Introduction
In its 2005 Budget the Government of Canada committed to "a regulatory system and policies that instill and protect public trust and confidence, support innovation and foster a favorable business environment…" Subsequently, the Honourable Reg Alcock, President of the Treasury Board outlined how the federal government plans to meet the need for regulatory renewal. In his March 24 press release Mr. Alcock stated that "Canada has been recognized internationally as having a strong regulatory system that contributes to our economic and social well‑being." He acknowledged a range of challenges to the system and declared that "Canada's regulatory system must be renewed to ensure that it keeps pace with evolving needs, and that Canada's social and economic goals are continually met through effective and timely regulation."
The government's commitment to regulatory change is in keeping with advice contained in a report prepared for it by the External Advisory Committee on Smart Regulation. The report acknowledged Canada's strong regulatory foundation but declared that the "system is not sustainable at the level Canadians expect without fundamental and systematic changes." It indicated that many of Canada's regulations are outdated and act to impede innovation and economic development by inhibiting competitiveness, productivity, investment and growth in key economic sectors.
While recommending major shifts in perspective and practice, the report of the External Advisory Committee on Smart Regulation states that deregulation is not the alternative. Rather, the objective is to maintain a high level of protection for Canadians while supporting both social and economic achievement. The report outlines criteria for attaining that end such that Smart Regulations will protect and enable, be responsive to development, and involve cooperative effort between governments, citizens and industry.
The national Advisory Committee on Rural Issues supports this call for regulatory reform and is pleased to note the federal government's prompt attention to the issue. The need to adapt regulations to meet public expectations is especially apparent in rural Canada. It is an enormous challenge to field a system of regulations that will serve the entire nation. The national Advisory Committee on Rural Issues is convinced that the challenge cannot be met without taking into account those characteristics that are unique to rural Canada.
It is the purpose of this paper to call for attention to rural issues and circumstances as part of the overall job of renewing Canada's regulatory system. It outlines reasons why it is important to take the rural perspective into account; it provides a few examples to support those reasons; and, it offers some suggestions to ensure that rural is an essential consideration in the transformation of Canada's regulatory system.
The Importance of Rural
Rural Canada is a diverse expanse of tundra, seascapes, forests, pastoral and crop landscapes, and farmsteads, with populations ranging from lonely outposts to quiet villages where everyone knows everyone else, through to bustling small towns based on local natural resource industries. In many respects the expanse of rural Canada is the backbone of its economy. However, its wide dispersion and diversity preclude rural from being considered in a simple way. This is especially so when looked at in relation to an issue as complex as Smart Regulations. Consideration for the interests of governments, industry and consumers is as important in rural as it is in the nation as a whole. However, rural takes on a different complexion when it is considered in terms of such critical variables as population size, distance from market, availability of employment and services, cost of service delivery, and accessibility of transportation and communication media. Then, not only does rural differ in many ways from urban, but rural itself contains an enormous range of differences to be considered if it is to be accorded fair treatment in its own right and as an essential part of Canada.
In the interest of developing a better regulatory framework the External Advisory Committee on Smart Regulation emphasized, among other considerations, the need to involve provincial and territorial governments, to develop government-wide regulatory positions, and to have up-to-date assessments of citizens' risk tolerance. Fulfilling these needs, even in the most general terms, will be a major undertaking. There is profound concern among leaders in rural Canada that government policies and the ensuing regulations are developed and implemented by Canadians who have minimal understanding of rural Canada. While their views may well reflect the opinions of most Canadians, the impact of their advice too often has adverse effects for those who live and make their living in the vast land we call rural Canada. It is therefore necessary to find ways to ensure that rural Canada is part of Government's overall perspective as it fulfills its commitment to realize "a regulatory system and policies that instill and protect public trust and confidence, support innovation and foster a favorable business environment."
Examples of Rural Vulnerability
It would take in-depth study to provide a complete listing of the characteristics of rural that make it vulnerable to regulatory measures designed to benefit the country as a whole. Efforts to achieve effective and equitable program delivery across the country in such broad policy areas as health, childcare, transportation, communication, economic development, etc., soon run into rural circumstances where uniform regulations are inappropriate. Too often the result is that programs cannot serve rural citizens and their communities because it is impossible to fulfill regulatory requirements. Overall, regulatory flexibility is more valuable than a static regulatory system.
