Canada’s economic Achilles’ heel is its regulations. The Building Canada Strong Act may change that

As published in The Hub

When it comes to current global trade disruptions, Canadian oil, natural gas, critical minerals, agricultural products, and other commodities have become highly sought after. But Canada’s main trade challenge has never been a lack of global demand. The key constraint has been capacity.

For years, Canada’s potential to produce, process, move, and transport its resources competitively to diverse markets has been held back by stagnant investment conditions, regulatory malaise, and underperforming supply chains.

But there is some hope on the horizon. As a result of growing geopolitical tensions, tariffs, and negligible economic growth, the Canadian public has become much more supportive of policy and legislative improvements to federal regulation. Canada is seeking to double non-US trade by 2035 and become the fastest-growing G7 economy. Following on the heels of a successful investment summit that pitched Canada to the world’s largest investors, the Carney government has introduced ambitious legislative changes through Bill C-39, which updates the country’s labour relations system, improves supply chains, and speeds up major project regulatory approvals and permitting.

The packaging of these issues is strategic: while we tend to focus on energy and critical minerals production in discussions around trade diversification and regulatory reform, these products are only valuable if they can get to global customers. The government’s reform package addresses each link in the chain: regulatory approvals determine whether production grows; transportation policy determines whether it can access markets; and federal labour law affects whether those trade corridors operate reliably. Taken together, they are intended to achieve an outcome that supercharges Canada’s economic resiliency and sovereignty.

The question now is whether our policymaking capacity can stay disciplined and deliver on this bill’s expected outcome. The progress our legislators make in the coming weeks and months will be critical to paving the way for a more prosperous and economically sovereign Canada.

One could argue that this parliamentary sitting will be the most consequential in a decade.

From Band-Aid to surgery

Canadian businesses have long ranked regulatory burden as their number one barrier to investment in the country. Over the past decade, that burden has manifested as low productivity, stagnant GDP per capita, net outflow of investment and weak spending on machinery, technology and infrastructure.

The Carney government was elected in spring 2025 with a mandate to get the economy moving and diversify trade partners. Its first big legislative bill, C-5: Building Canada Act, provided a fast-track mechanism for projects designated in the national interest, and created a Major Projects Office to facilitate progress using federal levers.

The criticism of C-5 from the private sector was that it picked winners and losers— that the regulatory system was not made more efficient, but instead a concierge service was developed for politically favoured projects to get around the inefficient system. While it lent public and political enthusiasm for building major projects in Canada again, it unleashed only a handful of projects, not the economy.

To their credit, the Carney government—in particular the Prime Minister and several key ministers—spent the subsequent year listening to the concerns and challenges of Canadian business leaders and employers. The result was the release of three discussion papers, on labour, transportation and major project regulation respectively, in April and May of this year, after a majority government had been secured. The federal government often releases discussion papers as a way to communicate policy changes it is considering, and to solicit informed feedback from the public, including Indigenous rightsholders, on particular issues, before they are translated into new regulations or legislation.

Business leaders communicated their support for several measures in each area during the consultation period. These measures included:

Simplifying federal processes for major projects

• Ensuring that federal reviews and final decision-making timelines take no more than one year once a proponent’s information is complete.
• Building  “One-Project, One-Review, One-Decision” architecture to eliminate intra and inter-governmental duplication.
• Establishing a centralized Crown Consultation Hub to manage a single, coordinated Indigenous consultation process focused on federal effects and fulfilling the Crown’s obligations under Section 35 of the Constitution Act.
• Assigning project oversight directly to the Canadian Energy Regulator and the Canadian Nuclear Safety Commission for intraprovincial pipeline and nuclear projects.

Trade and transportation

• Adding supply chain efficiency language into the Canada Transportation Act to ensure that future policy decisions focus on enhancing supply chains rather than focusing narrowly on specific modes of transportation.
• Advancing alternative ownership models of Canadian transportation and logistics assets including in airports, ports, and other public assets.
• Eliminating persistent regulatory bottlenecks and administrative burdens that slow down the development of gateways and corridors.
• Materially improving government-to-government planning processes and investment opportunities in supply chains across Canada, including multi-modal logistics coordination.
• Enhancing port governance and modernizing their ability to generate revenues and investment.

