When we cut red tape, businesses thrive.
18 July 2019
Many factors contribute to a vibrant business climate. From low taxes and balanced budgets to strong infrastructure and a skilled labour force, creating a business environment that encourages innovation, rewards risk and drives growth requires the right mix of ingredients. One factor receiving much-deserved attention in Alberta is eliminating red tape and the burden it places on businesses.
In just three months, Alberta’s new government has taken decisive action on overregulation. After appointing Grant Hunter as the first-ever Associate Minister of Red Tape Reduction, Premier Jason Kenney announced the government’s plan to reduce red tape in the province by one third to alleviate the regulatory burden on businesses. Scissors in hand, he ceremoniously cut a line of red tape to mark the introduction of the Red Tape Reduction Act and launch of the Cut Red Tape website.
The Edmonton Chamber of Commerce has long advocated that governments of all levels consider the layered costs of government policies—and we’re glad the Alberta government is listening.
The high, hidden cost of red tape
In addition to the taxes, fees and levies piled onto the backs of businesses, all three levels of government contribute to the regulatory burden—the regulations, policies, statutes and forms that are sometimes unnecessary, frequently contradictory, and too often out of date. Red tape represents the worst of these.
The benefits of eliminating red tape are numerous and far-reaching. A streamlined regulatory process encourages investment and competition by removing some of the barriers entrepreneurs face in growing their businesses, innovating their products and accessing markets.
More importantly, cutting red tape avoids the high—and often hidden—costs to businesses of every size. Estimates peg the cost of red tape to Canadian businesses at $10 billion each year, with the harshest blows dealt to Canada’s small businesses. In 2017, businesses with fewer than five employees spent an astonishing 178 hours per employee complying with government regulation. While this number drops to 20 hours per employee for businesses with more than 100 employees, this does little to help, since 98% of Alberta businesses fall below that threshold.
The economic toll of overregulation – to our business community and to Canada’s economy—is monumental. But the personal toll may be even worse. For some, it can even mean the difference between a banner year and being out of business.
Good for business, good for everyone
The recent zeal for cutting red tape in Alberta is nothing new. With the consequences of overregulation so clear and the benefits universal, eliminating red tape is a perennially popular idea that crosses political lines. And unlike most other measures to boost the economy, it costs governments very little to implement.
In 2015, the federal government enshrined a one-in, one-out policy for new regulations described simply as “the right thing to do”. Provincially, BC is the real trailblazer, whittling down its 330,000 regulatory requirements by about 50 percent since 2001. In 2017, Manitoba legislated red tape removal through the Regulatory Accountability Act and Ontario did the same this past April.
Now it’s Alberta’s turn.
Making the right cuts
Done right, eliminating red tape should uphold responsible business practices that safeguard public health, promote worker safety and preserve the environment.
These aims are not mutually exclusive—regulations that are well-designed, clearly defined and fairly applied are more likely to be followed. A successful regulatory regime is one subjected to continual re-examination and, most importantly, regular consultation.
That’s why we are encouraging you to share your views on the Cut Red Tape website, which invites the public to identify red tape and suggest innovative solutions that save time, reduce costs, create more jobs and increase prosperity. As business and community leaders, your voice matters.
Canadian Federation of Independent Business, The Cost of Government Regulation on Canadian Businesses. January 2018.
Canadian Press, Alberta introduces Red Tape Reduction Act to limit regulations hampering economy. May 29, 2019.
Financial Post, Every small business owner in this country has a red tape story. Some are shocking. January 22, 2019.
Government of Alberta, Cut Red Tape. Accessed July 10, 2019.
Government of Canada, Key Small Business Statistics. January 2019.
The Globe and Mail, Announcing a drive to cut red tape wins applause but doing it is a thankless task. December 2, 2018.