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.
One does not have to look too deeply into recent headlines to see that Canada’s economic conditions are declining and consequently eroding the prosperity and living standards of Canadians. Between 2000 and 2023, Canada’s per-person GDP (a key indicator of living standards) has lagged far behind its peer countries. Business investment is also lagging, as are unemployment rates across the country particularly compared to the United States.
There are many reasons for Canada’s dismal economic conditions—including layer upon layer of regulation. Indeed, Canada’s regulatory load is substantial and growing. Between 2009 and 2018, the number of regulations in Canada grew from about 66,000 to 72,000. These regulations restrict business activity, impose costs on firms and reduce economic productivity.
According to a recent “red tape” study published by the Canadian Federation of Independent Business (CFIB), 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. If we apply a $16.65 per-hour cost (the federal minimum wage in Canada for 2023), $12.2 billion annually is lost to regulatory compliance.
Of course, Canada’s smallest businesses bear a disproportionately high burden of the cost, paying up to five times more for regulatory compliance per-employee than larger businesses. The smallest businesses pay $7,023 per employee annually to comply with government regulation while larger businesses pay a much lower $1,237 per employee for regulatory compliance.
And the Trudeau government has embarked on a massive regulatory spree over the last decade, enacting dozens of major regulatory initiatives including Bill C-69 (which tightens Canada’s environmental assessment process for major infrastructure projects), Bill C-48 (which restricts oil tankers off Canada’s west coast) and electric vehicle mandates (which require all new cars be electric by 2035). Other examples of government red tape include appliance standards to reduce energy consumption from household appliances, home efficiency standards to reduce household energy consumption, banning single-use plastic products, “net zero” nitrous oxide emissions regulation, “net zero” building emissions regulations, and clean electricity standards to drive net emissions of greenhouse gases in electricity production to “net zero” by 2035.
Clearly, Canada’s festooning pile of regulatory red tape is badly in need of weeding. And it can be done. For example, during a deregulatory effort in British Columbia, which appointed a minister of deregulation in 2001, there was a 37 per cent reduction in regulatory requirements in the province by 2004.
Rather with plowing ahead with an ever-growing pallet of regulations to be heaped upon Canadian businesses and citizens, government should reach for the garden shears and start reducing the most recent regulatory expansions (before they have time to do too much harm), and then scour the massive strangling forest of older regulations.
Whacking through the red tape would go a long way to help Canada’s economy out of its dismal state and back into competitive ranges with its fellow developed countries and our neighbours in the U.S.
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President Donald Trump signed an executive order moving marijuana from a Schedule I to a Schedule III controlled substance, despite many Republican lawmakers urging him not to.
“I want to emphasize that the order I am about to sign is not the legalization [of] marijuana in any way, shape, or form – and in no way sanctions its use as a recreational drug,” Trump said. “It’s never safe to use powerful controlled substances in recreational manners, especially in this case.”
“Young Americans are especially at risk, so unless a drug is recommended by a doctor for medical reasons, just don’t do it,” he added. “At the same time, the facts compel the federal government to recognize that marijuana can be legitimate in terms of medical applications when carefully administered.”
Under the Controlled Substances Act, Schedule I drugs are defined as having a high potential for abuse and no accepted medical use. Schedule III drugs – such as anabolic steroids, ketamine, and testosterone – are defined as having a moderate potential for abuse and accepted medical uses.
Although marijuana is still illegal at the federal level, 24 states and the District of Columbia have fully legalized marijuana within their borders, while 13 other states allow for medical marijuana.
Advocates for easing marijuana restrictions argue it will accelerate scientific research on the drug and allow the commercial marijuana industry to boom. Now that marijuana is no longer a Schedule I drug, businesses will claim an estimated $2.3 billion in tax breaks.
Chair of The Marijuana Policy Project Betty Aldworth said the reclassification “marks a symbolic victory and a recalibration of decades of federal misclassification.”
“Cannabis regulation is not a fringe experiment – it is a $38 billion economic engine operating under state-legal frameworks in nearly half of the country that has delivered overall positive social, educational, medical, and economic benefits, including correlation with reductions in youth use in states where it’s legal,” Aldworth said.
Opponents of the reclassification, including 22 Republican senators who sent Trump a warning letter Wednesday, point out the negative health impact of marijuana use and its effects on occupational and road safety.
“The only winners from rescheduling will be bad actors such as Communist China, while Americans will be left paying the bill. Marijuana continues to fit the definition of a Schedule I drug due to its high potential for abuse and its lack of an FDA-approved use,” the lawmakers wrote. “We cannot reindustrialize America if we encourage marijuana use.”
Marijuana usage is linked to mental disorders like depression, suicidal ideation, and psychotic episodes; impairs driving and athletic performance; and can cause permanent IQ loss when used at a young age, according to the Substance Abuse and Mental Health Administration.
