Why Business Should Care About Reducing Red Tape

Regulations guide our lives from the moment we are born until we die, and then some. They are necessary for the orderly conduct of life and society. It would take a considerable amount of searching to find any facet of life not impacted by one government regulation or another. Food, water, air, fire, birth, death, even love is subject to the laws of the land.

Regulation becomes red tape when it’s done poorly. When rules are contradictory, unreasonably time-consuming, redundant, unfair or too costly they become counterproductive. We need to constantly step back and look carefully to see if the rules and laws we put in place are having the desired effect. It’s about managing the scarce resources of government properly and ensuring our regulations are fitting our needs.

Think of a highway.  Speed and directional signs, painted lane markers, guidance, warnings and other regulatory indicators help us navigate the route safely. However, if we continually add more and more signs and markers along the road without stopping to assess their cumulative impact and cleaning out the clutter of unnecessary or redundant directions, we’d soon have a dangerous, impossible to navigate the road.

After a while, we’d require a traffic cop every 500 meters just to help navigate the confusion. Traffic would slow down, the cost to administer the road would skyrocket and eventually we’d lose sight of the fact the highway is there to get people and things efficiently and safely to their destination, not to employ police officers.

So it goes with government. Adding more layers of regulatory compliance means putting the resources in place to enforce those regulations, driving up the cost of government. Make no mistake, business owners understand the need for regulatory compliance, however, when rules and their enforcement are causing more problems than they’re solving, we have to step out of the car and have a look down the road.

For the past nine years, CFIB has been grading governments on how they are managing regulation with our Red Tape Report Card. We look at three things; political leadership, measuring the problem and putting constraints on regulation. The political leadership simply needs to be there or nothing will get done, measurement is essential because you can’t manage any problem unless you understand its scope, and constraining regulation simply means understanding if you’re going to put another sign up, you’ll also need to take one down.

We are beginning to see some very good results. Provincial governments are recognizing better rules and regulations for business means better results for the economy. It also has the added benefit of reducing administrative costs and provides citizens with better government customer service. As governments look for ways to reduce costs and provide necessary services, regulatory reform is being embraced. In fact, Nova Scotia received a grade of A- for 2018, putting it in the top echelon of red tape fighting provinces in Canada.

One great initiative is the Business Navigation Service, a resource for small business to help find its way through existing regulatory compliance issues. The government is also committing to removing 25 million dollars in compliance costs to business and through its Guiding Principles on Regulations, is obliged to ensure the additional cost of any regulation to business is offset by a commensurate reduction.

Those are all moves that make the road to success for small business a little less confusing.

Jordi Morgan is Vice President, Atlantic of the Canadian Federation of Independent Business

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