Excessive regulation is strangling Mark Carney’s efforts to kick-start economic growth, companies argue
Canada’s leading industry groups say Prime Minister Mark Carney’s effort to cut red tape is floundering, costing the country billions more in trade losses than US President Donald Trump’s tariffs.
Forestry, oil and gas, and auto industry representatives told the FT they are frustrated at the pace of regulatory reform that is central to Carney’s efforts to insulate Canada from Trump’s devastating US trade war.
“Ottawa needs to align its regulatory policy objectives with economic reality,” said Derek Nighbor, president of the Forest Products Association of Canada, which represents one of the country’s largest employers, contributing C$19.9bn of its GDP.
Nighbor said over the past decade overlapping government policies, mostly environmental regulation, have “chilled strategic investments” and become “a productivity and competitiveness killer, driving away investment”.
Last week, Carney announced a “first-ever” investment summit in Toronto for September as part of the government’s “ambitious plan to catalyse $1tn in total investment in Canada over the next five years”.
But industry groups warn this plan is impeded by the slow implementation of a red-tape review that found nearly 500 ways to streamline services, cut duplication and reduce costs when it was launched last July.
“I’ve heard of resource projects that require hundreds of permits, due to federal, provincial and municipal requirements,” said David Pierce, the Canadian Chamber of Commerce’s vice-president of government relations.
“There’s a lot of concern that these changes need to be made quickly so that projects can start and Canada can be competitive again in this new world,” he added.
Dan Kelly, the Canadian Federation of Independent Business president, said the regulatory reform agenda “remains stalled”.
“Ottawa is focused on helping a few big players, with every other unwashed business owner stuck in the old, unworkable system.”
Canadian businesses face approximately $51.5bn in compliance costs annually, just under $18bn of which is considered “red tape”, the CIFB reported earlier this year.
“There’s clearly a disconnect between statements and implementation,” said Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association. “The longer this goes on, with no resolution on US tariffs, it will have real implications for investments in this country.”
This week, Rogers Communications, one of Canada’s top two telecommunication companies, announced approximately $1bn worth of spending cuts, or 30 per cent, blaming in part the “punitive” regulatory environment.
In November last year, Saskatchewan-based Nutrien, the world’s largest potash fertiliser producer, announced plans to build a $1bn port in Longview, Washington, over Canada’s west coast, citing regulations as a key factor in its decision.
Heather Exner-Pirot, a policy director at the Macdonald-Laurier Institute think-tank, said Ottawa is promoting critical mineral investment but long approval timelines and a heavy regulatory burden can “add an extra 12-14 per cent to the cost of building a new mine.
“Canada could be way richer and stronger than it is,” she said. “Our biggest problem is ourselves.”
A mine in Canada takes 20 years to build, according to S&P Global.
Carney is also trying to turn Canada into an “energy superpower,” considering its vast oil and natural gas resources, as a pivot to Asian and European markets.
But a tentative agreement signed in November between Ottawa and Alberta to build a million-barrel-a-day pipeline missed an April 1 deadline. Industry blames regulatory hurdles, a costly decarbonisation requirement and the lack of clarity around carbon pricing.
“Capital goes where it is welcome. And for too long, it hasn’t felt welcome here,” said TC Energy chief executive François Poirier.
A spokesperson for Enbridge, North America’s biggest pipeline producer that sends most of Canada’s oil south to the US, said “changes in policy and (the) regulatory environment need to happen”.
“Not only for a new pipeline to be considered, but for producers to have confidence to increase production,” the person said.
But progress is being made in other areas as Enbridge announced on Friday the C$4bn expansion of its natural gas pipeline system in British Columbia after receiving federal government approval.
A spokesperson for the minister of the environment said: “Climate change is a defining challenge of our time and meeting it head-on is both a moral obligation and a massive economic opportunity.”
The Treasury Board of Canada, which oversees Ottawa’s red tape review, did not reply to questions.
Canada faces other domestic challenges such as stagnant productivity, anti-competitive behaviour and a tax regime that repels investment and inhibits the economy.
In July last year Carney pledged to lift intra-provincial trade barriers — which act as cross-border regulations and fees — but the dysfunctional system remains mostly intact due to myriad vested interests.
The IMF reported that Canada’s economy could gain nearly 7 per cent, or C$210bn, in real GDP by removing these persistent protectionist mechanisms.
“The economic cost is undeniable,” says National Bank chief economist Stéfane Marion in a note to clients last year.
“It seems that for Canadian policymakers, ‘regulation’ is the most beautiful word in the dictionary.”
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