Law to Reduce Red Tape on Small Businesses Achieved Little: Federal Report

The Canadian flag flies near the Peace tower on Parliament Hill in Ottawa, on June 17, 2020. The Canadian Press/Adrian Wyld

A law enacted in 2015 to reduce federal red tape imposed on Canadians and small businesses has achieved little, says a report by the Treasury Board of Canada Secretariat.

Released in December, the agency’s “Report on the Internal Review of the Red Tape Reduction Act” states that there is a “disconnect” between what the law purports to achieve and the actual result.

Bill C-21, the Red Tape Reduction Act which received royal assent in April 2015, requires the elimination of one regulation for every new regulation created, under a “one-for-one rule,” established by Parliament in April 2012, to control the “administrative burden” that regulations impose on businesses.

An administrative burden is defined as “anything that is necessary to demonstrate compliance with a regulation, including the collecting, processing, reporting and retaining of information and the completing of forms,” according to the Act.

Required under the Act itself, the Treasury Board started reviewing the law in 2020, covering a period from 2012 to 2021.

The report said 248 regulations were repealed between April 1, 2012, and March 31, 2021, but 87 percent “were regulations that had no impact on the administrative burden on businesses.”

“There is therefore no direct link between the number of repealed regulations and the control or reduction in administrative burden,” said the Treasury Board, as first reported by Blacklock’s Reporter.

“Regulators echoed this disconnect.”

The report said regulators wanted the federal government to remove the one-for-one rule which presumably holds that the offsetting will reduce the burden a new regulation will weigh on business.

“Because [the rule] treats regulations the same no matter how much burden they impose, the requirement doesn’t help achieve the purpose of the act,” the board said.

‘End Up Being Perverse’

In addition, the report noted that many new regulations bypassed the one-for-one rule.

“As of March 31, 2021, a total of 124 regulations were exempted from the rule out of a total of 212 that imposed a new administrative burden on businesses (about 58 percent).”

Regulations related to tax matters, “international or legal obligations,” and “emergency, unique or exceptional circumstances” were exempted.

Chris Aylward, national president of the Public Service Alliance of Canada, told the Senate national finance committee in 2015 that the Act was “completely unnecessary.”

“If regulations are no longer deemed in the public interest, after due consideration and consultation, the regulators have always had the ability to amend or delete them,” he said.

The Treasury Board said regulators also told them that the requirement to comply with the rule could create an incentive to develop long regulations that have a broad scope instead of shorter, but focused ones.

“If that were to happen, the outcome would end up being perverse because one long regulation can be harder to follow, and therefore more complex and burdensome, than several short ones,” the report said.