Recommendation Letter (March 2021)
c/o The Honorable Jean-Yves Duclos, P.C., M.P.
President of the Treasury Board
March 31, 2021
Thank you for your recent letter expressing appreciation for our work. It has been our pleasure to provide advice on regulatory competitiveness, and we understand and appreciate that many of our recommendations are being worked on.
In this, our fourth and final letter, we offer some overall thoughts and recommendations based on our work since we first convened in April 2019. We also offer some more specific advice based on our meetings since January with representatives from government, academia, and industry. The more specific advice is covered in the appendix to this letter to allow us to focus on our over-arching thoughts more clearly.
As this committee’s mandate comes to an end, our most important and urgent recommendation is that government enhances and accelerates its work to make regulatory excellence a priority across all departments and agencies going forward. In doing so, the government should ensure that relevant parties, including consumers, are meaningfully consulted. We cannot overstate how important this is to Canada’s economic recovery, longer-term prosperity, health, safety and environmental outcomes, and ongoing confidence and trust in government.Footnote 1
We define regulatory excellence as a regulatory system that is rigorous, agile, and efficient, giving consumers confidence in their protections and businesses confidence to invest. It is a system where decisions are made in a timely way that recognizes the interconnectedness of a modern economy. Improving the lives of Canadians means taking an ecosystem approach and working collaboratively with those inside and outside of government. When departments work in silos, valuable opportunities are lost, and time is wasted. Regulatory excellence means using the best available evidence and being transparent and inclusive. It means regulations that are flexible and predictable, so investors and households can make long-term investments with confidence in regulatory direction. It favours simplicity, recognizing that additional rules and complexity do not always lead to better outcomes. It puts a high premium on ensuring that regulations and the processes to implement them (reporting, verification, and enforcement) minimize compliance burden and avoid unintended consequences. Regulatory excellence builds trust between government and the citizens it serves.
We remain convinced there is an opportunity to make regulatory excellence a key strategic advantage for Canada. We also appreciate that many challenges exist, given the complexity of the issues; however, the regulatory nimbleness and other lessons learned through COVID-19 demonstrate that much can be accomplished in a timely way. Turning aspirations about regulatory excellence into reality requires a culture change supported by sustained leadership and dedication from politicians and civil servants across government, including those on the front lines of administering regulation.
The COVID opportunity
The pandemic created an opportunity for regulators to think and behave differently. If leveraged properly, this could be the catalyst for changes needed to accelerate the drive to regulatory excellence. COVID-19 highlighted the importance of collaboration across economic sectors, researchers, governments, and the public. This collaboration was crucial in developing solutions to address challenges presented. We encourage government to continue to work collaboratively as we move forward.
In our last letter, we recommended that the government bring together a small group within government to capture the best of the regulatory flexibilities provided during the pandemic and focus on institutionalizing changes that can contribute to Canada’s regulatory excellence. We continue to recommend seizing the opportunities presented by the COVID-19 pandemic to make the regulatory system more flexible and responsive without compromising rigour or credibility as a regulator. For example, are there broader applications for the rolling submission approach that allowed vaccines to be approved in record time without making compromises on safety? What new insights do we have around supply chains that may change the way we approach regulation?
Treasury Board should continue to encourage a balanced common-sense approach to regulatory management and examine whether there are system-wide measures that could be adapted to facilitate implementation of flexible, outcomes-focused approaches to regulating. We also believe each department should take the opportunity to do its own review and leverage the lessons learned from the pandemic to move closer to regulatory excellence. These learnings should be shared broadly for cross-sectorial and departmental best practices, particularly as it relates to innovative approaches and risk mitigation practices.
