Government regulations are often imposed to protect Canadian businesses and make sure that companies operate in an ethical way. However, regulations can potentially create barriers for businesses, requiring them to reimagine related business practices in order to stay competitive. These policies, often known as red tape, are pieces of legislation that are well-intentioned but can potentially force businesses to:
- Pay more money (in duties, taxes, or fines);
- Fill out more paperwork (feasibility and impact studies); and
- Wait longer to complete projects.
Canada is progressing in its mission to clear red tape. In 2015, the Red Tape Reduction Act received near-unanimous support by federal parliament. The legislation called for a ‘one-for-one’ policy when introducing new legislation that impacts small and mid-sized enterprises (SMEs). Through the law, one outdated piece of legislative red tape must be removed for every new measure introduced.
Red tape regulations are being challenged thanks to small businesses and organizations like the Canadian Federation for Independent Business (CFIB) who lead the Red Tape Awareness Week. CFIB’s 2017 Red Tape Awareness Week (January 23-27, 2017) made the call for provincial governments to also adopt the ‘one-for-one’ policy in hopes that even more regulations will be repealed.
What’s the Big Deal with Red Tape and Government Regulation?
If you’re a business owner or executive, your strategic direction may have been impacted by red tape in the past. Some examples of how regulations have impacted Canadian businesses include:
- Ontario Wine and Spirits: Ontario has some strange rules outlining the manufacturing and sale of wine and spirits. For example, craft distillers cannot sell product directly to bars and restaurants – rather, it must first pass through the LCBO in a process that adds costs and delays sales. Likewise, Ontario wineries need to maintain up to 6 permits, from selling wine on property, to selling wine by the glass, and another if the winery also wishes to serve food.
- Building Sidewalks: During the renovation of a commercial building, a law required the company to construct a sidewalk across the road. The cost of this came to $10,000 which could have been totally avoided since the sidewalk was unattached on either side. The closest sidewalk connection was a half-kilometre away and there are no plans to expand the public sidewalk towards that of the business.
- Alberta Agriculture: The Government of Alberta included mandatory Workers’ Compensation coverage to farming operations in January 2016, and several new legislations will also impact Alberta agriculture in the near future. This will reduce the ability for producers/processors to respond to seasonal capacity and hinder profits.
These are just a few of the many examples of red tape in Canadian business, however, the stories are endless and are felt by SMEs across the country. Red tape is more than just a hassle, it also:
- Hinders the growth potential of businesses;
- Limits the amount of new startups joining the business community; and
- Lessens the ability to create business-government partnerships.
Red Tape Leaders and Losers
During Red Tape Awareness Week, the CFIB released their report card depicting who the best and worst provinces were in cutting red tape. While the federal government received a ‘B’ rating, some provinces were more or less successful:
- Grade A: British Columbia and Québec
- Grade B: Ontario, Saskatchewan, and Nova Scotia
- Grade C: Prince Edward Island, New Brunswick, and Newfoundland
- Grade D: Manitoba
- Grade F: Alberta and Northwest Territories
British Columbia was this year’s leading red tape cutting province. Since 2016, the BC provincial government has led an annual Red Tape Reduction Day. During its first year, 37 pieces of legislation were repealed, resulting in the removal of over 215 regulatory requirements.
Manitoba, despite receiving a D rating this year, started the CFIB Red Tape Awareness Week off by introducing specific legislation that states one law must be removed for every new one created. In fact, the province will scrap two pieces of red tape for every new law until 2021.
What Can Be Done to Repeal Government Regulations?
Cutting red tape and removing as many government regulations as necessary will give business’ more strategic freedom and in turn fuel their competitiveness – but what can Canadians do to help accelerate the optimization of red tape?
Canadian Small and Medium-Sized Enterprises (SMEs)
The first measure would be to openly advocate for a red tape reduction event in your province. Government agencies need to hear the input of business leaders who routinely deal with unnecessary our outdated red tape. Tell them what your problems are and why you think it’s impeding the growth or success of businesses. CFIB does this on behalf of its membership base, but all organizations have a role to play in this.
Raise awareness of red tape and trust that your government will find a way to revise or repeal it.
Take the lead from BC’s government and introduce a day, week, or some type of challenge to act on pieces of red tape. Government agencies should focus on the solicitation of ideas from businesses and members of the community who have been affected by red tape.
Then, with specific pieces of legislation in mind, it’s essential that these are reviewed by a committee to determine where changes can be made. It’s important to ask for this information, however it also needs to be acted on.
Ontario, for example, is in the process of constructing a red tape action plan. The ‘Red Tape Challenge’ sought consultation from businesses from December 1, 2016 to January 31, 2017 and will compile these findings into a report mid-2017. Hopefully this report will include actions the province is taking to address specific business regulations.