Broad Discussion Is Needed On The Concept Of User Pays Regulations

on July 24 | in Ag News | by | with No Comments

This week’s guest commentary comes from Nathan Stevens of the Christian Farmers Federation of Ontario

 

The impact of changes in approach to regulating industries over time is an important issue for farming and for the businesses that support Ontario agriculture. The tight fiscal situation facing provincial government has resulted in efforts to change the approach of several ministries to adopt a “user pays” model for regulatory approvals and other fees associated with their mandates. There is the need for a deeper discussion of when these fees are appropriate and when the public should carry a portion of the burden.

The concept of “user pays” seems relatively straightforward. The individual or business that makes use of the item or service pays for the associated costs related to the item. When there are choices and there is competition between the providers of the item or service, then a low cost solution will emerge. The potential for unreasonable fees arises when choices are lacking and there is no competition for the item or service.

One example of the “user pays” concept that works well is the 407 highway. Motorists have the choice when they travel through Toronto to use provincially-owned highways such as the 401. They also have the choice to pay for the use of the 407 toll highway as a means to get across the city. Individuals get to choose whether spending a few dollars in tolls is worth the potential time savings offered by this highway or to use the public highway and potentially sit in congested traffic for a longer period of time. There is choice and there is competition.

When we apply this concept to the area of regulations and government user fees, the situation is quite different. While there are rules that govern how great the impact of regulations on businesses in Ontario can be, the simple fact is that choices are often limited and the lack of competition means that finding the lowest cost solution is not a high priority. Instead, it is possible that many low-cost solutions are not allowed for a variety of reasons, some of which are quite valid and others which could be debated and perhaps altered.

For farmers, the most recent example of the impact of the regulatory “user pays” concept is the changes to the eco-fees charges on tires from Ontario Tire Stewardship. The addition of regulations that mandate full-cost recovery on the recycling of tires means that the fees need to go up over time or more competitive options need to be allowed. It makes sense and is reasonable for the users of tires help pay for recycling them, but Ontario tire users are facing exceptionally high costs because a number of generally accepted low-cost options have been removed for a variety of reasons.

The CFFO believes that in situations such as the eco-fee on tires the public should help bear the cost burden created by limiting options. Where exceptionally high costs are being imposed on a user because of exceptional societal restrictions, there needs to be open debate on whether society should help shoulder the burden being imposed.

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