Treasury Board president issues new directive to cut regulation costs

The federal government is introducing a measure that will require departments to cut the cost of regulation by $2 for every dollar added over a three year period.

On Wednesday, Oct. 21, Treasury Board President Shafqat Ali announced a new cabinet directive that will implement the change. The government said the directive will also assess the impact of regulatory proposals on competitiveness and remove outdated rules.

“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,” Ali said in a statement.

The directive, pitched as another way the federal government is reducing regulation and red tape, will come into effect on Dec. 31, 2026. It will replace a cabinet directive from 2018, which set out the government’s expectations and requirements for developing and managing federal regulations.

The new directive will also review “significant impact regulatory measures” defined by the Treasury Board within five years, and all other regulations once every 10 years.

Business leaders applauded the new directive.

“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,” Dan Kelly, president of the Canadian Federation of Independent Business, said in a statement.

The new directive is the latest example of the government of Prime Minister Mark Carney looking to loosen Canada’s regulatory regime, and arrives on the heels of a new bill, which if passed, would change 31 laws to cut regulations.

Bill S-7, titled the Cutting Red Tape for all Canadians Act, was tabled in the Senate in early October and proposes amendments to laws governing a wide swathe of industries.

The changes are intended to address “irritants and obstacles” in the current regulatory regime and is expected to save $264 million over 10 years, with knock-on economic effects expected.

Eleven of the 31 legislative changes within the bill emerged from the federal government’s “red tape review” and consultation process.

In July 2025, Ali gave ministers 60 days to identify outdated regulations. The red tape exercise identified nearly 500 initiatives, covering a broad scope of sectors from transportation to the environment.

Around 160 of those initiatives have now been complete and the federal government is expected to deliver more updates on the initiatives in the near future.