Canada’s small- and medium-sized business lobby and the federal government are in disagreement over the state of entrepreneurialism and red tape in the country, with internal official documents pouring cold water on claims of a crisis.
The Canadian Federation of Independent Businesses, which represents more than 103,000 small and medium enterprises (SMEs), shared its “Canada’s Entrepreneurial Drought” report with Innovation, Science and Economic Development officials both before and after the government’s spring economic update on Apr. 28.
The report noted that Canada is experiencing a sustained period of business exits outpacing starts, making for “one of the most challenging environments in decades.” Exit rates reached 5.6 per cent in the second quarter of 2025 while entry rates fell to 4.8 per cent in the fourth quarter of the year, marking some of the highest closure rates and weakest startup activity outside the pandemic, according to the report, which was released publicly on Apr. 15.
CFIB representatives met with ISED officials including assistant deputy minister for small business and tourism marketplace services Etienne-Rene Massie on Apr. 30, two days after the economic update, to discuss the report and to make a swath of recommendations on how to reverse the trend.
In briefing materials prepared for the meeting under the heading, “Question: Is Canada experiencing an entrepreneurial drought?” ISED pushed back on the CFIB’s numbers. While acknowledging that business exits have exceeded entries since early 2024 and that the difference increased in 2025, the notes highlight that CFIB was using “an experimental data set from Statistics Canada” to come to its conclusions.
“Amid economic fluctuation, there has actually been an increase in the number of small businesses since 2019 according to figures published by Statistics Canada,” read the notes, which were acquired by Do Not Pass Go through an access-to-information request.
“While recent tariffs are creating economic uncertainty for entrepreneurs and dampening investment, the overall impact remains contained amid resilient domestic demand and government support.”
In their presentation, CFIB officials identified three priority areas for government action: reducing the cost of doing business by lowering tax burdens that would then improve access to financing and government programs and procurement processes; cutting red tape by removing regulatory burdens that would streamline internal trade; and responding to the evolving labour market by protecting access to temporary foreign workers, supporting workplace development and smoothing business succession.
Those priorities were supplemented by 16 specific recommendations:
Increasing remission thresholds for GST and payroll deductions.
Simplifying work-from-home reporting.
Simplifying the disability tax credit form.
Reinstating payroll services exemption.
Extending excise renewal periods.
Removing internal barriers to the movement of food.
Exempting more drivers under the Electronic Logging Devices mandate.
Amending flight duty time limits.
Exempting SMEs from some import systems.
Improving Canada Revenue Agency customer service.
Simplifying the tariff remission process.
Reducing application and information requests in the child care sector.
Providing clearer guidance on fish medicines.
Clarifying animal health care regulations.
Removing barriers for SMEs applying for federal procurement under the Buy Canada First initiative.
Reducing paperwork for doctors.
ISED’s briefing notes contain a rebuttal list of “concrete actions” the government has taken to help SMEs diversify their markets and remain resilient, including:
The Regional Tariff Response Initiative, which is providing $1 billion over three years to support SMEs affected by tariffs.
Information, tools and support via Global Affairs Canada to help businesses navigate U.S. tariffs and export duty-free under the Canada-United States-Mexico Agreement.
Export Development Canada’s $5 billion Trade Impact Program to help businesses diversify away from U.S. markets.
The Business Development Bank’s $500 million Pivot to Grow program that provides loans to SMEs affected by tariffs.
And Farm Credit Canada’s Trade Disruption Customer Support, which is a $1 billion investment to provide financing for farmers affected by tariffs.
An email after the meeting from Massie to Michelle Auger, the CFIB’s director of national affairs, trade and marketplace competitiveness, highlighted the gulf between the organization’s requests and ISED’s responses.
“It will be interesting to see if the [disability tax credit] changes help reduce the paperwork burden identified in the list (trying to find some victories wherever we can),” he wrote.
“Government hasn’t taken any concrete steps in order to do things like improve government customer service.”
The CFIB has been busy on Parliament Hill since the spring economic update, logging at least 49 communications with public office holders, including meetings with ISED Minister Melanie Joly, Finance Minister Francois-Philippe Champagne and Jobs and Families Minister Patty Hajdu.
In an interview, the organization’s director for Alberta and inter-provincial affairs Keyli Loeppky expressed frustration that the government hasn’t take the same measures to reduce red tape and regulatory burdens for SMEs as it has for large businesses.
“Government hasn’t taken any concrete steps in order to do things like improve government customer service,” she said. “Take a look at government forms and wait times and how long it’s taking to get back to the everyday individual or the small business owner. How long does it take to get someone on the phone at CRA?”
In an emailed response, ISED said last year’s budget introduced measures to modernize government services and procurement processes, streamline construction processes and ease the regulatory burden on financial institutions to unlock more private capital.
The President of the Treasury Board, Shafqat Ali, also launched a government-wide review in July 2025, aimed at eliminating outdated and overly complicated regulations that raise costs, reduce productivity and stifle economic growth.
“The review promoted innovation and better service delivery through modern tools and clearer, faster approvals,” said spokesperson Cheyenne Daly.
“In response to the review, ministers with regulatory responsibilities conducted reviews within their portfolios and released public progress reports within 60 days, to share early achievements and describe next steps. Across these reports, ministers identified approximately 500 recent achievements and forward-looking actions to reduce regulatory red tape.”
ISED also pointed to the recently announced Productivity Mega Deduction, which expands business’ ability to write off up to two-thirds of capital investments as a measure that will help entrepreneurs.
But nearly a third of SMEs are struggling financially and aren’t in a position to invest in capital and productivity measures, according to the CFIB.
