December 16, 2003

Mr. Gaétan Lussier
Chair of the External Advisory Committee on Smart Regulation
Suite 1102 - 155 Queen Street
Ottawa, Ontario
K1P 6L1

Dear Mr. Lussier,

I would like to take this opportunity to provide the External Advisory Committee on Smart Regulation (EACSR) a submission on behalf of members of the Canadian Chamber of Commerce. Our submission comments on the EACSR report entitled The Regulatory Process: Enabling Smart Regulation, A Dialogue with Stakeholders (September 2003). Further, for your information, I have attached two documents; one outlines the particular regulatory concerns of our members and the other is a list of existing interprovincial trade barriers.

The Canadian Chamber of Commerce is Canada's largest and most representative business association. We speak for 170,000 businesses of all sizes and sectors through our 350 local chambers of commerce and boards of trade located in every province and territory. Our members will benefit from a regulatory system that protects the interests of Canadians while minimizing the regulatory burden on Canadian business.

The federal government must work to streamline its regulatory regime to ensure it is not expensive, complex or bureaucratic. The regulatory framework must be in step with the dynamic environment that characterizes the global economy. If Canada's regulatory regime is not improved, it will undermine our productivity and international competitiveness, as well as our attractiveness to entrepreneurs, knowledge workers, and domestic/international investors.

Cost and time-to-market are critical considerations for businesses operating in an intensely competitive environment. The legal and regulatory environment affects both business costs and time-to-market of new products. Resources devoted to regulatory compliance are no longer available for reinvestment into the company. Additionally, undue government regulation delays the development of products, limits entrepreneurship, and slows productivity growth. Lengthy government approval processes discourage new product development.

The most contentious regulatory issue for Canadian business is overlapping federal and provincial/territorial regulations and separate regulatory regimes among the provinces and territories. Overlapping and separate regulations represent a cost to doing business and are an impediment to the efficient functioning of the Canadian economy. Canadian businesses should operate in an environment that encourages the expansion into new markets. However, as is too often the case, Canadian businesses are discouraged from expanding into new provincial/territorial jurisdictions due to the added costs of regulatory compliance. In effect, complying with excessive federal/provincial/territorial regulations is a barrier to trade and economic growth. In addition, certain provincial/territorial regulations prevent businesses from operating in their jurisdiction, a further barrier to trade.

The Regulatory Process: Enabling Smart Regulation

The Canadian Chamber wishes to provide a constructive response to the discussion document prepared by the External Advisory Committee on Smart Regulation entitled The Regulatory Process: Enabling Smart Regulation, A Dialogue with Stakeholders (September 2003). The EACSR must be commended for providing a thorough overview of issues pertaining to the development and application of regulations and for providing useful discussion questions.

The Canadian Chamber supports the EACSR 'vision' and 'principles' of an effective regulatory system. In regard to the stated 'principles', the Canadian Chamber recommends that the term 'competitive' be included as a principle of the regulatory system. The Canadian regulatory system must be competitive with other national regulatory systems, in terms of regulatory development and ensuring that the Canadian regulatory system minimizes the regulatory burden on Canadian business.

The current regulatory system is guided by the federal Regulatory Policy, and the development and approval of regulations is done in conformance with the Regulatory Process Management Standards. In the opinion of the Canadian Chamber, the key elements of the Regulatory Process Management Standards, as identified by the EACSR, are not fully considered in the development and application of regulation. In particular, the key element Intergovernmental coordination, that is the consideration of existing national, provincial and international standards when developing regulations is not readily considered when developing national regulations. As was stated in our introduction, overlapping regulations both nationally and internationally is prevalent and results in a cost to doing business and is an impediment to the efficient functioning of the Canadian economy. Greater consideration must be given to existing national, international, and inter-provincial standards when contemplating the development of new regulations.

In regard to judging the success of the regulatory management system, the EACSR identified a number of criteria that are important determinants of a successful regulatory system. The Canadian Chamber supports the identified criteria. However, the application of the criteria must be monitored and reported upon. The Canadian Chamber recommends that an independent body report regularly as to the performance of the regulatory management system and make recommendations, through consultative input from business and citizens, as to how to improve the regulatory system. Continual improvement must be an operational goal of our regulatory system.

