Cost of Red Tape: Online Consultation
Australian businesses would benefit from the reduction of unnecessary regulation and red tape. It is seen as a significant strain on our national productivity and a significant barrier to job and wealth creation.
In a recent report the Productivity Commission estimated the rewards for red tape reduction to be worth $12 billion in extra GDP.
Red tape is believed to contribute to 4% of Australia’s business costs.
To identify avoidable red tape and unnecessary regulation, public policy think-tank Global Access Partners (GAP) in conjunction with its First 5000 business network, is hosting the Cost of Red Tape online consultation on Open Forum.
The consultation will feed into the Coalition Deregulation Taskforce which was formed in December 2011 by the Leader of the Opposition, the Hon. Tony Abbott MHR. Chaired by Senator Arthur Sinodinos AO, the Taskforce is exploring how to reduce the costs and burden of regulation to business. It also plans devise ways to reduce the time and cost of compliance in order to stimulate growth, investment and productivity.
The Cost of Red Tape online consultation is open to small and medium businesses. Larger organisations and key stakeholder bodies are also invited to contribute.
We ask you to share your experiences by answering the questions below. We welcome you to provide anecdotal evidence and any supporting material to explain your circumstances.
- Which regulations and red tape affect your business the most?
- How much time and money does this compliance cost your business? How do you record/calculate this?
- Which regulations do you consider redundant and why?
- What opportunities are current regulations preventing you from pursuing?
The online consultation will start on Wednesday, 16 May 2012 and close at 5pm AEST on Friday, 15 June 2012.
THIS CONSULTATION HAS NOW CLOSED. THANK YOU FOR YOUR SUPPORT.
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RELATED CONTENT
- Finding ways to cut red tape – by Sen. Arthur Sinodinos
- Regulating the 21st century – by Patrick Callioni
- Forms, forms and more forms – by Leighton Jenkins
- Cut red tape to help innovation – by Peter Strong
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Cost of compliance outweighs benefits – by Sen David Bushby
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Does red tape strangle an economy or provide a safety harness? – by Fergus Neilson
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Bad regulation clogging the economic arteries of Australia – by Kelly O’Dwyer MP
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Red tape and Australia’s cost of doing business – by Tim Mazzarol
SHARE YOUR VIEWS BELOW
DISCLAIMER: The comments published below represent a wide range of views and interests of the participating individuals and organisations. Statements made during online discussions are the personal opinions of the commentators and do not necessarily reflect those of the Coalition Deregulation Taskforce or Open Forum. Open Forum, at all times and at its absolute discretion, reserves the right to remove offensive comments from the Cost of Red Tape Online Consultation. For your reference, any comments/messages that are offensive for the online consultation would include any or all of the following: breach of privacy, defamatory content, profane content, risk of contempt of court, racial and religious hatred/vilification, confidentiality concerns.
Open Forum is an interactive policy discussion website hosted and moderated by Global Access Partners (GAP).
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cforedtape
May 17, 2012 at 4:48 am
Red Tape answers
Thanks for the opportunity to participate.
Which regulations and red tape affect your business the most?
Payroll Tax and BAS
How much time and money is compliance costing your business? How do you record/calculate this?
Approximately $150k. This is recorded under administrative and overhead costs, and is based on a percentage of the time spent by employees completing compliance related work.
Which regulations do you consider redundant and why?
We would like to abolish Payroll Tax because it discourages us from employing more staff. We also believe in the implementation of a unified system of taxes and compliance procedures, in order to save time, and company resources.
What opportunities are current regulations preventing you from pursuing?
These regulations hinder on our organisational growth, as Payroll Tax discourages a large workforce.
The process of adhering to compliance policies and completing all relative procedures takes up a significant amount of valuable time of which could be better spent on our organisational objectives.
Without having to adhere to these regulations our organisational growth, would ultimately better the economy. We could also engage in further non-for-profit activity with the money saved and we would be able to create 3 or 4 new jobs. We think the dollar value of these new opportunities would be around $250k plus.
