Businesses rank being 'stifled by red tape' as more of a threat than Trump tariffs, new report finds

OTTAWA — Canada is being “stifled by red tape” so much that businesses now rank excessive regulation as more of a threat to investment than the Trump tariffs, a new report from a leading Canadian business group has found.

The Business Council of Canada, a non-partisan organization that represents businesses across the economy, found that Canada’s regulatory burden is growing rapidly, with the number of government requirements now topping 321,000, an increase of 37 per cent since 2006.

The business group says unnecessary red tape isn’t just annoying and a waste of time and money but also directly affects the economy. Smarter, more efficient regulation, meanwhile, can allow companies to trim costs without sacrificing the environment, worker safety or other social protections.

The BCC says the morass shaves 1.7 per cent off the economy, 9 per cent from business investment, and 1.3 per cent from total employment.

The list of regulations and requirements that the business group deems expendable includes permits for minor adjustments, long delays in processing paperwork, contradictions between jurisdictions, and unclear rules. The report identifies a wide range of examples of dubious red tape, including multiple and overlapping environment, social and governance (ESG) frameworks, lags of nearly 250 days to get a building permit, and overlapping federal and provincial privacy legislation.

“Our productivity is sagging, business investment is lacklustre, and Canada’s most valuable trade relationship — with the United States — is in crisis,” the report says. “The most effective way to counter trade instability is to ensure our economy is as efficient and competitive as it can possibly be.”

Don Drummond, a former high-ranking executive with the Department of Finance and chief economist at TD Bank, said Canadian governments do not seem to grasp the severity of Canada’s productivity problem and how that directly affects the standard of living. The Trudeau years left the Canadian economy in “terrible shape,” Drummond said, and it doesn’t look so far like his successors have the courage to take the bold steps that are needed.

“One way or another, we’re coming to a disaster.”

Recent news has not been positive as the Canadian economy is showing clear wounds from the U.S. tariffs that have trimmed exports to Canada’s most important market. Statistics Canada reported today that Canada lost 66,000 jobs in August, as the unemployment rate jumped to 7.1 per cent. That figure represents a significant increase over the 6.9 per cent posted in July and Canada’s highest unemployment rate since 2016.

But the federal government has given some indication that it views cutting red tape — and unlocking the Canadian economy more broadly — as a priority.

The federal government launched a red tape review of its operations in early July. Ministers were told to review regulations in their portfolios and were to report back within 60 days on their progress and plans. Those progress reports are supposed to be published by Friday , with next steps to be tracked by the new Red Tape Reduction Office.

The government has also passed legislation designed to allow big projects such as ports, pipelines and mines to be developed more quickly. The BCC says it can take two decades to get a mine in Canada approved, for example, one of the slowest approval processes in the world. But it’s not the first time that Ottawa — or a number of provinces and territories — has said that reducing red tape is a priority.

The federal Treasury Board Secretariat includes a team whose job is to implement the Red Tape Reduction Act, legislation passed a decade ago to insist that the government cut one regulation for every one it adds.

In 2024, the federal government’s fall economic statement proposed a new Red Tape Reduction Office to accelerate the elimination of unneeded regulations. But that office according to the BCC’s report, is still a work in progress.

National Post

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