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Bernier's comeback rests on his performance

Maxime Bernier, Minister of State for Small Business and Tourism, in his office on Parliament Hill, in Ottawa Oct. 17, 2011.

Maxime Bernier, Minister of State for Small Business and Tourism, has a message for Canada's entrepreneurs: I'm from the government and I'm here to help.

Call it a quirk of fate for a Quebecker who considers Ronald Reagan a political muse. After all, the former U.S. president famously called those the "nine most terrifying words in the English language."

But for Mr. Bernier, who has spent time meeting with entrepreneurs during his first five months on the job, they also signify the formidable challenge he faces in his new role.

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"I can remember an entrepreneur in Vancouver telling me – and it was direct and blunt – telling me that he has too much government on his back and too much government in his pocket," Mr. Bernier said in an interview. "We had a discussion about that. He was quoting Ronald Reagan."

Philosophically, it seems Mr. Bernier is the ideal fit for his new post. Not only does he have a business background, he makes no secret of his own aversion to big government, red tape and high taxes. Even so, squaring his political ideology with the practical realities of the job will be no easy feat.

The federal government may have designated 2011 the Year of the Entrepreneur, but small business has long been a neglected cabinet portfolio. Speculation is already rife that he will use it as a stepping stone to a more influential and senior cabinet post.

Although Mr. Bernier denies harbouring such grand designs, observers say his political comeback is riding on his performance in this junior role – especially since a scandal cut short his previous stint in cabinet.

Mr. Bernier counts himself among just a handful of Conservatives who were re-elected in Quebec earlier this year, and he is nothing if not ambitious.

For instance, as chair of Ottawa's Red Tape Reduction Commission, he's made slashing red tape his top priority even though many of his predecessors have proven powerless to change Ottawa's byzantine regulatory systems.

He knows small business owners are dubious.

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"There has been a lot of frustration from business people about red tape and also they were skeptical about us being able to have an answer and a solution for the long-term," he said. "...There's been a lot of exercise(s) like that in Canada, and they were asking me why it will be different – why this time it will be different?"

It's no wonder entrepreneurs have misgivings. The commission's consultation process has unearthed some 2,300 "irritants" related to red tape, according to its interim report. And in some cases, problems arose because of a lack of "common sense."

Although regulations exist at all three levels of government, the commission estimates there are roughly 2,000 federal regulations covering some 14 sectors. That means the number of identified irritants surpasses total regulations at the federal level alone.

"We will be tackling what lies at the root of government red tape and we will look at systemic solutions. That is important," Mr. Bernier said. "What I am doing right now, I am looking at what's happening in other countries – in Europe, in U.S., in Australia."

The commission's final recommendations are expected later this year. While he declined to speculate on those proposals, Mr. Bernier's ability to persuade his cabinet colleagues and the civil service to implement those changes will be the real test of his prowess.

As far as the powerful small-business lobby is concerned, simply addressing a few irritants just won't cut it. "I think all eyes are on how he is going to do in this job to determine his potential role in the future," said Dan Kelly, senior vice-president of legislative affairs with the Canadian Federation of Independent Business.

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The CFIB estimates that it costs businesses roughly $30.5-billion each year to comply with regulations from all three levels of government. "If he can help bring about reform to the regulation-making system in Canada, his stock will rise very, very rapidly," said Mr. Kelly.

Ian Lee, an assistant professor in the Sprott School of Business at Carleton University, surmises Mr. Bernier's biggest challenge will likely be ensuring co-operation from the government bureaucracy across multiple departments.

"Ottawa is famous for foot-dragging if it wants to. If it wants to kill one of your initiatives, they have a myriad of ways in which to do it," said Mr. Lee. "And the fact that he is not highly regarded by public servants could be a drawback."

Still, red-tape reduction is just one of a slew of weighty issues currently affecting his portfolio, suggesting Mr. Bernier faces serious challenges on multiple fronts. In addition to the dimming global economic outlook and strong Canadian dollar, entrepreneurs are also bracing for softening domestic demand now that debt-laden consumers are all but tapped out.

"It is going to be a big challenge to find new growth opportunities, especially for small businesses, at least in the next few years," said Doug Porter, deputy chief economist at BMO Nesbitt Burns.

That is worrisome because small businesses account for nearly 30 per cent of Canada's gross domestic product, while also providing just under half of all private-sector jobs, according to Industry Canada's own statistics.

As a result, the CFIB is furiously lobbying for a freeze in employment insurance premiums, which are set to rise in each of the next three years. Failing that, entrepreneurs are hoping for an extension of the temporary Hiring Credit for Small Business. It is worth up to $1,000 per new hire for eligible businesses but is set to expire at the end of 2011.

Raymond Côté, the NDP's small business critic, argues the credit is too small and likens it to a public relations stunt. Speaking in French, he expressed doubts that a renewal, if granted, would have much of an impact.

His Liberal counterpart, Joyce Murray, says EI premiums should be frozen, arguing higher payroll taxes will further stifle job creation. While she believes that Mr. Bernier was a "good choice" to represent small business, she argues he is being hindered by the government's broader policy agenda. "Minister Bernier has a portfolio that essentially is being ignored and marginalized by this government," she said.

Depending on how one reads public opinion polls, such criticism may be valid. According a recent Leger Marketing survey commissioned by BMO, 41 per cent of business owners agreed that federal initiatives, such as the Year of the Entrepreneur, would point to growth or economic prosperity heading into 2012.

While his critics suggest that Mr. Bernier lacks political heft in his current role, he is openly critical of the tax burden borne by small businesses. Still, in keeping with the Conservative government's messaging strategy, he repeatedly stressed that deficit reduction must be Ottawa's top priority.

"Maybe when the budget would be balanced, maybe we'll, if we are able, we'll do what we believe, lower the taxes for small businesses because we want them to have more money in their pocket," Mr. Bernier said.

Until then, he is vowing to be a champion of small business issues at the cabinet table, saying he is very enthusiastic to be back. He is also boosting his profile on the international stage, having recently returned from a trip to China and South Korea to promote Canada as a travel destination.

Enhancing his image at home and abroad also means he has also turned the page on the scandal that cost him his last cabinet job. In 2008, Mr. Bernier resigned as Foreign Affairs minister after leaving sensitive documents at the home of ex-girlfriend Julie Couillard, who was linked to biker gangs. When reflecting on what he's learned since that time, Mr. Bernier said he doesn't take anything for granted: "It was tough. I decided to stay in politics. I learned a lot on being more prudent."

Fallout from the scandal, however, has cast him as a loose cannon in the Conservative caucus and earned him unflattering monikers like "Mad Max" and the "bad boy of the Beauce."

Mr. Bernier seems to weather such criticism with aplomb: "You have to learn from your mistakes and I think I did. Now it is all behind me. I can speak about that and I don't have any problem because it is all behind and I learned from it. But at that time, it was tough."

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