The good news is that shining a spotlight on this problem has been a catalyst for change
By Laura Jones
Published in the Financial Post on January 22, 2019.
Business licences for lemonade stands, permits to transport tadpoles to show-and-tell and inspectors demanding safety documentation for Windex. Individual examples of red tape can sound trivial or even funny but the cumulative consequences are far from benign.
Hundreds of thousands of hours and billions of dollars are wasted on red tape every year. Studies confirm that all this waste translates into lower incomes, less economic growth, more poverty and higher levels of income inequality. That’s why 10 years ago the Canadian Federation of Independent Business launched its first annual Red Tape Awareness Week.
For some, the impact is very personal. My mother was a small-business owner and I remember the long nights she would spend filling out government forms at the kitchen table. Some were necessary; many cut into our story time and raised her blood pressure for no benefit. This is common. Business owners all across the country report missing out on valuable time with family and friends due to red tape. In fact, nearly half of business owners (48 per cent) would caution their children against starting a business given the high economic and emotional burden of regulation.
Just about every business owner I’ve ever spoken to has a red-tape story. Some are run of the mill — not being able to navigate government websites easily, getting different answers to the same question from the Canada Revenue Agency, and filling out mandatory surveys from Statistics Canada that are excessively long and complicated. The more troubling stories threaten the viability of businesses with little recourse. They often involve overzealous inspectors applying rules capriciously or governments publishing contradictory information.
For example, one fabric-store owner was following a government tax bulletin properly, only to be told the instructions in the bulletin were wrong. As a result of following bad government advice she was on the hook for over $90,000, a bill that would have cost her house or her business (thankfully we were able to get this audit reversed).
The good news is that shining a spotlight on this problem has been a catalyst for change. Since our first Red Tape Awareness Week in 2010, governments across Canada have heard business-owners’ stories and accepted our challenge to measure the hidden burden of regulation and set reduction targets. British Columbia is the country’s longest-standing model of success, reducing its rules by an incredible 49 per cent relative to 2001 while maintaining high levels of health, safety and environmental outcomes.
Many other provinces, including Saskatchewan, Quebec and Nova Scotia have targets to control red tape. Manitoba recently jumped to the head of the class by creating the most comprehensive measure of the regulatory burden in North America and legislating a regulatory cap in 2017 (two rules scrapped for every new one introduced until 2021 and one for one after that).
The Canadian government was first in the world to pass a law requiring one regulation (and equivalent burden) be eliminated for every new one introduced. The law passed with all-party support in 2015. As former Treasury Board president Scott Brison said in a recent speech about red-tape reduction: “it’s the right thing to do.”
Indeed it is. One of the worst consequences of red tape is that it undermines the relationship between a government and its citizens.
Small-business owners deserve credit for the momentum they’ve created in the last decade by bravely telling their red-tape stories.
Regulators deserve credit too. In many provinces, their jobs are changing from that of regulation-maker, whose job is to add rules, to that of regulation manager with the far more sophisticated job of adding rules where needed and subtracting ones that don’t add value. They are rising to this challenge and doing a good job.
But we are just beginning. Some provinces still have no regulatory measurement and accountability, while others have significant room to reduce the number of rules and improve government customer service. The federal and provincial approval processes for large projects is widely seen as too costly, too complex, and too time-consuming. At the municipal level, red tape run amok in permitting and development processes for buildings and renovations is undermining affordability in our cities. That’s why CFIB will likely celebrate a 20th annual Red Tape Awareness Week.
Laura Jones is chief strategic officer for the Canadian Federation of Independent Business. She has been researching and advocating for red-tape reform for over a decade, including creating Canada’s Red Tape Awareness Week.