 2008
Marilyn Braun-Pollon, Vice President, Saskatchewan and Agri-Business
Laura Jones, Vice President, Western Canada
The government of Saskatchewan has a huge opportunity to do what no other government has done: address the regulatory accountability deficit.
Introduction
Today opportunities in Saskatchewan seem as limitless as the Prairie sky. Unemployment rates are at record lows. Oil rigs are crossing the border from Alberta as investment in oil and gas increases dramatically. The housing market is strong and small business confidence is higher than anywhere else in the country. There is a renewed sense of pride and feeling that the future will be better than the past. Such an enviable situation can court government complacency. But there is another choice, one that we are confident the Saskatchewan government will embrace: work to create the conditions that will secure solid economic growth and improve living standards for years to come. In other words, focus on building a strong foundation for sustained prosperity.
There are several core ingredients to a foundation for sustained prosperity. For example, it has long been recognized that fiscal discipline, including competitive tax rates, balanced budgets, spending restraint, and reasonable debt-to-GDP ratios, is a foundation for economic growth. The “Alberta Advantage” slogan was coined to advertise that province’s prowess in this area and has helped attract considerable investment to the province over a long period of time. Saskatchewan’s recent moves to significantly improve its tax competitiveness have, without question, helped fuel optimism and growth in the province.
It is taken for granted that progress or backsliding on any one of the fiscal indicators listed above can be quantified and will be widely reported. It would be unthinkable and unlawful for a government not to, for example, table an annual budget. Regular measurement and public reporting creates the transparency and accountability that is the bedrock underlying the foundation of sensible fiscal policies that support long term prosperity.
An equally important, but too often ignored core ingredient of long term growth is regulatory discipline. While some regulation is necessary and even beneficial, too much frustrates entrepreneurship, limits consumer choices, raises prices, reduces productivity and innovation and ensures that living standards are lower than they would otherwise be. Regulation is a hidden tax. It affects all of us but is most in the face of small business owners who are on the front lines of compliance.
Incredibly, unlike taxes and spending, there is no institutionalized regulatory transparency and accountability. Several governments across Canada have followed British Columbia’s lead and taken some promising steps in this direction by finding ways to measure and report the regulatory burden. But none has committed to continue measuring and reporting by making it a legislated requirement. In each case the measures were created to quantify whether a short-term red-tape reduction commitment had been met. For example, in 2001 the BC Liberals made a pre-election commitment to cut regulation by one-third in three years should they be elected. Many within government argued that once the short-term measure had been met in 2004, there was no longer any need to measure and report the regulatory burden. While regulatory requirements continue to be reported today, there is still no permanent commitment to continue publicly reporting beyond the next three years.
Reducing red-tape is, of course, a desirable goal. But without a long-term commitment to report regulatory measures, what is to stop regulatory creep from setting in once the short term target has been met? Without ongoing measurement, how do we know whether the burden is increasing or decreasing? How do we have any ongoing accountability?
British Columbia and other jurisdictions that have followed its lead have made the mistake of focusing on the reduction targets as the most important goal to be achieved, measurement is secondary. It is, however, the establishment of ongoing measures that are reported at regular intervals to the public that is more critical. Once these measures have been established as permanent, preferably by making it a legislated requirement, policies can be established to reduce red tape and, once the regulatory burden has been reduced to a reasonable level, to control its growth.
The government of Saskatchewan has a huge opportunity to do what no other government has done: address the regulatory accountability deficit. Once it has committed to this bedrock, it can build on lessons learned in jurisdictions like British Columbia and Nova Scotia and create successful policies to reduce red tape while being secure in the knowledge that the benefits flowing from the reductions will be long lived.
What benefits does this approach promise? The biggest benefit is the potential to unleash entrepreneurship within both the private and public sectors by reducing the time, money, and frustration that both sides incur when coping with unnecessary red tape. This leads to many other positive outcomes: a more constructive relationship between government and the private sector, a more productive and resilient economy, an increased ability to cope with labour shortages, and a more attractive investment climate.
In summary, CFIB recommends:
1) Pass a Regulatory Transparency and Accountability Act that requires the government to report measures of the regulatory burden by ministry in the Budget and Fiscal Plan documents, as well as at other regular intervals through out the year.
2) Measure the regulatory burden using the “regulatory requirement” model developed in British Columbia.
3) Determine a baseline count and set reduction targets to be achieved within a time period. CFIB recommends reducing by one-third in three years.
4) Implement a regulatory checklist for Ministers to sign off on for any new regulatory requirements introduced.
5) Institute a policy that for every new regulatory requirement introduced, two must be eliminated to achieve the red-tape reduction. Once the target has been met, institute a new policy where one requirement must be eliminated for every new requirement introduced to stop regulatory creep.
6) Regularly report progress at achieving the target, preferably by Ministry, to the public. In addition, publish regulatory counts by Ministry in the Budget and Fiscal Plan documents.
7) Commit to developing other measures, including measures of government customer service, to complement the “regulatory requirement” measure that can be reported regularly.
The rest of this submission lays out in detail CFIB’s prescription for meaningful regulatory reform and makes the case that there is currently too much red tape in Saskatchewan.
