What We Heard Report on Regulatory Reviews and modernization stakeholder consultations

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Background: Regulatory Reviews

In 2017, the Advisory Council on Economic Growth published a report entitled Investing in a Resilient Canadian Economy. The Advisory Council said that Canadian regulations should be agile and adaptive enough to ensure health, safety, security and environmental considerations without imposing barriers to innovation and competitiveness on Canadian businesses.

In response to the Advisory Council’s recommendations, Budget 2018 made regulatory modernization a priority by announcing that the Government of Canada would fund “targeted reviews, over the next three years, of regulatory requirements and practices that are bottlenecks to innovation and [economic] growth.” The first round of targeted regulatory reviews focused on 3 high-growth sectors:

• agri-food and aquaculture
• health and bio-sciences
• transportation and infrastructure

The Treasury Board of Canada Secretariat (TBS) is coordinating the targeted Regulatory Review process with federal departments and agencies. A central feature of the Regulatory Reviews is engaging stakeholders, including businesses, Canadians, and academia. Throughout the spring, summer, and fall of 2018, consultations were held to support the Government of Canada’s agenda of ensuring that regulations remain flexible and agile to support economic competitiveness.

Stakeholders were asked to provide their feedback in order to:

• identify regulatory irritants and bottlenecks to economic growth and innovation
• explore ways for regulations to be more agile to keep pace with emerging technologies
• ensure that Canadian businesses can grow, and all Canadians can benefit from new opportunities

Overview of consultations

TBS led an extensive national engagement exercise on the first round of Regulatory Reviews with impacted stakeholders over the summer and fall of 2018. This included an online public consultation that was posted in the Canada Gazette, Part I. TBS received more than 140 written responses from businesses, industry associations, academia, and Canadians.

TBS, along with implicated federal departments and agencies, also met with numerous stakeholders through individual meetings, round-table workshops and webinars.

Throughout these consultations stakeholders identified issues and irritants resulting from existing regulatory requirements and practices. They also provided suggestions for proposed solutions, and identified opportunities for regulatory experimentation.

What we Heard

The following report is a summary of the stakeholder engagement on the targeted Regulatory Reviews that took place during the spring, summer and fall of 2018.

This report is not meant to be an exhaustive list of all issues raised. Rather it represents a high-level synopsis of the broad themes that stakeholders raised as part of the online Canada Gazette, Part I public consultation. Further, this report highlights some of the broad regulatory impediments to economic growth, competitiveness and innovation that departments and agencies will be considering when developing plans to modernize regulations. These plans are referred to as sectoral Roadmaps.

Some potential early actions in response to stakeholder feedback on the Regulatory Reviews were announced in the 2018 Fall Economic Statement, and additional actions will be outlined in sectoral Roadmaps that will be published in 2019.

Horizontal Issues

Throughout the consultation process, stakeholders consistently raised several issues that cut across and affect all sectors.

The following 6 horizontal issues emerged:

1. Regulatory modernization and greater regulatory agility are needed

Several stakeholders indicated that many regulatory frameworks are out of date, and do not reflect current business models or practices. They perceived certain regulations as being overly prescriptive rather than being focused on outcomes. They also noted that regulations do not always take a risk-based approach, and do not always take into account the reality of the industry that is being regulated.

Taken together, stakeholders expressed that many current regulatory frameworks are ill-equipped to respond to current and emerging technologies. Stakeholders recommended modernizing regulations and ensuring that they are agile enough to accommodate and adapt to future technologies.

2. Engagement with stakeholders should increase

Stakeholders indicated a need for increased and ongoing engagement between regulators and regulated parties and are seeking more open and meaningful engagement with regulators.

Stakeholders expressed a desire for earlier involvement in the regulatory process. This includes being engaged before pre-publication of draft regulations in Canada Gazette, Part I. Stakeholders also want to be engaged to identify key regulatory considerations that may impact instrument choice. Further, stakeholders seek opportunities to provide details on how industry works in order to optimize the implementation of regulations.

