2012-2013 Scorecard report: reducing regulatory administrative burden and improving service and predictability

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Preface

The Annual Scorecard Report demonstrates the Government’s commitment to transparency and accountability for implementation of the Red Tape Reduction Action Plan’s systemic reforms.

About the Annual Scorecard Report

On October 1, 2012, in response to recommendations made by the Red Tape Reduction Commission, the Government of Canada released the Red Tape Reduction Action Plan. In doing so, the Government launched an ambitious regulatory reform package, and made cutting regulatory red tape for Canadians and businesses a priority.

Through the Action Plan, the Government has committed to implement a comprehensive package of fundamental, systemic regulatory reforms that address many of the Commission’s recommendations. These systemic reforms

include:

• The One-for-One Rule;
• The Small Business Lens;
• Forward regulatory plans;
• Service standards for high-volume regulatory authorizations;
• Interpretation policies; and
• The Administrative Burden Baseline Initiative.

The Government also committed to releasing an annual Scorecard Report on the results achieved in implementing the systemic reforms as part of the Action Plan’s broader commitment to transparency and accountability.

Scorecard Methodology

The 2012–2013 Scorecard Report has been prepared as per the commitments made in the Red Tape Reduction Action Plan and has also been reviewed by an external Regulatory Advisory Committee.

The Treasury Board of Canada Secretariat has produced this Scorecard Report based on a review of progress made by departments and agencies in implementing the systemic reforms in the 2012–2013 Fiscal Year. Through these assessments, 22 regulatory portfoliosSee footnote[1] and portfolio entities received a rating summarizing their initial progress for each of the systemic reforms implemented this year (see Annex A). These assessments are intended to drive compliance with the requirements of the Cabinet Directive on Regulatory Management, which supports a fair, predictable, and transparent regulatory environment for Canadians and businesses.

Message from the President of the Treasury Board

I am pleased to present the first annual Scorecard Report on progress made in implementing the Red Tape Reduction Action Plan.

Canada is internationally recognized as one of the best places in the world to do business. With a strong fiscal foundation, declining tax rates and a robust regulatory system, Canada has become a global leader by finding smarter ways to encourage investment and foster economic growth. However, in the current climate of economic uncertainty and intense global competition, this is not the time to rest on our record of success.

In January 2011, Prime Minister Stephen Harper launched the Red Tape Reduction Commission. The Commission was asked to identify irritants to business stemming from federal regulatory requirements and provide recommendations on how to reduce the regulatory burden. On October 1, 2012, the Government released the Red Tape Reduction Action Plan as a response to the Commission’s recommendations.

The Action Plan outlines an ambitious regulatory reform agenda that aims to reduce regulatory burden on Canadians and businesses, make it easier to do business with regulators, and improve service and predictability in the federal regulatory system. In doing so, the Action Plan commits to a comprehensive package of fundamental, systemic regulatory reforms that are being implemented under the oversight of the Treasury Board of Canada Secretariat.

The Annual Scorecard Report is part of the Government’s commitment to a transparent and accountable Action Plan implementation. This first edition provides a results-focused account of the progress made in implementing the systemic reforms in the 2012–2013 Fiscal Year. Overall, it shows that these reforms are off to a very promising start and have the potential to significantly benefit individuals and businesses all across the country.

I would like to thank the members of the Regulatory Advisory Committee who have reviewed this Scorecard Report. Their input has been very helpful in our efforts to ensure that the report fairly represents the Government’s progress in implementing the systemic reforms in 2012–2013. Their volunteering of their time and expertise is a testament to their exemplary commitment to public service and dedication to building a better country.

Business is the foundation of Canada’s economic strength. Removing unnecessary regulatory barriers and administrative burden allows businesses to focus their time and energy on creating jobs and seizing new opportunities for growth. Over the coming years, we will build on the successes already achieved and deliver the quality of services that Canadians and businesses expect and deserve from their Government.

