Annual Report to Parliament for the 2017 to 2018 Fiscal Year: Federal Regulatory Management Initiatives

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December 2018

This is the second annual report to Parliament on federal regulatory management initiatives. This report is part of regular monitoring of certain aspects of Canada’s regulatory system.

This year’s report has four main sections:

• section 1 describes the benefits and costs of regulations that were made by the Governor in Council (GIC) and that have a significant impact
• section 2 reports on the implementation of the one-for-one rule, fulfilling the Red Tape Reduction Act reporting requirement
• section 3 sets out the Administrative Burden Baseline for 2017 and for previous years, providing a count of administrative requirements in federal regulations
• section 4 describes the new Cabinet Directive on Regulation, which replaced the Cabinet Directive on Regulatory Management on September 1, 2018 , as well as associated improvements to the federal regulatory process  

The regulations reported on in this document were published in the Canada Gazette, Part II, between April 1, 2017, and March 31, 2018. As such, they fall under the former Cabinet Directive on Regulatory Management.

Annual Report to Parliament for the 2016 to 2017 Fiscal Year: Benefits and Costs of Significant Federal Regulations, and the Implementation of the One-for-One Rule (PDF, 590 KB)

Message from the President

The Honourable Scott Brison, President of the Treasury Board and Minister of Digital Government

This second annual report to Parliament on federal regulatory management initiatives marks an important milestone in the government’s march to regulatory modernization.

The Government of Canada is committed to openness and transparency, including informing Parliament and Canadians about the management of federal regulations. This report provides important information about the costs and benefits of significant regulations, as well as the implementation of the one-for-one rule, just one key element in a suite of continuing and new measures to limit the administrative burden on businesses that deal with the federal government. It also includes information about the Administrative Burden Baseline count, a measure of the number of administrative requirements in federal regulations.

While Canada’s regulatory system is internationally recognized as world-class by bodies such as the Organisation for Economic Co-operation and Development, we must continue to keep pace with emerging economic opportunities and evolving challenges. For this reason, we are taking steps to make the system more agile, transparent and responsive, which will have a positive impact on business growth and the lives of all Canadians.

On September 1, 2018, the government’s Cabinet Directive on Regulation came into effect. It provides a strong foundation for the ongoing modernization of our regulatory system. The directive emphasizes that regulations should support and promote entrepreneurship, innovation that benefits people and businesses, and economic growth that includes as many Canadians as possible. The directive is also supported by a series of new policies, including the first-ever Government of Canada Policy on Cost-Benefit Analysis.

In addition, the 2018 Fall Economic Statement announced a number of measures aimed at revitalizing our regulatory system to improve business innovation and economic growth, while safeguarding our citizens and natural resources.

I invite you to read this report to see how the government is continuing its work to create effective, agile and efficient regulations that protect our environment and the health, safety and security of Canadians.

Original signed by:

The Honourable Scott Brison

President of the Treasury Board and Minister of Digital Government

Types of federal regulations

Regulations are a type of law intended to change behaviours and achieve public policy objectives. They have legal binding effect and support a broad range of objectives, such as:

• health and safety
• security
• culture and heritage
• a strong and equitable economy
• the environment

Regulations are made by every order of government in Canada in accordance with responsibilities set out in the Constitution Act. Federal regulations deal with areas of federal jurisdiction, such as patent rules, vehicle emissions standards and drug licensing.

There are three principal categories of federal regulations. Each is based on where the authority to make regulations lies:

1. GIC regulations are reviewed by a group of ministers who recommend approval to the Governor General. This role is performed by the Treasury Board.
2. Ministerial regulations are made by a minister who is given the authority to do so by law.
   • Example: The Canadian Environmental Protection Act, 1999 gives the Minister of the Environment the authority to amend the Domestic Substances List to include substances introduced to the Canadian marketplace that have been risk-assessed and for which control measures have been taken.
3. Regulations made by an agency, tribunal or other entity that has been given the authority by law to do so in a given area, and that do not require the approval of the GIC or a minister.
   • Example: The Farm Products Agencies Act authorizes Turkey Farmers of Canada to make regulations that set production quotas and levies on the Canadian turkey sector as part of the supply management system.

Section 1: benefits and costs of regulations

What is cost-benefit analysis?

In the regulatory context, cost-benefit analysis (CBA) is a structured approach to identifying and considering the economic, environmental and social effects of a regulatory proposal. CBA identifies and measures the positive and negative impacts of a regulatory proposal and any feasible alternative options so that decision-makers can determine the best course of action. CBA monetizes, quantifies and qualitatively analyzes the direct and indirect costs and benefits of the regulatory proposal to determine the proposal’s overall benefit.

Since 1986, the Government of Canada has required that a CBA be done for most regulatory proposals in order to assess their potential impact on areas such as:

• the environment
• workers
• businesses
• consumers
• other sectors of society

The results of the CBA are summarized in a Regulatory Impact Analysis Statement (RIAS), which is published with proposed regulations in the Canada Gazette, Part I. The RIAS enables the public to:

• review the analysis
• provide comments to regulators before final consideration by the GIC and subsequent publication of approved final regulations in the Canada Gazette, Part II

Analytical requirements

Regulatory proposals are categorized according to their expected level of impact. The level of impact is determined by the anticipated cost of the proposal.

Table 1: the three levels of impact

Impact level	Present value of costs (over 10 years)	Annual cost
Low-impact	Less than $10 million	Less than $1 million
Medium-impact	$10 million to $100 million	$1 million to $10 million
High-impact	More than $100 million	More than $10 million

The level of impact determines the degree of analysis and assessment required for a given regulatory proposal. This proportionate approach is consistent with regulatory best practices set out by the Organisation for Economic Co-operation and Development (OECD).

Table 2: analysis required by level of impact

Impact level	Description of costs	Description of benefits
Low-impact	Qualitative or quantitative	Qualitative
Medium-impact	Quantified and monetized	Quantified and monetized (if data are readily available)
High-impact	Quantified and monetized	Quantified and monetized

This report covers GIC regulations only and is limited to regulations that are considered significant, that is, those that have a medium impact or a high impact. Figures are taken from the RIAS for regulations published in the Canada Gazette, Part II, in the 2017 to 2018 fiscal year. To remove the effect of inflation, figures are expressed in 2012 dollars and, as such, will vary from those published in the RIASs. This approach permits meaningful and consistent comparison of figures, regardless of the year in which regulatory impacts were originally measured.

Overview of benefits and costs of regulations

In the 2017 to 2018 fiscal year, a total of 292 regulations were published in the Canada Gazette, Part II, compared with 326 in the 2016 to 2017 fiscal year. Of these 292 regulations:

• 184 were GIC regulations (63.0% of all regulations)
• 108 were non-GIC regulations (37.0% of all regulations)

Of the 184 GIC regulations (compared with 189 in the previous fiscal year):

• 166 were low-impact (90.2% of GIC regulations and 56.8% of all regulations)
• 18 were significant (9.8% of GIC regulations and 6.2% of all regulations)