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Canada launches new directive: $2 of red tape cuts for every $1 added
Treasury Board President Shafqat Ali on October 21 announced the new Cabinet Directive on Regulatory Competitiveness and Red Tape Reduction, requiring regulators to cut $2 of regulatory burden costs for every $1 added, effective December 31, 2026.
Why it matters
The federal government announced on October 21 in Ottawa a new Cabinet Directive on Regulatory Competitiveness and Red Tape Reduction, changing the foundation of how the government creates regulations. Its centrepiece: regulators must reduce regulatory burden costs by $2 for every $1 added, a two-for-one rule designed to stop compliance costs from growing year after year.
The directive follows the October 7 introduction of the Cutting Red Tape for All Canadians Act (Bill S-7) and takes effect on December 31, 2026, replacing the 2018 Cabinet Directive on Regulation.
Full report
According to the Treasury Board of Canada Secretariat, Treasury Board President Shafqat Ali's new directive requires regulators to assess the impacts of regulatory proposals on competitiveness, remove outdated rules as quickly as possible, use recognized national or international standards by default, and regularly review regulations to ensure they remain effective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 up to date.
The announcement says improving the predictability and efficiency of federal regulations will make it easier for businesses to invest, innovate and grow, while maintaining protections for the health and safety of Canadians and the environment. The directive also requires regulatory proposals and decisions to be based on assessments of cost, benefit and risk, and to uphold obligations to First Nations, Inuit and Metis communities.
Business groups welcomed the move. CFIB President Dan Kelly called the two-for-one requirement "a significant step forward" that CFIB has long advocated, while adding that success "will ultimately be measured by results" — fewer forms and lower compliance costs. Canadian Chamber of Commerce President and CEO Candace Laing said the next priority is translating the commitments into measurable reductions in red tape.
For context, the December 3, 2025 Red Tape Reduction Summit in Ottawa launched horizontal red tape reviews, and since the September 8, 2025 Red Tape Progress Reports, nearly 500 achievements and initiatives have been identified, with more than 160 completed.
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