Labour policy

• Strengthening direct bargaining, conciliation, and cooling-off processes to ensure that negotiations are conducted efficiently,  in good faith, and maximize opportunities for settlement before economic pressure is applied.
• Extending the 72-hour strike/lockout notice periods for activities critical to Canada’s economy and the supply chains that serve it.
• Creating a new “Special Mediator” role to intervene and facilitate resolution in cases where parties are deadlocked, and the national interest is at stake, while suspending the right to strike during this period.
• Creating new statutory authority for the Governor in Council to compel binding arbitration in limited instances where collective bargaining has been attempted and exhausted, including the Special Mediator step, and in circumstances where a strike or lockout will significantly harm the national interest.

Trust is our most valuable commodity

In this fraught era, with worsening physical and political disruptions to supply chains, it has become a favourite line within the Carney government to point out that trust is Canada’s most valuable commodity. But there have been good reasons for trading partners and investors to doubt Canada’s ability to deliver projects and products on time and on budget.

It has become too complicated and expensive to build trade corridors. Our trading capacity is often close to being or actually maxed out, creating unnecessary delays at ports and railroads, congestion in pipelines, and allowing inevitable weather disruptions or maintenance failures to become catastrophic supply chain disruptions.

As the federal government itself notes, Canada’s transportation system has been slipping in its global performance and rankings in recent years. Doubling non-US trade is an admirable goal.  But increasing Canada’s trade volumes by just 10 per cent would require an additional 650 million tonnes of goods to be moved through our systems, which is roughly four times more than what transits through the Port of Vancouver in a year. If we are to pull this off, building new trade infrastructure must become simpler and more efficient.

Canada has a reputation for moving slowly and not respecting investors’ money; content to whittle away months or even years on permits and approvals, asking for gratuitous information or redundant studies, or leaving months between required consultation sessions. The consequences of these policy choices are real. Our inability to move our goods to customers limits growth, suppresses pricing for Canadian products and constrains the country’s ability to compete in global markets, despite our abundant natural resources and agricultural strengths.

While considerable efforts have been made by the federal government and the Impact Assessment Agency of Canada to pare back the number of projects it has to review and create cooperation agreements with provinces so that they have more scope to regulate within their jurisdiction, this work must be finished.

As part of the government’s reform package, its  “Crown Consultation Hub” has the potential to thread the needle between improving clarity on roles, timelines, and accountability in processes for proponents and Indigenous rights-holders, while maintaining confidence in the process. In our view, a one-year approval timeline must also be consistent with the constitutional duty to consult and accommodate, and be resilient to judicial reviews.

Recurring labour disputes at ports, railways, and airlines have cost the country billions of dollars in lost revenue and have frustrated travellers, shippers, and customers. From 2022 to 2025, Canada suffered an alarming 54 work stoppages in federally regulated sectors involving more than 260,000 workers. This is far outside the norm experienced by our peers and competitors, and it has become untenable.

The economic losses of work stoppages fall just as heavily on farmers, miners, manufacturers, and customers. There are cases when it is in the national interest to prevent such outcomes. For example, the 2024 simultaneous railway work stoppages at CN and CPKC paralyzed the country’s supply chain networks, with CIBC estimating that a one-week shutdown could have reduced annualized GDP growth by about 0.4 percentage points.

Moreover, these losses can weaken investor confidence and send the wrong signal to countries wanting to secure reliable supplies of energy and resources through increased levels of trade or foreign direct investment.

The Carney government’s proposed policy measures are designed to establish a higher level of stability for Canadian exporters and the supply chains that serve them. This is an admirable goal for a country determined to anchor its economic strategy in trade diversification and increased exports outside of the U.S. The next few weeks will provide an opportunity to ensure the policy reforms go far enough.

A crisis is a terrible thing to waste

Canada has many regulatory, transportation, and labour issues that must be fixed.  C-39 provides a generational opportunity to fix them.

Changes that are politically complicated and contentious have been deferred.  Until now. Our lack of action has led to slow economic decline.  As Canada faces a number of extraordinary threats, not least of which is a trade conflict with the U.S., a window of opportunity has opened whereby public opinion is favouring bold action. Sticky problems are becoming possible to address.

We appear to have a federal government willing to spend the political capital needed to make these necessary improvements. Parochial interests will no doubt object loudly to some of the reforms and seek to water them down. But those who understand that these reforms are urgent, necessary and in the country’s best long-term interests need to be vocal in their support for ambitious action, not half measures.