Australia needs to cough up its ‘regulatory hairballs’, declares PC boss

Productivity Commission boss Danielle Wood is calling on all levels of government to launch a war on red tape and bureaucracy, describing an avalanche of laws over recent years as “regulatory hairballs” that have held back living standards.

Before the federal government’s three-day economic roundtable, which Treasurer Jim Chalmers says will tackle red tape in areas from housing to mining approvals, Wood will use a speech on Monday to argue that politicians have sought to over-regulate the country at the expense of economic growth and opportunities for all Australians.

Wood is one of the key attendees at the roundtable that will include business, community and union leaders who will canvass issues ranging from the shape of the tax system to the rise of AI to the lack of competition across parts of the economy.

In an address to the National Press Club, Wood will say that economic growth has fallen down the list of priorities. Governments at all levels have instead focused on other policy goals.

This had contributed to “regulatory creep” where governments feel they have to respond to any issue with new laws or red tape, as voters looked to a “Canberra fix” that ultimately led to decisions that slowed growth.

She will argue all governments should follow the lead of the administration of former American president John F. Kennedy, which put up signs in the US Commerce Department asking: “What have you done for growth today?”

“Perhaps it’s time to distribute that sign to government agencies and ministerial offices all around our country,” she will say.

“Regulatory hairballs have found their way into almost every corner of our economy. Growth has simply fallen down the list of priorities in policymaking.”

Wood, whose organisation has made more than 40 recommendations across five separate specialist reports in the lead-up to the roundtable, will defend some of the commission’s more contentious proposals.

She will argue that an economy-wide carbon price remains the cheapest and most effective way to reduce the nation’s greenhouse emissions, and push back at criticism from the business community of a commission proposal to introduce a 5 per cent cash-flow tax on all firms.

The proposed company tax change, which the commission estimates would boost investment by $7.4 billion and increase GDP by $14.6 billion, was worth pursuing.

“Big enough to get out of bed for, I would think,” she will say.

Industry and business groups are working together at the roundtable with 30 organisations, ranging from Universities Australia to the National Farmers’ Federation, pushing the government to commit to a 25 per cent cut in red tape by 2030.

The group also believes there needs to be an improvement in the speed of approvals for major projects, an issue that is expected to be one of the outcomes of the roundtable.

“We need to cut red tape for consumers and businesses, so it’s quicker to approve and build homes and make it easier for businesses to operate so a cafe owner in Melbourne doesn’t face 36 licences before they can pour a cup of coffee,” Business Council of Australia chief executive Bran Black said.

One area of red-tape reduction likely to see some movement this week is on so-called “nuisance tariffs”. These are small imposts on imported goods where the revenue from the tariff is smaller than the cost of collecting the tax.

In last year’s budget, Chalmers axed 500 of these in a move that the Treasury estimates will save businesses $180 million in compliance costs by 2029-30.

But the Productivity Commission estimates there are another 315 that bring in just $13 million in revenue but cost more than $60 million to collect.

“We’ve made, on those 500 nuisance tariffs that we’ve already abolished … good progress. If I can build consensus and momentum to go further on that, I would like to,” he told Sky News.

Shadow treasurer Ted O’Brien, who last week labelled Chalmers the “candy man” for his approach to the roundtable, is expected to attend for its full three days.

On Sunday, Chalmers said while O’Brien had been invited to the meeting, he was the only attendee not to have pitched any ideas to the government.

But on Monday, the opposition’s productivity and deregulation spokesman, Andrew Bragg, will use an address to outline some of the Coalition’s attitude towards red tape.

Bragg, in an address to the Sydney Institute, will argue that Australians’ prosperity was now at threat from a “regulatory quagmire” that meant there were now 1241 acts of parliament in force compared with 1057 in New Zealand and 880 in Canada.

He will signal that the Coalition will support a reduction in regulation, particularly in areas such as housing or where an industry may be better served by self-regulation.

“If there is a lever to make building houses easier, we will look at it,” Bragg will argue.

“Over the coming three years, I will be actively looking for opportunities for industry to self regulate. This isn’t always possible or desirable, but it should absolutely be considered.”

While the Coalition will spend its years in opposition looking for regulations to axe, the Labor-aligned McKell Institute on Monday will argue workers should get part of the productivity gains enjoyed by businesses now.

In a report into retail businesses, the institute argues that worker productivity across the sector has increased by 26 per cent since 2007, but real wages have fallen by more than 1 per cent.

It said this “productivity debt” highlighted the dangers of business leaders demanding productivity gains which did not flow to working people.

“Productivity is important. But Australia doesn’t yet have the policy architecture in place that ensures productivity gains flow through to workers’ living standards,” institute chief executive Ed Cavanough said.

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