External Advisory Committee on Regulatory Competitiveness Recommendation Letter (July 2019)
c/o The Honourable Joyce Murray
President of Treasury Board
90 Elgin St, 8th Floor
Ottawa ON K1A 0R5
July 29, 2019
On May 24, 2019, the External Advisory Committee on Regulatory Competitiveness (EACRC) submitted its recommendations to you for three areas to be examined in the second round of Regulatory Reviews: digitalization, clean technology, and international standards. We believe that taking action to modernize regulatory frameworks, advance innovative approaches, and reduce unnecessary burden in these areas will contribute to Canada’s regulatory competitiveness and improve the quality of life for Canadians. We are pleased to see that these areas were endorsed by the Treasury Board, and that a notice of consultation was subsequently published in the Canada Gazette on June 28, 2019.
After reaching consensus on the aforementioned recommendations, the Committee has now turned its attention to the broader and more complex questions of how to improve regulatory competitiveness in Canada while protecting health, safety, security, and the environment. At our second in-person meeting, the Committee engaged a range of experts including representatives from federal and provincial governments, industry, and academia. We are pleased to share some additional recommendations and observations from this meeting.
The Committee understands that the Government has taken action to advance regulatory competitiveness, including: championing regulatory cooperation with the US, the EU, and across Canada; strengthening the analytical requirements in the Cabinet Directive on Regulation; launching an annual Regulatory Modernization Bill; announcing the Centre for Regulatory Innovation; and initiating Regulatory Reviews. While acknowledging that most of these initiatives are new and their benefits have yet to be fully realized, key elements are still missing from the competitiveness landscape.
The Committee notes that work on regulatory competitiveness should have two main foci:
- Reducing irritants and inefficiencies that add unnecessary cost, duplication and/or delay for business and citizens. We believe there are many areas where these inefficiencies can be reduced without compromising societal and regulatory objectives (like health, safety, security, and the environment). Doing so will save time and money, and free up resources that can be put to better uses such as enhancing innovation and competitiveness.
- Modernizing Canada’s regulatory system to accelerate innovation and better position Canada to be competitive in a changing global economy. In future meetings we will explore topics such as designing regulations so that they promote innovation (for example, stringent, flexible, predictable); creating regulatory “sandboxes” to enable innovation; strategies to help regulators be more agile and keep pace with innovation.
By focusing on both short-term competitiveness (reducing irritants and costs) and longer-term competitiveness (creating an environment for innovation to thrive), we can support an economy that generates better economic outcomes (for example, investment and jobs) and better health, security, safety, and environment outcomes for all Canadians.
Measuring cumulative burden
To address regulatory burden, we first need to better understand it and define it in a way that is transparent, accountable, and measurable at a point in time and over time.
The Committee has heard that there are numerous indicators to suggest that Canada is not doing well on regulatory competitiveness; however, many of those indicators are based on opinion polling or very limited data. For example, the World Bank’s Doing Business report (2018), indicates that it takes over 200 days to obtain a construction permit in Canada. This indicator is widely quoted; however, it is based on a sole case study which examined the time it took to acquire a construction permit for a single warehouse in Toronto.
While we do not doubt that the frustration with the regulatory system in Canada is real, we need better data with which to assess what is happening with respect to the net cumulative regulatory burden and how it is changing over time. Such information will help us estimate the size of the challenge and ensure accountability as we work to increase competitiveness while maintaining, and ideally improving, outcomes in areas related to health, safety, security, and the environment.
The Committee recommends that the Government make measuring cumulative burden of regulation a priority. Without measures to complement cost-benefit assessments done for individual regulations, it will continue to be difficult to assess whether Canada’s regulatory competitiveness is improving. Different approaches may be taken to achieve this goal, including:
- Developing broad-based federal metrics by looking to best practices from other countries as well as provinces, such as British Columbia, which has had a regulatory measurement program in place for long enough that it serves as a model for other jurisdictions
- Measuring the cumulative burden of one or more illustrative sectors in order to understand the aggregate net impact of federal, provincial, municipal, and international regulations and regulatory practices (for example, policy and guidance requirements) on that sector. This assessment could include a regulatory mapping initiative. Efforts should be made to understand the differences in burden on large, medium, and small businesses as well as on consumers where possible.
- Working with organizations such as Statistics Canada and the OECD among others to determine what data sets could be generated to enhance the understanding of regulatory competitiveness in Canada.
It is worth emphasizing that the choice of regulatory measure should be broad enough that it captures the concerns of those tasked with compliance. For example, only looking at regulatory requirements from statutory instruments (regulations) would miss capturing requirements that may be found in legislation, program implementation, and guidance documents that can have considerable financial and competitive impacts on industry. Broad-based regulatory metrics should be developed with input from interested stakeholders (including academics and research institutions) and Indigenous peoples, and the methodology should be transparent. While no one measure will capture everything we might want to know about regulatory competitiveness, it is clear that we need some additional measures beyond those currently available.
The Committee heard two examples that may prove helpful in regard to regulatory measurement. British Columbia has kept a count of regulatory requirements since 2001, covering regulatory requirements found in legislation, regulation, and associated forms, guidance and policy. Other provinces are also starting to quantify regulation. The Committee also heard about the use of machine-based text analysis and its potential for regulatory measurement.
Related to regulatory measurement we further recommend developing a methodology for the ex-post analysis of regulations that are expected to impose $10 million or more in annual costs on business in order to assess both their effectiveness, and their impact on competitiveness. Relevant experts from academia, industry, consumer organizations, and Indigenous peoples could be consulted for priorities and views with respect to these reviews and results should be made public.