To put this in context our busines has:
Turnover: $15.2M
Net Profit: $1.6M
Total Overhead Admin Costs: $650K
Number of Employees: 51
Leo Silver
May 22, 2012 at 3:36 am
State Based Legislation
The biggest impediment to us growing our business is State based legislation. Even though we are a small business (approximately 50 staff) we service customers nationally. We face significant overhead in managing compliance accross the States on a range of issues including staff registration and licensing and of course Pay Roll Tax.
Henrykof
May 29, 2012 at 12:31 pm
Red Tape Related Issues
Although I do not encounter direct Red Tape costs in my consultative activities I would like to make the following suggestions to help assess the real cost impacts of Red Tape for business, as well as identify where the focus should be to correct the situation.
1. Categorise the Red Tape that exists for businesses highlighting the overlaps occurring between Federal, State,and Local requirements as well as issues of obtaining Financial Funding. All these will probably vary for different types of business,and do
2. The same for new Start-up businesses.
Finally 3. Specially target the financial funding barriers that exist for new Start- Ups both in terms of seeding capital and expansion capital which impact negatively on potential entrepeneurs who have no established business records.
Overall, all these barriers hinder the business community from either operating more efficiently or allowing entry of new firms.
bizcentral
May 22, 2012 at 2:54 am
Answers
Which regulations and red tape affect your business the most?
How much time and money does this compliance cost your business? How do you record/calculate this?
Which regulations do you consider redundant and why?
What opportunities are current regulations preventing you from pursuing?
Gavin Solsky
May 28, 2012 at 4:20 am
Payroll tax is ridiculous
Which regulations and red tape affect your business the most?
The regulation that affects our business the most is payroll tax – it’s the most ridiculous thing ever to tax companies for creating jobs. Also Unfair Dismissal laws, because they discourage hiring, particularly in small businesses.
What opportunities are current regulations preventing you from pursuing?
If workplaces laws were more flexible we would be more inclined to hire more people.
How do you record/calculate the effect red tape has on your business?
We don’t record how much of an effect red tape has on our business.
robert.crompton
May 31, 2012 at 11:20 pm
Consultation answers
Which regulations and red tape affect your business the most?
How much time and money does this compliance cost your business? How do you record/calculate this?
Which regulations do you consider redundant and why?
What opportunities are current regulations preventing you from pursuing?
Mark Ostryn
June 5, 2012 at 5:22 am
Answers
»Which regulations and red tape affect your business the most?
There is a large number of rules and regulations built up around the Sale of Businesses. A few are unnecessary, but most exist to protect Business Buyers and Sellers from unethical practices.
»How much time and money does this compliance cost your business? How do you record/calculate this?
Such compliance issues are built into our business – every document we issue, every conversation we have, every procedure we follow is moderated by the need to comply. Because they are built in, it’s impossible to quantify them.
However, our business gains from this. Compliance raises the barriers to entry to the industry and serves to keep the rogue operators out. This enables our business to concentrate on adding quality services for our customers, rather than worrying about being undercut or being the lowest cost operator.
»Which regulations do you consider redundant and why?
There are a number of state based regulations that a) stop me from practicing across state boundaries and b) force me to renew licenses that are unrelated to performance or accreditation.
These licenses appear to be a simply “money grab” from state governments without any discernible benefit for the profession.
»What opportunities are current regulations preventing you from pursuing?
Because state governments predominate in the licensing of this profession, it can be unclear what the precise regulatory environment is when businesses’ with subsidiaries, directors and offices in multiple states are sold.
Merv09
June 5, 2012 at 5:38 am
Industry
I want to remind you that deregulation of both the egg and milk productions back about thirty years ago, which almost destroyed the industries in various States in Australia, and did not produce any significant improvements, and I suggest there is probably others in which it has only been done to further enhance the profits of a particular individual or business.
Paul RedTape
June 7, 2012 at 4:56 am
Re: Kelly O’Dwyers comments
I agree with the sentiment from Kelly O’Dwyer that regulation has the potential to stifle productivity. I could draw attention to numerous examples at federal, state and local government levels where I believe this to be the case. Our company is involved in property development and construction and is continually frustrated by the planning approval process that fluctuates between local and state governments which increase property prices dramatically and hence our international competitiveness. However, the most topical current regulation relates to the pending carbon tax. I am currently being asked by potential clients to take the risk on the impact of the carbon tax for projects priced now and signed post July 1, 2013. Potential subcontractors and suppliers refuse to take that risk. I defy anyone to tell me with any accuracy at all what the impact of carbon tax will be on our projects. The complexities in doing so are enormous and are not something that SMSE’s are competent in undertaking and nor should they be.
