The Red Tape Problem
What is Australia’s red tape problem?
Red tape is holding back our prosperity and progress.
The growth of low quality and poorly designed regulations and policies slows our economy, stymies our entrepreneurial talent and drives down our living standards. Every industry, business and Australian is hurt by red tape.
Our economic future is threatened by the growth of red tape. Red tape does not only harm big business, it prevents new businesses from starting and small businesses from expanding.
Our nation has experienced a remarkable quarter century of unbroken economic growth. It was the determination, enterprise and grit of Australian’s which propelled this economic miracle.
To unleash Australia’s prosperity we must cut red tape. Australia can remain a global economic leader, but we must first tackle our red tape problem.
That’s exactly why the IPA has launched the Red Tape Project.
How big is our red tape problem?
Institute of Public Affairs research estimates the annual cost red tape in Australia as $176 billion in foregone economic output. If we cut Australia’s red tape we could be $176 billion richer.
Each year red tape costs us more than income tax ($166 billion), and is now our largest industry. At 11 per cent of GDP that’s bigger than our mining, agriculture and manufacturing industries.
There are now over 100,000 pages of Commonwealth legislation. This figure has been rising dangerously fast for decades.
In 2015 alone the Commonwealth government passed 6,453 new pages of legislation.
How does red tape hurt the Australian economy?
How do we rank internationally?
| Competitor | Ranking on the burden of government regulation (best to worst) |
|---|---|
| Singapore | 1st |
| China | 26th |
| New Zealand | 36th |
| Canada | 37th |
| United States | 51st |
| Australia | 80th |
Source: World Economic Forum Global Competitiveness Report 2015
The cost of red tape is more than just the time and money filling out reports and applying for licenses. The real economic cost of red tape is how it changes the decisions we make, the risks we take, and our entrepreneurial spirit.
Every hour businesses spend on red tape they don’t spend growing and innovating. Our best and brightest are pushed from being entrepreneurial to being compliant. A recent survey by the Australian Chamber for Commerce and Industry (ACCI) found that regulation prevented over 47 per cent of businesses from making changes to grow their business.
Red tape holds us back when we compete in international markets. Australia doesn’t just compete on quality or price of products, we compete on the basis of our regulatory system.
Recently the World Economic Forum placed Australia in the bottom half of world rankings for the ‘burden of government regulation’. This means we’re behind many of our major competitors including Singapore, the United States and Canada.
How are our businesses expected to be agile and innovative when we can’t even get our own government out of the way?
Where does red tape come from?
Red tape now comes from every level of government. From the Commonwealth intrusion into state matters causing duplication or overlap, to the thousands of permits and approvals required from local governments for seemingly minor tasks, how big is the red tape state?
At the Commonwealth level there are currently 1,181 departments, agencies, authorities and boards. The Institute of Public Affairs recently estimated the size of the Commonwealth red tape state as 497 are involved in the process of regulatory design and enforcement.
In addition, Australian government now impose more than 30,000 licenses, permits and approvals listed in the government’s database. Over 80 per cent of those licenses come from local governments.
