Self-regulated professions

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Foreword

The professions comprise up to one fifth of Canada's service economy and seven percent of the total hours worked in Canada's business sector. It is cause for concern, therefore, that labour productivity in this important sector of the Canadian economy is approximately half that of the professions in the United States and is in the bottom quintile for labour productivity among Canadian industries.

Research by the Organization for Economic Co-operation and Development (OECD) confirms the worrisome state of Canada's professional services sector. The OECD reported earlier this year that Canada's best opportunity for growth is in labour productivity and specifically recommended that Canada promote competition in professional services by reducing regulation. Other research by the OECD has shown that countries that have streamlined and improved their regulatory regimes have seen significant payoffs in terms of productivity.

Much of the productivity problem that plagues Canada's professions may be due to regulators not considering competition issues, or considering them inadequately, when they were creating their regulatory schemes, in the context of a very different Canadian economy than exists today.

Normally, competition in a free market system protects both consumers and service providers better than any other alternative. The only time it is desirable to supplant competition by regulation is when markets are not functioning as well as they should be and when the benefits of regulation demonstrably outweigh the benefits of competition alone. But even then, regulation will be most effective when it imposes minimal restraints on competition.

This study, the first of its kind by the Competition Bureau, is a detailed look at the way regulation affects competition in self-regulated professions in Canada. As such it is a valuable tool for professionals, politicians, policy makers and consumer advocates. The Bureau is uniquely placed to do this study. As advocates for competition, we have considerable expertise in analyzing professional practices to identify uncompetitive elements. In addition, we hope that our advocacy and enforcement activities will work in tandem: by having regulators consider the competitive impacts of regulation, it will become unnecessary for the Bureau to consider them during investigations into alleged anti-competitive conduct.

I encourage readers to see this report's findings as applying to all professions. Our recommendations, which we plan to revisit in two years, are certainly not an indictment of any of the professions. Rather, our goal is to identify opportunities for improving necessary regulations and eliminating unnecessary ones so that Canadians can benefit from the best combination of regulation and competition.

Some will no doubt argue, correctly, that competition needs to be balanced against other policy objectives. My concern is that we have regulatory regimes that were established without adequately considering competition.

Our collective challenge, whether we are professionals or users of professional services, is to bring more competition to the professions. This study is a good place to start.

Sheridan Scott

Commissioner of Competition