OECD Reviews of Regulatory Reform Canada - Maintaining Leadership Through Innovation.

132 Pages·1.809 MB·English

by  OECD

«
OECD Reviews of Regulatory Reform
OECD Reviews of Regulatory Reform
CANADA
MAINTAINING LEADERSHIP THROUGH INNOVATION
CANADA
Canada, one of the OECD’s strongest economies, has a mature, effective and innovative system of
regulatory governance closely linked to the government’s public policy goals. Canadians attach growing
priority to health, safety and the environment, and seek a balance among economic, competitiveness and
social goals. This is a demanding agenda: in international trade – a major driver of the economy – Canada
needs to maintain a careful balance between bilateral and multilateral liberalisation efforts. Further work is MAINTAINING LEADERSHIP
needed to improve the effectiveness of the single internal market. Competition policy needs to make a much
stronger contribution to regulatory reform and market openness. Despite a positive policy shift, some THROUGH INNOVATION
important sectors are protected through import and foreign ownership restrictions. The recently launched
government’s Innovation Strategy is expected to make a major contribution to addressing these challenges.
Canada is one of many OECD countries to request a broad review by the OECD of its regulatory practices
and reforms. This review presents an overall picture, set within a macro-economic context, of regulatory
achievements and challenges including the quality of the public sector, competition policy and market
openness. It also assesses progress in the telecommunications sector.
The background material used to prepare this report is available at:
www.oecd.org/regreform/backgroundreports
C
In the same series: a
n
a
Regulatory Reform in the Czech Republic Regulatory Reform in Mexico d
Regulatory Reform in Denmark Regulatory Reform in the Netherlands a

Regulatory Reform in Greece Regulatory Reform in Poland
M
Regulatory Reform in Hungary Regulatory Reform in Spain A
Regulatory Reform in Ireland Regulatory Reform in Turkey IN
T
Regulatory Reform in Italy Regulatory Reform in the United Kingdom A
Regulatory Reform in Japan Regulatory Reform in the United States IN
Regulatory Reform in Korea IN
G
L
The policy starting point for these reviews is presented in the OECD Report on Regulatory Reform: E
A
Synthesis, and the supporting two-volume OECD Report on Regulatory Reform: Sectoral and Thematic D
E
Studies, published in 1997. R
S
H
IP
T
H
R
O
U
G
H
IN
OECD's books, periodicals and statistical databases are now available via www.SourceOECD.org, our online library. N
O
This book is available to subscribers to the following SourceOECD theme: V
Governance A
T
Ask your librarian for more details on how to access OECD books on line, or write to us at IO
N
[email protected]
www.oecd.org
ISBN 92-64-19908-X
42 2002 09 1 P -:HSTCQE=V^^U]]:
© OECD, 2002.
© Software: 1987-1996, Acrobat is a trademark of ADOBE.
All rights reserved. OECD grants you the right to use one copy of this Program for your personal use only. Unauthorised reproduction,
lending, hiring, transmission or distribution of any data or software is prohibited. You must treat the Program and associated materials
and any elements thereof like any other copyrighted material.
All requests should be made to:
Head of Publications Service,
OECD Publications Service,
2, rue André-Pascal,
75775 Paris Cedex 16, France.
OECD Reviews of Regulatory Reform
Canada
Maintaining Leadership Through Innovation
2002
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came
into force on 30th September 1961, the Organisation for Economic Co-operation and Development
(OECD) shall promote policies designed:
– to achieve the highest sustainable economic growth and employment and a rising standard of
living in Member countries, while maintaining financial stability, and thus to contribute to the
development of the world economy;
– to contribute to sound economic expansion in Member as well as non-member countries in the
process of economic development; and
– to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in
accordance with international obligations.
The original Member countries of the OECD are Austria, Belgium, Canada, Denmark, France,
Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries
became Members subsequently through accession at the dates indicated hereafter: Japan
(28thApril1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973),
Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland
(22nd November 1996), Korea (12th December 1996) and the Slovak Republic (14th December 2000).
TheCommission of the European Communities takes part in the work of the OECD (Article 13 of the
OECD Convention).
Publié en français sous le titre :
Examens de l’OCDE de la réforme de la réglementation
Canada
Rester à la pointe du pogrès grâce à l'innovation
© OECD 2002
Permission to reproduce a portion of this work for non-commercial purposes or classroom use should be obtained through the Centre français
d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, tel. [phone], fax [phone], for every country
except the United States. In the United States permission should be obtained through the Copyright Clearance Center, Customer Service, [phone],
222Rosewood Drive, Danvers, MA 01923 USA, or CCC Online: www.copyright.com. All other applications for permission to reproduce or translate all or
part of this book should be made to OECD Publications, 2,rueAndré-Pascal, 75775 Paris Cedex 16, France.
FOREWORD
Foreword
The OECD Review of Regulatory Reform in Canada is one of a series of country reports
carried out under the OECD’s Regulatory Reform Programme, in response to the1997 mandate by
OECD Ministers.
