GREEN: Government red tape strangling Canada’s economy (2024)

There are many reasons for Canada’s dismal economic conditions — including layer upon layer of regulation. Indeed, Canada’s regulatory load is substantial and growing. Between 2009 and 2018, the number of regulations in Canada grew from about 66,000 to 72,000. These regulations restrict business activity, impose costs on firms and reduce economic productivity.

Author of the article:

Kenneth Green

Published May 22, 2024Last updated 2hours ago2 minute read

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GREEN: Government red tape strangling Canada’s economy (1)

One does not have to look too deeply into recent headlines to see Canada’s economic conditions are declining and consequently eroding the prosperity and living standards of Canadians. Between 2000 and 2023, Canada’s per-person GDP (a key indicator of living standards) has lagged far behind its peer countries. Business investment is also lagging, as are unemployment rates across the country particularly compared to the U.S.

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GREEN: Government red tape strangling Canada’s economy Back to video

There are many reasons for Canada’s dismal economic conditions — including layer upon layer of regulation. Indeed, Canada’s regulatory load is substantial and growing. Between 2009 and 2018, the number of regulations in Canada grew from about 66,000 to 72,000. These regulations restrict business activity, impose costs on firms and reduce economic productivity.

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According to a recent “red tape” study published by the Canadian Federation of Independent Business (CFIB), the cost of regulation from all three levels of government to Canadian businesses totalled $38.8 billion in 2020, for a total of 731 million hours — the equivalent of nearly 375,000 full-time jobs. If we apply a $16.65 per-hour cost (the federal minimum wage in Canada for 2023), $12.2 billion annually is lost to regulatory compliance.

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Of course, Canada’s smallest businesses bear a disproportionately high burden of the cost, paying up to five times more for regulatory compliance per-employee than larger businesses. The smallest businesses pay $7,023 per employee annually to comply with government regulation while larger businesses pay a much lower $1,237 per employee for regulatory compliance.

And the Trudeau government has embarked on a massive regulatory spree over the last decade, enacting dozens of major regulatory initiatives including Bill C-69 (which tightens Canada’s environmental assessment process for major infrastructure projects), Bill C-48 (which restricts oil tankers off Canada’s west coast) and electric vehicle mandates (which require all new cars be electric by 2035). Other examples of government red tape include appliance standards to reduce energy consumption from household appliances, home efficiency standards to reduce household energy consumption, banning single-use plastic products, “net zero” nitrous oxide emissions regulation, “net zero” building emissions regulations, and clean electricity standards to drive net emissions of greenhouse gases in electricity production to “net zero” by 2035.

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Clearly, Canada’s festooning pile of regulatory red tape is badly in need of weeding. And it can be done. For example, during a deregulatory effort in B.C., which appointed a minister of deregulation in 2001, there was a 37% reduction in regulatory requirements in the province by 2004.

Rather with plowing ahead with an ever-growing pallet of regulations to be heaped upon Canadian businesses and citizens, government should reach for the garden shears and start reducing the most recent regulatory expansions (before they have time to do too much harm), and then scour the massive strangling forest of older regulations.

Whacking through the red tape would go a long way to help Canada’s economy out of its dismal state and back into competitive ranges with its fellow developed countries and our neighbours in the U.S.

Kenneth Green is a senior fellow at the Fraser Institute.

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    GREEN: Government red tape strangling Canada’s economy (2024)

    FAQs

    What drives the Canadian economy? ›

    International trade, including both exports and imports, is a large component of Canada's economy, each making up about one-third of GDP. Canada's largest trading partners are the U.S., China, and the U.K. The three largest industries in Canada are real estate, mining, and manufacturing.

    What stage of the business cycle is Canada currently in 2024? ›

    The Canadian economy will begin 2024 still mired in recession as the lagged impact of higher interest rates continues to filter through. However, we expect a modest recovery in the latter half of 2024 as the Bank of Canada begins to cut interest rates, disinflation continues, and global growth improves.

    How much is Canada's economy in trillion? ›

    $2.118 trillion

    What is Canada's largest contributor to the economy? ›

    Ontario (contribution of +0.60 percentage points) was the largest contributor to Canada's economic growth, accounting for almost half of the 1.2% increase in national GDP in 2023.

    Who controls Canada's economy? ›

    The Department of Finance Canada is responsible for the overall stewardship of the Canadian economy.

    How is Canada's economy right now? ›

    Canada's Economy is Outperforming Expectations

    Canada avoided the recession expected by many forecasters (Chart 3), with real GDP rising by 1.1 per cent in 2023, over three times higher than what was forecasted in Budget 2023 (0.3 per cent). Canada's economy is growing.

    How rich is Canada in 2024? ›

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    GDP PPP Estimates: All Countries2023 Estimate Billions, Int$2024 Estimate Billions, Int$
    Saudi Arabia$2,582.43$2,649.58
    Spain$2,392.62$2,438.08
    Egypt$2,234.35$2,301.38
    Canada$2,144.68$2,170.41
    109 more rows

    What is the cost of living in Canada 2024? ›

    The cost of living in Canada is rising, so couples need a combined income that keeps pace with these increases to maintain a comfortable lifestyle. On average, couples in Canada can expect to spend between $3,500 and $5,000 per month in 2024 to cover their living expenses.

    Is Canada's economy stronger than the US? ›

    Canada has not altered its fundamental and longstanding position: It is somewhat poorer than the US, but it is progressing at a more or less typical pace. First, a note on the numbers: Canadian GDP per capita has not regressed to where it was in 2014.

    Is Canada the richest country in the world? ›

    Answer: China is the world's most prosperous country. It just surpassed the United States as the world's most prosperous country. Answer: China, the United States, Germany, France, the United Kingdom, Canada, Australia, Japan, Mexico, and Sweden are the world's wealthiest countries, according to McKinsey & Co.

    What is the main source of economy in Canada? ›

    In Canada, the service sector makes up two-thirds of the economy. Real estate, manufacturing, and natural resources are all also major sectors of the economy.

    What factors lead to economic growth in Canada? ›

    Canada's economy is growing. Despite some temporary factors such as the Quebec public sector strikes late in 2023, real GDP rose by 1 per cent on an annualized basis in the fourth quarter, driven by strong global demand for Canadian exports, as well as resilient demand from households for goods and services.

    What is the top 5 income in Canada? ›

    To be in the top 5%, Canadians needed to have a total income of slightly above $102,300 and to be in the top 1% required just over $191,100, nearly seven times the national median income.

    What are Canada's top 5 exports? ›

    Canada Exports – Top Categories
    • Crude oil—$68 billion (USD)
    • Cars—$41 billion (USD)
    • Gold—$15 billion (USD)
    • Processed petroleum oil—$12 billion (USD)
    • Car parts and accessories—$11 billion (USD)
    • Petroleum gas—$9 billion (USD)
    • Medications—$7 billion (USD)
    • Aircraft and spacecraft—$7 billion (USD)
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