July 15, 2010
The pros and cons of regulation
Tom Intven
LO President
All of us, no matter the sector of our industry we operate in, face regulations every day. Regulations are rules of conduct put in place by governing bodies, which include any level of government, or self-imposed governing bodies — such as with our own certification programs.
Experts split the types of regulation into three categories: economic, social and process. Economic regulation refers to restrictions on prices, quantity, entrance and exit conditions for business. These are usually set by government. Social regulations include the areas of environmental protection, public health and safety. Process refers to government requirements influencing the operation of the public and private sector, such as paperwork requirements and administrative costs incurred in the operation of business. We all can think of examples of these three categories that apply to our own business and in our everyday lives.
Regulations have positive and negative aspects. They help to set standards of behaviour and quality. Standards are necessary in any business, especially those that set quality, which are lacking in some of our sectors. In landscape construction, for example, there is a real need for a quality assurance system.
Nurseries are heavily regulated for pest control by the Canadian Food Inspection Agency (CFIA) and other government agencies. Minimum size standards have been established, but the area that needs attention is quality assurance. This is particularly important for new cultivars, where tremendous demand can sometimes reduce quality. Right now our association takes a passive role in ensuring quality standards. We really need to step up, and address this important issue in the coming years.
A sense of order is important for our own well being and for outside interest groups and governments. A good example is found in the history of new plant introductions in Canada.
In the 1960s, no plant patent act existed in Canada. Breeders of new plants from overseas were not interested to introduce them into Canada, because there was no way of regulating propagation and the collecting royalties. Canada was considered the Wild West, consisting of a bunch of independent cowboys. A small group of Ontario nurserymen, led by Leno Mori and Lloyd Murray, formed the Canadian Ornamental Plant Foundation. This allowed the introduction of new plants and protected their propagation and royalty collection, paving the way for a stream of new plants into the Canadian market. The regulation that COPF provided, created an international sense of order and brought investment and new introductions to our emerging markets.
What we fear from easy entry is that newcomers may not be professional. It is felt this may reflect badly on the rest of us who focus on quality work and building a solid reputation. As an association, it is still our mandate to educate from within through certification, management and technical courses and training which enable and empower our members to raise their professionalism. We will remain focused on this. Our goal is to harmonize our educational efforts with those offered by all educational institutions in Ontario.
The study suggests that in most first world countries, regulations account for about 10 per cent of GDP, and for many businesses up to 10 per cent of operating costs. Greece has one of the highest levels of government regulation, and we see the problems it is experiencing. The same applies to our businesses. When we are faced with more regulation, it immediately hits our bottom line.
Recently, a letter of concern was received from a contractor member in the Golden Horseshoe Chapter. His complaint was that municipalities are adding so many rules and regulations for contractors. He feels it is making it extremely difficult to survive. Examples: parking a commercial vehicle on the road while working at a site requires a permit; placing materials on the road temporarily requires a permit; moving more than two truckloads of material in or out of a site requires a permit; excavating more than 100 square feet requires a permit. The list goes on and on.
On the grower front, there is pressure from CFIA that nurseries become domestically certified in pest control and tracking plants. Some nurseries have embraced this regulation, while others are hesitant, claiming the implementation and ongoing costs are prohibitive. They feel this is especially true in this highly competitive market, where margins are already squeezed.
How much regulation is too much? When does it become stifling to business? When does it reach the breaking point, where there is so much regulation that it is no longer profitable to operate a business?
Tom Intven may be reached at 519-631-1008, or tintven@landscapeontario.com.
LO President
All of us, no matter the sector of our industry we operate in, face regulations every day. Regulations are rules of conduct put in place by governing bodies, which include any level of government, or self-imposed governing bodies — such as with our own certification programs.Experts split the types of regulation into three categories: economic, social and process. Economic regulation refers to restrictions on prices, quantity, entrance and exit conditions for business. These are usually set by government. Social regulations include the areas of environmental protection, public health and safety. Process refers to government requirements influencing the operation of the public and private sector, such as paperwork requirements and administrative costs incurred in the operation of business. We all can think of examples of these three categories that apply to our own business and in our everyday lives.