Additionally, research shows that “people who use marijuana are more likely to have relationship problems, worse educational outcomes, lower career achievement, and reduced life satisfaction,” SAMHA says.
Canadians are told dairy farmers need protection. The newest numbers tell a different story
Every once in a while, someone inside a tightly protected system decides to say the quiet part out loud. That is what Joel Fox, a dairy farmer from the Trenton, Ont., area, did recently in the Ontario Farmer newspaper.
In a candid open letter, Fox questioned why established dairy farmers like himself continue to receive increasingly large government payouts, even though the sector is not shrinking but expanding. For readers less familiar with the system, supply management is the federal framework that controls dairy production through quotas and sets minimum prices to stabilize farmer income.
His piece, titled “We continue to privatize gains, socialize losses,” did not come from an economist or a critic of supply management. It came from someone who benefits from it. Yet his message was unmistakable: the numbers no longer add up.
Fox’s letter marks something we have not seen in years, a rare moment of internal dissent from a system that usually speaks with one voice. It is the first meaningful crack since the viral milk-dumping video by Ontario dairy farmer Jerry Huigen, who filmed himself being forced to dump thousands of litres of perfectly good milk because of quota rules. Huigen’s video exposed contradictions inside supply management, but the system quickly closed ranks until now. Fox has reopened a conversation that has been dormant for far too long.
In his letter, Fox admitted he would cash his latest $14,000 Dairy Direct Payment Program cheque, despite believing the program wastes taxpayer money. The Dairy Direct Payment Program was created to offset supposed losses from trade agreements like the Comprehensive Economic and Trade Agreement (CETA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Canada–United States–Mexico Agreement (CUSMA).
During those negotiations, Ottawa promised compensation because the agreements opened a small share of Canada’s dairy market, roughly three to five per cent, to additional foreign imports. The expectation was that this would shrink the domestic market. But those “losses” were only projections based on modelling and assumptions about future erosion in market share. They were predictions, not actual declines in production or demand. In reality, domestic dairy demand has strengthened.
Which raises the obvious question: why are we compensating dairy farmers for producing less when they are, in fact, producing more?
This month, dairy farmers received another one per cent quota increase, on top of several increases totalling four to five per cent in recent years. Quota only goes up when more milk is needed.
If trade deals had actually harmed the sector, quota would be going down, not up. Instead, Canada’s population has grown by nearly six million since 2015, processors have expanded and consumption has held steady. The market is clearly expanding.
Understanding what quota is makes the contradiction clearer. Quota is a government-created financial asset worth $24,000 to $27,000 per kilogram of butterfat. A mid-sized dairy farm may hold about $2.5 million in quota. Over the past few years, cumulative quota increases of five per cent or more have automatically added $120,000 to $135,000 to the value of a typical farm’s quota, entirely free.
Larger farms see even greater windfalls. Across the entire dairy system, these increases represent hundreds of millions of dollars in newly created quota value, likely exceeding $500 million in added wealth, generated not through innovation or productivity but by a regulatory decision.
That wealth is not just theoretical. Farm Credit Canada, a federal Crown corporation, accepts quota as collateral. When quota increases, so does a farmer’s borrowing power. Taxpayers indirectly backstop the loans tied to this government-manufactured asset. The upside flows privately; the risk sits with the public.
Yet despite rising production, rising quota values, rising equity and rising borrowing capacity, Ottawa continues issuing billions in compensation. Between 2019 and 2028, nearly $3 billion will flow to dairy farmers through the Dairy Direct Payment Program. Payments are based on quota holdings, meaning the largest farms receive the largest cheques. New farmers, young farmers and those without quota receive nothing. Established farms collect compensation while their asset values grow.
The rationale for these payments has collapsed. The domestic market did not shrink. Quota did not contract. Production did not fall. The compensation continues only because political promises are easier to maintain than to revisit.
What makes Fox’s letter important is that it comes from someone who gains from the system. When insiders publicly admit the compensation makes no economic sense, policymakers can no longer hide behind familiar scripts. Fox ends his letter with blunt honesty: “These privatized gains and socialized losses may not be good for Canadian taxpayers … but they sure are good for me.”
Canada is not being asked to abandon its dairy sector. It is being asked to face reality. If farmers are producing more, taxpayers should not be compensating them for imaginary declines. If quota values keep rising, Ottawa should not be writing billion-dollar cheques for hypothetical losses.
Fox’s letter is not a complaint; it is an opportunity. If insiders are calling for honesty, policymakers should finally be willing to do the same.
Dr. Sylvain Charlebois is a Canadian professor and researcher in food distribution and policy. He is senior director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast. He is frequently cited in the media for his insights on food prices, agricultural trends, and the global food supply chain.
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