Federal regulators continue to ignore industry concerns

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Appeared in the Calgary Sun, August 14, 2019
Federal regulators continue to ignore industry concerns

Good news. A new report by the Canadian Chamber of Commerce gives the federal government an A+ on modernizing individual regulatory frameworks, an A on establishing a regulatory competitiveness working group and a bunch of Bs on other aspects of regulatory reform. But crucially, a failing grade on “regulatory consultation,” which is bad news for Alberta.

According to the chamber, rather than using consultation to help improve regulatory approaches, some regulators will use the process to justify their preferred policy outcome. The chamber gives two examples, which ironically both involve getting high.

For example, Ottawa’s new approach to air passenger rights. In 2008, the Government of Canada introduced Flight Rights Canada, an air passenger rights initiative based on a voluntary code of conduct for airlines. In 2009, Canada’s largest carriers all agreed to the code and adjusted their tariffs to address flight and tarmac delays, cancellations, overbooking and lost or damaged baggage.

But the Trudeau government has pursued new regulations, which are scheduled to come into effect in 2019, despite industry concerns that the cost-benefit analysis done for the new regulations does not accurately reflect costs increases, and that the implementation timeline is “too ambitious considering the changes that will be required to air carrier information technology infrastructure, employee training and communication procedures.”

The chamber also notes that when Health Canada launched consultations on cannabis “edibles, derivatives, and topicals” (in December 2018), the nascent cannabis industry expressed strong concerns over various aspects of the regulations, particularly concerns that packaging rules would not only raise costs for the industry and consumers, but generate more solid waste.

The industry proposed alternative approaches to lower costs and reduce waste while still achieving health and safety objectives. But “when the final regulations were released, none of the industry feedback on packaging rules or other major elements were reflected,” leaving many stakeholders questioning why they should invest time and effort to improve regulations if regulators will simply proceed with their initial proposals.

Moreover, this federal government gets a B- in improving the cost-benefit analysis for regulatory proposals. Cost-benefit analysis is critical to ensuring that proposed regulations produce greater benefits than they impose in increased costs to business. But the chamber says that “despite extensive guidance provided by the Treasury Board Secretariat to departments and agencies, government consultations have revealed that a majority of stakeholders find that cost-benefit analyses are not always consistent.”

Of course, there’s an urgent need for regulatory reform, especially in Alberta, where red tape is strangling a major contributor to Canada’s economy. While falling oil prices have contributed to Alberta’s troubles, many other factors affect investment in Alberta. And many of those factors are regulatory.

In fact, respondents to the Fraser institute’s Global Petroleum Survey said the key deterrents to investment in Alberta are all regulatory—environmental regulations and their enforcement, and the cost of regulatory compliance. This was particularly true in the oil and gas sector where 73 per cent of respondents said compliance costs were a deterrent to investment in 2018 compared to only 32 per cent in 2013.

Ottawa should be commended on several elements of its regulatory reform agenda, but more must be done to resolve regulatory duplication, lighten the overall regulatory burden in the oil and gas industry and position Canada to be competitive with its neighbour to the south, which is aggressively streamlining and reducing regulations.