Guide to Making Federal Acts and Regulations

Part 1 - Law-making Framework

Chapter 1.1 - Choosing the Right Tools to Accomplish Policy Objectives

This chapter supplements section 2 of the Cabinet Directive on Law-making which says:

Law should be used only when it is the most appropriate. When a legislative proposal is made to the Cabinet, it is up to the sponsoring Minister to show that this principle has been met, and there are no other ways to achieve the policy objectives effectively.

This chapter provides guidance on meeting this requirement by providing an analytical framework that covers:

• the range of instruments (techniques) available for accomplishing policy objectives;
• how to determine which ones are the most appropriate; and
• how to decide whether an Act or regulation is required.

Officials are encouraged to adopt a comprehensive approach to developing proposals to accomplish policy objectives. They should focus on achieving a desired outcome, rather than assuming that a particular instrument, particularly an Act or regulation, will be effective. This chapter is also a good place to begin thinking about what should go into an Act or regulation if one is required. This question is explored in more detail in the "Checklist for Preparing Bill-drafting Instructions for a Memorandum to Cabinet" in Chapter 2.2.

Departmental program officials and their legal advisers.

• Instrument-choice should be considered early in the policy development process.
• The Government cannot deal with every situation. Its involvement must be assessed in light of its responsibilities, its resources and the likely effectiveness of its involvement relative to the involvement of other governments or the private sector.
• The range of possible instruments available to accomplish policy objectives is very broad, allowing the Government to choose the type and degree of its intervention, if any.
• An Act or regulation should only be chosen after assessing the full range of possible instruments.
• Instrument-choice has wide-ranging effects and is an important element of many governmental activities.
• Consultation on instrument-choice, both within and outside the Government, is essential to making good choices.

Introduction

When a situation may require the Government’s attention, it should be assessed to determine what, if anything, the Government should do to address it. This involves determining the objectives in addressing it and how these objectives can best be accomplished. This determination should be done as early as possible in the policy development process. The following questions may help you to do this:

• What is the situation?
• What are the objectives in addressing the situation and what particular results are desired?
• Is there a role for the Government of Canada?
• What instruments are available to accomplish the desired results?
• What is involved in putting the instruments in place?
• What effect would the instruments have?
• How will their success be measured?
• Which (if any) instrument(s) should be chosen?

The assessment process does not necessarily follow the order of these questions. Answers reached at one point in the process may have to be re-evaluated in light of other answers.

In order to obtain sound answers, it is also important to conduct appropriate consultations with those affected.

What is the situation?

This step involves defining the key features of a situation that may require the Government’s attention. A situation may present itself in the form of a problem, in which case you should try to get to its source and not define it in terms of its symptoms.

The situation may also be an opportunity for the Government to do something creative or positive, for example celebrating a national or global event, as opposed to responding to a problem.

A description of the situation is often framed in terms of how people are behaving or how they may behave in future. Their behaviour may be active (doing something) or passive (not doing something). A behavioural approach involves identifying the following elements:

• the behaviour that is, or may be, creating or contributing to the situation;
• who is engaging in the behaviour;
• who is affected by the behaviour and what these effects are;
• whether some behaviour, or behaviour by some persons, is more serious than others;
• what external factors are influencing the behaviour;
• what behavioural changes are desired to address the situation.

What are the objectives and desired results?

This question is intended to help you define the objectives as concretely as possible in terms of particular results to be achieved. Objectives and the desired results go hand in hand, but they are not quite the same.

For example, an objective might be to make a particular activity safer, while the desired result might be a 30 percent reduction in the rate of injury.

Another example is an objective of increasing Canada’s capacity in information technology. The desired result would be to increase the number of people who immigrate to Canada with expertise in this field by 500 in the next two years.

Is there a role for the Government of Canada?

Consider whether the Government of Canada can or should do something. The Constitution constrains the authority of the Government through:

• the distribution of legislative powers between Parliament and the provincial legislatures (although this distribution is qualified by powers such as the spending power and the power to declare works for the general advantage of Canada);
• limits on the exercise of legislative powers, for example the Canadian Charter of Rights and Freedoms;
• obligations relating to such things as the provision of services in both official languages.

Policy considerations should also be weighed, including consistency with the political platform of the Government and its approach to federal-provincial relations.

Practical considerations should be addressed as well. The Government has limited resources and it can’t deal with every situation: perhaps others are better placed to achieve a desired outcome.

Finally, if the Government does become involved, what role should it play? Possible roles include taking the lead, acting in partnership with others or stimulating or facilitating action.

What instruments are available to accomplish the desired results?

This question looks at the full range of available policy instruments, which can be grouped into five categories:

• information;
• capacity building;
• economic instruments, including taxes, fees and public expenditure;
• rules;
• organizational structure.

Information can be a powerful tool. People act on the basis of the information available to them. By giving them specific information, it may be possible to influence their behaviour. Some examples are:

• consumer information about the quality or safety of products;
• occupational health and safety information;
• anti-drinking and driving advertising and education campaigns;
• "buy-Canadian" promotional campaigns;
• environmental awareness programs;
• information about how programs are operated or about administrative practices;
• symbolic gestures.

