Bosses’ work is ’26pc red tape’

ANDREW WHITE
November 14, 2012
The Australian

RED tape is thought to have been invented by the court of King Charles V in Spain in the 16th century to bind the important documents of state.

But increasingly the bureaucratic processes to which it gave its name are tying up the time of company directors in Australia, according to new research.

A survey by the Australian Institute of Company Directors to be released today finds red tape compliance consumes an average 26 per cent of the total board commitment of Australian company directors.

And it is getting worse, with more than half the directors believing the level of commitment has increased in the past year.

According to the survey, administrative costs and time spent complying with regulations are identified by more than 70 per cent of directors as having the most impact on their business.

A similar proportion of directors identified employing workers and workplace health and safety as aspects of their business most affected by red tape.

The results are in line with anecdotal evidence and complaints from other business groups about the increased regulatory burden in Australia, including the reregulation of industrial relations, slow approval times for projects and the need to address environmental concerns.

Improving productivity is ranked by respondents as the second most urgent issue for the federal government to address in the short term and among the most important economic challenges facing Australia.

Directors identified general economic conditions as the biggest impediment to productivity growth (65 per cent). This was followed by workplace laws and regulations (42 per cent), government policy (41 per cent), excessive red tape and regulation (39 per cent) and skills shortages (31 per cent).

In line with the results from the previous survey, more than 60 per cent of directors believe the amount of red tape has increased in the past year.

They are, however, slightly less pessimistic regarding red tape in the future, with less than 60 per cent expecting the problem to increase in the coming year.

The concerns about red tape and productivity are among the findings of the fourth edition of the biannual Directors Sentiment Index, which was begun last year and is claimed to be Australia’s only market sentiment indicator measuring the opinions and future intentions of company directors.

Readings from the first three surveys, beginning in February last year, have shown director sentiment falling from neutral levels around the time the federal government tabled its plan to introduce a carbon tax.

It turned negative around August last year as international events including the Japanese earthquake and tsunami, European debt fears and a downgrade of the US’s AAA credit rating infected local conditions.

Sentiment improved from that low through the last quarter of 2011 and the first two months of this year, even after the grounding of the Qantas fleet in an industrial dispute, floods in Queensland and NSW, a leadership challenge by former prime minister Kevin Rudd, budget cuts and continuing turmoil in the eurozone.