Australia's Regulatory "Bonfire"

March 24, 2014

The World Economic Forum ranks Australia 128th in the world in terms of the burden of government regulation, noting “the business community cites labor regulations and bureaucratic red tape as being, respectively, the first and second most problematic factor for doing business in their country.” 

Concerns over regulatory burden have resonated with the Australian coalition government elected last September, which committed to “building a stronger, more productive and diverse economy with lower taxes, more efficient government and more competitive businesses…by reducing the regulatory burden that is strangling Australia’s economic prosperity and development.”

In a ministerial statement to the House of Representatives of the Australian Parliament last week, Prime Minister Tony Abbott announced that March 26, 2014 will be the parliament’s “first ever repeal day: to abolish regulation and legislation that’s outlived its usefulness or is doing more harm than good.” 

Committing to create “the biggest bonfire of regulations in our country’s history,” the Prime Minister promised that next week’s repeal day will remove “more than 9,500 unnecessary or counter-productive regulations and 1,000 redundant acts of Parliament, and “more than 50,000 pages...from the statute books”, saving “individuals and organizations over $700 million” annually.

Among the deregulatory items on the agenda for repeal day are:

  • Abolition of the Australian Charities and Not-for-Profits Commission and Independent National Security Legislation Monitor,
  • Removal of several redundant acts, such as “the 1970s conversion from imperial to metric measurement,”
  • A change to regulation so that “films will only need to be classified once – not again and again when they are reissued in DVD, blu-ray or 3D,”
  • Streamlining of paperwork requirements related to approval mechanisms for agricultural chemicals and veterinary medicines, and universities and employment agencies reporting, and
  • Removal of requirements for businesses to administer the former government’s paid parental leave scheme.

The Prime Minister committed to holding at least two repeal days per year, and has formed deregulation units within each regulatory portfolio, noting “it’s sometimes more important to repeal old laws than to pass new ones.”  

A Productivity Commission is developing metrics by which to evaluate cost reductions, and each “department and agency is conducting a comprehensive audit of the costs it puts on individuals and entities so that it can put a dollar figure on the cost of compliance and reporting and start reducing it every year.” 

Through these efforts, the Government commits to $1 billion in “red tape cost savings” each year.

In addition, the Government is reemphasizing the importance of a regulation impact statement (RIS) for newly proposed regulations, “developed early in the policy making process…to encourage rigour, innovation and better policy outcomes from the beginning.”

The Australian Government Guide to Regulation, released this month, identifies ten principles for policy makers (see box).

TEN PRINCIPLES FOR AUSTRALIAN GOVERNMENT POLICY MAKERS

1.       Regulation should not be the default option for policy makers: the policy option offering the greatest net benefit should always be the recommended option.

2.       Regulation should be imposed only when it can be shown to offer an overall net benefit.

3.       The cost burden of new regulation must be fully offset by reductions in existing regulatory burden.

4.       Every substantive regulatory policy change must be the subject of a Regulation Impact Statement.

5.       Policy makers should consult in a genuine and timely way with affected businesses, community organisations and individuals.

6.       Policy makers must consult with each other to avoid creating cumulative or overlapping regulatory burdens.

7.       The information upon which policy makers base their decisions must be published at the earliest opportunity.

8.       Regulators must implement regulation with common sense, empathy and respect.

9.       All regulation must be periodically reviewed to test its continuing relevance.

10.    Policy makers must work closely with their portfolio Deregulation Units throughout the policy making process.  

The world will watch with interest the effect of these actions on Australia’s rankings in global indexes such as the World Economic Forum’s, as well as the nation’s economic growth and global competitiveness.