(original signed by)

The Honourable Tony Clement, President of the Treasury Board

The Regulatory Advisory Committee’s Advice to the President of the Treasury Board on the 2012–2013 Annual Scorecard Report

Deliberations of Advisory Committee

The Regulatory Advisory Committee was established in September, 2013. Committee members who will serve an initial term of two years are: Vic Young, Corporate Director and Committee Chair; Eve-Lyne Biron, President and CEO of Biron Groupe Santé; Bruce Cran, President of the Consumers’ Association of Canada; David Fung, Chairman and CEO of ACDEG Group; and Laura Jones, Executive Vice President of the Canadian Federation of Independent Business.

The Committee held two meetings by teleconference on September 19th and November 25th. It also held three meetings in person on September 25th, December 9th and December 10th. All of the in-person meetings included in-camera sessions of Committee members only, in the absence of government officials. At its initial meeting, the Committee held a phone conversation with the President of the Treasury Board, Mr. Tony Clement to discuss their mandate and the desire of the Minister to receive unvarnished advice. On December 24th, the Chair of the Committee held a phone conversation with Minister Clement to discuss Committee progress and the timing of the final report.

Throughout the months of September to December there was continuous communication between the Chair and senior Treasury Board officials to discuss meeting agenda items and the ongoing information requirements of the Committee. The Committee was impressed with the presentations that it received and has no doubt about the personal commitment of Treasury Board officials to the success of the program.

Focus of Initial Report

In its initial report, the Committee did not perform nor was it mandated to perform an ‘audit-like’ review of the Scorecard. Rather the Committee has drawn on the expertise of government officials as well as the members’ business backgrounds and experience to arrive at a general opinion on the overall fairness and reliability of the Scorecard. The Committee focused on the implementation of (i) the One for One Rule, (ii) the Small Business Lens, (iii) Forward Regulatory Plans and (iv) Service Standards for high-volume regulatory authorizations.

The Committee’s role is limited to providing advice on red tape arising from regulation. Other potential sources of burden that business may experience in their interaction with government may include, for example (i) applying for grants and contributions programs; (ii) meeting government requirements to do business with government through contracts; (iii) requirements from government policy and (iv) lacklustre government customer service.  These potential sources of red tape burden are not covered by our mandate. The Committee has been advised by Treasury Board officials that ‘regulatory red tape’ makes up a significant portion of the total red tape universe. However, it is important to note that the Committee spent considerable time trying to understand the government’s definition of ‘regulatory red tape’ and how it differs from the more comprehensive definition of red tape that is commonly used by the private sector. More clarity in this area is still needed in order to fully understand the potential impact of the reforms. While the mandate of the committee when commenting on the scorecard is limited to ‘regulatory red tape’, we recommend that the government not limit itself to this definition where it gets in the way of making a difference on the ground.

In our meetings and interactions with the Treasury Board Secretariat, the Committee has come to the conclusion that the Red Tape Reduction Action Plan is a significant initiative that is being undertaken with real commitment. It must, however, be viewed as a longer-term program. The Scorecard for 2012–2013 should be seen as an important first step in a three year program aimed at changing the regulation making process and halting the growth of red tape in the Government of Canada. The next two years will be critical to the objective of embedding the understanding of the importance of red tape reduction into the culture of government departments and agencies. This is no easy task and it would be premature to make any bold claims with respect to early and significant results. The most important thing at this stage is to retain the commitment to the completion of the three-year program; to reinforce political leadership and tone at the top related to the necessity of red tape reduction; and to ensure the appropriate resources are applied to the remaining projects associated with implementing these systemic reforms.

We believe that government is on a very significant journey that will require many more years of hard work. Therefore the key message is that the program is off to a good start and there is much work to be done and that red tape reduction remains a priority for government going forward. At this stage, we should not confuse significant early action with longer term results.

Focus of Future Reports

The Committee is keen to determine the extent to which Action Plan implementation is, in fact, resulting in lasting systemic change that makes a difference for business and other stakeholders.  The Committee will monitor the work of TBS officials in 2014 aimed at developing meaningful metrics to better gauge the impact of the systemic reforms. The Committee did not undertake any stakeholder consultations on the progress reported in the initial Scorecard as it was considered too early to do so. It intends, however, to undertake such consultations in 2014 with a view to assessing the ‘on the ground’ response of stakeholders. Also in 2014 and 2015 respectively, the Committee will review the implementation of (i) Interpretation Policies and (ii) the Administrative Burden Baseline.