One important positive change has been increased outreach. Regulators and those they are regulating have both commented on how helpful this more frequent communication has been. We recommend that regular communication, including early outreach on policy before it becomes a regulatory proposal, be strongly encouraged and considered a best practice across government. Further, departments should work together where policy and regulatory changes in one area will have broader implications for those being regulated; thinking in terms of ecosystems rather than silos is a more modern and effective approach to regulating.Footnote 2
We recommend that departments take a whole-of-government approach to consultations to help with the challenges faced by groups who do not have the capacity to engage in multiple consultations that seem misaligned.Footnote 3 A consultation calendar would enable industry and consumer groups more ability to plan and manage resources in order to provide better input, which supports better outcomes.
Round three regulatory reviews
The last outstanding area of our mandate where we were asked to provide advice is the third round of regulatory reviews.
We suggest the third round of regulatory reviews build on the lessons learned from the pandemic to advance regulatory excellence.Footnote 4 Specifically, we recommend the government focus on:
- capturing and institutionalizing improvements to regulatory agility that were a result of the pandemicFootnote 5
- reflecting and taking action to improve on challenges in the system highlighted by COVID-19 that remain problematic post-pandemicFootnote 6
- doubling-down on digital innovation (the subject of an existing review)
In the pandemic lessons, it may be helpful to reach out more broadly to consumers, businesses, and other groups through a survey to ensure that their perspectives on pandemic lessons are included.
We reiterate that our most important advice is that the government find ways to enhance and accelerate progress towards regulatory excellence and modernization. Our concern is that the recommendations we have made will not be enough to sustain the culture and institutional change needed. Will we be another in a long list of committees that worked hard on its recommendations only to later witness the same problem languishing or getting worse? How do we create a continued sense of urgency that encompasses all of government in modernizing Canada’s regulatory system to benefit Canadians? Something is not working in the system when an issue as important as this continues to be raised so regularly and urgently by businesses of all sizes in Canada and consumers continue to feel they are not included in important decisions that affect them.
Modernizing Canada’s regulatory system and striving for excellence requires a sustained wholistic approach that coordinates actions across government and provides ongoing mechanisms for research and analysis of innovation and pragmatic approaches. We offer the following suggestions for your consideration.
Every department and agency has a role to play in working towards regulatory excellence. We urge departments to become very proactive in this space and that the need to work towards regulatory excellence be highlighted in ministerial mandate letters. It is an opportune time to make a strong statement coming off the new agility and flexibility required to deal with COVID-19.
To help support regulatory agility across government, we recommend strengthening the capacity of the Centre for Regulatory Innovation to achieve its important mandates: regulatory experimentation to promote innovation, and supporting industry in bringing new technologies into the Canadian marketplace. (See more details in the appendix on this recommendation.)
We also recommend a strengthened advisory committee: one with greater capacity to provide outside advice to government on developing world-leading regulatory systems that support innovation and competitiveness; support Canadian prosperity; and achieve better health, safety, and environmental outcomes (regulatory excellence). We need a regulatory system that supports and enhances Canada’s unique economy and position in the world. The government’s Advisory Council on Growth and the Economic Strategy tables both recommended the creation of an effective advisory council on regulatory agility and innovation as a top priority.Footnote 7
The functions that such a committee can cover include:
- providing informed advice to government that drives regulatory excellence and supports innovation, including:
- encouraging a systems-based approach to regulating that cuts across silos and brings together different departments and actors, inside and outside of government
- creating a place for government to “report back” on progress with regulatory reviews and other recommendations made about regulatory excellenceFootnote 8
- helping prioritize regulatory modernization initiatives and commenting on specific topics (such as regulatory measurement and use of AI)
- being a place where departments and Treasury Board can come to for independent advice
- building and consolidating expertise (in Canada) on world-leading approaches for achieving regulatory excellence and accelerating innovation
- advising and supporting the Centre for Regulatory Innovation on regulatory experimentation
- building trust between government and citizens around regulatory modernization by being a credible, independent group outside of government that provides guidance
Without being too prescriptive, we recommend that such a committee be adequately resourced and sufficiently independent to offer bold, objective advice, and sufficiently connected to government to ensure that its advice is well informed by practical realities. This committee should have sufficient budget to conduct independent research and analysis and its own secretariat.
