Incentives are the key to growth

23 February 2024

This opinion article by Business Council Chief Executive Bran Black was published in The Daily Telegraph on 23 February 2024

No one needs to be told how bad our housing crisis is. What we need are some practical solutions - and they aren't always flashy.

Businesses know that a big part of keeping grand plans in planning stage, and going nowhere fast, is regulation.

A patchwork of tortuous regulation across the nation is contributing to making us unproductive and stopping housing developments moving faster.

The problem is that the incentives for reforming regulation that holds back our productivity (like lengthy planning approvals for new housing) aren't there at a NSW level. And that's a bad thing because productivity matters.

When we undertake reforms to be more productive, the dollars returned on that investment mostly go to the Australian Government, on an 80/20 split, with NSW getting the paupers share even if they do the heavy lifting.

That's why the Business Council of Australia has proposed a National Reform Fund, funded by the Commonwealth Treasury, that rewards NSW for efforts to break down these barriers, such as years-long paths to getting a new apartment building off the ground.

The idea is that this fund would provide ongoing payments to states and territories that implement productivitygenerating reforms, like simplifying their planning approvals for housing.

There are other areas of reform where we need to incentivise states to help us be more productive too, like consolidating payroll tax into one national system so it's easier to hire new workers.

We could also be improving retail trading hours or removing stamp duty to lower house purchase costs.

All these kinds of reforms can make us more productive.

Productivity is bureaucratic jargon but it's important. It simply means getting more out of every dollar invested and hour worked.

It's not about making everyone work harder - it's doing more with what we have. And it's what improves our quality of life.

The best example is red tape on businesses.

Even if no one worked a single hour more, if we cut some of the complex regulations that consume business owners, then those hours get spent on creating things of value like jobs. Or building new housing.

If there is regulation holding back new housing from being built, let's fix it. If it's hard, and costly, let's incentivise the ones who have to do that work.

There are of course changes which could happen tomorrow and make a difference (such as pulling back on destructive workplace relations legislation that just passed Parliament).

There are also many which would require concerted effort, time and will from governments, which is why the size of payments to state and territory must be enough to genuinely incentivise them.

It's one way we can build NSW homes faster and sustainably grow wages, grow jobs and maintain our valued quality of life.


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