The most important advice we can provide at this time is that Treasury Board does everything possible to keep everyone’s feet to the fire to bring red tape reduction to fruition. Some of the key questions that need to be answered are: what does success look like; is the red tape reduction action plan making a difference; what, if any, culture change, is occurring in the manner government is dealing with red tape; and what is the ongoing impact on stakeholders? Going forward, measuring the success of the reforms in a manner which is comprehensive and provides clarity and consistency will lead to credibility with respect to how the program is being implemented. The Committee intends to monitor the critical elements associated with metric development and implementation credibility.

Advice to the President of the Treasury Board

As is required by its mandate, the Regulatory Advisory Committee to the President of the Treasury Board has reviewed the first Annual Scorecard Report related to the Government's Red Tape Reduction Action Plan. Based on the information provided, the nature of the initial review undertaken and, in the overall context of the related and pertinent issues described above, the Advisory Committee is of the view that the Scorecard and the statements made therein are reliable and fairly (i) represent progress to date and (ii) reflect the ongoing commitment of Government, between now and 2015, to establish a comprehensive process of regulatory red tape reform.

At the risk of being repetitive, the Committee wishes to reiterate that while there has been much progress to date much work remains to be done; meaningful performance metrics need to be developed; and stakeholder consultations need to be undertaken. These red tape reforms are being implemented over three years but are intended to set the rules for regulation making over the long term and will affect the regulatory system for years to come. Evaluating impact and making necessary adjustments where needed will be critical to making a positive difference in the lives of all Canadians. We look forward to providing ongoing advice during this critical period related to the implementation of the Red Tape Reduction Action Plan.

Signed,

(original signed by)

Vic Young

Corporate Director and Committee Chair

Eve-Lyne Biron

President and CEO, Biron Group Santé

David Fung

Chairman and CEO, ACDEG Group

Bruce Cran

President, Consumers’ Association of Canada

Laura Jones

Executive Vice President, Canadian Federation of Independent Business

List of Acronyms Used in the Annual Scorecard Report

Acronyms
AAFC	Agriculture and Agri-Food Canada
AANDC	Aboriginal Affairs and Northern Development Canada
CDRM	Cabinet Directive on Regulatory Management
CH	Canadian Heritage
CIC	Citizenship and Immigration Canada
CRA	Canada Revenue Agency
CWB	Canadian Wheat Board
DFATD	Foreign Affairs, Trade and Development Canada
DFO	Fisheries and Oceans Canada
EC	Environment Canada
ESDC	Employment and Social Development Canada
FIN	Department of Finance Canada
FPCC	Farm Products Council of Canada
GIC	Governor in Council
HC	Health Canada
IC	Industry Canada
JUS	Department of Justice
NRCAN	Natural Resources Canada
PS	Public Safety Canada
PWGSC	Public Works and Government Services Canada
RIAS	Regulatory Impact and Analysis Statement
TBS	Treasury Board of Canada Secretariat
TC	Transport Canada
VAC	Veterans Affairs Canada
VIN	Vehicle Identification Number

Executive Summary

In 2012–2013, 86% of all final, Governor in Council (GIC)-approved regulatory changes published in the Canada Gazette either reduced (7%) or did not impose any new (79%) administrative burden on business. Source: Based on data published in Part II of the Canada Gazette

One of the Government of Canada’s top priorities is to create the right conditions to support jobs, economic growth, and long-term prosperity for all Canadians. A robust, effective and efficient federal regulatory system provides consistency, fairness, and transparency, and supports innovation, productivity, and competition.

Canadians and businesses across the country have identified a number of irritants that exist in the federal regulatory system, creating unnecessary delays, costs and bureaucracy. The Red Tape Reduction Action Plan, released in October 2012, outlines a package of fundamental, systemic reforms that the Government has committed to putting in place to reduce regulatory red tape and strengthen regulatory transparency and predictability.