Capacity-building increases the ability of people or organizations to do things that advance policy objectives. It goes beyond providing information to include transferring to them the means for developing their ability. Some examples are:

• employment skills training programs;
• programs to support scientific research and public education about the results of the research;
• information gathering through consultation or monitoring;
• working with industries to help them develop voluntary codes governing their practices.

Many instruments have a mainly economic focus. They affect how people behave in the marketplace or in other economic transactions. These instruments include taxes, fees and public expenditure, which are considered separately below. They also include the creation of exclusive or limited rights, such as marketable permits, licences or marketing quotas that acquire value because they can be bought and sold. Insurance requirements are another example of economic instruments because they can, for example, force businesses to assess and reduce risks and ensure that their products are priced to cover the costs of insurance or preventive measures.

The basic purpose of taxes and fees is to raise revenue. However, they are also capable of influencing how people make choices about the activities to which the taxes or fees apply. In this sense, they can be powerful tools for accomplishing policy objectives. Examples include:

• taxes on income, property or sales;
• customs duties;
• fees or charges for licences or services;
• tax exemptions, reductions, credits or remissions.

Further information on user fees and charges is available from the Treasury Board Secretariat:

• Cost Recovery and Charging Policy available at
  http://www.tbs-sct.gc.ca/Pubs_pol/opepubs/TB_H/CRP_e.html.
• Information on External User Charges at
  http://www.tbs-sct.gc.ca/Pubs_pol/opepubs/TB_H/FeeInfoe.html

The Government can act by transferring or spending money in a particular area in order to accomplish policy objectives involving those who receive the money. This makes it a potentially effective instrument for encouraging particular activities that support the policy objectives. Some examples of public expenditure are:

• monetary benefits, grants or subsidies;
• loans or loan guarantees;
• vouchers redeemable for goods or services;
• transfers to the provinces and territories for education or health programs.

Rules, in the broadest sense, guide behaviour by telling people how things are to be done. However, there are many different types of rules. For example, they differ in terms of how they influence behaviour:

• Acts, regulations or directives tend to apply to groups of people and have legal force in that they can be enforced by the courts;
• contracts or agreements also have legal force, but they generally apply only to those who are parties to them;
• guidelines, voluntary codes or standards and self-imposed rules usually apply to groups of people, but they do not have legal force, relying instead on their persuasive or moral value.

Rules having legal force are generally cast in terms of requirements, prohibitions or rights. A combination of these elements can be seen in rules that create:

• rights that entitle people to do things on an equal footing, such as obtaining goods, services or employment, and corresponding requirements to provide these things to those entitled to them;
• prohibitions against doing something without a licence that confers a right to do it, for example, exclusive or limited rights, such as marketable permits, licences or marketing quotas that acquire value because they can be bought and sold.

Rules may also be formulated in different levels of detail, for example:

• as precise requirements that tell people exactly what to do; or
• as performance standards that set objectives that people are responsible for meeting.

Finally, it is worth noting the drafting technique of incorporation by reference. Rules of one type (for example, Acts or regulations) can sometimes be drafted so that they incorporate rules of the same or another type (for example, other Acts or regulations as well as industry codes or standards) simply by referring to them, rather than restating them. This avoids duplication of the incorporated rules and can be a way of harmonizing the laws of several jurisdictions if they each incorporate the same set of rules. However, this technique, particularly in the context of regulations, is subject to a number of legal considerations, such as requirements governing the publication of laws in both official languages and the general accessibility of the law.

Additional information on choosing the right type of rules can be found in the publications listed at the end of this chapter as well as in the "Checklist for Preparing Bill-drafting Instructions for a Memorandum to Cabinet" in Chapter 2.2.

Organizational structure is often critical in accomplishing policy objectives. It generally supports the use of other instruments by providing for their administration. Examples of organizational instruments include:

• departmental or agency structures to deliver programs;
• framework agreements and partnerships with other governments or organizations;
• privatization or commercialization of government services;
• public investment in private enterprises.

Additional information on organizational structure can be found in the Alternative Program Delivery Policies and Publications, available from the Treasury Board Secretariat at http://www.tbs-sct.gc.ca/Pubs_pol/opepubs/TB_B4/siglist_e.html or through the Alternative Service Delivery Division Home Page at http://www.tbs-sct.gc.ca/asd-dmps/.

These instruments are not necessarily stand-alone alternatives to one another. In fact, many of them are mutually supportive or otherwise interrelated. For example, information enables organizations to work effectively and organizations are often needed to administer legal rules, such as Acts or regulations, which may, in turn, be needed to support the creation of organizations.

Another important dimension of the range of available instruments is timing. Some instruments are better used in the initial stages of policy implementation while others may only be needed later if circumstances warrant. For example, information campaigns often precede the imposition of legal rules and, if they are effective enough, they may avoid the need for such rules.

What is involved in putting the instruments in place?