Regulations have positive and negative aspects. They help to set standards of behaviour and quality. Standards are necessary in any business, especially those that set quality, which are lacking in some of our sectors. In landscape construction, for example, there is a real need for a quality assurance system.
Nurseries are heavily regulated for pest control by the Canadian Food Inspection Agency (CFIA) and other government agencies. Minimum size standards have been established, but the area that needs attention is quality assurance. This is particularly important for new cultivars, where tremendous demand can sometimes reduce quality. Right now our association takes a passive role in ensuring quality standards. We really need to step up, and address this important issue in the coming years.
Helping to build public image
Regulated trades enjoy more confidence from the public than unregulated trades. As a home-owner, we hire a certified electrician with confidence, knowing his work is monitored by government inspectors. In our trade, consumer confidence comes from reputation and word of mouth. Regulation, whether in the form of self-regulated or government-imposed quality assurance systems, goes a long way to help us gain improved public image and confidence.Sense of order
Our industry has come a long way in two generations. From a fledgling industry of unorganized, independently-minded operators, we have evolved into a well organized association of 10 sectors, all striving under the LO banner toward the same goals.A sense of order is important for our own well being and for outside interest groups and governments. A good example is found in the history of new plant introductions in Canada.
In the 1960s, no plant patent act existed in Canada. Breeders of new plants from overseas were not interested to introduce them into Canada, because there was no way of regulating propagation and the collecting royalties. Canada was considered the Wild West, consisting of a bunch of independent cowboys. A small group of Ontario nurserymen, led by Leno Mori and Lloyd Murray, formed the Canadian Ornamental Plant Foundation. This allowed the introduction of new plants and protected their propagation and royalty collection, paving the way for a stream of new plants into the Canadian market. The regulation that COPF provided, created an international sense of order and brought investment and new introductions to our emerging markets.
Easy entry into industry
A common complaint from some members is that anyone with a pick-up truck and wheelbarrow can become a landscaper. Yet many members entered into our industry with nothing, and became very successful, thanks to a strong work ethic and commitment to excellence.What we fear from easy entry is that newcomers may not be professional. It is felt this may reflect badly on the rest of us who focus on quality work and building a solid reputation. As an association, it is still our mandate to educate from within through certification, management and technical courses and training which enable and empower our members to raise their professionalism. We will remain focused on this. Our goal is to harmonize our educational efforts with those offered by all educational institutions in Ontario.
Negative aspects of regulation
On the negative side, regulation adds time and cost to our operations and can reduce margins. Studies by the World Bank show that regulation can add substantially to costs of doing business.The study suggests that in most first world countries, regulations account for about 10 per cent of GDP, and for many businesses up to 10 per cent of operating costs. Greece has one of the highest levels of government regulation, and we see the problems it is experiencing. The same applies to our businesses. When we are faced with more regulation, it immediately hits our bottom line.
Recently, a letter of concern was received from a contractor member in the Golden Horseshoe Chapter. His complaint was that municipalities are adding so many rules and regulations for contractors. He feels it is making it extremely difficult to survive. Examples: parking a commercial vehicle on the road while working at a site requires a permit; placing materials on the road temporarily requires a permit; moving more than two truckloads of material in or out of a site requires a permit; excavating more than 100 square feet requires a permit. The list goes on and on.
On the grower front, there is pressure from CFIA that nurseries become domestically certified in pest control and tracking plants. Some nurseries have embraced this regulation, while others are hesitant, claiming the implementation and ongoing costs are prohibitive. They feel this is especially true in this highly competitive market, where margins are already squeezed.
How much regulation is too much? When does it become stifling to business? When does it reach the breaking point, where there is so much regulation that it is no longer profitable to operate a business?
Regulation can be crippling
The dramatic cosmetic pesticide ban last year, imposed by the Liberal government in Ontario, crippled the lawn care sector to a dangerous level. In addition, garden centres lost significant sales from pest control departments. This is an example of how unilateral government regulation can devastate an industry. As we move forward, we will face more regulation imposed by government, and in some cases self-imposed. Let us proceed with caution on regulations that we as an industry control, and fight stifling government-imposed regulation at every turn.Tom Intven may be reached at 519-631-1008, or tintven@landscapeontario.com.