This Scorecard Report captures the progress made in implementing the systemic reforms in the 2012–2013 Fiscal Year. Overall, it demonstrates that the reforms are being faithfully implemented and have traction and momentum within government. It also shows progress is clearly being made and, perhaps most importantly, that a solid foundation for sustained results achievement has been built.

The One-for-One Rule

Service standards help to create a more transparent and predictable federal regulatory system, making it easier for Canadians and businesses to know what to expect in terms of the timeliness of decision making. On March 1, 2013, regulators posted new service standards for a wide range of high-volume regulatory authorizations and processes representing over 60,000 annual transactions with Canadians and businesses.

The One-for-One Rule, which came into effect on April 1, 2012, places strict controls on the growth of regulatory red tape on business. It requires regulators to offset any administrative burden from new regulatory changes with equal reductions from existing regulations. In addition, when brand new regulations are introduced that add administrative burden, an existing regulation must also be repealed.

During its first year of implementation, the Rule provided a successful, system-wide control on regulatory red tape impacting business. In fact, the Rule did more than control regulatory red tape – it reduced it by about $3 million and eliminated a net of six regulations from the government’s books in 2012–2013. It is estimated that application of the Rule in 2012–2013 will also save businesses 98,000 hours per year in time spent dealing with regulatory red tape. The above trend has continued well into 2013–2014. As of December 12, 2013, a total reduction in administrative burden of almost $20 million and a net reduction of 19 regulations had been achieved.

In 2012–2013, all portfolios that published final, GIC-approved regulatory changes in the Canada Gazette with administrative burden cost increases or decreases reduced the overall burden of their regulations. Burden relief was provided through a wide range of regulatory changes that eliminated unnecessary or redundant reporting requirements imposed on business.

The Small Business Lens

The Small Business Lens, which came into effect on February 1, 2012, requires that regulators consider small business realities and consult early with small businesses in designing regulations.

In 2012–2013, the Small Business Lens only applied to regulatory proposals under development that had yet to come forward to Cabinet for final approval. It is therefore too early to determine whether the Lens is having the intended impact. However, there were some early signs that regulators have become more sensitive to and transparent in describing the potential impact of their regulations on the small business community.

Forward regulatory plans

By introducing forward regulatory plans, the Government has taken a significant step to increase the transparency of the federal regulatory system for Canadians and businesses. These plans provide stakeholders with early notice of regulatory changes to be introduced by regulators within a 24-month period.

In spring 2013, regulators posted 32 forward regulatory plans on their Acts and Regulations Web pages. Collectively, regulators identified about 460 planned regulatory initiatives in these plans. These initiatives covered a wide range of sectors—from health and the environment, to security and trade. The vast majority of the identified initiatives (75%) were not expected to have any business impacts.

Service standards for high-volume regulatory authorizations

Service standards are a public commitment to a measurable level of performance that clients can expect under normal circumstances. The Government has committed to establishing and reporting annually on service standards for those high-volume regulatory authorizations where service standards either do not exist or are not publicly available.

In spring 2013, regulators posted service standards for 24 high-volume regulatory authorizations and processes on their Acts and Regulations Web pages. As a result, more than 60,000 annual transactions (or “touch points”) with businesses have been added to those already governed by a publicly available timeliness commitment, performance target and service feedback mechanism. This represents an important first step towards improving service performance across the federal regulatory system.

Federal Regulatory Management in Canada

The role of federal regulation in Canada

“A robust and effective regulatory system provides consistency, fairness, and transparency, and supports innovation, productivity, and competition.” - The Cabinet Directive on Regulatory Management

The Government of Canada uses regulation as a key policy instrument to enable economic activity and protect the health, safety, security, and environment of Canadians.

Regulations are a form of law. They have a binding legal effect and set out rules that usually apply generally, rather than to specific persons or situations. Regulations are made by persons or bodies to which Parliament has delegated authority, such as the Governor in Council (GIC),See footnote[2] a minister, or an administrative agency.