3. Economic competitiveness and the cumulative impact of regulations must be considered

Some stakeholders expressed concern that the economic impact of regulations and regulatory management practices are not always considered by regulators. In particular, the impact of regulations on small and medium-sized businesses and smaller marketplaces is not always taken into account, which can lead to regulatory obstacles for those businesses.

Stakeholders identified the need for more risk-based regulatory approaches that ensure health, safety, security, and protection of the environment while also supporting economic competitiveness. Further, some stakeholders also expressed concern regarding the degree of transparency when departments and agencies conduct their cost-benefit analysis.

There is a desire from industry to assess the impact of proposed regulations on the competitiveness of Canadian businesses, and to consider the cumulative impact of regulations.

4. Regulatory management is important

Several stakeholders indicated that there is a need for greater clarity and guidance on existing regulations. They want more predictable and faster service standards and more streamlined and efficient processes. In addition, they are seeking greater use of digital tools, and acceptance of trusted third-party standards.

These are some of the suggestions identified by stakeholders as ways to streamline regulatory processes and more efficiently manage regulatory frameworks.

5. Regulatory cooperation and harmonization must be further considered

Stakeholders noted that misalignment within Canada (for example, between provinces and territories), and between other international jurisdictions increases unnecessary burden on industry. It can also be a barrier to trade, competitiveness, and growth.

Except when there is a justifiable case for differences, stakeholders recommended alignment between the federal, provincial, and territorial governments, and with other international jurisdictions or standards, to the extent possible.

6. There should be innovation through experimentation

Stakeholders noted that emerging technologies do not always have effective paths to market through existing regulatory frameworks (for example, remotely piloted aircraft systems, or advanced therapeutics).

In some cases, stakeholders noted that the development of guidance and use of pilots or testing are needed first to determine whether regulations are required, and subsequently, the appropriate level of regulatory oversight for a new innovation.

Stakeholders expressed a desire for the increased use of novel approaches and regulatory experimentation, whether through specific pilots, regulatory sandboxes, or other approaches to prepare for and respond to emerging technologies.

Sector-Specific issues

In addition to the horizontal themes, sector-specific issues were also identified for the 3 initial targeted Regulatory Review sectors. These include agri-food and agriculture, health and bio-sciences, and transportation and infrastructure.

Agri-food and aquaculture

Through the Canada Gazette consultation process, stakeholders submitted 60 written responses to the Agri-food and Aquaculture Regulatory Review. There were also 13 cross-sectoral submissions that identified issues, some of which identified issues in this sector.

Specific issues included the following:

1. Feeds, seeds, hatcheries and fertilizers

Stakeholders expressed that the existing regulations for these industries are outdated and prescriptive. Stakeholders noted that, in some cases, the approval processes are lengthy and burdensome (for example, registration of fertilizers, and the pre-market assessment and approval of new feed products). They also noted that it can be challenging when several federal departments and agencies are involved in a regulatory regime, as is the case for the regulation of feed products.

Stakeholders noted that existing regulations should be updated and modernized, and that there should be a move toward more outcome-based approaches. When the regulations are modernized, there should be enhanced clarity and guidance to industry on how to meet the regulatory objectives.

2. Grains

Stakeholders indicated that many areas of the Canada Grain Act and Canada Grain Regulations administered by the Canadian Grain Commission have not kept pace with the rapidly evolving nature of the Canadian grain industry. Areas of concern include the efficiency and effectiveness of the current system in the mandatory weighing and inspection of exported grain, and in the classification of grain varieties by the Canadian Grain Commission.

3. Veterinary drugs

Stakeholders indicated that the Canadian market for veterinary drugs is small, and there is concern that the regulatory regime may be impeding the ability of farmers and aquaculture producers to access certain products quickly. In addition, fees for veterinary drug reviews should reflect Canada’s market size and incentivize the entry to market of more products for minor use and minor species.

