In 2015, the Canadian government became the first government in the world to pass a law requiring that one regulation be removed for every new regulation introduced. The change has deep roots in a much longer running set of reforms at the provincial (state) level in Canada. In 2001 the British Columbia government announced it would cut regulation by one-third in three years. Not only did it accomplish its goal but it continues to track its regulatory requirements and guild on its early success. Earlier this year, British Columbia became the first jurisdiction in North America to legislate an annual Red Tape Reduction Day.
British Columbia is Canada’s western-most province, with a population of 4.6 million people (roughly the same population as Louisiana) and a GDP of approximately C$220 billion. Economic growth and employment in British Columbia lagged the rest of the country in the 1990s. Excessive regulation and high taxes were widely cited as major concerns by those in the business community.
In 2001, a new government was elected after campaigning on promised to improve the economy by reducing taxes and regulation. A minister of deregulation was appointed to lead the file and ensure that the government’s specific campaign promised of reducing regulation by one-third in three years was met.
The minister of deregulation chose “regulatory requirements” as his measure. A regulatory requirement is defined as “an action or step that must be taken, or piece of information that must be provided in accordance with government legislation, regulation, policy or forms, in order to access services, carry out business or pursue legislated privileges.” Notably the measure includes “requirements” found not just in regulation but also those found in legislation and forms or other government policies. It is more comprehensive in this dimension than many other measure. A few additional notes of interest:
- The first baseline count revealed 382,139 regulatory requirements across government (just counting regulations would have generated 2,200 regulations). The count was accomplished in several months with the help of some interns.
- Government departments and agencies were required to track progress against their own baselines. The counts by department were made public quarterly and discussed regularly at cabinet meetings.
- A regulatory reform checklist was put into place. The minister is required to sign off on the checklist. It includes an indication of how many regulatory requirements will be added and how many will be subtracted.
- When measuring began, it was a requirement that two regulatory requirements be removed for every one added. Currently one must be removed for every one added to maintain the reduction.
- Currently the government has achieved a 41 percent reduction relative to the 2001 baseline.
Lessons from British Columbia
Reducing the regulatory burden has proved extremely challenging. British Columbia’s model stands out for its simplicity, longevity and results. Following are some reflections on its success as well as some of its shortcoming:
- For regulatory reform to succeed it must have top level political support. B.C.’s premier (equivalent of a state governor) was a champion and appointed a minister whose only job it was to oversee the reforms.
- It is hard to lose weight without stepping on a scale. A differentiating factor for B.C.’s model was a clear measure, with a reduction (and subsequent maintenance) target.
- Requiring the elimination of existing regulatory requirements before new ones can be adopted engaged the bureaucracy in becoming part of the solution. In B.C. each agency is responsible for tracking, reporting, and monitoring its own progress. This decentralized approach helped create buy-in. The minister of deregulation offered guidance, support and feedback about which regulations were problematic based on extensive consultation with the private sector.
- Language matters. In B.C. “deregulation” worked initially in the context of a struggling economy with excessive regulation. It has since changed its language to “red tape reduction.” Red tape reduction helps create clarity in necessary government rules are not going to be eliminated. In hindsight, this term could have been used right from the beginning to more clearly capture what the government was trying to do.
- Small business advocacy was important in championing B.C.’s reforms and particularly critical in ensuring they survived past 2004, when the initial one-third reduction target was met.
- One of the short comings of the B.C. model is that it does not address a critical component of what is often felt by citizens as red tape: poor government service (confusing language on forms, long wait times, etc.) However, the B.C. government recently legislated a Red Tape Reduction Day. The consolation around what to announce during this day focused heavily around improving government customer service. How this will be measured over time has yet to be determined.