An effective and streamlined regulatory system contributes significantly to a competitive and resilient economy. For example, in the economic sector, regulation establishes the rules for fair markets, reduces barriers to trade through alignment with trading partners, clarifies conditions for the use of new products, services, and technologies, and fosters new investment.

Despite the importance of regulation to maintaining a fair and competitive economy, Canadians and businesses from across the country have identified a number of regulatory irritants that add unnecessary delays, costs and bureaucracy. This has a direct and negative impact on their bottom lines. Cutting regulatory red tape and reducing barriers in the regulatory system will therefore free up businesses to expand and create jobs, while cementing Canada’s reputation as one of the best places in the world to do business.

The Cabinet Directive on Regulatory Management

The Cabinet Directive on Regulatory Management (CDRM), which came into effect on April 1, 2012, applies to all federal departments, agencies, and entities (herein referred to as “regulators”) over which Cabinet has either general or specific regulation-making authority.

The CDRM requires that the Government, when regulating, adheres to the following principles:

• to protect and advance the public interest;
• to advance the efficiency and effectiveness of regulation;
• to make decisions based on evidence;
• to promote a fair and competitive market economy;
• to monitor and control the administrative burden of regulation;
• to create accessible, understandable and responsive regulation; and
• to require timeliness, policy coherence and minimal duplication throughout the regulatory process.

The Government of Canada’s regulatory reform agenda

“Red tape is like death by a thousand paper cuts. It’s a cost that leaves hundreds of thousands of small business owners frustrated. Every hour spent dealing with red tape is an hour not spent serving a customer or training an employee.  It has a huge impact on all Canadians.” Laura Jones, Senior Vice-President, Canadian Federation of Independent Business, Times and Transcript, January 14, 2012

In January 2011, Prime Minister Stephen Harper launched the Red Tape Reduction Commission. The Commission was asked to identify irritants to business stemming from federal regulation and make specific and system-wide recommendations on how to reduce the regulatory burden.

The Commission canvassed business representatives from across the country with an emphasis on identifying regulatory irritants that have a clear detrimental effect on growth, competitiveness and innovation, particularly from a small business perspective. Through these consultations, business representatives voiced frustration over duplicative regulatory requirements, high administrative costs and a lack of a customer-service orientation within government in providing regulatory services.

Overall, business representatives felt that regulators have a poor understanding of industry realities and need to pay greater attention to timeliness, predictability and accountability.

Following the release of the Commission’s "What Was Heard" Report in September 2011, its Recommendations Report was released in January 2012. The Report outlined several “systemic” recommendations to address the root causes of regulatory red tape and 90 additional department-specific recommendations to reduce or eliminate regulatory irritants.

The Red Tape Reduction Action Plan, released in October 2012, is the Government’s response to the Commission's recommendations. The Action Plan underscores the Government’s commitment to breaking down barriers to doing business in Canada and building the foundations of long term prosperity.

The Action Plan details a package of fundamental, government-wide regulatory reforms that the Government is implementing to address the Commission’s “systemic” recommendations. These systemic reforms are:

• The One-for-One Rule, which targets and strictly controls the growth of administrative burden on business imposed by regulation. More information on the Rule can be found in Chapter 3.
• The Small Business Lens, which requires that regulators take into account the needs and realities of small business when they design or change regulations. More information on the Lens can be found in Chapter 4.
• Forward regulatory plans, which provide Canadians and businesses with an early warning of regulatory changes affecting them over a 24-month period. More information on these plans can be found in Chapter 5.
• Service standards for high-volume regulatory authorizations, which drive accountability for service improvement, particularly for those authorizations and processes that impact business. More information on service standards can be found in Chapter 6.
• Interpretation policies, which provide clarity on how regulators interpret their regulations and when they can be counted on to give answers in writing to questions or concerns from stakeholders. Interpretation policies are under development and will be publicly-released later this year.

