Red Tape Needs Systematic Overhaul, Not Quick Fixes Says BCA Submission to Regulation Review

The problems of over-regulation could only be solved by long-term systemic changes and not quick fixes, the Business Council of Australia said today.

The comments were outlined in the BCA’s submission to the federal government’s Taskforce on Reducing Regulatory Burdens on Business, which was established to address Australia’s regulatory blow-out.

BCA Chief Executive, Ms Katie Lahey, said that while the BCA supported the work of the government’s taskforce, the only lasting solution to fixing the blow-out would be fundamental changes to the way red tape is generated.

In its submission to the taskforce, the BCA identifies a number of straightforward steps that should be taken by government at both federal and state levels to reform the basic structures of regulation making and compliance, including:

  • Putting in place proper assessment and consultation processes that allow business and others to identify overlapping regulation and unintended consequences before new regulation and legislation comes into effect.
  • Introducing streamlined compliance and reporting processes that result in companies providing information only once to government, rather than repeatedly to different government agencies.
  • Adopting standard definitions across all regulation and legislation.
  • Setting up effective ‘one-stop shops’ to streamline compliance and approvals processes.
  • Requiring regulators to work in ways that help create vibrant, dynamic and competitive businesses, rather than just focusing on rule making.

The submission, which was based on wide consultation with BCA Members, identified the six key drivers of excessive compliance costs for business as:

  • Conflicting, overlapping, or inconsistent regulation.
  • Constantly changing laws.
  • Multiple and un-coordinated licensing and approvals processes.
  • The lack of clarity around the roles, powers and objectives of regulators.
  • A ‘zero tolerance’ attitude by regulators.
  • The excessive focus on the personal liability of directors and officers.

“One of the biggest regulation costs for business in Australia comes from the layers of overlapping, inconsistent and conflicting legislation, particularly across the states and Commonwealth Governments,” said Ms Lahey.

“One BCA Member company has estimated that removing this overlap and duplication would reduce its compliance costs by 20 per cent, freeing up $2–4 million each year for new investment and increasing its tax contribution by $1–2 million.”

“Not only would better regulation save companies money and increase their competitiveness, but more competitive and prosperous companies add more to government revenues,” she said.

“In addition, it would save governments a significant amount of taxpayer dollars which could go towards more or improved government services, instead of funding unnecessary or wasteful regulatory and compliance activities.”

The submission also called for the Council of Australian Governments, which meets again early next year, to adopt as a priority the objective of reducing the regulatory burden imposed on Australian business in areas such as occupational health and safety, workers’ compensation, payroll tax and stamp duty.

The imperative for better regulation-making has been identified and publicised by the BCA as one of the ‘four key steps’ to help assure Australia’s future prosperity.

“The high levels of regulation that we now face are due to failings in the systems and processes through which regulation is developed, implemented and reviewed,” Ms Lahey said.

“We look forward to decisive action from governments when the taskforce delivers its report.”

“As the BCA set out in its Business Regulation Action Plan, released in May, only fixing these systemic failings will provide long-term, sustained improvements in business regulation.”

FACT SHEET 

BCA SUBMISSION TO THE REGULATION REVIEW – SOME EXAMPLES OF HOW THE RED TAPE BLOW-OUT AFFECTS EVERYONE

DEATH BY PAPERWORK

Overlapping and inconsistent legislation results in excessive documentation requirements for even the simplest matters. For example, 227 pages of documentation need to be given to a customer wishing to open a simple cheque account with overdraft limit and home loan:

  • 139 pages of documentation for a cheque account with electronic access.
  • 46 or more pages of documentation for the overdraft facility.
  • 17 pages for the housing loan offer.
  • 9 pages to perfect the bank’s security position overdraft.
  • 14 pages of documentation to perfect the security position for housing finance.
  • 2 letters confirming final fees and funding of each of the loan facilities.

END TO CAKE STALLS?

In some areas, councils require food sold at community and church stalls to be prepared in kitchens that meet the same health standards as permanent professional restaurants, effectively putting an end to the Saturday morning cake stall and undermining the efforts of volunteers to support their local communities.

ONE STEP FORWARD, TWO STEPS BACK

Initiatives to decrease compliance costs may not be successful because of competing policy or regulations in another jurisdiction. For example, the tax consolidation regime was intended as a means of reducing compliance costs through decreasing the number of income tax returns that need to be prepared for wholly-owned company groups by deeming all applicable companies to be a single entity. However, this legislation has not reduced compliance costs because, under the Corporations Act, separate accounts still need to be maintained by each legal entity, rather than on a tax consolidation basis. As a result, companies have been forced to continue to maintain records on an entity by entity basis.

BIZARRE LICENSING

Overkill

There is considerable overlap and inconsistency between the various roles of major Australian regulators. This exists, for example, between banking and superannuation licences administered by APRA and Australian Financial Services Licences administered by ASIC; between capital requirements in relation to superannuation licences (administered by APRA) and Australian Financial Services Licences (administered by ASIC). In addition, between regulation of Managed Investment Schemes by ASIC and public offer superannuation funds by APRA, companies are required to hold both a registrable superannuation entities licence (RSE) from APRA and an Australian financial services licence from ASIC. One BCA Member company estimates the cost of duplication in licensing to be $500,000 per annum plus $500,000 to obtain the separate RSE licences.

Historical anomalies

Licensing requirements for those permitted to install steel roofs are controlled by state governments. In Victoria, unlike every other state in Australia, you need to be a licensed plumber to install a steel roof; you do not need to be a licensed plumber to install a tile roof. This anomaly is largely historical, but it has the effect of restricting the supply of skilled labour to install steel roofs in Victoria, pushing up installation costs for home owners, and in some instances, discriminating against some products compared with competitor roofing materials. This is primarily a state issue, but greater consistency could be brought about through a co-operative CommonwealthState scheme of trades training and regulatory standards.

OCCUPATIONAL HEALTH AND SAFETY

The Commonwealth and each state and territory have separate and distinct legislation setting out minimum standards for employers in relation to occupational health and safety. While these laws are broadly similar in scope, there are several differences which add to the costs of companies. For instance, the Queensland law requires each workplace with 20 or more employees to have a trained Work Health and Safety Officer. The legislation in South Australia requires the appointment of senior executive officers as ‘responsible officers’ who must reside in South Australia and take reasonable steps to ensure the employer organisation complies with the law in South Australia. These requirements are particular to the regimes in Queensland and South Australia, meaning that a national organisation must make special arrangements in those states.

Initial proposals for reform to the New South Wales Occupational Health and Safety (OH&S) legislation would have significantly increased the jeopardy for managers and Directors where breaches of OH&S requirements occurred. For example, under the legislation, bank hold ups are considered to create unsafe workplaces. Bank managers can therefore be held liable under the legislation for an OH&S breach. Changes to the law proposed by the New South Wales Government mean that managers can be found personally liable where, on the balance of probabilities, their corporate employer was found to have breached the OH&S law. Ironically, it would have been easier to jail managers for OH&S breaches than those responsible for the bank hold up (who would be subject to proper criminal prosecution, including the need to prove guilt beyond reasonable doubt). The New South Wales Government has since moderated these changes, although concerns remain.

Submission to the Taskforce on Reducing Regulatory Burdens on Business

Submission to the Taskforce on Reducing Regulatory Burdens on Business: Attachment A: Specific Regulatory Issues