Red tape continues to burden Canadian small businesses
June 24, 2011
Regulations continue to be a drag for small businesses and entrepreneurs in both Canada and the United States. While governments in both countries have acknowledged how many compliance burdens strap companies both logistically and financially, the problem remains real and is far from removed.
In fact, a survey by the Canadian Federation of Independent Business found earlier this year that regulatory procedures and bureaucratic minutiae cost Canadian small businesses more than $30 billion per year in compliance costs alone.
"It all adds up to a colossal waste of entrepreneurs' time and money and clearly diverts their focus away from where it needs to be - building their businesses, creating jobs and expanding the economy," said Laura Jones, CFIB vice president of Western Canada and regulatory reform.
To combat the issue, the government of Prime Minister Stephen Harper created the Red Tape Reduction Commission - a federal agency that aims to reduce regulatory burdens on businesses, particularly small and mid-sized ones.
However, red tape remains, and these same obstacles that hinder small businesses are beginning to affect governmental processes as well. A survey released this week by the CFIB found more businesses are opting out of federal procurement and contracting opportunities simply because of the regulatory procedures involved, seeing them as financially not worth the time and effort.
As a result, many Canadian small firms are feeling left out of viable opportunities. The study found as many as 60 percent of small companies in industries where the government is a principle client have chosen not to sell to the federal government or felt it was too difficult and not worth the effort.
"Dealing with federal tenders is too painful to bother," a CFIB manufacturing member said in a statement. "If I spent all my time responding to the silly amounts of paperwork they require just to be 'qualified' to bid, I would have gone bankrupt a long time ago."
"One of the biggest challenges facing small businesses over the past few years is the 'bundling' of contracts into one massive contract and awarding it to a single firm. Government seems to believe that this will save money, yet there is very little proof that this is the case," stated Louis-Martin Parent, CFIB policy analyst for Ottawa and report author. "These contracts can reduce competition for government work by smaller businesses, potentially leading to higher costs to taxpayers in the long run."