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The 2012–2013 Scorecard Report: Implementing the Red Tape Reduction Action Plan

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4. The Small Business Lens

“This [the Small Business Lens] will enable small business owners to judge for themselves, and to comment upon, the government’s efforts to minimize regulatory burden.”

Government of Canada, Red Tape Reduction Action Plan, 2012

4.1 Our commitment

Small businesses account for 98% of all businesses in Canada See footnote [5]. They play a vital role in creating jobs and generating wealth in communities across the country. As such, the Government of Canada must be sensitive to their challenges in complying with regulation, which are magnified due to the fact that small businesses generally have fewer resources to dedicate towards achieving regulatory compliance.

The Small Business Lens, which officially came into effect on February 1, 2012, requires that regulators consider small business realities and consult early with small businesses in designing regulations. This is intended to hardwire increased sensitivity to small business impacts into the regulatory development process.

The Small Business Lens applies to regulatory proposals that impact small business and that have nationwide cost impacts of over $1 million annually. The Lens places the burden of proof on regulators to demonstrate that they have done what they can to minimize direct administrative and compliance costs on small business without compromising the health, safety and security of Canadians or the Canadian environment or economy.

A small business is defined as “any business, including its affiliates, that has fewer than 100 employees or generates between $30,000 and $5 million in annual gross revenue.”

- TBS’s Guide for the Small Business Lens

Regulators must also include a summary of their analysis of small business impacts within the RIAS when the regulatory change is published in the Canada Gazette. This enables small businesses to judge for themselves and comment on the Government’s efforts to minimize their regulatory burden.

4.2 Summary of results: 2012–2013

In 2012–2013, the Small Business Lens only applied to regulatory proposals under development that had yet to come forward to Cabinet for final approval. This is due to the fact that regulations with significant business impacts can take many months or even years to design and implement due to the need to thoroughly analyze and consult with stakeholders on the underlying problems that these regulations are attempting to address.

Recognizing this, it is still too early to draw conclusions as to whether the Lens is having the intended effect. As more regulatory proposals are brought forward to Cabinet for approval, it is expected that a better picture of efforts to reduce the regulatory burden on small businesses will emerge.

However, there were some early signs that regulators were being more sensitive to small business impacts in designing their regulations in 2012–2013. For example:

  • Under the Regulations Amending the Canadian Aviation Regulations, Transport Canada provided small businesses with more time to comply with the requirement to install an Enhanced Altitude Accuracy function in private turbine-powered aeroplanes.
  • Under the Regulations Amending the Sulphur in Diesel Fuel Regulations, Environment Canada generated savings for small businesses in a number of ways.  For example, the department reduced reporting requirements for importers of small volumes of diesel fuel into Canada and allowed for the electronic submission of information.

Regulators have also become more transparent in describing small business impacts when their regulations are published in the Canada Gazette. In 2012–2013, more than 40 final, GIC-approved regulatory changes included an analysis of these impacts in their published RIAS.

Did you know?

Management consulting firm Ernst and Young ranked Canada among the top five places in the world to start a business in their 2013 Entrepreneurship Barometer, a report that studies and compares conditions for business start-ups in G20 countries.

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