Red tape to recovery

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This article was published 28/01/2021 (788 days ago), so information in it may no longer be current.

For struggling businesses, pandemic-related shutdowns aren’t the only source of worry in 2021. 

Also cause for concern are the mandated fees, operational tariffs and professional permits some business owners believe represent a wall of red tape hindering recovery efforts, as they brace for reopenings in a state of flux.

The cost of those regulations from all three levels of government totalled nearly $39 billion in 2020, suggest data released this week by the Canadian Federation of Independent Business.

Of those costs, nearly a third — $11 billion — is “unnecessary” and could easily be diverted for this period of uncertainty during COVID-19, said CFIB Prairies director Jonathan Alward.

“This is the kind of thing you really don’t want to be worrying about when you’re already in survival mode,” Alward said Wednesday.

“You’re already having a hard time, but now you have to pay these costs and spend all this time complying with rules and regulations that could be so much more seamless.”

In Manitoba, businesses spent about $1.26 billion last year on such costs. That’s compared to Saskatchewan at around $1.1 billion.

While regulatory cuts directly associated with COVID-19 are not included in CFIB’s estimates, polling shows 83 per cent of Canadian businesses believe the pandemic substantially increased their compliance costs in terms of time and money. Those numbers are consistent from province to province.

In a statement to the Free Press, a provincial spokesperson said Manitoba has “made it our priority over the past few years to create a transparent and accountable regulatory system that maintains effective rules and regulations and removes ineffective ones.”

Referring to the Regulatory Accountability Act and the Red Tape Reduction Task Force, the spokesperson said the province has “removed tens of thousands of outdated and ineffective regulatory requirements that were not achieving their intended outcome or doing so in an inefficient manner to the detriment of society.”

“Government has an obligation to create regulatory requirements that positively benefit all Manitobans, such as public health and safety rules and environmental protections,” she said. “At the same time, there is an obligation to remove requirements that do not achieve these goals.”

But that red tape affects different types of businesses in a varied way. Small companies or stores, for example, face significantly higher per-employee regulatory costs compared to their larger counterparts.

‘Every year, they say that Manitoba has reached a grade-A level of cost-cutting. I’ve yet to see that for my restaurant– not from the province and not from the city, either’ — Tony Siwicki, owner, Silver Heights Restaurant

In 2020, businesses with fewer than five workers paid $7,023 per employee, according to CFIB. That’s almost five times the cost for a business with 100 or more workers, which paid out about $1,237 per employee last year.

And polled by CFIB, an overwhelming 94 per cent of businesses believe government has big companies in mind more than small firms when creating regulations — a result that’s up seven percentage points from 2017.

“The pandemic’s far from over, so it’s why governments should be mindful in the way they assess these costs,” said Alward, citing the low number of respondents that are confident governments are committed to reducing red tape (15 per cent federally and 24 per cent provincially).

For Harman Kaur, who runs Spa Botanica with co-owner Gabrielle Zoppa, cutting down red tape could be “a matter of survival.”

The Corydon Avenue business has been shuttered since strict code-red measures were introduced in November. “Yet somehow, we’re still paying these excessively high costs,” said Kaur.

“Don’t get me wrong,” she said. “It’s not like we haven’t benefited from government help — their emergency aid has been great once it was introduced. But it took quite a while for that help to come.

“And it’s a drop in a bucket when you compare it to the costs of keeping our doors open inside for our employees, while they’re still closed outside to any clients who want to come.”

Kaur said, should regulation costs such as taxes and permit fees for her storefront be waived during this time, she could pay for remote sales opportunities like spa hampers or kits.

“But none of that is possible, because we have to worry about our bottom lines,” she said. “We didn’t even make one per cent of sales in our regularly busiest month of the year in December.”

Tony Siwicki, owner of Silver Heights restaurant, said that’s something his business would benefit from.

“Every year, they say that Manitoba has reached a grade-A level of cost-cutting,” he said. “I’ve yet to see that for my restaurant — not from the province and not from the city, either.”

A city spokesperson said Mayor Brian Bowman has “supported red tape reduction since his election,” citing the recent creation of the Permit Logistics Desk, which helps reduce or eliminate delays in providing permits to businesses.

“To be quite frank, there’s so much more than can be done,” said Siwicki. “If they expect us to help raise the local economy, then they should start by doing their part to help us survive.”

Twitter: @temurdur

Temur.Durrani@freepress.mb.ca