Effective regulation and ongoing regulatory reform have contributed to Canada’s solid economic performance and relatively high living standards, but improvements are possible in some areas and would yield significant gains, according to a new OECD publication.

The new paper, Regulatory Reform in Canada: Maintaining Leadership through Innovation, identifies Canada as a pioneer and leader in the area of regulatory reform. Unlike most other OECD countries, the report observes, Canada has accomplished substantial progress on regulatory reform since the mid-1980s. Greater competition has improved efficiency and service in many economic sectors, in particular telecommunications and trucking. Similar effects are being achieved through reform of the electricity sector, though at different paces across the provinces.

Canada is described as a vigorous innovator in the areas of good regulatory governance. Canada was also a leader in the dialogue that led to the creation of OECD regulatory best practice principles in the mid-1990s and the country remains at the forefront of regulatory development. It notes that the Throne speech announced the creation of an external advisory committee. “This is a positive step and is consistent with the OECD recommendation for an independent body to advocate further reforms.”

“While these accomplishments are significant, continued effort would benefit Canada’s internal market,” it says. “Important sectors from air transport to fisheries and from broadcasting to the performing arts are protected through restrictions on imports and foreign ownership. Aspects of Canada’s trade and investment regime, including those affecting imports of some agricultural and textile products, are similarly restrictive.”

Among specific recommendations, the OECD suggests that Canada should:

  • strengthen the contribution of competition policy to regulatory reform and market openness, including an enhanced advocacy role for the Competition Bureau;
  • encourage a more systematic and strategic review of the federal, provincial and territorial regulatory environment and work to harmonise inter-provincial regulatory frameworks;
  • continue to foster regulatory reform to encourage greater productivity and innovation; and
  • take a more pro-active approach to trade policy in international negotiations, while maintaining a careful balance between bilateral and multilateral liberalisation efforts.

Referring specifically to the financial sector, the report says that the Office of the Superitendent of Financial Institutions and other regulatory bodies should be adequately staffed to meet the new challenges of overseeing a more competitive market, and that progress is needed on harmonisation. The study also notes that Canada’s banking sector is highly concentrated and profits are high.