Statistics Canada Finds Regulations Harm GDP, Job, Business Growth

Statistics Canada recently released a study that concluded the accumulation of regulations has had a measurable impact on economic growth, employment, and business expansion in the country. The study analyzed data from 2006 to 2021 and utilized a new measure of regulatory burden developed by KPMG in collaboration with Transport Canada.

Specifically, Statistics Canada found:

• The number of regulatory provisions in federal legislation and regulatory requirements in the country grew by 2.1 percent annually from 2006 to 2021;
• This rising number of regulatory requirements was associated with a 1.7 percentage point reduction in gross domestic product (GDP) growth and a 1.3 percentage point decline in employment growth in the business sector;
• Led to a nine percent reduction in business investment growth over 15 years;
• Business entry rates would have been 10 percent higher and exit rates five percent higher had the total number of regulatory provisions remained at 2006 levels; and
• Regulatory accumulation has a more pronounced impact on larger firms than smaller ones though both small and large businesses experienced reduced output, employment, and productivity growth due to increasing regulations.

The study did not assess any benefits of regulations, such as improved public safety or market stability. Indeed, the report highlighted the complexity of measuring regulatory impacts and suggested future studies should consider both the costs and benefits of regulations in assessing their overall economic impact.