An Administrative Burden Baseline initiative, through which regulators will develop and maintain an inventory of requirements in regulation that impose administrative burden on business, thereby providing additional assurance of the Government’s commitment to monitoring and reporting on regulatory red tape. Once established, these inventories will help regulators manage their stock of regulatory requirements. Regulators will release their initial inventories of regulatory requirements by fall 2014, to be updated annually thereafter.Government-wide results

In addition, the Action Plan accepts all of the Commission’s 90 department-specific recommendations, the vast majority of which will be implemented by the applicable regulator(s) by the end of 2015–2016.

A transparent and accountable approach to reform implementation

The commitment to transparency and accountability is central to the implementation of the systemic regulatory reforms. For example, details on how the One-for-One Rule and the Small Business Lens have been applied to regulations are publicly available through the Canada Gazette. Furthermore, in spring 2013 regulators created 36 new Acts and Regulations Web pages. Although not called for in the Action Plan, these standardized Web pages are intended to make regulatory information easier to find and provide a more consistent user experience for Canadians and businesses. These Web pages also showcase a regulator’s forward regulatory plan, service standards for high-volume regulatory authorizations and other regulatory red tape reduction efforts.

The publication of an Annual Scorecard Report on the implementation of the systemic reforms further underscores the Government’s commitment to transparency and accountability. This edition of the Scorecard represents the Government’s first opportunity to report publicly on the overall results achieved so far.

The One-for-One Rule

Our commitment

“Our One-for-One Rule puts a permanent control on the size and cost of administrative burden on business.”

Tony Clement

President of the Treasury Board

April 24, 2013

Canada’s business community is concerned that without an effective way of controlling the growth of administrative burden stemming from regulation, this burden will steadily grow and will directly affect the cost of doing business in Canada.

In January 2012, the Government of Canada announced that it would implement a One-for-One Rule to target and control the growth of administrative burden (i.e., the time and resources spent by business to show compliance with government regulation) that regulations impose on business. Experience from other jurisdictions, such as the United Kingdom, strongly suggests that such a rule can be an effective way of freeing businesses from unnecessary and frustrating regulatory red tape.

The One-for-One Rule, which came into force on April 1, 2012, is imposing a new discipline across the federal regulatory system. Through the Rule, regulators are controlling administrative burden and eliminating outdated regulations in two ways:

• When a new or amended regulation increases the administrative burden on business (an “in”), regulators are required to offset—from their existing regulations—an equal amount of administrative burden cost on business (an “out”).
• Regulators must remove an old regulation every time they introduce a brand new regulation that imposes new administrative burden on business.

Under the Rule, regulators have two years to provide administrative burden relief that is at least equal to any new burden imposed through a regulatory change. The value of the administrative burden cost increases or decreases and the underlying cost assumptions are made public in the Regulatory Impact Analysis Statement (RIAS³) when the regulatory change is published in the Canada Gazette.

Summary of results: 2012–2013

Government-wide results

Administrative burden includes “planning, collecting, processing and reporting of information, and completing forms and retaining data required by the federal government to comply with a regulation.” - TBS’s Guide for the One-for-One Rule

During its first year of implementation, the One-for- One Rule successfully controlled the growth of administrative burden on business imposed through regulation. A strong supporting infrastructure within government and a solid commitment to implement the Rule were key to this success. The Government even managed to reduce the overall regulatory burden by about $3 million (see Graph 3.1). It is also estimated that the application of the Rule will save businesses 98,000 hours annually in time spent dealing with regulatory red tape.

The Rule also provided an opportunity for regulators to reduce the number of outdated regulations currently on the books while continuing to preserve the health, safety, security, and environment of Canadians. For example, Public Safety Canada repealed regulations that impose outdated rules on individuals and businesses that sponsor or participate in gun shows. By the end of 2012–2013, a net of six regulations had been eliminated under the Rule.

It should be noted that progress under the Rule has continued in 2013–2014 with a cumulative reduction in administrative burden of almost $20 million and a net reduction of 19 regulations as of December 12, 2013.

The administrative burden balances under the One-for-One Rule as of March 31, 2013, are: OUTs - $3,460,459; INs - $533,191; Net Balance - $2,927,268