We recognize this may take time to consider and structure. In the meantime, it may be helpful to appoint an interim committee such as this one with some new members, while retaining some of the current members for continuity and to maintain momentum.
As we conclude our work together, we reflect how valuable it has been to have such a diverse group of voices around the table. We hope we have lived up to our promise to deliver advice that is bold and pragmatic. We want to thank those who took time out of their busy schedules to present to us and help further our thinking. We also want to thank your officials at Treasury Board of Canada Secretariat who have done an incredible job supporting us. Their dedication is commendable, and we felt a true spirit of partnership as we worked through our advice and recommendations.
Finally, success in positioning Canada as a leader in regulatory excellence requires strong leadership across government. We want to thank you and Minister Murray, your predecessor in working with our committee, for being strong leaders. We want to impress upon you and your colleagues across government the importance of championing regulatory excellence as the country turns its attention to recovery and beyond.
Chair, External Advisory Committee on Regulatory Competitiveness
Executive Vice-President and Chief Strategic Officer Canadian Federation of Independent Business
On behalf of committee members:
Dr. Catherine Beaudry
Professor and Canada Research Chair in Creation, Development and the Commercialization of Innovation Polytechnique Montréal
Professor of Law and Economics and Executive Chair of the Smart Prosperity Institute University of Ottawa
Retired Suncor Energy Inc. executive and current Chair, Board of Directors for Clean Resource Innovation Network
CEO of AgWise Strategic Solutions
Fruit and Vegetable Dispute Resolution Corporation
Consumers Council of Canada
Vice-President of Regulatory Affairs
I.E. Canada, Canadian Association of Importers and Exporters
Professor and Director of the School of Public Policy
Simon Fraser University
Views expressed by committee members are their own, not the views of the organizations they are affiliated with.
APPENDIX: Recommendations and further thoughts from recent meetings
We were pleased to hear that some progress on this recommendation has been made, as your officials within the Treasury Board of Canada Secretariat (TBS) are working with the University of Waterloo and industry partners to develop a proof of concept for a new measurement methodology that is promising.
It is currently being applied to a very specific scenario: the construction of a new meat processing plant in Hamilton, Ontario. Our main concern is whether the approach can be used more broadly. If yes, this would be an exciting development that could put Canada at the forefront of regulatory measurement. If not, it still may be useful for more detailed analysis of certain sectors. However, we want to underscore this would not replace the need for more broad-based measurement. The committee continues to recommend that the government make developing a framework to measure cumulative regulatory burden a priority. We appreciate that this is challenging, but its importance is clear. We need data with which to assess the net cumulative regulatory burden and how it is changing over time, as well as data that allows for better understanding of how regulation affects innovation and outcomes at a sector level. This supports a system that is transparent and accountable.
Consultation and engagement
Ensuring that the right people are consulted is another area of strong concern. We heard about the challenges facing the government to reach underrepresented groups and the capacity pressures that consumer advocacy groups face when interacting with government and industry.
We applaud Health Canada’s Let’s Talk Health initiative to ensure that feedback is collected from those with lived experience on issues such as palliative care regulations. The government should use this type of approach more often. We also commend work to modernize the Canada Gazette, which will allow Canadians to submit comments on regulatory proposals through the Canada Gazette website and view comments submitted by other respondents. This is an important step forward on transparency.
We recommend all departments and agencies work to ensure that relevant voices, including consumers, are included in their consultations, with a special focus on ensuring that those directly affected by new regulations or regulatory amendments have an opportunity to provide feedback during the policy development process, while regulations are being developed (well before the Gazetting stage) and after they are implemented. This should also apply to the conceptualization and development of new legislation. Online technologies should be leveraged to improve consultation and communication. But care needs to be taken to ensure that affected parties are reached and have the means to participate.