Paul
Warwick Neilley 2
June 11, 2012 at 11:38 pm
Red Tape
I fully concur with COSBOA’s Peter Strong’s comments on Red Tape and there are other issues that need to be addressed.
On the national availability of skilled and qualified labour, its contribution of higher incomes for workers and subcontractors and to increased productivity, COAG has been an abject failure in Australia over the past 15 years. More flexible skill formation that could train workers and help support enterprises in product innovation and improved productivity was at the heart of award restructuring across key industries in the late 1980s and into the 1990s. These initiatives triggered COAG processes and an agreement in July 1998 that a national system be introduced for the building and construction industry. A National Occupational Licencing System will now not be fully operational until March 2013, while skills formation in the industry continues its decent into a deep crisis.
In workers compensation, I have been aware of past cases in NSW where SMEs have sought reductions in premiums but have been declined as they transition from labour intensive manufacturing to CAD and computerised production systems to be more competitive, niche suppliers with far lower workplace injury risks.
On local government planning processes, proposals for changes to existing use conditions for industrial land and the aggregation of adjacent industrial properties should in all cases have fast track approvals available for projects that lead to job retention and creation.
Alex Dunnin
June 13, 2012 at 1:01 am
Fergus Neilson blog RE:
Does red tape strangle an economy or provide a safety harness?
This is a really clever and insightful question. Red tape is regulation and that is part of the rule of law which holds us together. So I think you may be right Fergus. Sure we have too much red tape but while we want less of it, we can’t agree which bits to reduce and yet we also and ironically want more controls too. The implication is that not all red tape (law and regulation) is bad. Great question this one.
David Myer
June 13, 2012 at 2:23 am
Re: Fergus Neilson blog
Yes, a classic ‘on the one hand… but on the other…’ argument. Six of one and half a dozen of the other. And as long as there is healthy debate, the red tape can move around so that we continue to improve the situation: taking it out in one area where it is disproportionate and putting it round another area where it’s needed. Love the deliberate mixed metaphors, Fergus, tape being a glue, and taking an axe to the tape. Great stuff.
Sarah Zanon
June 13, 2012 at 2:31 am
Fergus Neilson blog RE:
Being a lawyer, I have long held that rule of law in Australia is one thing that sets us above and apart from other societies. I agree that there is some truth in the argument that reduction in red tape would lead to greater corruption. However, I query exactly what "red tape"means in this instance. Fergus refers to the US populace’s reluctance to embrace universal health care as an aversion to red tape – I wouldn’t see this as such; more as their extreme devotion to individualistic capitalism.
I see red tape as increased administrative overload in order to comply with or navigate the legislative / regulatory framework. To be perfectly honest, when you’ve dealt with government departments in places like India, China and the Middle East, we have absolutely no problems with red tape (in my definition) here: In general, I find personnel in Aus govt departments approachable and easy to deal with. Unlike other countries, most Aus govt websites are well structured, informative and have the information required to deal with that dept. While it sometimes takes a while to find the answer, it’s not opaque or arbitrary, and we have good and open processes for appeal against administrative decisions.
Col
June 13, 2012 at 5:19 am
Small Business Entwined in Red Tape Seeks Rescue
Now might be an appropriate time for Federal and State Ministers for small business to affirm COAG’s impending changes in accounting administration and 2011 "seamless economy implementation plan".
“Council of Australian Governments Business Advisory Forum, Communiqué Canberra, 12 April 2012…"
“Meeting the red tape challenge – Participants at the Forum agreed to commit to lowering costs for business – particularly small and medium sized enterprises – by identifying unnecessarily burdensome, inefficient or duplicative rules and regulations that impede productivity and economic growth. Accordingly, all Government leaders committed to work individually and collectively, to identify and reduce “nuisance” regulations that may impose unnecessary costs on business, hindering competitiveness and stifling innovation.
