Gillard government fails to cut red tape

Bruce Billson
The Australian
April 13, 2012

PUTTING the carbon tax aside, which will be the greatest economic impost on small business created by man, the Gillard government must learn that reducing the red tape and compliance costs crippling small business needs far more action than an improved system for registering a business name.

Labor ministers continue to point to national business name registration changes instigated by the former Howard government as its only answer to legitimate concerns of growing bureaucratic imposts.

Beyond securing a name that a business can print on its letterhead are the ever-growing regulatory requirements a business must wade through to actually commence operating.

These operational red tape requirements and compliance burdens have expanded substantially under Labor’s watch.

According to the government’s own regulatory recording mechanism, more than 16,000 new or amended regulations have been introduced since Labor was elected, with only 76 repealed regulations.

This is despite a 2007 Labor election promise of a “one in, one out” approach to reducing red tape.

A recent study found small businesses in Australia are spending about $28,000 and nearly 500 hours a year on working on red tape and compliance burdens.

As shown by the World Bank’s Doing Business 2012 rankings, we are falling behind the rest of the world, dropping three places in the past 12 months.

The World Bank analysis shows that Australia has gone backwards on every measure except “dealing with construction permits”, where Australia has gone from 43rd to 42nd — hardly spectacular.

Even in terms of “getting credit”, there has been no improvement despite Australia’s strong banking system.

We languish among a cluster of economies that include Rwanda, Zambia, Guatemala and the Kyrgyz Republic.

Surely, we can do better than that.

Needless and excessive red tape compliance obligations serve no good public policy purpose, especially when small business is at the crossroads.

Many believe that small business is in the same position where the farming sector was about 20 years ago, not because of weather conditions but because of economic conditions made worse by red tape.

The sons and daughters of small business people look at mum and dad and wonder why they do it. They see them working during the day and then doing paperwork well into the night just to keep up with the compliance burdens forced on them by government.

It causes business operators to “take their eyes off the ball”, instead of better serving customers and maintaining a viable enterprise.

Challenging business conditions, made worse by an incompetent, divided and dysfunctional government that the small-business community knows is not on its side, in part accounts for the 95 per cent reduction in new business start-ups in the past 12 months, according to a recent Dun & Bradstreet report.

We’ve all seen examples of where red tape can be reduced and are bewildered by the lack of Gillard government action.

The Labor-Greens alliance continues to oppose the Coalition campaign universally backed by the small business community to have employers relieved of the unpaid pay clerk burden they face under the Gillard Labor government’s paid parental leave scheme. The legislation to enable the Coalition’s “opt in” proposals to be put to a vote has disappeared for months into some kind of parliamentary Bermuda triangle.

Smaller enterprises have no dedicated department to handle new payroll burdens or to wade through hundreds of pages of new work safety requirements clearly designed by big unions and big business and with little regard for their effect on organisations where the entire team can sit on a Vespa. To unwind some of Labor’s mess, the Coalition has committed to a $1 billion red tape reduction plan in our first term of office.

This ambitious target will be verified independently by the Productivity Commission.

It is a measure that goes to the cost and time imposition of red tape and those compliance obligations that over-reach or are unnecessary.

Identifying priority areas for action is the role of a team led by the experienced and respected former Howard government chief of staff, senator Arthur Sinodinos. It is well past time for the Labor government to realise that continuing to hang its hat on a single change instigated during the Howard government to introduce a national business name registration system is a grossly inadequate effort at reducing red tape and compliance costs after years in office.

The inability of the Gillard Labor government to reduce red tape and compliance costs despite years of rhetoric is yet another reason why fresh eyes and a genuine commitment to achieving compliance cost reduction are desperately needed.

Bruce Billson is the federal member for Dunkley and the opposition spokesman for small business, competition policy and consumer affairs