Stakeholders also noted that continued international cooperation, such as through the Canada-United States Regulatory Cooperation Council benefits Canadian producers by facilitating access to veterinary drugs at the same time as global competitors.

4. Pesticides

Stakeholders indicated a need for greater international collaboration, particularly with the United States. They also noted that there is an opportunity for Canada to play a larger role in working with international agencies. In particular, they are seeking Canadian leadership in establishing maximum residue limits. Finally, industry noted the need to engage all stakeholders and to consider competitiveness considerations as part of the re-evaluation of pesticide products.

5. Pathogen and toxin oversight

Stakeholders cited misalignment and duplication between Canada’s regulatory regimes for pathogen oversight. Regulated parties may be subject to differing regulatory requirements for human and animal pathogens and toxins. This can cause undue costs, unnecessary diversion of resources, and slow down innovative research.

6. Aquaculture

Stakeholders indicated that greater alignment of regulatory requirements and processes is needed between federal departments and agencies, and between federal, provincial, and territorial regulators.

Some stakeholders advocated for the creation of a national Aquaculture Act to provide clear responsibility for aquaculture, and support improved regulatory coordination.

7. Food labelling and advertising

Stakeholders expressed concerns that certain proposed changes to food labelling and advertising requirements will increase barriers to competitiveness. They believe that government decision-making does not always consider competitiveness concerns.

Stakeholders noted that minor differences between jurisdictions regarding labelling, packaging and marketing requirements hinder competitiveness. They expressed a desire to better integrate international standards into regulation.

Stakeholders also viewed certain labelling requirements as being prescriptive, outdated, and misaligned with scientific evidence.

8. Food modernization

Stakeholders indicated that the regulatory regime for supplemented foods (for example, food or drink that contains added vitamins, minerals, amino acids, herbal, or bioactive ingredients) is overdue. They noted that temporary solutions are not sufficient in the long term.

Stakeholders also commented that regulations should be updated or developed to address impediments to innovations (for example, standards of identity, clinical trials for food, scientific methodologies).

Misalignment between Canadian requirements and international standards was of particular concern to stakeholders because it puts Canadian manufacturers at a competitive disadvantage. Stakeholders also noted that some approval processes are burdensome and lengthy. In particular, this was noted for products that present a low risk to the health and safety of Canadians.

9. Plant breeding innovation

Stakeholders noted that the lack of clarity, predictability and transparency around information requirements and time frames for the regulation of plants with novel traits can discourage innovation and investment. Stakeholders indicated a need for a well-defined process for the determination of novel traits. Stakeholders are also asking for increased efficiencies, such as more streamlined data requirements, and a coordinated approach between federal regulators.

In addition, stakeholders mentioned that coordination between federal departments and agencies, as well as consideration of the global regulatory landscape, would maximize business opportunities and maintain market access and confidence in Canada’s regulatory system.

10. Internal and international trade

Stakeholders noted that when Canadian requirements and approvals differ from international standards, and where there are different requirements between jurisdictions, it increases burden on industry. Such differences can also hinder the import and export of agri-food and aquaculture products, thus negatively impacting the ability of Canadian businesses to reach new markets.

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Health and bio-sciences

Through the Canada Gazette consultation process, stakeholders submitted over 30 written responses to the Health and Bio-sciences Regulatory Review. There were also 13 cross-sectoral submissions, some of which identified issues in this sector.

Specific issues included the following:

1. Pharmaceuticals and biologics

Stakeholders indicated a need for streamlined drug submission and approval processes between federal and other regulatory bodies, both within Canada and internationally, in order to improve time to market, and reduce duplicative requirements. They suggested reducing onerous requirements, and providing incentives for products that would better serve pediatric patients and small patient populations.

Further, some stakeholders noted that the current clinical trial requirements and fees deter clinical trial investments in Canada. They requested greater alignment of drug scheduling with provinces. They also want expanded mutual recognition agreements and global alignment.

