Regulation

Regulatory barriers reduce competitiveness, create unnecessary headaches for business and increase costs for Australian consumers.

Australia’s competitiveness ranking on the burden of regulation has climbed from 128th to 80th in two years.

Over this period, the Federal Government estimates that it has reduced the annual burden of regulation by about $4.5 billion, including through annual legislation repeal days in Federal Parliament.

A key problem with Australia’s heavy handed approach to regulation is that it discourages innovation and risk tasking. The Productivity Commission’s recommendation to give regulators the authority to grant fixed term exemptions for innovative businesses is worth exploring.

Some of the worst regulatory problems relate to state regulations. For example, both the Productivity Commission and the independent Competition Policy Review recommended substantial reform for state planning and zoning laws.

The majority of respondents to the Australian Chamber’s National Red Tape Survey said the amount of red tape had increased over the previous 12 months, affecting productivity, labour costs and business expansion. Nearly half of respondents reported that the impact of regulation had prevented them from making changes to grow their business. More than one in four respondents said they spent at least 11 hours a week on compliance and almost one
in two put the annual cost of compliance at beyond $10,000.

Some 55 per cent of businesses said they could not pass on the increased cost to consumers, so they are absorbing the costs of compliance themselves.

Reducing red tape and unnecessary compliance measures will make it easier for business to do business, and therefore contribute to a productive and prosperous economy.

Regulatory creep into new areas must also be avoided. Industries should be allowed to self-regulate where they can indicate that they are doing so effectively.

Recommendations
8.1 Let entrepreneurs get on with growing their businesses by reducing government red tape each year.
 
8.2 Explore the Productivity Commission’s recommendation to give regulators the authority to grant fixed term exemptions to remove regulatory impediments to innovative business models.
 
8.3 Establish a reform body empowered to reward states that pursue regulatory reform, particularly in relation to planning and zoning laws.
 
8.4 Continue to work with industry associations to identify unnecessary red tape requirements, particularly for small and medium sized businesses.

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