There are many examples of the need for rural sensitivity in the implementation of smart regulation in order to protect and enable rural residents, businesses, communities and regions, and to be responsive to rural development. The examples below have impacts on the sustainability of rural communities. Some of these impacts are highlighted to demonstrate the critical nature of the following issues:
- regulations of the past;
- the financial impacts of enforcement
- regional appropriateness;
- the interconnected impacts of regulations arising from diverse sources and policies.
Regulations of the Past
The External Advisory Committee on Smart Regulation stated in its report that an outdated regulatory system is an impediment to innovation and economic development because it inhibits competitiveness, productivity, investment and the growth of key economic sectors. An example of how this claim applies to rural is found in the way that regulations from the past block innovation and new opportunities in cereal crop production on the prairies. While it is imperative to protect the current market, regulatory limitations related to grading parameters in the registration system discourage exploration of breakthroughs in cereal breeding. Canada's current system of licensing new varieties is at the core of its somewhat limited ability to produce feedstocks for industries such as ethanol or feeding. The lack of methods to replace kernel visual distinctiveness in the grading system limits the ability to license feedstocks for feeding, ethanol, or any new use. This drawback supports yesterday's market at the expense of tomorrow's opportunity. Without a complete revision of historical regulations the Prairie crop (cereal) system is unable to take advantage of economic diversification in a sustainable economy.
Development of the grain industry through food or non-food products will depend on the availability of relatively inexpensive and plentiful feedstocks. Successful competition within an integrated North American market requires Canadian grain growers to consider how their competitors are positioned. Currently, U.S. programs provide an incentive through deficiency and counter cyclical payments for maintaining a supply of feedstocks regardless of production amount or market price. This ensures a supply of product for value-added investments. Canada's programs discourage production of feedstocks in times of large supply or low price. This diminishes confidence to establish value-added industries when such activity is dependent on plentiful supplies of relatively cheap product.
Financial Impacts of Enforcement
The collapse of the Atlantic groundfish fishery, the ups and downs of Pacific salmon stocks, and expanding public and parliamentary concerns about endangered species have increased the need for government to be active in science and resource protection. It is an expensive demand. In turn, regulations relating to licensing and licensing cost have been modified, placing increased burden on resource and habitat users. All industry groups have seen substantial increases in costs for annual license and wharfage fees in recent years. While this shift can be justified, care has to be exercised to ensure that habitat users can reasonably bear the extra burden. The negative consequence is that literally thousands of smaller fishing communities and enterprises are being pushed out of the industry. Control of resources is being consolidated in larger companies in central regions—e.g. over 40% of fish licenses in British Columbia are now owned in Vancouver. The question is whether the users of the resource (either all or some of them) are bearing a disproportionate share of the cost of protecting the resource.
Regional Appropriateness
Canada's fishery provides an example of the need for regulations to be sensitive to the regional and local circumstances they serve. There are instances in non-coastal parts of Canada where fishery regulations are enforced in communities where no fishery exists. An example in the prairies is the designation of drainage ditches as fish habitat, a definition that creates unmanageable hardship for farmers and local governments.
An example from the dairy industry illustrates a concern in the realm of enabling regional development. Agricultural policy has contributed to a stable and profitable dairy industry, but in the last couple of decades the number of people involved in that industry has declined dramatically with dairy farms becoming concentrated close to large urban centres. This has greatly depreciated the impact of regional development policy designed to provide for economic stability in more remote rural areas. It suggests a need to examine national agricultural regulations to assess their regional impacts on the redistribution of the economic benefits of dairy farming through a broader rural expanse.
In general, rural circumstances require programming sensitivity beyond what is normally found in central locations where regulations are written. This is so for the national centre, for provincial centres, and even for centres of regional development areas. Flexibility is critical.
