On Thursday night, Ontario's Provincial Parliament cast a vote with important implications for small business policy from coast to coast. For over a decade, the Canadian Federation of Independent Business (CFIB) has argued that any net increase in the number of government regulations must necessarily be bad for the economy. The guy hammering a nail into the coffin of this doctrine was none other than former Ontario Progressive Conservative Party Leader Tim Hudak, now sitting as a backbencher after his party lost the 2014 election.
Hudak is the sponsor of a private member's bill called the Opportunity in the Sharing Economy Act, which won preliminary support from a majority of members on a second reading vote. His bill seeks to end city-by-city battles over Uber, AirBnB, Rover and other controversial technology businesses by legalizing them all at once provincewide.
The idea that provinces should regulate the Ubers of the world rather than cities isn't new; Republicans in several U.S. state legislatures have taken the same approach. What's new here is that Hudak's goal is conservative. He clearly believes he's making the economy more free with his proposal. But he's doing it by adding 35 pages worth of new rules to the province's books. This isn't what you'd normally expect to see from a dedicated Ontario conservative.
Hudak's bill fits what I've called "the Golden Rules" phenomenon. Orthodox conservatives still talk as if "more regulation" and "less regulation" are simple concepts, as though the economic impact of every new law is as mathematically tidy as it'd be with a new tax or a new expenditure. But law isn't science; it's art. Many new laws helped to expand Canada's economy, legalizing new products, new business models or new technologies to meet real market demands, while old rules governing old businesses remained in force.
If there are new food trucks serving customers in your city, that's likely because your city council added new laws to squeeze them in, not because existing restaurant regulations got repealed. If you use e-commerce to sell to customers, you should thank a wave of new laws in the 1990s that made electronic signatures contractually binding. If you're a contractor working on a condo site, note that condos are largely a creature of complex laws that legalized the subdivision of property. And so on, throughout the economy.
Canadian business groups spent decades lobbying for "less regulation," yet millions of real businesses owe their legal existence to new rules introduced in defiance of that thinking. If Hudak's bill becomes law, it will only be the latest example of this contradiction. And with new technologies emerging around us literally every day, be sure his bill won't be the last of its kind.
Yet the CFIB is still out there, lobbying Canadian policymakers to measure and cut the total number of regulations on the books, whether there's market demand for new rules or not. One of Prime Minister Stephen Harper's major announcements in the federal campaign reaffirmed his party's support for the CFIB's approach. Both Hudak and Toronto Mayor John Tory made similar commitments in their 2014 election races, while small 'c' conservative leaders in Saskatchewan and Manitoba will face pressure to do the same in their respective 2016 campaigns.
This all started in British Columbia, where micromanaging regulatory quotas has been a longstanding priority for the province's Liberal government. Between 2001 and 2015, B.C. counted 360,395 "regulatory requirements." It has since cut that total by 43 per cent to 204,826.
A few weeks ago, B.C.'s small business minister was widely mocked after she introduced legislation declaring every first Wednesday in March to be "Red Tape Reduction Day." The B.C. government is probably turning to gimmicks to promote its red tape record because fourteen years of cutting low-hanging regulatory fruit hasn't won much recognition on its own merits. According to the CFIB's own August 2015 survey, B.C. small businesses are more likely to call government paperwork a "serious concern" than Manitoba firms are, even though Manitoba's NDP government has done literally nothing the CFIB has asked it to do when it comes to tracking and cutting regulations.
It's time pro-business policymakers worried more about the practicality, quality and modernity of laws on the books, and worried less about the quantity of law. How free our markets are – and how smoothly governments regulate those markets – matters more than the precise number of rules it takes to get there.
Whether he's thought about it this way or not, Tim Hudak's proposal to create a new layer of regulation is a sign that small 'c' conservatives are subconsciously changing their thinking this way already. If so, it's time to make this policy shift a conscious choice.
Brian Kelcey is an urban public policy consultant. He previously served as a senior political adviser in the Ontario government, and he managed Canada's first-ever municipal red tape commission in Winnipeg in 2005.