As noted by the EACSR, when a problem requires intervention, governments have several options to deal with it. Governments may use a variety of policy instruments to achieve their objectives. However, stakeholders must be encouraged to provide government officials with options regarding alternatives to government enforced regulation, including self-regulation, and compliance alternatives or other flexible approaches to reaching regulatory objectives. Again, this can be done by engaging those affected by a particular regulation in meaningful consultation with the officials developing and enforcing the regulations. A partnership approach must be taken between the regulators and those impacted by regulation in order to ensure appropriate compliance tools are developed and implemented.

The Canadian Chamber welcomed the passage of Private Members' Bill C-205, An Act to amend the Statutory Instruments Act (disallowance procedure for regulations). This Act established a statutory disallowance procedure that applies to all regulations subject to review by the Standing Joint Committee for Scrutiny of Regulations. As such, this enactment ensures that both the House of Commons and the Senate will have an opportunity to disallow any regulation. The Canadian Chamber believes that greater emphasis must be given to requiring justification for choosing regulation as the policy instrument to achieve a desired goal. As such, regulators must be required to justify their proposed regulations, highlighting the cost and benefit of the regulations.

The use of a cost-benefit analysis must be a part of the regulatory development process. As such, a cost-benefit analysis must be completed prior to implementing the regulation. The federal government must have a greater understanding of the impact of its regulations. As noted by the EACSR, "One serious widespread problem is that impact analysis is often not integrated into the policy-development process, but rather takes the form of an after-the-fact preparation of the Regulatory Impact Analysis Statement (RIAS)". However, a cost-benefit analysis is only as good as the information used in the analysis. In order to obtain the appropriate information for a cost/benefit analysis, the Canadian Chamber recommends that this be done through information obtained from consultation. Additionally, the quality of the cost/benefit analysis must be continually improved. Finally, selected analysis should be reviewed after the regulatory program has been implemented to assess the quality of the cost/benefit analysis.

Transparent regulation and good communication will ensure a legitimate and accountable system of rules. In order to ensure that future regulation is more understandable, regulation must be written in 'plain language'. The use of 'plain language' refers to regulations that are clearly written and understandable. Further, regulations written in plain language must be easily accessible; this can be accomplished by posting regulations on the relevant government website (e.g. regulations pertaining to food safety would be found on the Canada Food Inspection Agency website). Further, a 'help-line' must be made available and staffed with individuals who can answer questions pertaining to specific regulations. Assessable and understandable regulation will decrease the level of confusion with those who are affected by the regulation and will lead to an increase in regulatory compliance.

As stated by the EACSR, "the existing stock of regulation is not receiving the attention it deserves. The challenge facing Canada is to ensure that outdated, inflexible and ineffective regulations are eliminated while continuing to protect the health and safety of Canadians and the environment." The Canadian Chamber agrees with this statement. A review of existing regulation is a necessity in order to improve the efficiency of our economic system, and thus increase productivity. Complying with unnecessary and outdated regulation wastes time and resources for businesses and government. In order to ensure that regulation is up-to-date, effective, and minimally burdensome, the Canadian Chamber recommends that the federal government dedicate a regulation review panel to review existing and proposed federal regulations. Overlapping regulations and regulations that no longer provide significant benefit to society must be eliminated.

An effective regulatory system will improve the competitiveness of the Canadian economy. This can be achieved through greater intergovernmental cooperation, specifically the use of existing national, provincial and international regulations when considering the development additional regulations. Further, a sustained effort is required to review existing regulations in order to determine their relevance. If a regulation is no longer relevant, it should be removed.

I would be pleased to discuss the items raised in this letter with you further.

Sincerely,

Nancy Hughes Anthony

Attachments

Examples of Existing Internal Trade Barriers in Canada

Specific Regulatory Concerns of the Canadian Chamber of Commerce