Stakeholders also requested that amendments to the Patented Medicine Regulations be subject to competitiveness and cost-benefit analysis involving stakeholders.

2. Emerging technologies

Stakeholders indicated there is a need to update the regulations to reflect medical advancements, and for the regulations to be more agile in order to enable and effectively regulate emerging technologies.

Stakeholders also encouraged greater alignment between federal agencies and with provinces and territories in order to reduce overlap and allow for simultaneous reviews.

3. Medical devices

Stakeholders noted that the regulatory framework for medical devices should be updated to increase clarity, and align with international jurisdictions. In addition, the regulatory framework should be updated to enable the classification and approval of emerging technologies

Stakeholders suggested that there should be fast-track approval processes for novel products. It was also noted that updated regulations on labelling requirements should remain outcome-based and technology-neutral in order to ensure information is delivered to consumers in a way that keeps pace with emerging technologies.

4. Self-care

Stakeholders indicated the need for a risk-based and consistent approach to regulating self-care products. This includes product labelling requirements, and enable the distribution of low-risk samples (for example, disinfectants). Stakeholders are also asking for less burden in the management and licensing of cosmetic-like drugs (for example, certain natural health products and non-prescription drugs).

5. Consumer products

Stakeholders indicated the need for greater harmonization with international standards and with the United States. They expressed a desire to be engaged early in the regulatory process. Stakeholders also asked for greater reliance on non-regulatory tools, such as voluntary standard development, particularly for new and emerging types of consumer products.

6. Cannabis

Stakeholders noted that the licensing regime for cannabis imposes significant regulatory burden on industry. They also remarked that the new tracking and licensing system is difficult to use.

7. Hazardous products

Stakeholders noted that regulatory requirements for hazardous products are burdensome, unclear, and misaligned with international jurisdictions.

8. Stakeholder management

Some stakeholders indicated that for the health and bio-sciences sector, there should be a venue for industry and regulators to document and address areas of disagreement.

9. Regulatory compliance

Some stakeholders indicated that when guidance is developed for inspectors, this guidance should also be made available to regulated parties so they know what is expected of them. Further, some stakeholders also remarked that inspections may need to be done further up the supply chain to catch problems before they reach consumers.

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Transportation and infrastructure

Through the Canada Gazette consultation process, stakeholders submitted 35 written responses to the transportation and infrastructure Regulatory Review. There were also 13 cross-sectoral submissions, some of which identified issues in this sector.

Specific issues included the following:

1. Aviation regulations

Stakeholder comments emphasized the need to update the Canadian Aviation Regulations to be more outcome-based and aligned with international standards, in order to implement current technologies and best practices. The Canadian Aviation Regulations need to be modernized to modify or remove prescriptive provisions that limit the implementation of new and innovative aviation technology such as allowing the use of personal electronic devices aboard aircraft.

Stakeholders also remarked that regulations and the associated fees need to take into account the needs of small firms and individual users. Further, they noted that the high costs and administrative delays associated with becoming a pilot have contributed to labour shortages.

2. Remotely piloted aviation systems

Stakeholders indicated that investment and innovation in the sector are impacted by a lack of clarity and regulatory direction for industry and outdated regulations.

Stakeholders felt that any future regulatory changes must enable emerging technologies. They also voiced an interest in receiving guidance in the absence of regulations, which would be similar to the approach being taken by the United States.

3. Connected and automated vehicles and vehicle safety

Stakeholders emphasized the importance of alignment with provinces and territories and with the United States in developing a flexible approach to enable connected and automated vehicles. They indicated that federal leadership is necessary for this alignment. They also indicated a need for updated infrastructure to prepare for new technologies.

Stakeholders also raised concerns about the safety of emerging technologies. They advocated for increased use of mandatory, safety-enhancing technologies, such as collision detection.

