Make the Most of New Review of Old Red Tape

By Steven Munchenberg
Deputy Chief Executive
Business Council of Australia

No other issue unites business as the regulation blow-out does. Whether you run a company employing three staff or a company with 1000 employees, the burden of business red tape grows each year – more form-filling here, increased compliance costs there.

It adds up but never reduces, and the cumulative effect is a significant brake on growth at an economic, business and community level.
In May, the BCA released its business regulation action plan which detailed the extent to which red tape in Australia is absorbing an unprecedented amount of the productive energies of business.

The figures are staggering. The Commonwealth and state parliaments added 33,000 pages of law to the statute and rule books in 2003. More pages of legislation have passed the Commonwealth Parliament since 1990 than were passed in the preceding 90 years.

Between 2000 and 2003, the NSW parliament passed 300 pages of acts, rules, regulations and bylaws each sitting week.

In 2004, there were 69 state-based business regulators in Victoria alone, administering 26,000 pages of regulation.

These are not just statistics. They have a real impact on business, and on consumers who ultimately have to foot the costs of red tape and compliance. The Housing Institute of Australia has estimated the costs of regulation add $60,000 to the price of a house in western Sydney.

The growing cost to governments to police these rules and regulations means fewer resources directed to schools, roads and hospitals.

The continuous growth of the economy has helped to absorb and therefore mask the impacts of the regulatory blow-out. But at some point, given the relatively small size of our economy and distance from major markets, it is inevitable that our rising level of red tape will impede our competitiveness.

The announcement yesterday by the Prime Minister and the Treasurer of a high-level review of red tape should be welcomed not just by business but the wider community. It represents a potential unwinding of the mindset of regulate first, ask questions later.

This commitment to start clearing out unnecessary and duplicative red tape should lead to a significant reduction in the tangle. But for reform to have true bite in the long term, bad regulation-making must be eliminated at its source.

This will necessitate fixing the systems that create new regulation, rather than simply removing or streamlining existing red tape.

We need to make sure that all new regulation fully takes account of costs to business and is subject to regular review.

State and territory governments are the source of much of the red tape burden and duplication. They also need to act now, follow the Commonwealth’s lead and begin reviews of their own regulatory processes.

Finally, the government has given business an opportunity – and business now has the chance to help identify where the greatest regulatory improvements lie.