Interconnected Impacts
Northeastern Ontario exemplifies the challenge facing many areas in Canada where the economy depends heavily upon natural resources. Especially in remote parts of that region, communities continually endure the devastating impact of volatile boom and bust cycles caused by outside economic conditions. With every bust, more jobs are lost and more people are forced to leave the region. The relative isolation, scarcity of population and geographic size make it difficult for governments and private industries to service such communities and call for alternative ways for providing optimal quality in social and economic services. Part of the search for alternative ways involves changing regulations to ensure a favorable environment for economic success, and for the health and wellbeing of rural residents. While regional development agencies do provide extraordinary, necessary financial arrangements for business development, they do not necessarily take into account regulations in other domains such as housing, education, transportation and health services. Without a balance of economic and social support it becomes impossible for special financial arrangements to serve their intended purpose of enabling economic diversification in remote parts of the region.
In a different example, at the very time when the Government of Canada is dealing with the need to transfer substantial resources to First Nations through new treaty agreements, some of their communities are being devastated, particularly on the West Coast, as a consequence of fisheries rationalization policies. The impacts of one policy and its associated regulations are obstacles to the realization of another.
In the case of recent changes in regulatory enforcement rules regarding BSE and Avian Flu, regulatory-driven cost increases have compounded the impacts on producers whose markets have been destroyed by developments in regulatory-driven export policy. This anomaly is the result of action taken without consulting those who are most affected: rural residents and producers, who have little or no recourse to the ever-increasing bureaucracy.
Implications
The foregoing examples are drawn from a number of sectors and a number of regions of Canada. Other sectors and places could equally well have illustrated the issues. In aggregate, they demonstrate the complexity of regulatory impacts on rural, remote and northern communities. Regulations that support the old way of doing things at the expense of innovation, that apply the costs without full consideration of the impacts of those costs or who benefits, that are enforced in a manner and in regions where it is not appropriate and may not originally have been intended, and that do not take into account the impacts of related regulations, are enormous barriers to rural development. Whether it is a question of inappropriate, new regulations or inappropriate, outmoded ones, the essential matter is that the economic and social costs of regulations must not outweigh their benefits for rural or urban Canadians. The Advisory Committee on Rural Issues draws attention to the following overarching implications:
Fair Distribution of Cost
Too often new laws and their subsequent regulations are promoted by special interest groups with strong urban support and without sufficient regard for the residents of rural Canada. Sometimes rural residents bear a disproportionate cost for compliance with these regulations. The application of new regulations dealing with food safety/traceability to protect consumers without a clear understanding of the ability of rural areas to absorb the cost or impacts illustrates the way the values of others are imposed on the rural landscape without appreciation of the fallout.
The development of the Canadian Food Inspection Agency Enforcement Act (Bill C27) with no consultation of those affected and the designation of all plants and animals as regulated products will affect everyone in rural Canada as it exempts government from all liability and applies all costs to the owners of animals or agricultural operations.
Protect Rural Viability
The vitality and sustainability of rural regions depend in large measure on regulations that ensure incentives for rural development; that the benefit outweighs the cost. Regulations that impede the advancement of rural areas should be amended or restructured. Likewise, criteria relating to rural wellbeing should be part of the approval process for new regulations. Without these safeguards the country as a whole becomes poorer. There is mutual value for rural and urban communities when both are viable and contributing to the nation's overall economy.
Reliable Rural Voices
It is necessary to include rural voices in the formulation of new regulations and in the revision/elimination of outmoded ones because of the lack of fit between regulations and rural reality. Many ways may be found to ensure that rural voices are fairly represented when regulations are created, revised or eliminated. Appropriate representation will require close attention to rural variations. There are differences to be acknowledged between and within rural regions, between and within rural industry sectors, and, between and within technologies affecting rural economies. An example from the meat industry illustrates the need for keen awareness of differences affecting rural business: while supply managed enterprises have the ability to pass on production costs, open market enterprises cannot do so and remain competitive when prices are dictated by global experiences. In addition to the range of geographic and enterprise differences, rural voices involved in regulatory renewal will have to balance economic, environmental and social interests. Most important of all, those voices must be of rural people whose operations are affected and/or persons who know about the unintended consequences of new regulations being promoted by special interest groups.
