Don’t build back PRE-COVID red tape
This week marks the 12th year the Canadian Federation of Independent Business has “celebrated” red Tape Awareness Week, which is dedicated to calling attention to the destructive impact of cumbersome, clunky government rules and processes that do more harm than good. Like almost everything in the past year, COVID-19 is giving us a new perspective. everything from vaccines to restaurant patio approvals were fast-tracked as we focused on managing the COVID-19 storm. Small business has been clamouring for this kind of “think different” approach from governments for decades. The challenge now is to preserve the best of this new regulatory nimbleness and not, as one government official recently put it to me, “snap back” to our old way of operating.
This challenge is more important than ever as the COVID-19 storm continues to batter small businesses across Canada. recovery is in sight, but post-storm cleanup will be its own herculean task. Our economy is smaller than it was last year. According to a CFIB study released last week, one in five businesses may close permanently by the time the crisis is over, which puts 2.4 million jobs, representing 20 per cent of private sector employment, at risk. Our shrunken economy is currently heavily dependent on government support programs, with 70 per cent of small-business owners agreeing that programs like rent and wage subsidies are critical to their businesses’ survival in 2021.
To be healthy again, businesses need to replace subsidies with sales. But even if sales come roaring back, things will be tough, as many businesses have racked up considerable COVID-19 debt. What’s at stake? Jobs, tax revenue, and support for kids’ soccer teams for a start.
Against this sobering backdrop, it seems inconceivable that governments would pile on unnecessary rules or make things more complicated than needed. But small businesses aren’t convinced. The sixth edition of Canada’s red Tape report shows that over 90 per cent of businesses think governments should make red tape reduction a priority, but only 15 per cent are confident the federal government will do that, and only 24 per cent that provincial governments will.
regulation is now estimated to cost Canadian businesses $39 billion a year — not including COVID-19 compliance. Many rules are worth the price, delivering solid net benefits. But the rotten part of regulation — true red tape — represents about 30 per cent of these costs, or $11 billion, and gives back very little if anything in societal benefits. Governments looking for low-cost ways to stimulate the economy need look no further.
To some extent, COVID-19 really has shocked regulators into thinking differently. More weight was put on outcomes and less on process as the risks of business-as-usual were put in perspective. Suddenly, doctors could bill for online appointments, restaurants could include liquor in their takeout orders and meat could cross provincial borders to help prevent food shortages. How long would these changes have taken in normal times?
As promising as this new way of thinking is, there is still a lot of work to do to get to a modern regulatory system that works efficiently, effectively, and respectfully to keep Canadians safe and protect the things we care about.
Confusing language, conflicting advice and contradictory rules serve no purpose. Nor do excessive wait times, poor communication, and officiousness. But none of these things are hard to find — from the accusatory language in basic letters from the Canada revenue Agency to the municipal black holes that swallow even the simplest applications for construction projects with long wait times and poor communication.
early in the pandemic, Ontario set up a hotline to help businesses get answers to critical questions about how to operate. After waiting up to four hours, many business owners were “helped” by hotline operators who were allowed to regurgitate only what was already on the website. It’s an all-too-common experience: call the government helpline and get read the same confusing language that caused you to call in the first place. My imprecise math suggests this helpline alone wasted tens of thousands of hours in time and countless taxpayer dollars. And the health effects of the increased blood pressure after these calls? Priceless.
Preserving the best of new-found regulatory agility and building on it should be a priority for all levels of government as we move from COVID crisis to COVID recovery. The cost of red tape was just about intolerable pre-covid. For Canada’s stressed-out small business owners, it’s now unbearable.