4. Transportation of dangerous goods

Stakeholders noted the need for greater clarity and consistency in the application of regulations. There were also requests for greater alignment with provinces and territories and with the United States. Stakeholders also remarked that many requirements are cumbersome and do not take a risk-based approach.

5. Marine regulations

Stakeholders noted that the current marine regulations are unclear, outdated and prescriptive. Further, they do not enable the use of new technologies.

Stakeholders requested greater stakeholder consultation and alignment with the United States and with international standards.

6. Rail regulations

Stakeholders indicated that the current regulations are prescriptive, unclear, and outdated. In addition, the regulations are not flexible enough to reflect different types of rail transport and inspections.

Stakeholders also highlighted challenges associated with misalignment within the federal government and with the United States.

7. Trucking

Stakeholders indicated the need for alignment with provinces and territories on a number of trucking-related issues (for example, wide-based tires and trucking weights). They also noted that provinces and territories should enforce greater compliance for carriers from the United States, such as examining electronic logging devices.

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Additional sectoral issues

Stakeholders highlighted many additional issues through the Canada Gazette consultation process. Although some of these additional issues are linked to the initial targeted Regulatory Reviews areas, they more directly relate to other sectors. These comments have been shared with the relevant federal departments and agencies, and will be considered in subsequent rounds of the Regulatory Reviews.

The additional sectoral issues included the following:

1. Environment and Natural Resources

i) Energy efficiency

Stakeholders indicated a need for greater alignment of energy efficiency requirements with the United States and with provinces and territories. Stakeholders also noted that certain emissions regulations can impede the commercialization of clean technologies in Canada.

ii) Environmental assessment

Stakeholders noted that a lack of coordination between environmental regulations and sector-specific regulations leads to duplicative approval processes, delays, and increased administrative burden. They noted that an inconsistent approach to enforcing these regulations is creating an uneven playing field both nationally and internationally.

Stakeholders recommended alignment with the United States Environmental Protection Agency. They also requested that the impact of environmental regulations on small businesses be considered and mitigated, and noted that carbon pricing could reduce their international competitiveness.

2. Labour

i) Labour shortages

Stakeholders indicated that labour shortages are a growing concern in many sectors because such shortages hinder growth. They recommended that there be greater alignment between federal programs and departments to help address labour shortage issues.

ii) Training and certification

Stakeholders identified a need for training to reflect new realities. This includes more flexible and remote training options, reducing costs for training, and using emerging technologies. They also recommended greater standardization of training across jurisdictions.

3. Immigration and Border Control

i) Temporary foreign workers and immigration

Stakeholders noted a need to expand the scope of eligible operations for the Temporary Foreign Worker Program given the growing labour shortage in some sectors. They also requested more paths to permanent residency for temporary foreign workers and for other workers who can address labour shortages.

ii) Cross-border trade issues

In addition to misaligned regulatory requirements that create trade barriers, stakeholders indicated that current border services and requirements are duplicative, outdated, and inefficient.

These border service issues result in long wait times and increased administrative burden. Stakeholders noted that Canadian border procedures are not aligned with international standards or with the United States.

4. Taxation

i) Tax requirements and services

Stakeholders noted that tax policies lack clarity and requested improved guidance and services, especially for small businesses, in order to help businesses understand their tax obligations.

It was noted that tax policies are unclear in the context of changing business practices, such as using independent contractors. Stakeholders also recommended increasing the earnings threshold for classifying small businesses.

Conclusion

The Government of Canada thanks all stakeholders for their input. Stakeholder submissions have been shared with relevant federal departments and agencies and continue to be considered in the development of plans to modernize Canadian regulations. Some potential early actions in response to these comments were announced in the 2018 Fall Economic Statement and additional actions will be outlined in sectoral Roadmaps, which will be published in 2019. It is anticipated that the next round of Regulatory Reviews will be announced in 2019.

To keep up with the Regulatory Reviews, visit the Targeted regulatory review web page on Canada.ca.