OTTAWA — A new report reveals that excessive regulation in Canada is now viewed as a greater threat to investment than U.S. tariffs. The Business Council of Canada (BCC), a non-partisan organization representing various businesses, highlights that the regulatory burden has surged significantly. Currently, there are over 321,000 government requirements, marking a 37 percent increase since 2006.

The BCC argues that unnecessary red tape not only wastes time and resources but also has a detrimental impact on the economy. The report states that more efficient regulations could help businesses reduce costs while maintaining environmental standards and worker safety. According to the BCC, the current regulatory environment reduces the economy by 1.7 percent, business investment by 9 percent, and total employment by 1.3 percent.

Examples of excessive regulations include permits for minor changes, lengthy delays in paperwork processing, conflicting rules between jurisdictions, and vague regulations. The report points out specific issues such as overlapping environmental, social, and governance (ESG) frameworks, delays of nearly 250 days for building permits, and conflicting federal and provincial privacy laws.

The report emphasizes the urgency of addressing these issues, stating, "Our productivity is sagging, business investment is lacklustre, and Canada’s most valuable trade relationship — with the United States — is in crisis. The most effective way to counter trade instability is to ensure our economy is as efficient and competitive as it can possibly be."

Don Drummond, a former senior executive with the Department of Finance and chief economist at TD Bank, expressed concern over the government's understanding of the productivity crisis. He stated, "The Trudeau years left the Canadian economy in terrible shape, and it doesn’t look so far like his successors have the courage to take the bold steps that are needed. One way or another, we’re coming to a disaster."

Recent economic indicators have not been favorable. Statistics Canada reported a loss of 66,000 jobs in August, raising the unemployment rate to 7.1 percent, the highest level since 2016. This increase is notable compared to the 6.9 percent rate in July, reflecting the negative impact of U.S. tariffs on Canadian exports.

In response to these challenges, the federal government has initiated a review of its regulations, launched in early July. Ministers have been tasked with evaluating regulations in their areas and are expected to report back within 60 days. Progress reports are due by Friday, and the new Red Tape Reduction Office will monitor the next steps.

Additionally, the government has enacted legislation aimed at expediting the development of major projects, such as ports and pipelines. The BCC notes that the approval process for mines in Canada can take up to two decades, one of the slowest in the world.

Despite previous commitments to reduce red tape, the BCC's report indicates that progress has been slow. The federal Treasury Board Secretariat has a team dedicated to implementing the Red Tape Reduction Act, which mandates that for every new regulation, one must be eliminated. The 2024 fall economic statement proposed a new Red Tape Reduction Office to expedite the removal of unnecessary regulations, but the BCC suggests that this initiative is still in its early stages.