Regulatory Reform

If Canada Can We Can

How America can replicate Canada’s successful regulatory reform

Government officials have long stymied businesses and innovators with overreaching, harmful, or outdated regulations called by the disgruntled regulatees “red tape.” QuantGov’s regulation tracker quantifies that red tape: US businesses face about 1.08 million federal regulations and as many as 307,636 additional regulations from their home state. A recent study by Laura Jones of the Mercatus Institute shows how America can tackle its red tape problem in a thoughtful but committed way using British Columbia as a template.

During the 1990s, British Columbia grossly over-regulated its economy bringing economic stasis and earning the period its reputation as the “dismal decade.” The government even regulated the number of par-4 holes per golf course and the size of TVs at restaurants. British Columbians began to recognize the connection between suffocating regulations and economic underperformance, electing a coalition that promised to reduce the regulatory burden by a third by 2004.

The new coalition created the Deregulation Office to manage regulatory reduction, defined and targeted the scope of the regulatory problem, and empowered the very agencies responsible for regulation to oversee the required regulatory cuts. By allowing agencies the flexibility to decide how to adhere to regulation reductions, their roles shifted “from regulation ‘maker’ to regulation ‘manager,’” as one official reflected. By asking agencies to think critically about the regulations they oversee and be cognizant of regulatory burdens as they decided how to cut regulations, British Columbia’s reformers boosted buy-in across government and enabled the success of their agenda.

The policy proved so effective that by 2004 regulatory requirements were reduced by 37%. BC’s economy rebounded from its terrible slump, becoming one of the most dynamic provinces in Canada. Once regulation levels were manageable, they shifted to a “1 in 1 out” policy. For every new regulation, an old regulation must be cut. Such as shift both prevents the reemergence of red tape and safeguards good and necessary regulations that need not be cut. BC’s striking turnaround inspired Canada’s national government to adopt the “1 in 1 out” policy to halt the growth of red tape.

Author Laura Jones highlights 6 key takeaways for legislators wanting to replicate British Columbia’s success:

  1. “Language Matters”: How governments talk about and define regulation makes a difference in how they address and approach reform.
  2. “Political Leadership Matters”: Reform requires strong political champions.
  3. “A Clear, Credible, Simple Measure Matters”: This enables politicians, regulators, citizens, and businesses to ascertain the extent of the red tape problem and set attainable reform goals.
  4. “Hard-cap Constraints on Regulators Matter”: Specific cut requirements force agencies to make the key decisions that will choose effective and efficient regulation over redundant and excessive regulation.
  5. “Institutionalizing Red Tape Control Matters”: Gains made must be protected into the future.
  6. “Outside Advocacy Can Make All the Difference”: Businesses and individuals can push the government toward regulatory reform.

ALEC model policy can help legislators interested in red tape reduction in their own states. The Government Red Tape Cap Act implements a “1 in 2 out” policy on new regulations and requires the legislature to set a reduction goal (aiming for 35%). The model Administrative Procedures Act would institute better legislative oversight of regulation development from the start. Both model policies would reduce present and future red tape by making the regulatory process more thoughtful and accountable.

Too often, regulation is developed in a silo with little consideration of the wider policy and economic implications. Outdated regulations are rarely reconsidered, refined, or removed. Instead, regulations pile on top of each other and become duplicative and unclear. In British Columbia, the government shifted the dynamics and incentivized the creation of good regulations and the cutting of poor ones. ALEC model policy provides similar structure for those wanting to free economies from the clutches of excessive red tape.

Don’t miss the ALEC Annual Meeting workshop on regulatory overreach on the afternoon of Wednesday, August 14 in Austin. Click here for more information on the conference and to get registered.


In Depth: Regulatory Reform

In his first inaugural address, Thomas Jefferson said that “the sum of good government” was one “which shall restrain men from injuring one another” and “shall leave them otherwise free to regulate their own pursuits of industry.” Sadly, governments – both federal and state – have ignored this axiom and…

+ Regulatory Reform In Depth