Since then, the OECD has assessed regulatory policies in 16member countries. The reviews aim
at assisting governments to improve regulatory quality – that is, to reform regulations to foster
competition, innovation, economic growth and important social objectives. It draws on two
important instruments: the 1995 Recommendation of the Council of the OECD on Improving
the Quality of Government Regulation and the 1997 OECD Report on Regulatory Reform.
The country reviews follow a multi-disciplinary approach and focus on the government’s
capacity to manage regulatory reform, on competition policy and enforcement, on market openness,
and on the regulatory framework of specific sectors against the backdrop of the medium-term
macroeconomic situation.
Taken as a whole, the reviews demonstrate that a well-structured and implemented programme
of regulatory reform can make a significant contribution to better economic performance and
enhanced social welfare. Economic growth, job creation, innovation, investment and new industries
are boosted by effective regulatory reform, which also helps to bring lower prices and more choices
for consumers. Comprehensive regulatory reforms produce results more quickly than piece-meal
approaches; and they help countries to adjust more quickly and easily to changing circumstances and
external shocks. At the same time, a balanced reform programme must take into account the social
concerns. Adjustments in some sectors have been painful, but experience shows that the costs can be
reduced if reform is accompanied by support measures, including active labour market policies.
While reducing and reforming regulations are key elements of a broad programme of regulatory
reform, experience also shows that in a more competitive and efficient market, new regulations and
institutions may be necessary to ensure compatibility of public and private objectives, especially in the
areas of health, environment and consumer protection. Sustained and consistent political leadership is
another essential element of successful reform, and a transparent and informed public dialogue on the
benefits and costs of reform is necessary for building and maintaining broad public support.
The policy options presented in the reviews may pose challenges for each country. However, the
in-depth nature of the reviews and the efforts made to consult with a wide range of stakeholders
reflect the emphasis placed by the OECD on ensuring that the policy options presented are relevant
and attainable within the specific context and policy priorities of the country.
Each review consists of two parts. PartI presents an overall assessment, set within the
macroeconomic context, of regulatory achievements and challenges across a broad range of policy areas:
the quality of the public sector, competition policy, market openness and key sectors such as
telecommunications. PartII summarises the detailed and comprehensive background reviews prepared
for each of these policy areas, and concludes with policy options for consideration which seek to identify
areas for further work and policy development in the countries under review. The background reviews for
Canada have been posted on the OECD Web site: www.oecd.org/regreform/backgroundreports
3
OECD REVIEWS OF REGULATORY REFORM: CANADA – ISBN 92-64-19908-X – © OECD 2002
FOREWORD
Acknowledgements. The horizontal Programme on Regulatory Reform is
headed by the Deputy Secretary-General Richard Hecklinger. The country reviews
are co-ordinated by the Public Management Service.
The Review of Canada reflects contributions from the Government of Canada, the
Working Party on Regulatory Management and Reform of the Public Management
Committee, the Competition Law and Policy Committee and its Working Party, the
Working Party of the Trade Committee, the Working Party on Telecommunication
and Information Services Policies of the Information, Computer and
Communication Policy Committee; representatives of member governments, and
members of the Business and Industry Advisory Committee (BIAC) and the Trade
Union Advisory Committee (TUAC), as well as other groups.
In the OECD Secretariat, Odile Sallard, Rolf Alter, Cesar Córdova-Novion, Caroline
Varley, Heather Robertson, Peter Jarrett, Sue Holmes, Rex Deighton-Smith, Denis
Audet, Vera Nicholas, Anthony Kleitz, Michael Wise, Patricia Heriard-Dubreuil,
Bernard J. Phillips and Dimitri Ypsilanti contributed substantially to the review of
Canada. Document preparation: Jennifer Stein.
