Red tape driving small business from Ottawa, owners say

Last Updated: Monday, October 2, 2006 | 12:15 PM ET

CBC News

A local business owner says it would have cost her $45,000 to relocate within Ottawa, and that's why she moved to the neighbouring city of Gatineau.

Judith Gripton moved her restaurant, Delish, from Ottawa's New Edinburgh neighbourhood to Old Hull in Gatineau after deciding Ottawa's fees and regulations were too much.

The city is trying to stem such moves with its Mayor's Cutting Red Tape Task Force, which released an interim report on Sept. 29.

The task force recommends that the city ultimately eliminate all red tape, but has made several recommendations in the meantime. For example, it says businesses should appoint someone within the organization to stay current on city regulations.

The task force will issue a final report in April 2007 including recommendations for getting rid of specific fees and regulations.

In the meantime, it has tough competition in Gatineau, where businesses owners such as Gripton say the regulations are simpler and cost less.

When Gripton's landlord in New Edinburgh needed her to move, she initially decided to renovate a nearby video store.

But following the City of Ottawa's regulations would have cost her $45,000, including drawings from an architect, an engineer and a surveyor, she said.

She decided to move after learning there was less red tape in Gatineau.

"Basically, it was just getting your business licence," she said.

"And they gave me a parking pass that I can park all day long on the street as a small business owner … so it was a real no-brainer at that point."

'It's just not worth it'

Ottawa's fees and regulations don't just prompt business owners to move. They also eat into the money they could invest into expansion, new equipment and more staff, says a spokesperson for independent business in Canada.

Garth Whyte, executive vice-president of the Canadian Federation of Independent Business, said excessive red tape also blocks the launch of small businesses in the Ottawa area.

"You can dissuade someone from starting a business," he said. "You can make it so onerous they're saying it's just not worth it."

The federation found more than two-thirds of Ottawa business owners feel the burden of regulation has increased over the past few years.

It also found that small businesses consider permits and licences to be their top burden after taxes.

Whyte said he is encouraged by city initiatives such as the mayor's task force, but more needs to be done.

He added that small business owners are hurt more by regulation than larger businesses are, and they need to be treated differently.

They may not have the option of appointing someone to deal with regulations as the task force recommends.

"They're trying to do it all themselves," he said.