Goldhawk Fights Back: Bureaucratic red tape costs business $30 billion a year

Zoomer | January 12th, 2010

This is a weekly column by Dale Goldhawk, Canada’s best-known consumer advocate. A journalist, author and broadcaster, Dale hosts Goldhawk Fights Back For You, on AM 740 or at AM740 ZoomerRadio, Monday through Friday from 11 am to 1 pm, in the eastern time zone. Visit his website at www.goldhawk.com.

I remember those halcyon days when the Canadian loonie reached parity with the American dollar. It was a boon to Canadians travelling south of the border but it soon triggered questions about the buying power of both currencies.

Why, we asked, did Canadian goods and services still cost substantially more than the same goods and services in the United States. Well, we were told it would take time for Canadian prices to come down. And we were also told it costs business much more to operate in Canada than in the United States.

And now, at least according to the Canadian Federation of Independent Business, we have a working number for that high cost — $30 billion a year.

That’s how much Canadian business pays to satisfy all the regulations required by government red tape and bureaucracy.

Catherine Swift, the President of the CFIB, concedes that some of that red tape is necessary, especially when it comes to health, safety, the environment and basic things such as collection of taxes and payroll.

“The majority of business owners still believe that a 10 to 25 per cent reduction in the regulatory burden would be possible without sacrificing the public interest,” Swift told me. “Imagine the productivity, jobs, higher wages and lowered prices that would result, especially as we emerge from a recession,” she added.

The CFIB also believes that the 30 billion dollar cost pours all kinds of cold water on competitiveness in the marketplace. Says Swift: “I hear this story all the time. Entrepreneurs enter the marketplace and then discover, to their dismay, the true cost of business regulation.” The CFIB says 25 per cent of its members say they might not have gone into business if they had known what the cost of servicing government regulation would be.

And the cost of dealing with government is much more expensive for the smallest business operations.

According to the CFIB, the smaller the business, the harder they get hit by annual regulatory costs. Here’s a comparison: businesses with more than 100 employees spend a yearly average of $1,117 per employee to comply with regulations. The cost per employee rises sharply as the number of employees goes down. For example, businesses with 0 to 4 employees pay an average of $5,825 per employee on regulation.

For the provinces of Ontario and British Columbia, where the dreaded Harmoized Sales Tax imposed on July first this year, Swifet believes the cost of red tape bureaucracy could drop. “In fact,” says Swift, “the cost of collecting and paying the sales tax in Ontario if the highest and the most complicated in the entire country. When the Feds start collecting the HST, I’m hoping the cost will go down.”

The CFIB is proposing a 10-point plan for regulatory reform, including “making regulatory accountability a political priority and appoint a minister responsible.”

Sure. Like that’s going to happen. What sensible politician would want to be known as the Minister of Red Tape?

A better idea would be for the Federal government to appoint an Ombudsman for Red Tape. We already have ombudsmen for banking, for telephone service and for taxpayers — why not an ombudsman whose job it is to hunt down useless red tape with a big pair of scissors? I like that idea.

READ OTHER COLUMNS BY DALE GOLDHAWK

Goldhawk Fights Back: Getting rich quick on the market

Goldhawk Fights Back: Secret Shoppers Left Holding the Bag

Goldhawk Fights Back: Keeping bankers at bay

Gemini award nominee, journalist and broadcaster, Dale Goldhawk has earned Canada’s trust by his four decades of work exposing fraud and greed in the marketplace. To read more of his articles, go to www.Goldhawk.com (now part of the ZoomerMedia family of websites).

Don’t miss Goldhawk Fights Back , on the New AM740 Monday to Friday from 10 a.m. until 1 p.m.