The Vow to Cut Through the White-Out of Red Tape? It's Just Another Pink Elephant

13 December 2005

By Katie Lahey
Chief Executive
Business Council of Australia

Two decades ago, then Prime Minister Bob Hawke promised to tackle front-on the problem of excessive red tape. He said: “I am convinced that we have accumulated an excessive and often irrelevant and obstructive body of laws and regulations.”

Given the undertaking to examine and then abandon inefficient regulation was made in 1984, it’s tempting to label his words as Orwellian newspeak because, since that time, the volume of federal legislation and regulation has actually doubled.

Canberra is again vowing to rein in red tape. The Howard Government’s recent announcement of a special taskforce to address Australia’s regulatory blow-out is a welcome move. But real action needs to back up what is, in reality, the latest in a long line of promises of regulatory relief.

The sheer volume and complexity of regulation means it is no longer just an irritant. It is a significant cost and resource burden on small and large business, as well as the broader community, and a potential brake on Australia’s future growth.

The size and urgency of the problem was demonstrated in May when the Business Council of Australia released a comprehensive action plan to tackle the problem of overregulation.

The analysis of red tape growth in the BCA’s Business Regulation Action Plan uncovered statistics that can be only described as frightening:

  • In 2003, the Commonwealth and state parliaments added 33,000 pages of new law to the statute and rule books.
  • In 2003, there were 1800 Commonwealth acts of parliament in place, 170 of which had been passed in the previous year – a growth rate of 10.4 per cent per annum, three times the rate of economic growth.
  • More pages of legislation have passed the Commonwealth Parliament in the 14 years since 1990 than were passed in the preceding 90 years.
  • In the four years from January 2000 to December 2003, the Commonwealth Parliament passed on average 350 pages of new primary legislation each sitting week.

The report helped spark a wider and more informed public debate on the issue, which in turn has helped to build a consensus for change.
The Regulation Taskforce set up by the federal government has been asked to identify steps to alleviate the regulatory compliance burden on Australian business. Importantly, it has the responsibility of highlighting further, more sweeping changes that could be made to reduce Australia’s regulatory burden over the longer term and in a sustainable way.

This is a significant advance on previous red tape reviews.

To address overregulation problems, we need to not only remove specific instances of costly or counterproductive regulation, but we need to tackle the problem at its source; namely the regulation-making processes and bureaucratic culture that makes it too easy for governments to use regulation as a first resort to manage issues.

As part of its submission to the red tape taskforce, the BCA is urging it to consider and address six underlying causes of so much wasteful and costly red tape. Namely:

  • conflicting, overlapping or inconsistent regulation
  • constantly changing laws
  • uncoordinated 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.

The BCA’s submission also identifies a number of straightforward steps that should be taken by governments to reform the basic structures of regulation making and compliance.

Topping the list are 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.

We need streamlined compliance and reporting processes that see companies provide information only once to government, rather than repeatedly and to different government agencies. Employing standard definitions across all regulation and legislation will be essential for clarity and simplicity.

Importantly, the submission calls for a co-ordinated approach by federal and state governments to the issue.

No review by Canberra will result in lasting impacts without support from the state and territory governments, which are responsible for a vast amount of the red tape produced. That is why the Council of Australian Governments, which meets again early next year, needs to agree on working together to reduce the regulatory burden on business in areas such as occupational health and safety, workers’ compensation, payroll tax and stamp duty.

Regulation reform promises many benefits. Not only would it save companies money and increase their competitiveness, but more competitive and prosperous companies add more to government revenues.

By channelling government resources away from policing unnecessary compliance activities, red tape reform could potentially provide governments with increased taxpayer dollars which could go towards spending on areas such as services.

The BCA looks forward to action from federal and state governments that recognises the only lasting solution to fixing the regulation blow-out are fundamental changes to the way red tape is generated.



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