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Government red tape strangling Canada’s economy

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4 minute read

From the Fraser Institute

By Kenneth P. Green

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 fulltime jobs.

One does not have to look too deeply into recent headlines to see that 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 United States.

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.

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 fulltime 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.

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.

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 British Columbia, which appointed a minister of deregulation in 2001, there was a 37 per cent 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.

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2025 Federal Election

Alcohol tax and MP pay hike tomorrow (April 1)

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By Franco Terrazzano

The Canadian Taxpayers Federation is calling on all party leaders to stop a pair of bad policies that are scheduled to happen automatically on April 1: pay raises for members Parliament and another alcohol tax increase.

“Party leaders owe taxpayers answers to these two questions: Why do you think you deserve a pay raise and why should Canadians pay higher taxes on beer and wine?” said Franco Terrazzano, CTF Federal Director. “Politicians don’t deserve a raise while millions of Canadians are struggling.

“And the last thing Canadians need is another tax hike when they pour a cold one or uncork a bottle with that special someone.”

MPs give themselves pay raises each year on April 1, based on the average annual increase in union contracts with corporations with 500 or more employees.

The CTF estimates tomorrow’s pay raise will amount to an extra $6,200 for backbench MPs, $9,200 for ministers and $12,400 for the prime minister, based on contract data published by the federal government.

After tomorrow’s pay raise, backbench MPs will receive a $209,300 annual salary, according to CTF estimates. A minister will collect $309,100 and the prime minister will take home $418,600.

Meanwhile, the alcohol escalator automatically increases excise taxes on beer, wine and spirits every year on April 1, without a vote in Parliament. Alcohol taxes will increase by two per cent tomorrow, costing taxpayers about $40 million this year, according to Beer Canada estimates.

The alcohol escalator tax has cost taxpayers more than $900 million since it was imposed in 2017, according to Beer Canada estimates.

“Politicians are padding their pockets on the same day they’re raising beer taxes and that’s wrong,” Terrazzano said. “If party leaders want to prove they care about taxpayers, they should stop the MP pay raises.

“And if party leaders care about giving Canadian brewers, distillers and wineries a fighting chance against tariffs, it’s time to stop hitting them with alcohol tax hikes year after year.”

The CTF released Leger polling showing 79 per cent of Canadians oppose tomorrow’s MP pay raise.

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2025 Federal Election

Poilievre To Create ‘Canada First’ National Energy Corridor

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From Conservative Party Communications

Poilievre will create the ‘Canada First’ National Energy Corridor to rapidly approve & build the infrastructure we need to end our energy dependence on America so we can stand up to Trump from a position of strength.

Conservative Leader Pierre Poilievre announced today he will create a ‘Canada First’ National Energy Corridor to fast-track approvals for transmission lines, railways, pipelines, and other critical infrastructure across Canada in a pre-approved transport corridor entirely within Canada, transporting our resources within Canada and to the world while bypassing the United States. It will bring billions of dollars of new investment into Canada’s economy, create powerful paycheques for Canadian workers, and restore our economic independence.

“After the Lost Liberal decade, Canada is poorer, weaker, and more dependent on the United States than ever before,” said Poilievre. “My ‘Canada First National Energy Corridor’ will enable us to quickly build the infrastructure we need to strengthen our country so we can stand on our own two feet and stand up to the Americans.”

In the corridor, all levels of government will provide legally binding commitments to approve projects. This means investors will no longer face the endless regulatory limbo that has made Canadians poorer.  First Nations will be involved from the outset, ensuring that economic benefits flow directly to them and that their approval is secured before any money is spent.

Between 2015 and 2020, Canada cancelled 16 major energy projects, resulting in a $176 billion hit to our economy. The Liberals killed the Energy East pipeline and passed Bill C-69, the “No-New-Pipelines” law, which makes it all but impossible to build the pipelines and energy infrastructure we need to strengthen the Canadian economy. And now, the PBO projects that the ‘Carney cap’ on Canadian energy will reduce oil and gas production by nearly 5%, slash GDP by $20.5 billion annually, and eliminate 54,400 full-time jobs by 2032. An average mine opening lead time is now nearly 18 years—23% longer than Australia and 38% longer than the US. As a result of the Lost Liberal Decade, Canada now ranks 23rd in the World Bank’s Ease of Doing Business Index for 2024, a seven-place drop since 2015.

“In 2024, Canada exported 98% of its crude oil to the United States. This leaves us too dependent on the Americans,” said Poilievre. “Our Canada First National Energy Corridor will get us out from under America’s thumb and enable us to build the infrastructure we need to sell our natural resources to new markets, bring home jobs and dollars, and make us sovereign and self-reliant to stand up to Trump from a position of strength.”

Mark Carney’s economic advice to Justin Trudeau made Canada weaker while he and his rich friends made out like bandits. While he advised Trudeau to cancel Canadian energy projects, his own company spent billions on pipelines in South America and the Middle East. And unlike our competitors Australia and America, which work with builders to get projects approved, Mark Carney and Steven Guilbeault’s radical “keep-it-in-the-ground” ideology has blocked development, killed jobs, and left Canada dependent on foreign imports.

“The choice is clear: a fourth Liberal term that will keep our resources in the ground and keep us weak and vulnerable to Trump’s threats, or a strong new Conservative government that will approve projects, build an economic fortress, bring jobs and dollars home, and put Canada First—For a Change.”

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