Too much salt spoils the soup

Excessive government regulation and red tape reaches a tipping point

Each week, a small group of Official Opposition MLAs get together to talk through a specific policy issue. As part of the process, a short commentary is compiled and then edited. Editorial committee members include DREW BARNES, Cypress Medicine Hat; SCOTT CYR Bonnyville Cold Lake; GRANT HUNTER, Cardston-Taber-Warner; RON ORR, Lacombe-Ponoka; MARK SMITH, Devon-Drayton Valley; RICK STRANKMAN, Drumheller-Stettler; and WES TAYLOR, Battle River Wainwright.

Everyone knows what it’s like to be busily doing something, only to have someone show up who wants to chitchat or distract you. Few of us would be rude at such times, but when it’s time to work, most of us aren’t interested in needless interruptions.

Business people are the same. Alberta businesses in the midst of building, developing, and serving the public don’t want regulators interfering, interrupting, or otherwise stonewalling productivity.

Unfortunately, this is exactly what happens when excessive government regulation and red tape reach a tipping point, which according to the Canadian Federation of Independent Business (CFIB), has already occurred in Alberta. When it comes to needless provincial red tape and excessive regulation, Alberta is in a league of its own. On CFIB’s annual red tape evaluation scale, Alberta is the only provincial government with an outright F.

How much power do government regulators have over the business community? Nobel Prize-winning economist Friedrich Hayek described it by saying that the power multi-millionaires have over us, whether they’re our neighbours or employers, is much less than the smallest bureaucrat who wields the coercive power of the state and decides whether and how we’re allowed to live or work.

Eric Nuttall, a Canadian investment manager involved in directing billions of dollars (much of it toward the oil and gas sector), describes the impact of current over-regulation on business in Canada and Alberta as profound “regulatory headwinds.” He indicates that these “headwinds,” are caused by provincial and federal governments implementing carbon taxes, royalty regime changes, and needless and useless regulations.

Nuttall says investors know that there is so much red tape and over-regulation in Canada that it takes 10-12 years to get a pipeline approved (and even then, there will be obstacles and interference). In the U.S. and Texas, he points out, a company can apply for a pipeline permit and be digging into the ground 6-9 months later.

One innovative individual who speaks eloquently about the perils of needless regulation is Maurice McTigue, New Zealand’s former Ambassador (High Commissioner) to Canada. Prior to arriving in Canada, McTigue had been a Cabinet Minister in a government that swept away mountains of red tape. He was one of the architects of a regulatory reform process referred to as the “New Zealand Miracle.”

McTigue says that when he and his colleagues took over, in just one government department, the regulation book was 25 inches thick. After deregulation, the new rules totaled 348 pages. “We [even] rewrote all of the farm acts, and the occupational safety and health acts,” he said.

McTigue said: “We brought our brightest brains together and told them to create the best possible environment for industry to thrive. These new laws, in effect, repealed the old, which meant that all existing regulations died—every single one.”

Measured by the number of employees, McTigue and his colleagues cut government by 66% and further reduced Income taxes by half. He says that as a result and at the time, government revenue rose 20% and New Zealand became one of the most competitive economies in the world.

To be sure, there is certainly a need for regulation and guidelines, yet overdoing regulation is really no different from putting too much salt in the soup. The right amount gives flavour. Too much will ruin it.

CFIB Red Tape Report is at: http://www.cfib-fcei.ca/english/article/8960-grading-the-provinces-on-red-tape-2017.html

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