Recommendations
In order to ensure that attention to rural issues and circumstances is an integral part of renewing Canada's regulatory system, and in the context of the Government of Canada's commitment to Smart Regulation and its March 2005 publication of Smart Regulation: Report on Actions and Plans, the Advisory Committee on Rural Issues makes the following recommendations:
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Review of Existing Regulations The Report on Actions and Plans notes that part of strengthening regulatory management is improved analysis, review and rationalization of the existing stock of regulations. In this connection, the Advisory Committee on Rural Issues recommends:
That a process be established immediately for looking at existing regulations that are impeding development in rural, remote and northern areas.
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Rural Voice The External Advisory Committee on Smart Regulations recommended establishing "swat teams" in order to realize cooperative effort between governments, citizens and industry. The Report on Actions and Plans refers to (1) multi‑stakeholder participation in a new management system for development and implementation of regulations; (2) the creation of an external Regulation Advisory Board as one forum for stakeholder participation; and, (3) a set of Theme tables which are expected to have working groups with stakeholder representation.
In light of these opportunities for stakeholder involvement in a management system for regulations the Advisory Committee on Rural Issues recommends:
That various stakeholder groups will include authentic rural representation and that specialized rural swat teams would, from time to time, examine sets of existing regulations and all new regulations to offset risk of damage to rural interests.
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Regulatory Consultations A Guide for Effective Regulatory Consultations is being developed by the Privy Council Office. In this connection the Advisory Committee on Rural Issues recommends:
That this internal government process will attend to the rural aspect of Regulations by applying the Rural Lens.
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Research Regulatory Impact The Report on Actions and Plans addresses the objective of Strengthening Regulatory Governance, including a new Regulatory Policy Statement that establishes the strategic objectives from which the government, stakeholders and the public can measure progress and hold the government to account. In this connection, in order to ensure that regulatory impacts on rural communities and residents are understood, responded to, measured and tracked in a transparent manner, the Advisory Committee on Rural Issues recommends:
That the research, analysis and communication of regulatory impacts include:
- the latest scientific evidence;
- health and environmental risk management;
- fiscal impact and practicability of the enforcement on rural residents;
- attention to differential impacts upon rural circumstances.
References
External Advisory Committee on Smart Regulation. Smart Regulation, A Regulatory Strategy for Canada. Report to the Government of Canada. September 2004.
http://www.pco-bcp.gc.ca/smartreg-regint/en/08/index.html
Smart Regulation: Report on Actions and Plans. Privy Council Office, Government of Canada. March 2005.
http://www.regulation.gc.ca/default.asp?Language=E&Page;=report
Further Reading
Cher Brethour, Larry Martin, Al Mussell, Kate Stefielmeyer and Terri‑lyn Moore. The Competitiveness Impacts of Canada's Agricultural Product Review Regulations. George Morris Centre. February 13, 2004.
http://www.georgemorris.org/GMC/Publications/Competitiveness.aspx
A Framework for the Application of Precaution in Science-based Decision Making about Risk. Privy Council Office, Government of Canada. 2003.
http://www.pco-bcp.gc.ca/default
Integrated Risk Management Framework. Treasury Board of Canada Secretariat, Government of Canada. April 2001.
http://www.tbs-sct.gc.ca/pubs_pol/dcgpubs/RiskManagement/rmf-cgr_e.asp
ANNEX—Advisory Committee on Rural Issues: List of Members, April 2005
Caroline (Kay) Young - Chair
Newfoundland and Labrador
Danny Huxter
Newfoundland and Labrador
Teresa MacNeil
Nova Scotia
Sue Calhoun
New Brunswick
Marion Green
New Brunswick
Bruno Jean
Québec
James Aquino
Ontario
Mike McCracken
Ontario
Owen McAuley
Manitoba
Margaret Rose Olfert
Saskatchewan
Bob Church
Alberta
Greg Halseth
British Columbia
Kathy Tsetso
Northwest Territories
Donna Mitchell (Ex officio)
Executive Director, Rural Secretariat
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Date Modified: 2006-02-27
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