In January, 2011, Prime Minister Stephen Harper announced he would create a Red Tape Reduction Commission to fight what he called a "silent killer of jobs" and a "hidden tax."
Small-business owners would add "killer of entrepreneurial morale" to the list: 25 per cent of them say they may not have gone into business if they had known about the burden of red tape.
A year later, the commission, chaired by Minister of State for Small Business and Tourism, Maxime Bernier, has released its final report containing 15 recommendations on how to reduce and control red tape in the long term. It's a promising start. If the government acts on the recommendations it could be a game-changer for Canada.
Red tape should not be confused with necessary regulation. Business owners have no beef with legitimate rules that allow for tax collection, protect human health, promote safety, or protect the environment. Red tape is something else, including unnecessary rules and bad customer service by government.
Examples of red tape range from the business owner who had to call the Canada Revenue Agency (CRA) seven times to get an answer to a straightforward corporate tax question to the entrepreneur who was almost completely shut down after Health Canada forced a recall of a product it later admitted was safe. All business owners have a story. Imagine the productivity that would be unleashed if they didn't.
The Canadian Federation of Independent Business (CFIB) estimates that regulation costs companies in this country $30 billion a year. About 25 per cent of those costs — $7.5 billion — can be attributed to red tape.
Beyond its corrosive impact on the economy, red tape has an equally troubling but less-talked-about effect: it strains the relationship between a government and its citizens. This is true of ill-conceived rules and it is especially true of poor government customer service. When citizens receive abrupt, seemingly accusatory letters from the government or talk to rude, arrogant or unhelpful government customer service agents, inspectors and auditors, they are left wondering why their own government is treating them like the enemy.
Reducing red tape is not an easy undertaking. Every other federal initiative of this nature – and there have been many – has failed to make much difference because, as Mr. Bernier rightly points out in the report, "treating the symptoms, which are the irritants, is not sufficient. A deeper, long-term approach is necessary."
This reality is reflected in the commission's recommendations.
One of the most innovative ideas is to add red tape oversight to the mandate of the Auditor General, which would include annual reports to Parliament. Another good recommendation, based on successes in other jurisdictions, is to legislate a "one-for-one rule" requiring that at least one regulation be eliminated for every new one introduced. Senior public servants would lose part of their bonuses if their department or agency did not respect the one-for-one rule.
The importance of measurement and accountability is a theme throughout the report. It is suggested, for example, that departments and agencies establish inventories of existing rules and publish them on their websites by the end of 2013.
Improving government customer service is the focus of a number of other recommendations. In the private sector, competition ensures customer satisfaction remains a priority: if you do not like the product or service from one company, you can take your business elsewhere. Since governments have a monopoly on regulating, an unsatisfied CRA client cannot, for example, decide to submit taxes through an agency with better service. Given the lack of competition, government agencies need to be extra vigilant about finding ways to hold themselves accountable.
The commission recommends that all regulatory departments and agencies "set and publish measurable standards on how they deliver regulatory programs, set goals for service improvement, and report on performance at meeting these standards." Another common-sense suggestion is that government departments provide interpretations in writing and not penalize businesses for following written directions from government.
Small businesses would love to see the CRA act on this one immediately. Putting information in plain language, creating opportunities for companies to provide feedback for improvement, and establishing "service charters" outlining a strong service culture are further commission ideas to help reduce red tape.
The report's recommendations are solid but there is still a long way to go toward making red tape reduction a reality. If Mr. Harper continues to champion the cause, the rewards for Canada will be big — higher productivity leading to more job creation, lower prices and higher wages.
Laura Jones is senior vice-president of research, economics and Western Canada for the Canadian Federation of Independent Business.