The Australian, January 5, 2018
As Coalition MPs enjoy the summer respite after a tumultuous year in politics, Malcolm Turnbull is gearing up to reset the national agenda with a focus on economic prosperity.
To that end, the Prime Minister should put red tape reduction at the top of his list of new year’s resolutions.
Unlike the mooted cuts to company and income tax — welcome as those would be — cutting red tape wouldn’t take one cent off the budget’s bottom line.
Research by the Institute of Public Affairs indicates that unnecessary regulation costs the Australian economy $176 billion — every year.
Without red tape, the Australian economy would be 11 per cent larger and annually, the average household would be $19,300 better off.
As Senate Red Tape Committee chairman David Leyonhjelm has said, this cost is “reflected in businesses that are never started, jobs never created and the time lost adhering to bureaucratic requirements”.
By world standards, Australia’s red tape problem is woeful. According to the World Economic Forum, we rank 80th in the world when it comes to burden of government regulation.
This is miles behind countries such as the US (12th), New Zealand (22nd) and Britain (32nd), putting us in the same league as jurisdictions such as Kyrgyzstan (77th), Bangladesh (78th) and Iran (83rd).
It’s no wonder that business investment as a percentage of gross domestic product is lower than it was when Gough Whitlam was in the Lodge.
And when it comes to our rate of entrepreneurial growth, Australia ranks dead last among the 32 countries in the OECD.
Meanwhile, once-thriving titans of Australian industry are throwing up their hands in frustration.
Frank Lowy, founder of the Westfield property empire, cited overregulation as a key reason for accepting a takeover offer from French multinational Unibail-Rodamco late last year.
“I was sick and tired of all the useless formalities,” Lowy said. “It took away a lot of the pleasure. Most of that box-ticking that was created over the last 15 years or so was a waste of time.
“It didn’t add value. It stifled entrepreneurship.”
Getting out, Lowy said, would be “less demanding on my time, body and soul”.
Lowy is not alone. Nor is Australia’s red tape crisis limited to the big end of town.
Aspiring hairdressers in NSW, for example, must complete 847 hours of study and can expect to part with up to $9970.
Opening a restaurant in the same state requires the completion of 48 separate forms and the acquisition of 72 licences.
Builders are so preoccupied with compliance that it is taking them more than 20 hours on jobs that otherwise would take six.
Meanwhile, average building approval times vary wildly between cities, ranging from just five business days in Cairns to 118 in Launceston.
To be sure, the Coalition has runs on the board when it comes to cutting red tape.
Biannual “repeal days” occurred under the Abbott and Turnbull governments, scrubbing more than 50,000 pages of regulation off the books in the program’s first year alone.
But the government’s red tape reduction program appears to have ground to a halt, publishing its last annual report in March 2016.
Fortunately, there are plenty of international examples the Turnbull government can use to jump-start its regulatory reform efforts.
Many jurisdictions have had success with variants of the “one-in-two-out” model — that is, for every new regulatory requirement introduced, the government is required to eliminate two. This model has been used perhaps most successfully in the Canadian province of British Columbia, where the government has cut red tape by 48 per cent, scrapping more than 160,000 individual regulatory requirements since 2001.
More recently, US President Donald Trump’s one-in-two-out executive order — signed just under a year ago — vastly exceeded its target, taking out 22 old regulations for every new one introduced.
The Key government in New Zealand took a qualitative approach, inviting Kiwis to submit examples of “loopy rules” that drove them crazy. Among the most egregious was a requirement on owners of a bus depot that had no walls to install four exit signs to assist passengers in finding their way out in the event of a fire.
Many Australians would have similar red tape horror stories. Hundreds of thousands of unnecessary, costly and downright bizarre regulations are sitting on our books. Malcolm Turnbull should make 2018 about slashing this jungle of red tape and unleashing prosperity for all Australians.
Gideon Rozner is a research fellow at the Institute of Public Affairs.