Excessive red tape costs Australian economy $110 billion a year

Originally published in the West Australian

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There are two simple points about red tape and regulation in Australia.

Firstly, over-regulation is misallocating resources and driving down productivity.

The Albanese Government has introduced 5034 regulations in just three years.

In addition to these, 400 new laws were enacted last Parliament.

The result? Since Labor came to power, productivity is down 5 per cent.

Albanese’s Labor has introduced retrograde laws that are hurting the nation. Laws like our strict country-by-country tax reporting rules.

This regime goes beyond comparable jurisdictions like the European Union, exceeds OECD standards, and will impose $30 million in compliance costs.

Another example is giving the Reserve Bank two boards.

Then there is the pointless legislation defining the objective of superannuation. It is unenforceable and unnecessary.

The cost of complying with new laws during Labor’s first term has reached $4.8 billion.

The National Audit Office said in 2014, “the total annual cost of all Australian Government regulation was around $65 billion per year, or 4.2 per cent of GDP.”

Since then, 1530 laws have been passed.

If it was nearly 5 per cent of GDP in 2014, it is now closer to 10 per cent. The BCA estimates the total cost is $110 billion.

This year, Australia fell five places in the IMD World Competitiveness rankings, and we now rank 37th for business efficiency.

New research from the Parliamentary Library shows a nation focused on making rules, not repealing them.

The total number of Acts in force is 1241. New Zealand has 1057. Canada, with almost twice our population, has just 880.

Why do we have 35 per cent more laws than Canada?

The second point is that we cannot afford to repeat past mistakes on red tape.

This starts with failure at the top. The Office of Impact Analysis, dedicated to analysing regulation, has seen staff fall from 21 to 16 in three years.

Labor gutted the OIA as it re-regulated the economy.

The OIA also waved through all 400 new bills in Labor’s first term, a 100 per cent strike rate.

The Productivity Commission is scathing in its latest report on the OIA. They recommend strengthening its independence.

Today, the OIA is a neutered dog under Labor. This is a failure of the Prime Minister. It is his department.

The default response of the government to a problem is always to add more regulation, even if it is duplicative or similar to an existing statute or rule.

More rules are always presented as good, but too often we pay for the burden of red tape and for their non-enforcement. Many existing laws are simply ignored.

A Senate inquiry documented ASIC’s failures, yet the government has not responded after 13 months.

They are supposed to respond in three.

Now, with the First Guardian, Shield and Lion collapses, Australians rightly ask why rules weren’t enforced.

Labor hasn’t even issued ASIC with a statement of expectations. The last was by treasurer Josh Frydenberg in 2018.

Alongside this failed enforcement is Labor’s service to vested interests such as unions, who demand bespoke regulation.

Delegated authority to ministers is also excessive.

On the unrealised gains tax, Treasurer Jim Chalmers will arm himself with power to set pension tax arrangements for the Prime Minister, an obvious conflict.

On mortgage insurance, Labor wants to uncap the Home Guarantee Scheme participant limit and remove all income restrictions. This is effectively nationalising lenders mortgage insurance for first home buyers, a huge change, and they want to do it all by regulation.

So a new approach — a new Australian approach to reboot enterprise — is needed.

The Coalition will take a whole of government approach to this. Our work begins now.

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