Canadian red tape is worse than Trump tariffs, say industry groups

Canada faces other domestic challenges such as stagnant productivity, anti-competitive behaviour and a tax regime that repels investment and inhibits the economy. Photo by COLE BURSTON/AFP via Getty Images

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Forestry, oil and gas, and auto industry representatives told the FT they are frustrated at the pace of regulatory reform that is central to Carney’s efforts to insulate Canada from Trump’s devastating U.S. trade war.

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“Ottawa needs to align its regulatory policy objectives with economic reality,” said Derek Nighbor, president of the Forest Products Association of Canada, which represents one of the country’s largest employers, contributing $19.9 billion of its GDP.

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Nighbor said over the past decade overlapping government policies, mostly environmental regulation, have “chilled strategic investments” and become “a productivity and competitiveness killer, driving away investment”.

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Last week, Carney announced a “first-ever” investment summit in Toronto for September as part of the government’s “ambitious plan to catalyze US$1 trillion in total investment in Canada over the next five years”.

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But industry groups warn this plan is impeded by the slow implementation of a red-tape review that found nearly 500 ways to streamline services, cut duplication and reduce costs when it was launched last July.

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“I’ve heard of resource projects that require hundreds of permits, due to federal, provincial and municipal requirements,” said David Pierce, the Canadian Chamber of Commerce’s vice-president of government relations.

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“There’s a lot of concern that these changes need to be made quickly so that projects can start and Canada can be competitive again in this new world,” he added.

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“Ottawa is focused on helping a few big players, with every other unwashed business owner stuck in the old, unworkable system.”

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Canadian businesses face approximately US$51.5 billion in compliance costs annually, just under US$18 billion of which is considered “red tape”, the CIFB reported earlier this year.

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“There’s clearly a disconnect between statements and implementation,” said Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association. “The longer this goes on, with no resolution on U.S. tariffs, it will have real implications for investments in this country.”

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This week, Rogers Communications, one of Canada’s top two telecommunication companies, announced approximately US$1 billion worth of spending cuts, or 30 per cent, blaming in part the “punitive” regulatory environment.