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Don’t Build Back Pre-COVID Red Tape

A shop showing Closed-Due-To-COVID-19 sign
A shop showing Closed-Due-To-COVID-19 sign
Laura Jones

Laura Jones

Executive Vice-President and Chief Strategic Officer, CFIB

Like almost everything in the past year, COVID-19 is giving us a new perspective on government innovation. 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 put it to me, “snap back” to our old way of operating.

This challenge is more important than ever as COVID-19 continues to batter small businesses. Our economy is smaller than it was last year. One in five businesses may close permanently by the time the crisis is over, which puts 2.4 million jobs at risk. Businesses are currently heavily dependent on government support programs, with 70 per cent agreeing that programs like rent and wage subsidies are critical to their 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—$170,000 on average.

It seems inconceivable that governments would pile on unnecessary rules or make things more complicated than needed. But small businesses aren’t convinced—over 90 per cent 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 centof these costs ($11 billion) for 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. 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.

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.

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