Red tape: The handbrake on small business productivity, competitiveness

In a new report, ACCI said it had highlighted the increasing complexity of Australia’s regulatory framework, as well as having identified regulatory reform as “one of the most significant opportunities to unlock productivity gains and secure future prosperity”. 

Andrew McKellar, ACCI chief executive, said red tape had become a handbrake on Australia’s productivity and competitiveness. 

“Businesses are buckling under the weight of excessive compliance obligations, which are stifling innovation, deterring investment, and holding back economic growth,” he said. 

“It’s time for the government to take decisive action to cut through the regulatory clutter and put Australia back on the path to prosperity.”

In the report, it was stated the government needed to place regulatory reform at the forefront of its agenda with successful reform deemed as one that shrunk the existing stock of regulation, improved the processes through which new regulations were passed, and simplified compliance mechanisms to limit the collateral costs of regulation.

To achieve this, it was noted that first it needed to be recognised that red tape and over-regulation was a serious economic problem at a Prime Ministerial level, followed by a growth-first directive to all government departments and regulators. 

In addition to this, ACCI proposed having the target of a 25 per cent reduction in the compliance burden by 2030, appointment of a cabinet-level minister specifically for red tape reduction, digitalisation of compliance and monitoring, reduce barriers to trade through digitisation, streamline the environmental approval process and simplify the national construction code. 

From these suggestions, McKellar said clear acknowledgement from the government that red tape was a serious economic problem was essential, as well as the ‘growth-first' directive from all government departments and regulators.

“A dedicated cabinet-level minister for red tape reduction should be appointed to spearhead this effort and ensure we meet an ambitious but achievable target of reducing the compliance burden by 25 per cent by 2030,” he said. 

“Small businesses are the backbone of our economy, yet they are being crushed under the weight of red tape. It’s time to streamline processes and ensure regulations are proportionate to the size of the business.”

“Streamlining Australia’s regulatory landscape is not just about cutting costs; it’s about creating an environment where businesses can thrive, innovate, and compete globally. This is a critical moment for Australia to make bold commitments to cutting red tape and driving productivity growth for the benefit of all Australians.”