May 29, 2015 - 9:30am

What the U.S. Can Learn from Canada about Regulatory Reform


Senior Editor, Digital Content

bloomberg_canada_flags_800px.jpg

Canadian flags in a can.
Photo credit: Photographer: Brent Lewin/Bloomberg.

Most Americans think we’re overregulated. With the federal government issuing over 180,000 regulations since 1976, you can understand why.

Worries about red tape aren’t just an American phenomenon. Our neighbor to the north came up with one way to lasso in the Regulatory State. Since 2012, Canadian federal regulators have been operating under a “One-for-One” rule:

[F]or every new regulation added that imposes an administrative burden on business, one must be removed.

NPR reports that it has had a positive effect on Canada’s business climate:

[Canadian cabinet minister Tony] Clement says small businesses are logging less time on paperwork - a reduction of hundreds of thousands of hours so far. Nineteen federal regulations have been eliminated.

Laura Jones of Canadian Federation of Independent Business writes, “In 2012-13, it saved small businesses 98,000 hours and $20 million.” [H/t Greg Markle]

[Earlier this year, I noted that Australia is also engaging in a regulatory reform effort by emphasizing cost-benefit analysis and adequate public consultation and review.]

Would Canada’s approach work in the U.S.? While the rule is interesting and is having some effect, it misses an important point about federal regulations. It’s not the sheer number of regulations that we should worry about as much as whether regulations accomplish what Congress intends in a cost-effective manner.

For example, EPA regularly practices bait and switch by issuing costly air pollution regulations—like those for mercury--that claim massive benefits. But in the fine print you find that the vast majority of the benefits come, not from the primary pollutant the regulation is designed to reduce, but fine particulate matter (PM). This pollutant, as William Kovacs points out, “is already controlled by its own stringent air quality standards, and is currently well below (25-30% below) the level that EPA itself considers safe for virtually every American.”

Here are two other examples:

A plus of the one-for-one approach is it would force regulators to reexamine old regulations to see if 1) they’re still necessary; 2) they’re working at intended; 3) there are better ways to meet the desired end. That’s better than the Obama administration’s record of regulatory look-back.

But taming the Regulatory State needs more than just a regulatory budget. It requires a systemic approach that restores accountability, transparency, and meaningful public input. A better process will result in better regulations.

More Articles On: 

About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.