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One day a man walked into the café that my wife and I owned in Halifax and asked my wife if she "lived on the premises." After some preliminary skirmishing, she discovered that this man was on Her Majesty's Service and he was there to determine if we were entitled to write on the café window that our baked goods were "homemade."

We naively thought that the fact that she made all the stuff from scratch every day from her own recipes, often handed down from her grandmother, would be enough to pass muster. But no. Ottawa found it worthwhile to dispatch a civil servant to our café and announce haughtily that we could say "homestyle" or "housemade" (I promise you I am not making this up) but not "homemade." He gave us a week to fix our transgression and photographed the evidence of our shocking threat to the health and well-being of Canadians.

I was put in mind of this brush with the regulatory state by a fashion sweeping the policy-making world to become more business-friendly, not by cutting business taxes, but by reducing the burden of regulation.

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My own view is that the distinction between tax burden and regulatory burden is superficial. Governments used to tax you and spend the money to hire people to put into effect their policies. Regulation, they have learned to their eternal delight, allows them to cut out the middleman. They don't need to take your money and use it to hire others to persecute you. They can use regulations to make you spend your own money on their policy objectives instead. "Regulation" is so abstract and sounds so reasonable and civic-minded that governments find that raising the regulatory burden gets the policy outcome they want without the opprobrium of raising taxes.

But how in practice might one rein in this regulatory passion of governments? By shining a bright light on the regulatory state and the costs it imposes on us all.

The torrent of regulation has now become so vast that, like the Saskatchewan floods, it has swept all before it. Parliamentarians have essentially given up the fight to scrutinize regulation – a shocking state of affairs when one remembers that one survey of outgoing MPs showed that many of them were confused or ignorant about what their true role is. They seem to think it is getting up on their hind legs in Question Period and making themselves objects of ridicule and contempt rather than being doughty defenders of our right to be free from unwarranted intrusion by the state.

To help them, we should have an annual regulatory budget, just as we do an annual financial budget. The financial budget directs public and parliamentary scrutiny to the money government intends to take from us to fund the state. But regulatory costs are every bit as real as the tax bill. By stealthily substituting regulation for taxation, government obscures its true cost. Let's make the government table a regulatory budget detailing how much time and money it plans to force citizens and companies to spend in pursuit of government policy – and let Canadians decide if that's a price they're willing to pay.

Such a budget requires tough, consistent and independent yardsticks for measuring the costs that regulations impose, so governments couldn't fiddle the regulatory books. A regulation that produces $10-million of benefit but costs $100-million in lost economic activity is a poor deal. We should make that cost-benefit relationship perfectly transparent.

Require by law that each regulation achieve its stated purpose at the lowest cost (in time and money) possible, and those who bear the burden of regulation could challenge regulatory absurdities directly in court.

We might consider a universal sunset provision. No regulation could be valid for more than, say, 10 years, unless put through the whole process afresh.

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An Auditor-General of Regulation (AGR) could produce an annual report for Parliament highlighting a few areas of regulation (e.g. food safety, or airport security), cycling through all areas of government activity every five years or so. The AGR could work with the accounting profession and others to come up with those objective measures of regulatory costs and benefits we would need.

Finally, the federal government should assert its power to sweep away barriers to trade created by the provinces; they are an important part of Canadians' regulatory burden.

I'd be tempted to say this would be a Made in Canada solution, but some bureaucrat would surely appear to tell me that phrase is forbidden by the regulations.

Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.

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