Canada's regulatory modernization efforts aim to reduce duplicate paperwork and overlapping requirements between federal and provincial regulators, potentially unlocking over $540 billion in cumulative GDP growth while lowering compliance costs that currently consume up to 22% of financial firms' labor expenses.
- Compliance costs in financial services rose from 16% to 22% of surveyed firms' labor costs between 2019 and 2024, with smaller businesses facing disproportionately higher proportional expenses
- Deloitte Canada recommends clearer requirements, predictable approval deadlines, and better coordination between regulators to reduce unnecessary complexity
- Coordinated infrastructure reviews with binding six-month decision timelines could accelerate major projects by up to eight years
- Proposed reforms could generate $540 billion in cumulative real GDP growth and an additional $56 billion through enhanced defense procurement changes
- Federal Treasury Board launched the Red Tape Review on July 9, 2025, with approximately 500 completed measures and proposed actions already documented
Reducing duplicate paperwork and overlapping regulatory requirements has been proposed as a way to lower business costs and improve investment in Canada.
Deloitte Canada released its Smarter regulation: Unlocking Canada’s growth potential series in Sept. Its authors recommend clearer requirements, predictable approval deadlines and better coordination between regulators.
“Regulatory modernization is a powerful, controllable policy tool as Canada navigates heightened trade and geopolitical uncertainty," said Nino Montemarano, a regulatory and risk leader at Deloitte Canada, and the lead author of the series.
"It’s imperative that the country’s regulatory framework is efficient, coordinated, and designed to reduce unnecessary complexity and unlock economic growth across all sectors.”
The proposals include matching compliance obligations to actual risks and recognizing trusted certifications across jurisdictions. The clearest evidence of disproportionate costs for smaller businesses comes from financial services.
In a separate C.D. Howe Institute study, researcher Gherardo Caracciolo estimated that compliance work accounted for approximately 22% of surveyed firms’ labour costs in 2024, up from 16% in 2019.
That includes time spent meeting regulatory requirements across employees’ jobs, rather than just work performed by dedicated compliance staff. Smaller firms faced higher proportional costs.
The survey covered 55 financial firms, with some providing data for fewer years than others.
The recommendations include setting requirements according to the likelihood and severity of harm. Businesses would face less prescriptive paperwork where risks are well understood, while regulators would assess whether public protections are being achieved.
The authors also recommend reducing duplication between federal and provincial requirements and aligning rules with trusted international standards. Clear obligations and predictable decisions would help owners plan investments. These principles concern how businesses comply, rather than simply how many rules exist.
Federal officials have already begun reviewing requirements. Treasury Board President Shafqat Ali launched the Red Tape Review on July 9, 2025. Approximately 500 completed measures and proposed actions are listed in the federal summary. The total includes work still planned or underway.
For major infrastructure projects, the Deloitte authors recommend coordinated reviews, a lead regulator and binding deadlines. Suitable projects within existing corridors would receive decisions within six months of an application being deemed complete, with limited extensions. The Crown’s duty to consult Indigenous Peoples would remain.
Researchers estimated potential gains exceeding $540 billion in cumulative real gross domestic product. The modelling assumes approvals accelerate projects by eight years and that reform retains investment that otherwise would not proceed. The estimate covers multiple years and is not a forecast of annual savings for businesses.
Smaller suppliers could also benefit from changes to defence procurement. Overlapping security and certification requirements can increase entry costs for businesses seeking government contracts.
The proposed changes include coordinated security checks, recognition of trusted certifications and clearer purchasing plans. Researchers estimated an additional $56 billion in cumulative real GDP between 2026 and 2035 under an enhanced spending scenario. That calculation assumes earlier spending increases and a larger share of procurement directed to Canadian firms.
Regulation remains one of several concerns affecting investment. In a May 2025 Business Council of Canada survey, 41% of responding executives identified regulatory burdens as the leading factor affecting investment planning. Another 38% cited uncertainty surrounding the Canada-United States-Mexico Agreement.
