Canada Launches New Cabinet Directive to Cut Red Tape and Boost Regulatory Competitiveness
On October 21, 2026, the Government of Canada announced a new Cabinet Directive on Regulatory Competitiveness and Red Tape Reduction. Effective December 31, 2026, the directive requires regulators to reduce regulatory burden costs by $2 for every $1 added, assess competitiveness impacts, remove outdated rules, and use recognized standards.
On October 21, 2026, the Honourable Shafqat Ali, President of the Treasury Board, announced a new Cabinet Directive on Regulatory Competitiveness and Red Tape Reduction. The directive takes effect on December 31, 2026, replacing the 2018 Cabinet Directive on Regulation.
Under the new framework, regulators are required to reduce regulatory burden costs by $2 for every $1 added. They must also assess the impacts of regulatory proposals on competitiveness, remove outdated rules quickly, use recognized national or international standards by default, and regularly review regulations. Regulators must uphold all obligations to First Nations, Inuit, and Métis communities under the directive.
The initiative aims to make it easier for businesses to invest, innovate, and grow while strengthening federal regulatory predictability and efficiency. It is intended to maintain effective protections for health, safety, and the environment, and is expected to reduce time spent on paperwork for small business owners.
The announcement follows the introduction of Bill S-7, the Cutting Red Tape for All Canadians Act, on October 7, 2026. That bill targets amendments to 31 pieces of legislation. Progress has already been reported: since the September 8, 2025, Red Tape Progress Reports, more than 160 of nearly 500 identified achievements and initiatives have been completed. These efforts build on a 60-day Red Tape Review conducted in Summer 2025.
Business leaders responded to the announcement. Dan Kelly, President and CEO of the Canadian Federation of Independent Business, welcomed the two-for-one rule as a meaningful step to lessen regulatory burden. Candace Laing, President and CEO of the Canadian Chamber of Commerce, stated that the directive is an important step toward a more efficient regulatory environment but emphasized the need for measurable reductions.