Australia’s productivity chief, Danielle Wood, has raised concerns about the country’s regulatory landscape and its detrimental impact on economic growth. In a speech scheduled for March 25, 2024, at the National Press Club, she will argue that the increasing complexity of regulations has shifted policy focus away from growth. This warning comes as various business groups urge the government to cut red tape by 25% by the end of the decade, coinciding with Treasurer Jim Chalmers’s commitment to prioritizing productivity.
Regulatory Burdens and Economic Growth
In her address, Wood will highlight the declining emphasis on growth in policymaking, pointing to what she describes as “regulatory creep.” This trend, she argues, results from a growing expectation for governments to respond to every emerging issue with new regulations. Wood will assert that this has led to an overwhelming regulatory burden, which ultimately stifles economic development.
“This manifests not just in less economic reform but in decisions by governments—federal, state, and local—to pay less attention to growth trade-offs in pursuing other policy goals,” Wood will state. “Nowhere is this more evident than in the growth of regulatory burden.”
Recent leaked advice indicates that the government is considering a freeze on changes to the National Construction Code as part of a broader strategy to simplify regulatory frameworks. Additionally, a national artificial intelligence plan is proposed to reduce environmental red tape.
As the productivity round table approaches, business leaders, economists, and unions will gather at Parliament House for discussions on the nation’s economic challenges. Prime Minister Anthony Albanese will open the proceedings on March 26, 2024, emphasizing that the agenda will be shaped by participant contributions.
Business Leaders Demand Reform
In the lead-up to the round table, 29 business groups have banded together, advocating for significant regulatory reform to enhance the ease of doing business in Australia. The coalition, representing small, medium, and large enterprises, is calling for a streamlined approval process for major projects and tax reforms that do not burden consumers or businesses.
Matthew Addison, chair of the Council of Small Business Organisations Australia, emphasized the need for regulatory relief. “Our small businesses are buckling under the weight of excessive red tape,” he said. “The current compliance obligations are slowing growth.”
Chalmers has reiterated that regulation will be a central focus of the discussions. He stated that the government is determined not to repeat the productivity stagnation seen in previous decades. “We don’t want to waste the next decade on productivity, the way our predecessors wasted the last,” he noted.
Wood will reference research from the Productivity Commission, revealing that the time required to build houses and apartments has increased by 50% over the past 30 years. She will attribute this to a convoluted approvals process, encompassing planning, heritage, and environmental considerations. “These regulatory hairballs have found their way into almost every corner of our economy,” she remarked.
Critics, including Andrew Bragg, the Coalition’s shadow minister for productivity, have argued for deregulation as a means to enhance productivity. Bragg contends that while many regulations are well-intentioned, their cumulative effect has resulted in inefficiencies costing the economy billions annually. He warns against the tendency to respond to challenges with additional regulations, advocating instead for a more streamlined approach to governance.
As the round table convenes, the outcomes remain uncertain. Both Chalmers and Albanese have committed to allowing the discussions to guide decision-making without pre-empting any results. The goal is to develop actionable strategies that address immediate needs while also tackling long-term economic challenges.
Wood’s upcoming address is poised to set the tone for these critical conversations, as stakeholders seek to navigate the complexities of Australia’s regulatory environment and its impact on productivity and growth.
