SME productivity potential reliant on regulatory overhaul, IPA says

Vicki Stylianou, IPA group executive, advocacy and professional standards, and submission author, said there was an urgent need to ease the disproportionate regulatory compliance burden on small businesses and SMEs.

“Australian small businesses operate in an increasingly complex global environment of increased interconnectedness, interdependence, uncertainty and change,” she said.

“For this reason, and others, the sector requires support to become more innovative and efficient, to employ more people and export more.”

To solve this, IPA called on the government to enable and promote access to affordable finance, facilitate education and skills development, update regulatory settings over time, resist protectionism and facilitate increased access to international markets.

The professional body also commented on simplifying specific regulations to help the government play a role in positively influencing productivity growth and supporting small businesses.

If compliance in certain areas including tax, employment and financial reporting were simplified, it would directly improve regulatory efficiency, the IPA said.

“The current system requires SMEs to allocate valuable time and resources to complex compliance, which is a demonstrable drag on growth.”

“By streamlining these regulations, businesses can reallocate their resources towards innovation, expansion, and job creation. Without this kind of reform, compliance costs will continue to rise, limiting small businesses’ ability to invest in growth and contribute to the economy.”

This recommendation follows various calls from industry professionals highlighting the regulatory pressure experienced by small businesses, as well as the Productivity Commission's finding that Australia’s regulatory systems hinder business dynamism and that the regulatory burden was getting worse.

The commission did put forward proposals on how to resolve this, which the IPA said it “fully supports”.

These proposals consisted of setting a clear agenda for regulatory reform and regulatory burden reduction, setting targets for regulatory burden reduction and committing to a comprehensive reporting regime to hold the government to account, bolster high-level scrutiny of regulations, and enhance regulatory practice to deliver growth, competition and innovation.

“A clear, government-wide agenda for regulatory reform is needed. Fundamental reforms aimed at boosting productivity growth are overdue, and the current regulatory burden is a demonstrable drag on growth.”

“An overhaul of the regulatory landscape is crucial to boosting Australia’s productivity and fostering a dynamic, resilient economy. We encourage the government to put in place a productivity agenda based on these recommendations and act quickly.”