Performance Benchmarking of Australian Business Regulation : Submission to the Productivity Commission
Authors
Publication date
30 October 2006
Publisher
Abstract
The need to “reduce red tape” and regulatory inconsistencies is a desirable outcome (OECD 1997) for
developed countries. The costs normally associated with regulatory regimes are compliance costs and
direct charges. Geiger and Hoffman (1998) have noted that the extent of regulation in an industry
tends to be negatively associated with firm performance. Typically, approaches to estimation of the
cost of regulations examine direct costs, such as fees and charges, together with indirect costs,
such as compliance costs.
However, in a fragmented system, such as Australia, costs can also be incurred due to procedural
delays, either by government, or by industry having to adapt documentation for different spheres of
government; lack of predictable outcomes, with variations occurring between spheres of government
and sometimes within the same government agency; and lost business opportunities, with delays and
red tape preventing realisation of business opportunities (OECD 1997). In this submission these costs
are termed adaptation costs.
The adaptation costs of complying with variations in regulations between the states has been
estimated by the Building Product Innovation Council (2003) as being up to $600 million per annum for
building product manufacturers alone. Productivity gains from increased harmonisation of the
regulatory system have been estimated in the hundreds of millions of dollars (ABCB 2003). This
argument is supported by international research which found that increasing the harmonisation of
legislation in a federal system of government reduces what we have termed adaptation costs (OECD
2001). Research reports into the construction industry in Australia have likewise argued that improved
consistency in the regulatory environment could lead to improvements in innovation
(PriceWaterhouseCoopers 2002), and that research into this area should be given high priority
(Hampson & Brandon 2004). The opinion of industry in Australia has consistently held that the current
regulatory environment inhibits innovation (Manley 2004).
As a first step in advancing improvements to the current situation, a summary of the current costs
experienced by industry needs to be articulated. This executive summary seeks to outline these costs
in the hope that the Productivity Commission would be able to identify the best tools to quantify the
actual costs to industry
Is data on this page outdated, violates copyrights or anything else? Report the problem now and we will take corresponding actions after reviewing your request.