Consultation, engagement, and communication
The Committee has heard that there is a need for regulators and regulated parties to have a better understanding of the challenges and realities each faces. There is a continued need to enhance relationships, trust, and opportunities to communicate among government, industry, academic and research institutions, consumers, Indigenous peoples and other relevant interested parties. With new technology, regulators have additional tools to facilitate consultation and create new ways of getting ongoing feedback. We want to emphasize, however, that there is still an important place for face-to-face dialogue, which can be a powerful way to reach a common understanding and address complex problems. Face-to-face dialogue can be a good complement to broad-based online consultations. Consultation and engagement is a theme we raised in our first letter and, given its importance, it is one we expect to return to again.
To help initiate enhanced consultation, engagement, and communication, the Committee recommends that the Government:
- Investigate and consider experimenting with new available technologies to improve consultation, and investigate using innovative approaches that allow for more intensive, interactive, multi-party consultation for complex issues that may benefit from novel approaches. There may be opportunity to do this in upcoming consultations.
- Ensure that all regions in Canada have the opportunity to participate.
- Where possible, coordinate consultations with other organizations or regions (that is, other departments, agencies, provinces, or territories) which may be consulting on similar initiatives.
- Be mindful of times when some stakeholders may not be able to participate (for example, farmers are generally unavailable during the planting and harvesting seasons).
- Look for opportunities to engage relevant parties early and often to facilitate an ongoing dialogue throughout the development of regulations, including when determining the regulatory approach.
- Provide a detailed rationale when regulatory proposals are exempted from pre-publication in the Canada Gazette, Part I, to enhance transparency of decision-making.
In addition, the Committee recommends that the Government consider a more general web-based consultation on regulatory irritants to engage all interested Canadians as a means of identifying issues that may be relatively easy to fix such as complicated language on forms, broken web links, and service areas that may need attention. We believe that this has the potential to benefit all departments and agencies and may be particularly relevant in identifying some easy things to fix in the digitalization review. Further, this will help the Government better understand the wide range of issues that can contribute to the idea that Canada can improve its regulatory competitiveness. If the initiative is successful, the Government could create a more permanent place on its website to solicit ongoing suggestions for reducing regulatory irritants and improving regulatory accountability.
Competitiveness issues in pesticides regulations
Canada’s agri-food sector is vital to our prosperity. Following the recommendations of the Economic Strategy Tables on ways to strengthen the Canadian agri-food sector, and in an attempt to better understand some of the issues identified in the Agri-food and Aquaculture Regulatory Review, the Committee was asked to provide some observations regarding pesticides issues as they relate to regulatory competitiveness. The Committee would like to thank the Canada Grains Council and the Pest Management Regulatory Agency (PMRA) at Health Canada for sharing their views. This example highlighted issues from a government and an industry perspective that are common to several regulatory programs including the complexity of re-evaluations of products already on the market (for example, 30,000-page data packages), the growing volume of re-evaluations (approaching unsustainable levels), the backlog of re-evaluations (in some cases taking years to resolve), and the challenges of international alignment. Both government and industry representatives agreed that the current system with respect to re-evaluations is not as effective or efficient as it needs to be.
In light of the importance of pesticides to the many parts of the agri-food sector, the need to ensure continued environmental and health protections, and the current challenges with the pesticide re-evaluation process, the Committee recommends that the PMRA consider:
- Prioritizing higher-risk pesticides for post-market re-evaluation (with clear, objective criteria for prioritizing) rather than only using the current time-based cyclical review of all pesticides. This may be a valuable approach to consider in other areas where government approvals are seriously backlogged.
- Exploring the feasibility of using innovative tools and approaches to tackle backlogs in the pesticide re-evaluation process, such as an artificial intelligence pilot project for lower-risk pesticides;
- Identifying opportunities to take a meaningful leadership role influencing international standards;
- Exploring strategies to enable Canada to accept pesticide evaluations of trusted international partners; and
- Engaging industry and relevant non-industry groups (for example medical professionals, researchers, public advocacy organizations, consumer organizations, and academics) throughout the re-evaluation process to define risks and impacts, identify proposed solutions, and secure reliable data (for example, water-monitoring data).
As a next step, the Committee will be observing some of the regulatory consultations this summer in order to provide additional recommendations in the areas noted above as well as the consultation process itself. As we consider the scope of the Committee’s mandate and look ahead to future work, we expect to return to the issues around regulatory consultation and communication as well as the important challenge of regulatory measurement. Finding ways to reduce existing regulatory irritants remains important and we would like to turn our attention to the overarching challenge of modernizing the regulatory system to make regulatory excellence a key strategic advantage for Canada. We are interested in exploring innovative and collaborative solutions that support the co-development of regulations such as “sandboxes” and risk-based approaches to regulation that make better use of data to facilitate better outcomes and reduced compliance burden. A more in-depth investigation of ways to reduce regulatory delays and uncertainty and seeking the views of interested parties on the effectiveness of the first round of Regulatory Reviews are also on our radar screen.
We look forward to providing additional advice over the coming year and continue to commend the Government for its ongoing commitment to taking action to modernize Canada’s regulatory system for the benefit of all Canadians.
Chair, External Advisory Committee on Regulatory Competitiveness
On behalf of Committee members:
Dr. Catherine Beaudry
Professor and Canada Research Chair in Creation, Development and the Commercialization of Innovation
Professor of Law and Economics and Executive Chair of the Smart Prosperity Institute
University of Ottawa
Vice President of Government Relations
CEO of AgWise Strategic Solutions
Fruit and Vegetable Dispute Resolution Corporation
Executive Vice-President and Chief Strategic Officer
Canadian Federation of Independent Business
Consumers Council of Canada
Vice-President of Regulatory Affairs
I.E.Canada, Canadian Association of Importers and Exporters
Director of the School of Public Policy
Simon Fraser University
The views expressed by Committee members are their own and not the views of the organizations with which they are affiliated.
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