Hey Ontario! Where’s OUR Red Tape Challenge? (Part 2)

The province of Ontario ‘s 2014 Red Tape Challenge is attempting to identify where provincial bureaucracy hinders industry and causes inefficiencies. And although the residential construction industry was notably absent from the survey, that doesn’t mean it should sit by silently. We invite your comments here and suggest you send your thoughts to the general inquiry page of the province’s web site. (Read Part 1)

Part 2: Regulatory compliance expectations and procedures
Steve Ryan has a problem with Ontario’s Red Tape Challenge. He summarises their approach as “You tell us what’s wrong with the legislation and we’ll see if we can fix it.” Ryan is Managing Partner of MMI Professional Services, a business advisory and educational service to the construction industry that helps owners and operators manage their companies better. His position gives him a great overview of the red tape and bottlenecks faced by operators of residential construction companies. “For me, the answer is not a series of bullet points like; fix this, fix this, and fix this. It’s about how the whole regulatory framework is developed and how it’s applied to each business.”

When Ryan suggests the Red Tape Challenge has things mixed up, he’s talking about the province’s underlying assumption that every operator understands all the relevant legislation in the first place. For small and medium sized companies, that isn’t realistic. “The builder is pretty much left to himself to figure out what the rules are, and what constitutes compliance,” he says. “Maybe there are tools available that help with this, but I certainly am not aware of them. How does a builder even find out if they’re complying? I think if we got down to the nuts and bolts of what it takes to be compliant, I don’t think anybody really knows.”

Compliance headaches on the work site
At the work site level, this can result in difficulties with compliance inspectors. On one hand are interpretations of regulations and guidelines that can change from inspector to inspector and even visit to visit. This makes it very difficult for those willing to comply when interpretations are at all subjective, or when an inspector feels the need to justify site a visit by coming up with something, anything, that can be made into a work order.

And then there are the inspectors and compliance officers who avoid hard-nosed builders, and instead visit sites where there’s a more a civil reception and some effort to comply with work orders. “You can end up with people who are doing their best to play by the rules attracting the oversight that should be directed to the real renegades,” Ryan suggests. “There can be a built-in bias.”

And it’s not solely a work site inspection problem; it’s an office management issue too. “When you talk to people on their second or third WSIB audit, the same applies,” says Ryan. “The ones who are easier to work with are often the ones who are audited repeatedly because the others are just too painful.”

The consumer has a role with compliance
Another area worth pursuing has to do with consumer education. “For things like WSIB, or perhaps the Tarion warranty programme, I think it would be much more efficient and fairer for those companies doing their best to comply if the province focused on education,” says Ryan.  “In other words, inform homeowners of the risks they are really undertaking if they have work done on a cash basis, which by definition means no WSIB coverage; or if they’re buying a home from a builder who’s not a Tarion builder. If consumers understood why the legislation was there it would actually be a sales benefit.”

“The burdens are way out of proportion,” says Ryan.
Ryan is willing to concede that Ontario’s Red Tape Challenge is focussed on industries that perhaps face inter-provincial or international competition in terms of efficiency and delivery cost. However, he feels the heavy burden placed on the small and medium sized businesses that make up the vast majority of the residential construction industry is, in fact, an important issue that needs to be addressed by all provinces, not just Ontario. The costs of current legislation and compliance imposed on residential builders are, as confirmed by the 2014 Fraser Institute report, so high they impact on housing availability, housing costs, and competition within the industry.

Ryan would love to see a couple of thousand comments go to the province addressing this and other bottleneck issues. Without that feedback, changes can’t be initiated.

We also invite your comments and encourage conversations

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