4
OECD REVIEWS OF REGULATORY REFORM: CANADA – ISBN 92-64-19908-X – © OECD 2002
Table of Contents
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Part I
Regulatory Reform in Canada
Chapter 1. Maintaining Leadership Through Innovation. . . . . . . . . . . . . . . . . 17
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
The macroeconomic context for regulatory reform . . . . . . . . . . . . . . . . . . 18
The strengths and successes of regulatory reform. . . . . . . . . . . . . . . . . . . 32
The challenges confronting future regulatory performance . . . . . . . . . . . . . 40
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Part II*
Regulatory Policies and Outcomes
Chapter 2. Regulatory Governance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Policy options for consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Chapter 3. Competition Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Policy options for consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Chapter 4. Market Openness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Policy options for consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Chapter 5. The Telecommunications Sector . . . . . . . . . . . . . . . . . . . . . . . . 107
Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Policy options for consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
* The background material used to prepare this report is available at: www.oecd.org/regreform/
backgroundreports
5
OECD REVIEWS OF REGULATORY REFORM: CANADA – ISBN 92-64-19908-X – © OECD 2002
TABLE OF CONTENTS
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
List of Boxes
1. What is regulation and regulatory reform? . . . . . . . . . . . . . . . . . . . . . . . 20
2. The Agreement on Internal Trade (AIT) . . . . . . . . . . . . . . . . . . . . . . . . . 26
3. The twelve steps of the federal regulatory process for secondary legislation. . . . 35
4. E-government in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5. Government of Canada Innovation Strategy . . . . . . . . . . . . . . . . . . . . . . 42
6. The federal-provincial division of powers. . . . . . . . . . . . . . . . . . . . . . . . 46
7. Federal/provincial co-operation in regulatory activity: the example
of Canada’s electrical safety system. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8. Central oversight units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9. Efficiencies: a hot issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10. The conformity continuum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11. Appendix A to the federal regulatory policy . . . . . . . . . . . . . . . . . . . . . . 98
12. CRTC Interconnection Steering Committee (CISC) . . . . . . . . . . . . . . . . . . . 110
13. Inside wiring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
List of Tables
1. Canadian investment position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2. The evolution of Canada’s regulatory policies . . . . . . . . . . . . . . . . . . . . . 33
3. Comparison of Canadian policy and law-making requirements with the1995 OECD
Recommendation on Improving the Quality of Government Regulation . . . . . . 57
4. Main sectoral regulators and the competition authority in Canada . . . . . . . . . 61
5. Regulatory powers across levels of government . . . . . . . . . . . . . . . . . . . . 62
6. Merchandise trade in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
7. Regional composition of Canadian merchandise trade . . . . . . . . . . . . . . . . 95
8. Major events in Canadian telecommunications . . . . . . . . . . . . . . . . . . . . 109
9. Cellular mobile market share and total subscribers . . . . . . . . . . . . . . . . . . 118
10. Development of local competition . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Appendix
1.1. Reform of sectoral economic regulations in Canada. . . . . . . . . . . . . . . . . . 125
1.2. Potential impact of sectoral regulatory reform . . . . . . . . . . . . . . . . . . . . . 128
List of Figures
1. Key indicators in long-term and international perspective . . . . . . . . . . . . . . 21
2. Canada’s real GDP growth rates and current account balances. . . . . . . . . . . . 24
3. OECD Basket of consumer mobile telephone charges . . . . . . . . . . . . . . . . . 118
4. Long distance minutes of traffic and average price per minute . . . . . . . . . . . 119
5. OECD residential basket. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
6. OECD Basket of business telephone charges . . . . . . . . . . . . . . . . . . . . . . 120
7. OECD leased line basket. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
8. Broadband subscribers in the OECD . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
6
OECD REVIEWS OF REGULATORY REFORM: CANADA – ISBN 92-64-19908-X – © OECD 2002
ISBN 92-64-19908-X
OECD Reviews of Regulatory Reform: Canada
Maintaining Leadership Through Innovation
© OECD 2002
Executive Summary
OECD REVIEWS OF REGULATORY REFORM: CANADA – ISBN 92-64-19908-X – © OECD 2002
EXECUTIVE SUMMARY
Canada has a mature and well-functioning
system of regulatory governance.
It is not just a regulatory reform pioneer but has been a consistent leader and a vigorous
innovator across a wide range of topics. The principles and processes of regulatory quality
management have permeated the policy-making process to an extent matched by few if
any OECD countries and are embedded in the administrative culture of policy makers.
Despite these extensive achievements some areas have been identified in this review in
which improvements are possible and would yield significant gains.
Canada has worked steadily to become a mature,
open and socially aware society.
It has forged its own unique path to achieve a quality of life near the top end of the OECD
scale. It is a highly decentralised federation with a huge landmass, and a necessarily close
economic relationship with its powerful US neighbour. Nation building is an important
policy goal, reflected in the priorities of the federal government and is pursued, for
example, through interregional co-operation, universal public services, Canadian content
policies, communication links and respect for diversity. Canadians also attach a growing
priority to health, safety and the environment and seek a balance among social goals and
competitiveness.
Its economy is one of the OECD’s strongest,
following major reforms.
The economy has revived after experiencing serious problems in the1970s. Sluggish
performance in terms of output, productivity, inflation and budget deficits endured into
the1990s. Structural reforms (including tax, labour market and sectoral reforms), free
trade agreements with the US and Mexico, and measures to tackle the fiscal deficit, set the
economy back on track.
Regulatory reforms contributed to the turnaround.
Regulatory shortcomings had been identified as underlying factors in the economy’s poor
performance. A number of sectors underwent significant deregulation, and regulatory
quality became an important policy goal, with the1986 Regulatory Reform Strategy one of
the first comprehensive regulatory policies developed in the OECD. There is evidence of a
sectoral link between Canada’s productivity performance and regulatory reform.
Performance of the telecommunications and trucking sectors greatly improved following
successful regulatory reforms that allowed greater competition in these sectors.
8
OECD REVIEWS OF REGULATORY REFORM: CANADA – ISBN 92-64-19908-X – © OECD 2002