We also repeat a recommendation from our second letter that the government consider a more general web-based consultation to engage all interested Canadians in identifying regulatory irritants that may be relatively easy to fix, such as complicated language on forms, broken web links, and service areas that may need attention. We continue to believe this has the potential to benefit all departments and agencies in better serving Canadians. It may also serve as a pilot for a more permanent approach to ensuring that the Government of Canada has a “suggestion box” on its website for how to improve the administration of regulation on an ongoing basis. Ideally, there is a lot of transparency with respect to the issues identified and the action taken.
In our first letter, we recommended digitalization as an area for a regulatory review, a recommendation that we were pleased to see accepted. Now more than ever, digitalization is changing how we work and engage—activities from dance classes to doctor’s appointments are happening virtually, which was unthinkable just over a year ago. For governments, digitalization offers enormous opportunities to save citizens time, improve outcomes with better risk management, and promote innovation. Successful digital transformation relies on public confidence in the government as a trusted source and keeper of information. While we recognize that some of our recommendations might fall to specific departments to implement, we are hopeful that you can help promote the ideas in collaboration with your colleagues.
We recommend the government double-down on its use of digital tools to improve transparency, regulatory outcomes, and service to citizens. Specifically:
- Investigate creating a national infrastructure that will enable individuals and businesses to verify digital credentials through user-controlled “digital wallets”
- Ensure that regulations are future-proofed (such as technologically agnostic rather than specifying compliance with a certain technology)
- Focus on developing digital literacy for regulators so that they can speak the same language as industry and build meaningful partnerships
- Look for practical applications of AI to improve risk assessment and management. Build trust with the public by explaining how this technology can improve outcomes
- Make life easier for small businesses by allowing them to submit taxes, surveys and records of employment through software they already use. We understand this has worked well in the UK and is a good example of practical digital modernization
- Keep the digital improvements made as a result of COVID-19 (such as accepting digital signatures and using online meetings to enhance consultations)
- Ensure that Canada is aligned with global business standards, including blockchain and traceability for consumers. For example, currently, Canada is the only country globally that requires lot codes for consumer prepackaged fresh fruit and vegetable items, as it is commonly recognized that traceability for these foods occurs at the case level
As digitalization proceeds, we want to continue to emphasize that every effort should be made to consider the user experience. For example, simply putting a difficult-to-understand form online without taking the opportunity to see if it can be simplified or put in plain language would be a missed opportunity. We also want government to continue to be mindful of the reality that not all citizens have access to high-speed internet, and digital literacy varies considerably among citizens.
Departments in charge of developing regulations are one of the “players” in the innovation ecosystem. They need to be aware of and work with the other players, including innovators and firms, universities, consumers, government and research innovation intermediaries, and consultants.
While early in its life and operation, the Centre for Regulatory Innovation (CRI) has an important role to play in bringing the right players the table to enable regulatory experimentation that supports innovative new products, systems, and technologies.
To be transformative, CRI needs to create strong connections with those inside of government and with the innovation ecosystem, including the intermediaries that help firms navigate the regulatory system. These intermediaries and consultants have incredibly valuable intelligence to share with CRI. In turn, CRI can act on this knowledge to prioritize sandboxes, engage relevant departments, and scale up regulatory innovation.
Part of the CRI mandate is to support industry and bring emerging technologies into the marketplace, including navigating federal regulations and programs. It can also report to government on areas where reductions in regulatory burdens and barriers would enhance firms’ ability and endeavours to innovate.Footnote 9 A well-functioning CRI will add considerable value in economic terms and allow our innovation to be exported, along with the strong regulatory standards that support them. This ensures that Canadian regulation and innovation can rapidly become the dominant standard in the niche markets in which our innovators excel or in fields in which we think there is a strong potential for this.Footnote 10
The CRI needs appropriate funding to achieve its mandate and work with the other players in innovation systems. Innovation organizations in the UK and Finland have much larger budgets for carrying out functions similar to the CRI’s.Footnote 11
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