Business

Ontario Takes Aim at Cutting Red Tape in Structural Reform Push 

Ontario has a problem. Its awash in red tape.

For example, hairdressers need to collect customers contact info just like tattoo parlours.

Soup kitchens have to follow the same rules that apply to major restaurant chains and face hefty fines or can even get shuttered if they dont.

And then theres the “arbitrary banana rule.” If its in the produce section, no problem. If its in the ready-to-eat section, it needs a label showing a calorie count or nutritional facts.

The Doug Ford government thus created the Ministry of Small Business and Red Tape Reduction and on Oct. 28 proposed “The Better for People, Smarter for Business Act, 2019,” which contains over 80 actions to lower the cost of doing business and make it easier to comply with regulations, and interact with the government. By eliminating excessive regulation, Ontario hopes to increase efficiency, productivity, and economic growth.

Cutting red tape falls under the broader category of structural reform. Its critical to policy-makers in an environment of slowing global growth and constraints on government spending (fiscal policy) to stimulate the economy due to mounting debt. Furthermore, additional central bank action (monetary policy) seems limited given that interest rates are already near historic lows. Other structural reforms include reducing trade barriers between provinces and making post-secondary education more accessible and responsive to skills demand.

The goal is to reduce duplicative, outdated, and unclear rules. The effort will also work to harmonize regulations with federal and other provincial bodies.

“Were ensuring that Ontarios regulations are effective, targeted, clear, and focused—while maintaining Ontarios high standards,” said Prabmeet Sarkaria, Associate Minister of Small Business and Red Tape Reduction, in a press release.

The ministry expects the proposed act and regulatory changes to reduce costs by $52 million.

All countries need to consider structural reforms, said Kristalina Georgieva, the new managing director of the International Monetary Fund (IMF), in her opening remarks at the IMFs annual meetings on Oct. 17.

“There is a range of ways countries can invest in their futures,” she said, noting “cutting red tape” as a specific example.

Grant Hunter, Albertas minister in charge of cutting red tape, previously told The Epoch Times that jurisdictions that have done a good job of curbing regulations have seen economic growth of 0.8 percent to 2 percent.

Marco Navarro-Genie, senior fellow at the Frontier Centre for Public Policy, says that by and large the champions of dialling back regulation have been mostly on the conservative side, with Ontario and Alberta making recent waves, but that cutting red tape is not an ideological issue. British Columbia has been carrying the torch for red tape cutting in Canada for nearly 20 years.

Navarro-Genie is an expert in federal structural issues and president and CEO of the nascent Haultain Research Institute.

He explains that as organizations—including governments—grow, its almost natural to have more rules. And the more rules there are, the more things they can control.

“The larger the bureaucracy, the more resistance there is to this kind of thing [cutting red tape], so its no surprise that at the federal level this has been less successful and more difficult to implement,” Navarro-Genie said.

Ontario Chamber of Commerce (OCC) president and CEO Rocco Rossi welcomed the newly proposed legislation. In an Oct. 28 statement issued in response to the governments announcement, Rossi said that Ontario is “the most regulated province in Canada” and that the OCC has worked closely with the provincial government on eliminating red tape.

Regulating Smarter

Critics may raise concerns about weaker environmental protections due to the reduction in regulation, but Navarro-Genie says British Columbia shows how it can be done.

“They have removed almost 50 percent of excessive regulation, and yet you look at B.C. and you cannot say that B.C. has lax or irresponsible environmental rules. In fact, what you might say is that B.C. is the opposite—that B.C. has some of the highest environmental standards in this country,” Navarro-Genie said.

He adds that its therefore not beyond the wit of Ontario to do just as well if not better. The proposed legislation says environmental protections will not be compromised but rather will be reinforced.

The Canadian Federation of Independent Business (CFIB) gave Ontario a grade of A- in its 2019 Red Tape Report Card. Thats Ontarios highest grade ever and a big jump from the C+ it got in 2018.

The grading is based on willingness to cut red tape, if the province keeps a registry of all regulations so that it knows the size of the problem, and if theres a limit on new rules.

As of 2012, Ontario had over 380,000 regulatory requirements. The CFIB recommends that the province update that count and eliminate one rule for every new rule added once it has hit its 25 percent reduction target.

Ontario is Canadas most populous province, and the buildup in regulation has contributed to the countrys decline in the World Banks Ease of Doing Business rankings. Canadas ranking has fallen from 4th in 2006 to 23rd in 2019.

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