Business
Canada should match or eclipse Trump’s red-tape cutting plan
From the Fraser Institute
With all eyes focused on WWT (World War Tariff), another Trump initiative was quietly put in place last week in one of the now-signature Trump “flood the zone” initiative waves.
On Jan. 31, the Trump administration published an executive order (EO) titled “Unleashing Prosperity Through Deregulation,” and as regulatory reform initiatives go, well, it’s every anti-regulatory analyst’s dream as “each new regulation issued, at least 10 prior regulations be identified for elimination.”
For reference, one of Canada’s strongest regulatory-reform efforts (in British Columbia back in 2001) only called for a 2-for-1 ratio. Although B.C.’s effort did somewhat foreshadow Trump’s, in that it created something of a DOGE (Department of Government Efficiency) when the B.C. government appointed an actual minister of deregulation to oversee the effort rather than leaving it to the bureaucracy to reform itself. And it worked. By 2004, 37 per cent of regulatory requirements in B.C. had been eliminated (exceeding the initial one-third target).
Trump’s new plan is less explicit in defining regulations, but it makes sure that new regulations cost less than the 10 regulations they replace. “For fiscal year 2025,” reads the EO, “the heads of all agencies are directed to ensure that the total incremental cost of all new regulations, including repealed regulations, being finalized this year, shall be significantly less than zero, and any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least 10 prior regulations.”
And Trump’s plan will put regulators in government agencies on a permanent diet, as a “total amount of incremental costs… will be allowed for each agency in issuing new regulations and repealing regulations for each fiscal year after fiscal year 2025.”
Why does this matter to Canadians?
Because, unlike those few years of B.C. regulatory reform, Canada has been wrapping itself in regulatory red-tape for decades, making our economy less competitive globally and with the United States. Between 2006 to 2018, the number of restrictive regulations in Canada grew from about 66,000 to 72,000. And according to the Canadian Federation of Independent Business, the cost of regulation from all three levels of government to Canadian businesses totalled $38.8 billion in 2020, for a total of 731 million hours—the equivalent of nearly 375,000 fulltime jobs.
Clearly, Canada has a regulatory problem—our governments generate seemingly endless spools of regulatory red tape, which keep Canadian businesses tangled in inefficiency, wasted labour and non-competitiveness. President Trump’s new regulatory reform initiative will further increase the “red-tape gap” between Canada and the U.S.
Policymakers in Ottawa and the provinces would do well to learn about Canada’s experiences with deregulatory programs and strive to match—or beat—the new U.S. regulatory reform efforts before a massive lack of regulatory competitiveness becomes a serious problem, adding insult to injury on top of World War Tariff.
Kenneth P. Green
From the Fraser Institute
By Tegan Hill
According to this week’s fiscal update, amid falling oil prices, the Alberta government will run a projected $6.4 billion budget deficit in 2025/26—higher than the $5.2 billion deficit projected earlier this year and a massive swing from the $8.3 billion surplus recorded in 2024/25.
Overall, that’s a $14.8 billion deterioration in Alberta’s budgetary balance year over year. Resource revenue, including oil and gas royalties, comprises 44.5 per cent of that decline, falling by a projected $6.6 billion.
Albertans shouldn’t be surprised—the good times never last forever. It’s all part of the boom-and-bust cycle where the Alberta government enjoys budget surpluses when resource revenue is high, but inevitably falls back into deficits when resource revenue declines. Indeed, if resource revenue was at the same level as last year, Alberta’s budget would be balanced.
Instead, the Alberta government will return to a period of debt accumulation with projected net debt (total debt minus financial assets) reaching $42.0 billion this fiscal year. That comes with real costs for Albertans in the form of high debt interest payments ($3.0 billion) and potentially higher taxes in the future. That’s why Albertans need a new path forward. The key? Saving during good times to prepare for the bad.
The Smith government has made some strides in this direction by saving a share of budget surpluses, recorded over the last few years, in the Heritage Fund (Alberta’s long-term savings fund). But long-term savings is different than a designated rainy-day account to deal with short-term volatility.
Here’s how it’d work. The provincial government should determine a stable amount of resource revenue to be included in the budget annually. Any resource revenue above that amount would be automatically deposited in the rainy-day account to be withdrawn to support the budget (i.e. maintain that stable amount) in years when resource revenue falls below that set amount.
It wouldn’t be Alberta’s first rainy-day account. Back in 2003, the province established the Alberta Sustainability Fund (ASF), which was intended to operate this way. Unfortunately, it was based in statutory law, which meant the Alberta government could unilaterally change the rules governing the fund. Consequently, by 2007 nearly all resource revenue was used for annual spending. The rainy-day account was eventually drained and eliminated entirely in 2013. This time, the government should make the fund’s rules constitutional, which would make them much more difficult to change or ignore in the future.
According to this week’s fiscal update, the Alberta government’s resource revenue rollercoaster has turned from boom to bust. A rainy-day account would improve predictability and stability in the future by mitigating the impact of volatile resource revenue on the budget.
Tegan Hill
Director, Alberta Policy, Fraser Institute
The Canadian Taxpayers Federation is criticizing the Memorandum of Understanding between the federal and Alberta governments for including higher carbon taxes.
“Hidden carbon taxes will make it harder for Canadian businesses to compete and will push Canadian entrepreneurs to shift production south of the border,” said Franco Terrazzano, CTF Federal Director. “Politicians should not be forcing carbon taxes on Canadians with the hope that maybe one day we will get a major project built.
“Politicians should be scrapping all carbon taxes.”
The federal and Alberta governments released a memorandum of understanding. It includes an agreement that the industrial carbon tax “will ramp up to a minimum effective credit price of $130/tonne.”
“It means more than a six times increase in the industrial price on carbon,” Prime Minister Mark Carney said while speaking to the press today.
Carney previously said that by “changing the carbon tax … We are making the large companies pay for everybody.”
A Leger poll shows 70 per cent of Canadians believe businesses pass most or some of the cost of the industrial carbon tax on to consumers. Meanwhile, just nine per cent believe businesses pay most of the cost.
“It doesn’t matter what politicians label their carbon taxes, all carbon taxes make life more expensive and don’t work,” Terrazzano said. “Carbon taxes on refineries make gas more expensive, carbon taxes on utilities make home heating more expensive and carbon taxes on fertilizer plants increase costs for farmers and that makes groceries more expensive.
“The hidden carbon tax on business is the worst of all worlds: Higher prices and fewer Canadian jobs.”
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