The Forum committed to reduce reporting burdens on business and identify ways to remove overlaps in Commonwealth and State reporting obligations and to further expand the use of online business reporting.”
Federal Government’s announcement 28th May 2012 is evidence that this COAG Plan is actually delivering changes.
“Joint media release with the Parliamentary Secretary to the Treasurer, the Hon Bernie Ripoll MP"
A new service that allows businesses to register their names nationally in one simple online process begins today.The National Business Names Registration Service is an online ‘one-stop shop’ and a key reform under the Council of Australian Government’s Seamless National Economy Agenda.
“This is an historic change which will cut costs and red tape for small businesses across the nation,” Minister for Small Business Brendan O’Connor said.”
COAG’s “seamless economy implementation plan 2011” includes : Payroll tax harmonization. Adopt common state and territory payroll tax administrative provisions and definitions by 1 July 2012 “ www.coagreformcouncil.gov.au
Perhaps the path is now clear for reform and free from Party politics that block implementation of COAG’s “seamless economy plan” so desperately needed by small business. Open Forum contributors have the facility to blow the whistle on frustrating petty Party politics.
However on the subject of red tape for large industries, such as property development, Open Forum Strata Title contributors revealed a need for increase in regulations!
‘Red tape’ to some is justifiable safeguard for others.
Warwick Hearne
June 13, 2012 at 11:57 pm
Answers
»Which regulations and red tape affect your business the most?
As Chairman of a small financial planning business all that is FoFA stands out.
This fiasco, while desperately needed, has consumed thousands of hours within the industry, will deliver little, and fails the community need for more advice to more people.
»How much time and money does this compliance cost your business? How do you record/calculate this?
In financial planning compliance is front of mind multiple times every day.
This, of itself, is not such a bad thing.
However, once regulators become involved, closely followed by compliance officers in companies, then you rapidly get convergence to a provably compliant outcome that is useless in the community.
If the PDS (product disclosure statements) are many pages of closely typed words you can guarantee nobody reads them, hence they are not worth producing.
This occurs for most contractual arrangements related to services in finance and telecommunications.
The cost is massive.
»Which regulations do you consider redundant and why?
The most obvious are related to industrial relations.
Many years ago people sought a job for life to provide secure income for them and their family. They would work a regular week, retire at 65 (if they made it) and then die shortly thereafter.
Our IR rules and regulations were built to suit that environment.
Today’s world is vastly different.
Employees actively seek a variety of jobs through their career. Increased participation of females brings lots of issues where part-time work is a major benefit.
Many small businesses operate from home and are a significant contributor. Many employees perform some of their work from home.
We are unlikely to save enough in a working life that ends at 65 to fund a retirement that will last to 90 and beyond for myself and my spouse.
This environment requires a vastly different set of regulations. In particular, all those that effectively assume a regular full time working week need to change.
The key is flexibility as much for the worker as for the employer.
Ruth Hayden
June 14, 2012 at 5:17 am
Issues
»Which regulations and red tape affect your business the most?
Probably the most expensive are the tax regulations and reporting. BAS is OK as it offers us a way of remaining accountable.
As a micro business the one size fits all approach to company tax reporting.
I am confused and it is costing me dollars just to understand and comply when we are a low volume service consultancy and does not involve product.
It seems a pity that things are so complicated it goes over our heads and requires huge fees and time to manage.
The next red tape issue is insurances when consulting to government.
We are a small business but consult to government as a preferred supplier and therefore are required to pay massive indemnity insurance bills on the off chance that we will be awarded work.
This is a red tape issue as it takes us time and costs us money to compliant even though we have not completed any government work for 1.5 years. Could the insurance be held by the Government in this case.
Accessing grants for business and innovation incentives is something I have wanted to do for a long time.
However, it seems that each time we attempt this the outlay of time to prepare and submit outweighs the potential benefit.
It means that as a genuinely "busy" small business service consultancy, investing the time to grow is almost impossible when added into the mix of day-to-day requirements. A pre-assesment avenue would be optimal for productive small businesses.
CommercialRadioAustralia
June 15, 2012 at 4:48 am
Answers
1. Which regulations and red tape affect your business the most?