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All Tangled Up: Cutting Through Ontario’s Red Tape

Published on
November 8, 2017

Fairly or not, there are rumblings about the cost and difficulty of doing business in Ontario. Hydro rates are a perennial issue; cap-and-trade has added a new business consideration/cost; an increase in the minimum wage to $14/hour is on the way in January, with an increase to $15/hour in 2019.

If you operate a business in Ontario, you face regulation of some sort every day. Then you’ll be glad to know Bill 154, Cutting Unnecessary Red Tape Act, 2017 passed Third Reading on November 1 and will soon come into force. This is a piece of legislation that could have a positive impact on every business in Ontario. And a government relations strategy can help ensure your organization will benefit.

What’s It All About?

Leaving aside the legislation title’s implication of some necessary red tape, the main part of the Act is a commitment to reduce the regulatory burden in a variety of ways:

-        A requirement for all ministries to offset $1.25 in old, unnecessary regulatory costs for any $1 of new administrative costs introduced. Essentially, whenever a Government ministry is going to introduce a new administrative cost through a regulatory measure, that Ministry is now required to conduct an analysis to determine what the administrative cost is on business. That same Ministry then has 24 months to come up with an offset that yields administrative savings of 125% of the new costs. The only restriction identified is regulation needed to protect health, the environment or worker safety (which was added as an amendment at the Committee stage to provide some assurances this regulatory bonfire wouldn’t lead to another Walkerton or similar tragedy).

-        Easier arrangements for small business. Particular attention is to be paid to the burden any regulation will place on small business. In theory, this provision opens up the possibility of creating a different regulatory regime for small businesses. In addition, Finance Minister Sousa has foreshadowed a suite of measures to assist small business will be part of the Fall Economic Statement on November 14.

-        Increased harmonization with national or international standards.

-        Recognizing businesses with good compliance records and reducing their costs by reducing their requirements.

-        A commitment any documentation that has to be submitted to the Ontario Government will have an electronic submission option.

-        Reviewing licence and registration fees with a goal of providing some level of relief for small and medium-sized businesses.

The legislation also includes a number of smaller, specific measures to clean-up identified regulatory issues and effectively modernize regulation.

What Does It Mean for You?

Certainly, there’s at least some political impetus behind Bill 154’s introduction and passage (there is an election on June 7, 2018, after all). These measures are meant to be an offset for the employment standard changes and minimum wage increases that are part of Bill 148, currently making its way to Royal Assent (they were first announced by the Government shortly before the minimum wage increase announcement).

But, none of this means this legislation disappears once the election’s done.

There are definitely a number of questions that still need to be sorted out, such as:

-        Who will conduct the regulatory analysis? How will the regulatory analysis be done?

-        What is the start date for this regulatory offset commitment?

-        What is viewed as a small business? What particular arrangements will be made for them?

-        How exactly will the offset be determined? To what extent can industry guide or participate in this process?

-        What sort of recognition will be given to those with good compliance records?

As with most legislation these days, the key answers will come in the regulations. Consultations on a draft regulation closed on October 30. That draft contained some guidance, but it wasn’t fully fleshed out and it came before the amendment about regulatory offsets not harming health, the environment or worker safety. So, much is still to be determined.

There is a major opportunity here to help shape your regulatory environment – or, at the very least, find a way to alleviate your most difficult, expensive and/or burdensome regulatory requirements. With many government cuts of recent years coming in the policy area, civil servants – the ones advising the political officials and generally leading this design stage – are more dependent on those in the field to inform them of the current situation, and emerging trends, than they used to be.

Over the years, I’ve learned the importance of playing offence – finding ways to make regulatory compliance part of your organization’s strategic advantages or, even better, getting in front of civil servants and politicians to share your story before the decision to regulate has been made.

Governments are regulating because they believe it is the best way to achieve their political and policy objectives, not because they want to negatively impact the economy. Often, informing officials of unintended consequences can lead to regulatory changes that avoid those outcomes. But it needs to be done before the train has left the station. In the case of Bill 154, it will be important to: identify to government any new administrative burdens that are being created; help government to understand and undertake the impact analysis; and then to work with government to obtain the regulatory offset that would be most beneficial.

To be clear, such engagement is all about a relationship with (and a strategy for engaging) government, not even necessarily political officials.

It’s an area of particular expertise for Sussex and one we’d love to help your organization with. Please do not hesitate to contact me for more information on this important change in Ontario’s regulatory environment.