“These measures won’t help them,” said vice-president of national affairs Jasmin Guénette in an interview. “Reducing the regulatory burden is the fastest and cheapest way to help businesses grow, expand and thrive.”
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🎧 ON THE PODCAST THIS WEEK:
DO NOT PASS GO CELEBRATES ONE YEAR!
Twelve months of breaking news and uncovering monopoly issues, expansion incoming, and The Hatchet’s Arshy Mann joins us for a competition state-of-the-union talk
🥊 COMPETITION
Canada’s growing relations with Europe may be about to take an interesting turn as it pertains to competition regulation and enforcement. According to a leaked joint statement draft on the subject to be issued at this week’s summit between the two in Montreal, Canada and Europe are looking at closer cooperation and integration on antitrust issues: “We have concluded negotiations on a second-generation competition agreement that strengthens cooperation between competition authorities, to effectively address anti-competitive conduct and foster a more open, innovative and competitive marketplace for businesses and consumers.” The news has the pro-competition crowd excited, with the Canadian Anti-Monopoly Project pointing out that this agreement is shaping up to be the first government-to-government cooperation initiative. “It won’t surprise readers that we’re thrilled with this development,” read the think tank’s newsletter this weekend.
🛒 GROCERIES & RETAIL
The COMPETITION BUREAU is investigating the use of minimum advertised prices by grocery chains, which are policies that can be imposed on retailers by suppliers or agreements between the two parties. These minimum advertised prices – which consumers often see in flyers or mobile apps – may be harming competition, the Bureau says, since they can prevent the retailers from selling products for even less. Smaller grocers, however, say that preventing such advertising policies could do more harm than good as it would give the large chains even more power to set prices. “The big guys will use power and leverage to push down the price on suppliers,” a representative of the Canadian Federation of Independent Grocers tells The Globe and Mail. “An independent grocer can’t do that, we don’t have that power.”
Fast-food purveyor MCDONALD’S found itself in the hot seat last week after a Reuters investigation found that the chain was using artificial intelligence to recommend different prices for menu items based on customers’ willingness to pay. U.S. franchisees interviewed said they were being pressured into adopting the technology, which turned up dramatically different prices for the same items at separate restaurants in close proximity to one another – a Big Mac at a location in Fresno, California, for example, was 20-per-cent more expensive than one at another location just two miles away. The company fired back after the report with a “separating fact from fiction” post on its website, where it denies using AI or dynamic pricing. Differentiated pricing between locations is a standard business practice, the company says, with factors such as “local costs, customer demand competition and economic conditions” playing roles.
🕺 SPORTS & ENTERTAINMENT
Say goodbye to PARAMOUNT and WARNER BROS., sort of, and say hello to SKYDANCE. That’s the official name of the about-to-be newly merged company, with the studios retaining their respective names as divisions of the combined entity. Chief executive David Ellison made the announcement Friday after getting court approval earlier in the week of a settlement with the 12 U.S. states that were fighting the $111-billion (U.S.) mega-deal.
Cable giant ROGERS has completed its $4.35-billion takeover of MAPLE LEAF SPORTS & ENTERTAINMENT, acquiring the 25-per-cent it did not own from minority stakeholder Larry Tanenbaum. The company says it will create a new business unit, Rogers Sports, to oversee the associated properties, which will include the Blue Jays, Maple Leafs, Raptors, Toronto FC and Argonauts. Rogers says its combined sports and media assets are worth $25 billion, with the company planning to sell stakes in them by the first half of next year.
A U.S. court has tossed an attempt by TICKETMASTER and its parent LIVE NATION to dismiss the Federal Trade Commission’s scalping case against them. U.S. District Judge Maame Ewusi-Mensah Frimpong last week allowed the FTC’s lawsuit, which alleges that Ticketmaster has willingly turned a blind eye to large-scale usage of bots to inflate ticket prices on its platform, to go ahead under the Better Online Ticket Sales Act (BOTS). The suit, which seven U.S. states have joined, argues that professional resellers have used hundreds and even thousands of fake accounts to buy tickets for resale on Ticketmaster’s secondary marketplace. The company had argued, unsuccessfully, that BOTS applies to resellers themselves rather than they platforms they use.
🏦 BANKING
Another week, another credit union merger, with members of the ACADIAN CREDIT UNION in Nova Scotia last week voting on whether or not to tie up with EAST COAST CREDIT UNION, iNOVA and TEACHER PLUS. The four-way merger would create a province-wide credit union network with 65,000 members, 400 employees and $2 billion in assets.
🏥 HEALTH
It’s not every day that a de-consolidation takes place, especially in health care, but that looks to be the case with CANADIAN ORTHODONTIC PARTNERS selling off a host of clinics. The support organization continues to downsize, with law firm MLT Aikins announcing last week that it had successfully assisted in selling off 13 clinics to multiple owners across Canada. The transactions took place over the course of 2025 and 2026, with purchasers ranging from Alberta to the Atlantic provinces. Five of those Atlantic clinics were purchased by Fredericton, N.B.-based HATHEWAY GROUP. Canadian Orthodontic Partners is the parent behind the docbraces brand.
🚨 COMING UP
Website crashes, long queues, fees upon fees… it sounds like we’re talking about buying concert tickets, doesn’t it? It’s a good analogy, but the topic is actually campsite reservations. Coming up on Thursday’s episode of the Do Not Pass Go podcast, journalist CAMERON FENTON talks about how Camis Inc. – the “Ticketmaster of camping” – and its dominance of reservations systems in Canada is making the enjoyment of the great outdoors more expensive and headache-inducing.
Three cheers for the ATIR! 💪❤️