Business lobby says regulation costs average of $6,000 per employee each year

TORONTO – Unnecessary red tape is not only frustrating, but it’s costing Canadian businesses about $31 billion a year, according to a study released Monday.

The Canadian Federation of Independent Business says small businesses spend an average of $5,942 per employee each year on regulatory compliance — about 45 per cent more than their counterparts in the United States who spend $4,084.

And according to the report, that figure has remained relatively unchanged since the federation, one of the country’s largest private-sector lobby groups, began tracking the cost in 2005.

Tony Clement, the minister who heads the Treasury Board, says the federal government began soliciting suggestions for reducing red tape in 2010 but adds that it takes time to put changes into place.

“We sought out advice from those most affected by red tape on how we could alleviate the situation,” Clement said during a policy announcement Monday.

“We announced our plans to move forward with over 90 recommendations and what you’re seeing now is the official roll out of these recommendations.”

Although the government is focused on cutting these costs for businesses, it must be done without compromising necessary regulations, Clement added.

“We think there is a lot of room to reduce that burden without negatively impacting on Canadian’s health and safety.”

The minister was at a downtown Toronto pharmacy to announce that regulated pharmacy technicians will now be able to oversee the transfer of prescriptions from one pharmacy to another — a task currently restricted to pharmacists.

The change will see Canadian pharmacies save $8.7 million per year in administrative costs related to proposed changes in federal food and drug regulations, the government said.

The policy change coincides with similar initiatives announced Monday by the federal government, including the reduction of corporate reporting for businesses with revenues between $10 million and $200 million. It says that move will generate $1.2 million in reduced regulatory burden, and apply to about 32,000 businesses.

The government also announced that call agents at the Canada Revenue Agency will now have to provide an agent ID number when greeting business clients, to ensure more accountability.

The CFIB’s latest report was released at the beginning of what has been dubbed Red Tape Awareness week.

Executive vice-president Laura Jones said businesses in the United States and Canada indicate regulatory costs could be reduced by 30 per cent without harming important health and safety objectives.

Jones said her members don’t have a problem with rules that govern health, safety and the environment but rather, disagree with the “garden-variety red tape” like unnecessary phone calls or audits from the Canada Revenue Agency that can be detrimental to small businesses.

“It’s really the bad government customer service, the confusing rules that deliver no health and safety benefit — that’s what we’re talking about when we talk about red tape,” she said.

The results were compiled by the federation from 8,562 surveys conducted online and through mail by small- to medium-sized businesses in Canada. It has a margin of error of 1.06 per cent, 19 times out of 20.

The U.S. results were compiled by pollster Ipsos Reid from 1,535 online surveys, with a margin of error of 2.5 per cent, 19 times out of 20.

— With files from David Paddon