This question involves the legal, procedural and organizational implications of using each instrument as well as the process requirements for making them operational. It also involves considering in greater detail the role that the Government of Canada may play, whether acting alone or as a partner with other levels of government or the private sector.

You should assess:

• whether the use of the instrument is within the general mandate or authority of the Government;
• whether some specific legal authority is needed, for example, authority to impose taxes or penal sanctions, and, if so,

• whether it requires new laws (Acts or regulations) to be made,
• whether there is legal authority to make the new laws federally, and
• whether the new laws would be consistent with Canada’s international obligations.

It is particularly important to consult departmental legal advisers when considering this legal aspect of the question.

• What the short- and long-term operational requirements, both organizational and financial, of the instruments are, including:

• organizations and personnel needed to administer the instruments, for example, officials needed to assess benefit claims or conduct inspections,
• additional costs for the courts because their workload has increased as well as the effect such an increase may have on their general efficiency;

• who should be consulted before the instruments are put in place (other departments, other governments, stakeholders);
• what processes are required to put the instruments in place, including processes required for any new laws (as described in this Guide);
• what, if any, monitoring or enforcement measures will be needed, such as penalties, inspections and court action (this is closely connected to the next question of what effect the instruments would have).

What effect would the instruments have?

This question involves assessing how the instruments would work, including:

• whether the instruments will bring about the desired results, including whether people will voluntarily do what the instruments encourage or require, or whether some are likely to try to avoid compliance or find loopholes;
• whether the instruments will cause any unintended results or impose costs or additional constraints on those affected by them;
• what the scope and nature of any likely environmental effects will be, particularly any adverse environmental effects and how they can be reduced or eliminated;
• what effect the instruments may have on federal-provincial relations or international relations, particularly in light of the Government’s obligations under interprovincial or international agreements;
• how the general public will react to the instruments and, in particular, whether the instruments will be perceived as being enough to deal with the situation.

When deciding whether to choose legal rules, you should also keep in mind their strengths and weaknesses. They can often be used to overcome resistance in achieving the desired results because they are binding and enforceable in the courts. However, they may also give rise to confrontational, rights-based attitudes or stifle innovative approaches to accomplishing the policy objectives. You should also not assume that a legal prohibition or requirement will, by itself, stop people from doing something or make them do it.

How will the success of the instruments be measured?

It is not enough to choose various instruments and use them. Clear and measurable objectives must also be established as well as a means for monitoring and assessing whether they are being achieved. This assessment should be ongoing and include looking at how other governments are addressing the same situation. This is necessary both for determining whether the chosen instruments should continue to be used as well as for providing a better basis on which to make instrument-choice decisions in future.

Which instruments should be chosen?

The final step is to choose the instruments that would be most effective in achieving the policy objective. It is important to realize that a single instrument is seldom enough. Usually a combination of instruments is required, often in stages with different combinations at each stage. They should be chosen through a comparative analysis of their costs and benefits, taking into account the answers to the preceding questions.

This is also a good time to consider again whether there is a role for the Government of Canada. It may be that none of the instruments should be chosen if:

• the situation does not justify the Government’s attention, for example, because there is no problem or the situation is beyond the Government’s jurisdiction or is not a priority for it;
• the situation will take care of itself or will be addressed by others;
• the Government does not have the resources to address the situation;
• the Government becoming involved in the situation would lead to unmanageable demands to become involved in similar situations.

Additional information

Additional information on how to implement policy objectives can be found in the following publications and through Web sites:

• Alternative Program Delivery Policies and Publications, Treasury Board Secretariat:
  http://www.tbs-sct.gc.ca/Pubs_pol/opepubs/TB_B4/siglist_e.html
• Alternative Service Delivery Division Home Page, Treasury Board Secretariat:
  http://www.tbs-sct.gc.ca/asd-dmps/
• Assessing Regulatory Alternatives, Regulatory Affairs and Orders in Council Secretariat of the Privy Council Office: http://www.pco-bcp.gc.ca/raoics-srdc/docs/publications/assessing_reg_alternatives_e.pdf
• Cost Recovery and Charging Policy, Treasury Board Secretariat:
  http://www.tbs-sct.gc.ca/Pubs_pol/opepubs/TB_H/CRP_e.html
• Designing Regulatory Laws that Work, Constitutional and Administrative Law Section of the Department of Justice
• 1999 Cabinet Directive on Environmental Assessment of Policy, Plan and Program Proposals, Canadian Environmental Assessment Agency:
  http://www.ceaa-acee.gc.ca/0012/0006/sea_e.htm
• Information on External User Charges, Treasury Board Secretariat:
  http://www.tbs-sct.gc.ca/Pubs_pol/opepubs/TB_H/FeeInfoe.html
• Standards Systems: A Guide for Canadian Regulators, Regulatory Affairs and Standards Policy Directorate of Industry Canada: http://strategis.ic.gc.ca/stdsguide
• Voluntary Codes: A Guide for Their Development and Use, Regulatory Affairs and Standards Policy Directorate of Industry Canada: http://strategis.ic.gc.ca/volcodes

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