Leaving a tip is a much more compicated transaction than you may have ever imagined as poor regulation has created a moral minefield that needs to be carefully navigated.

In the eyes of the law, what exactly is a tip?  

Not long ago, tipping was considered an American custom, but it is now common practice here. It's on the rise in synch with the explosion of Australia's dining culture in general. It seems pretty straightforward: happy customers might leave a little extra payment at the end of the night as a thank you for excellent service.   

Patrons do this with the expectation that the person they leave the tip for receives it, but this is not always the case.  

Tips are classed as earnings and should be listed as additional benefits on one's income tax return. Now, I'm not naming any names, but I worked as a waitress whilst putting myself through university and I would be very surprised if the ATO had any statistics showing that this practice is dutifully followed by the majority of hospitality workers.  

People aren't declaring their tips, so that money then exists outside the grid.  

Probably because it doesn't show up in the paperwork, this section of the economy has been left completely unregulated. There is no national legislation, and no state or territory laws I know of (although I'd be happy to be corrected) that addresses the issue of who tips belong to.  

To foster better regulation the first thing we need to do is to change our attitude.  

For a long time, there has been a prevailing attitude in the business community that regulation is an impediment to business, and that we must press forward with deregulation.

I believe this deregulatory approach, which focuses on throwing out as many of the old rules as possible, is a retrograde step.  

Despite all the rhetoric about it, very few people genuinely support the idea of blanket deregulation. Instead, we think it would be nice to keep the laws which protect us, and throw out the ones which restrict or punish us. Unfortunately, everybody else feels exactly the same way.

This demonstrates precisely why regulation is important: to keep self-interest in check.

It's common sense that a sound regulatory system upholds and supports the interests of the community. Business needs to realise that this in turn raises the standards in our marketplaces by fostering efficiency and innovation. Whilst it's true that too much or inappropriate regulation can have a negative direct effect, too little is likely to have a far more destructive influence.

Instead of characterising regulation in terms of higher taxes and fewer freedoms we urgently need to get over our gut reactions and adopt a more mature mindset. We need to appreciate the security and infrastructure regulation provides for us to operate within.

Managed well, Risk Equalisation has an important social role to play in ensuring health insurance is available to all Australian citizens, alleviating considerable pressure from the public purse. 

I'd like to highlight an area of regulation pertaining to the private health insurance sector that urgently requires reform.

The Risk Equalisation scheme must be amended, because at the moment, it totally lacks equity. Through my role as Chairman of HIRMAA (the peak body for restricted and regional funds I've been raising this contention with the Federal government (and the previous one) for quite a while. Unfortunately regulatory reform in this area is being stymied, due to no good reason I can see, other than the powerful opposition of the big insurers.

Risk Equalisation is essentially a new name for what we used to call reinsurance. It's a concept which has been a central aspect of private health insurance since October 1976 (having been preceded by a similar arrangement known as the Special Account that had been introduced in 1959). 

I agree we need to retain the system of Risk Equalisation funds pooling. However, because of the differences between the big and small players, a far more equitable approach would be to have two separate pools.

Working with business, rather than over the top of them, reduces costs to government, encourages private sector expertise and contributes to economic growth.

Regulatory reform is becoming a common project of governments across the world. As economies and businesses become more sophisticated in their operations, governments have recognised they must become more selective and innovative in the ways they regulate.

It is hard to describe the historical situation in Australia as one of more or less regulation. Relative to Europe there is a less regulated and rigid business environment. On the one hand, the number of pages of regulation has increased substantially; on the other hand governments have deregulated entire industries over the past few decades.

What we are seeing is change in the favoured style of regulation: these days, the focus is on setting the basic (enforceable) rules of the game and letting the market find its own solutions when this is possible. For example, where possible we expect regulation to be expressed in terms of an outcome to be achieved rather than a process for achieving it. This rewards productivity and innovation as firms seek the most efficient ways to comply.