NO.026

Reducing Red Tape and the Regulatory Burdens on Business

The Government has made significant progress over the past nine months in reducing regulatory burdens imposed on business by Commonwealth Government regulation, and in improving regulation‑making and review processes, in response to the Taskforce on Reducing Regulatory Burdens on Business (the Banks Taskforce).

The Prime Minister and I announced the establishment of the Banks Taskforce, chaired by Mr Gary Banks (Chairman of the Productivity Commission), on 12 October 2005, to identify practical options for alleviating the compliance burden on business from Commonwealth Government regulation.  The Banks Taskforce presented its final report to Government on 31 January 2006.

The Government accepted, in full or in part, 158 of the Banks Taskforce’s 178 recommendations.  A copy of the Government’s final response to the Banks Taskforce, which was released on 15 August 2006, is available on the Treasury’s website at www.treasury.gov.au.

The Banks Taskforce made recommendations across a broad range of regulation, including:  health‑related regulation; labour market regulation; consumer‑related regulation; environmental and building regulation; financial and corporate regulation; tax regulation; superannuation regulation; and trade‑related regulation.  Achievements in response to the Taskforce include:

• A new consumer information website, www.privatehealth.gov.au, managed by the Private Health Insurance Industry Ombudsman, has been created to provide consumers with more information about private health insurance and to allow them to compare insurance policies more easily.  The website will include easier access to information about ‘gap cover’ doctors and charging practices.
• The recommendations of the Australian National Audit Office’s 2005 audit report Managing for Quarantine Effectiveness — Follow‑up, have been fully implemented.
• The broad‑ranging superannuation reforms which I announced in the 2006‑07 Budget have now been enacted.  These are the most wide‑ranging reforms of the superannuation laws in decades.
• The public works committee threshold has been increased to $15 million, from $6 million, and arrangements made to more easily adjust the threshold in future.
• The Government is developing legislation to align the eligibility criteria for small business tax concessions for GST, the simplified tax system, capital gains tax, fringe benefits tax and pay‑as‑you‑go. The Board of Taxation also will soon report on the results of its scoping study on small business tax compliance costs.  Further, the Board of Taxation has commenced a study into the scope to apply consistent self assessment principles across all federally administered taxes.
• My Parliamentary Secretary, the Hon Chris Pearce MP, has made significant progress in reducing the burdens associated with corporate and financial services regulation.  Mr Pearce has undertaken extensive consultation through the Corporate and Financial Services Regulation Review Consultation Paper and implementation of the proposals in that paper has begun — draft Regulations to reduce duplication and simplify Product Disclosure Statements, Financial Services Guides and Statements of Advice were exposed for comment during March and April 2007, and drafts of the Simpler Regulatory System Bill and the Simplifying Regulation and Review Bill will be released soon.
• Mr Pearce is also consulting on reforms to insider trading provisions of the Corporations Act 2001 through the Insider Trading Position and Consultation Paper, and will bring forward separate reforms to auditor independence following completion of consultations on Australian Auditor Independence — A Comparative Review.
• The Minister for Revenue and Assistant Treasurer, the Hon Peter Dutton, MP, is also bringing forward legislative changes in response to consultations on the Streamlining Prudential Regulation:  Response to ‘Rethinking Regulation’.  These reforms will remove regulatory overlaps, provide greater flexibility for APRA to tailor prudential requirements, remove unnecessary or out of date legislation and improve APRA’s independence and accountability for its decisions.
• The Government has also committed an additional $1.6 million for ASIC to fund a better regulation initiative programme to enhance the regulatory decisions it takes.

The Banks Taskforce also made recommendations to strengthen the Government’s regulation‑making and review framework.  Regulation‑making processes have been enhanced within Government to ensure that the compliance and competition impacts of regulatory measures are considered by government at an early stage in their development, and to ensure that the cumulative effects of regulations are monitored effectively over time.  Measures to enhance the regulation‑making framework include:

• The role of the Office of Best Practice Regulation (OBPR) (formally the Office of Regulation Review) has been expanded to ensure that there is an objective, comprehensive analysis of the business compliance costs and competition impacts of all regulatory proposals.  The OBPR has been provided with additional funding to assist and advise agencies on the regulatory analysis requirements.
• Improved regulatory impact analysis, to be scrutinised by the OBPR.  The OBPR has issued guidance to Commonwealth Government departments and agencies on a revised regulatory analysis framework, including mandatory use of the Business Cost Calculator, or an equivalent approved by the OBPR.  The OBPR will continue to publish an annual report on departments’ and agencies’ compliance with the Government’s regulatory analysis framework.
• To reinforce comprehensive regulatory impact analysis, the Department of the Prime Minister and Cabinet’s gate‑keeping role has been strengthened to ensure that all proposals brought before Cabinet are accompanied by appropriate regulatory impact analysis.
• The Government also made a commitment that targeted reviews of all new regulation will be undertaken five years after new regulations take effect.  This requirement applies to all new regulation commencing in 2007 and later.  Commencing in 2011, all regulations subject to review will be identified in departments’ Annual Regulatory Plans, which are published on the OBPR’s website. 
• A business consultation website, www.consultation.business.gov.au, has been established as a one stop shop for businesses, associations and other interested parties to register an interest in being consulted about changes to proposed or existing regulations.  The Government has also updated the ‘new to business’ checklist on the www.business.gov.au portal to ensure easier compliance with regulations by new businesses.

The Government’s commitment to tackle red tape is ongoing.  Accordingly, I have commissioned the Productivity Commission to commence an annual review process to identify regulation that is unnecessarily burdensome, complex or redundant, or duplicates regulation in other jurisdictions.  This rolling programme of reviews will examine all sectors of the economy over a 5‑year cycle, commencing with the primary sector this year.  The Commission’s first review will be completed by the end of October 2007 and will form the basis of a rolling red tape reduction agenda, which will be considered by the Government each year.  Details of the review process are available on the Commission’s website at www.pc.gov.au.  

The Commonwealth Government is also working actively through the Council of Australian Governments (COAG) to ensure that regulatory burdens, especially where jurisdictional overlaps add to compliance burdens, are addressed at all levels of government.

To assist in monitoring regulatory performance at all levels of government, I announced on 11 August 2006 that the Productivity Commission would undertake a study to examine the feasibility of developing a common framework for benchmarking, measuring and reporting on regulatory burdens across jurisdictions.  The first stage of the Commission’s study, released on 6 March 2007, found that benchmarking of Australian business regulation in areas of regulation that have similar objectives is feasible and could produce significant benefits.

The Government will continue to implement its commitments made in response to the Banks Taskforce, in addition to pursuing other opportunities for regulatory reform.  It is important that regulatory burdens are tackled at all levels of government and into the future.

LONDON

12 April 2007

Contact:

David Gazard –

0428 405 107