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CEO red tape report: major headway requires further efforts

27 March, 2014

The extent of the red tape burden facing Australian business is highlighted in a new Australian Industry Group (Ai Group) CEO survey.

Ai Group Chief Executive, Innes Willox, who released the new CEO report during a speech in Canberra, said: "Australian businesses face regulatory burdens that are far too high. These burdens have been rising over recent years and they are dragging down our international competitiveness.

"Making real inroads will require a concerted effort over a number of years and will require tackling the major areas of regulatory burden on Australian business," Willox said.

Ai Group's National CEO Survey: Burden of Government Regulation reports that:

  • Over 83 per cent of employers surveyed listed regulation related to industrial relations and occupational health and safety as a significant regulatory burden in 2014
  • Regulatory burdens associated with taxation are also ranked as a key concern. Compliance costs associated with state-based taxes and charges such as payroll tax were ranked by 68 per cent of CEOs surveyed as imposing a medium to high regulatory burden on business while 64 per cent regard national taxes, including company tax and the GST as being a significant red tape burden
  • In the environment, waste and energy areas, almost half (48 per cent) of CEOs say these areas of regulation impose a significant burden on their business

"This new CEO survey reinforces calls for urgent attention to be given to labour-related areas of regulation. Detailed attention to labour and industrial relations regulations is needed from all levels of government because they are consistently nominated as placing the largest cost burden on business. Reducing duplication and improving harmonisation in occupational health and safety arrangements laws have been demanded by Australian business for many years, and it is still outstanding. Industrial relations regulation will be the subject of a forthcoming Productivity Commission inquiry. Reducing regulatory burdens should be a leading priority for this inquiry," Willox said.

"In regard to national and state tax compliance, business costs could be substantially reduced by addressing onerous and repetitive reporting requirements, providing online access, and addressing national inconsistencies across jurisdictions. It is essential that reducing the costs of compliance and the distortions to business decisions are a major focus of the government's foreshadowed taxation review.

"The 'green tape' that regulates the environment, waste and energy is a bugbear for around half of all businesses in 2014. Reporting requirements and regulatory inconsistencies across jurisdictions are frequently cited as the key burdens in this area. 'Green tape' is often also characterised by lack of clarity, repetition, duplication and lack of consistency in regulatory requirements across agencies.

"More specific regulations for areas such as infrastructure, planning, natural resources, transport, product safety, food safety, competition and fair trading all impose regulatory costs on some businesses. Around a third of CEOs say these types of specific regulation impose a significant burden in 2014.

"While the initiatives of the Commonwealth government are an important and welcome start, making real headway into regulatory burdens in Australia will require a continuation of these efforts for the life of the current parliament and beyond," Willox said.

Key findings:

  • The areas of industrial relations, employment, workcover and OH&S are expected to place the largest burden on businesses in 2014, with 83 per cent of CEOs stating the associated regulatory cost burden in these areas as medium or high
  • Compliance with payroll and other state taxes (68 per cent), as well as national company taxes and GST compliance (64 per cent), is also placing a medium or high cost on the majority of businesses in 2014
  • Regulations of environment, waste and energy place a medium to high burden on almost half (48 per cent) of businesses
  • Around one-third of respondents experience a medium to high burden from complying with laws on infrastructure, planning and natural resources (36 per cent), transport, product and food safety (34 per cent), as well as competition and fair trading (33 per cent)
  • Manufacturing businesses say they face a medium to high degree of regulatory burden from industrial relations and OH&S (85 per cent), payroll and other state taxes (70 per cent), national company taxes and GST (67 per cent) and environment and energy (55 per cent) related regulations in 2014
  • Among services businesses, industrial relations and OH&S (80 per cent), payroll and state taxes (65 per cent) and national company taxes and GST (58 per cent) are the most likely areas to impose a medium to high burden
  • Construction sector CEOs say they experience a medium to high regulatory burden as a result of industrial relations and OH&S (95 per cent), payroll and other state taxes (79 per cent), as well as national company taxes and GST (74 per cent)
  • The top three areas of regulatory burden for mining services businesses in 2014 include industrial relations and OH&S (69 per cent), payroll and state taxes (62 per cent) and national taxes (62 per cent)

Across the mainland states, businesses in Queensland are the most likely to report a medium to high regulatory burden due to industrial relations and OH&S (96 per cent) in 2014. Industrial relations and OH&S, payroll and state taxes, and national taxes and GST are placing the largest degree of regulatory burden on businesses across all states

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