The federal government is introducing a new directive requiring regulators to reduce regulatory burden costs by $2 for every $1 added, as Ottawa seeks to improve business competitiveness and make federal rules more efficient.
Treasury Board President Shafqat Ali announced the Cabinet Directive on Regulatory Competitiveness and Red Tape Reduction recently, following the introduction of the Cutting Red Tape for All Canadians Act earlier this month. The directive is scheduled to take effect Dec. 31, replacing the 2018 Cabinet Directive on Regulation.
The new framework will require regulators to assess the competitiveness impacts of proposed regulations, remove outdated rules as quickly as possible, use recognized national or international standards by default and regularly review regulations to ensure they remain effective and current.
The government says the changes are intended to make federal regulations more predictable and efficient, helping businesses invest, innovate and grow while maintaining protections for Canadians’ health and safety and the environment.
“Canada continues to reinforce its position as a destination to invest, innovate, and do business. Building on the Cutting Red Tape for all Canadians Act, this new directive modernizes our regulatory system and also supports economic growth and competitiveness while maintaining strong protections for Canadians and the environment,” said Ali.
Business groups welcome red tape measures
The Canadian Federation of Independent Business welcomed the introduction of the directive, saying paperwork and administrative requirements take time away from serving customers and growing businesses.
“Small business owners spend countless hours on process steps and paperwork that takes them away from serving customers and growing their business, so we’re pleased to see the federal government taking red tape reduction seriously. Introducing a series of measures, including a two-for-one rule, where government reduces regulatory burden costs by $2 for every $1 added, is a meaningful step that will help lessen the regulatory burden. We look forward to working with the government to make sure these changes delivers real, measurable savings for entrepreneurs,” said Dan Kelly, President and Chief Executive Officer, of the Federation.
The Canadian Chamber of Commerce also supported the directive, emphasizing the need to translate the government’s commitments into measurable reductions in regulatory requirements.
“Government red tape imposes real costs on Canadian businesses, consuming time and resources that could otherwise be invested in innovation, job creation and growth. The Canadian Chamber of Commerce welcomes the President of the Treasury Board’s new Cabinet directive to measure the cost of regulatory burden and establish a systematic approach to reducing it. Since last year’s Red Tape Summit, the Canadian Chamber and our members have worked closely with the Treasury Board of Canada Secretariat to identify unnecessary regulatory requirements and barriers to doing business. This directive is an important step toward a more efficient, predictable and competitive regulatory environment. The next priority is translating these commitments into measurable reductions in red tape so businesses can spend less time navigating paperwork and more time investing, hiring and growing Canada’s economy,” said Candace Laing, President and Chief Executive Officer, Canadian Chamber of Commerce.
New requirements for federal regulators
Under the directive, regulatory proposals and decisions must be based on assessments of costs, benefits and risks, as well as their effects on competitiveness and diverse groups of Canadians. Regulators must also continue to uphold all obligations to First Nations, Inuit and Métis communities.
Supplementary resources outlining requirements for developing regulatory proposals are expected to be made available shortly. Key obligations under the existing directive concerning good regulatory practices will remain in place.
The announcement follows a series of federal initiatives aimed at reducing administrative requirements for businesses. On Dec. 3, 2025, Ali hosted a Red Tape Reduction Summit in Ottawa and launched cross-government reviews of regulations, building on a 60-day Red Tape Review conducted in the summer of 2025.
On Oct. 7, 2026, the government introduced Bill S-7, the Cutting Red Tape for All Canadians Act, which targets amendments to 31 pieces of legislation to remove regulatory burdens and red tape.
The government has also continued work on nearly 500 achievements and initiatives identified in Red Tape Progress Reports published Sept. 8, 2025. More than 160 of those initiatives have been completed, with implementation continuing across federal departments and agencies.
The new directive establishes the government’s latest framework for reducing regulatory costs, with the two-for-one requirement and regular reviews intended to make reducing unnecessary burdens a continuing part of the federal regulatory process.
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