Lack of Discipline a Real Concern: Article by Tony Shepherd in the AFR

15 March 2013

This opinion article by Tony Shepherd, President of the Business Council of Australia, was published in The Australian Financial Review on 15 March 2013 under the title ‘Lack of Discipline a Real Concern’.

A series of damaging regulatory proposals by the federal government underscores the widening gap between the rhetoric of red tape reform and the reality of ill-disciplined regulation making for political expediency.

Last year two independent reviews found the government’s adherence to, and underlying belief in, good policy process to be seriously wanting. One of them, by the Productivity Commission, found that less than 40 per cent of significant regulatory proposals in recent years had met the government’s own requirements for proper analysis and consultation.

The government has set a worthy aspiration that Australia should be among the top five most efficiently regulated countries in the world. On recent form, however, it would appear the country will struggle to keep its current ranking of 96.

Despite broad acceptance of the review’s recommendations and acknowledgment of the need to lift its game on regulation, the government has taken just four months to abandon any pretence of disciplined regulatory processes.

Proposals announced in recent days break the golden rules of good regulation. They make heavy-handed impositions on business and the community without regard to the fundamental obligations of policymakers to consider different options, to consult affected parties and weigh up costs, benefits and possible unintended consequences.

These obligations have underpinned all the important policy reforms of previous decades. They are there to ensure regulation addresses genuine problems, to minimise costs and avoid unintended consequences. Proper process builds support needed to carry important reform and ensure change works for the benefit of the community at large.

My fear is that proper process has not been followed in the development and announcement of recent proposals because it would expose the lack of a clearly identified problem and the magnitude of economic damage these proposals are likely to have.

Take the proposed changes to media laws, set to be rushed through parliament in only two weeks. After two reviews and a year of uncertainty and speculation, the government announced its proposals in a 1½ page media release – with no meaningful consultation even inside government, it would seem.

This is despite the fact that these proposals represent unprecedented intervention in the media industry and raise real concerns about government encroaching on the freedom of the media to meet its fourth estate obligations.

The latest changes to 457 visa requirements and the way the government is communicating them is also deeply concerning. Claims of widespread rorting and a scheme running ahead of employment growth don’t stack up. For the past five months visa applications have been falling while total jobs have been growing – sanctions have dropped by nearly 25 per cent in the past three years. The department said the trend in applications was downward, even allowing for seasonal factors.

Despite states and territories already heavily regulating coal and coal seam gas, the government has sought to further duplicate regulation, for no tangible benefit to the environment.

These proposed changes fly in the face of the Commonwealth’s commitment last year to streamline environmental approval processes. They have not been subject to any analysis of impacts on current and future projects that are of enormous significance to the economy.

A series of proposed changes to industrial relations laws ranging from changing the objectives of the Fair Work Act without consultation, through to the announcement that unions would have the power to force employers into arbitration, are frightening examples of regulation that’s a poor fit for a modern economy.

These changes ignore decades of evidence that compulsory arbitration neither improves the job prospects of Australian workers nor helps businesses stay competitive in a global economy.

The regulatory changes I refer to are the ones that have been in the spotlight. But they are just the tip of the iceberg in terms of what’s been happening and what might yet happen over the long months of this election year.

When the Prime Minister announced the far-off date of the federal election, she said it would help the government get on with the job of governing.

Disciplined regulation making is part and parcel of governing in the best interest of the nation and all Australians.

The proposals we have seen in recent weeks, and the manner of their introduction, are unfitting of a dynamic modern economy equipped to attract investment and compete and thrive in an increasingly challenging world.



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