Introduction
Thank you for that warm welcome and it's a pleasure to be here at this year's Regulatory Reform Conference.
What do we mean when we say we intend to 'cut red tape'? It's a catch-all phrase that is bandied about frequently and often held out as a solution to the many challenges faced by the business and broader community.
Red tape reduction is more than just an exercise in counting and reducing the numbers of regulations on the statute books. It is often about introducing smarter and more efficient regulation that achieves the right policy outcomes without creating an unnecessary compliance burden for those the subject of the regulation.
It is also about ensuring that the right regulatory frameworks are in place to deliver better regulatory outcomes. This not only means effective policy development processes, but also ensuring that regulators do their job in a responsive manner, mindful of the impact of their actions on those they are regulating and the wider community.
Increasingly the debate around regulatory reform tends to focus purely on regulatory costs and burden. The term 'regulation' is often used interchangeably with 'red tape', implying that regulation is inherently a bad thing. Unfortunately, this ignores the fact that regulation can and does often have considerable benefits.
To quote President Obama's former chief regulatory policy adviser, Cass Sunstein:
Smart regulations save lives and dollars
I agree with him and emphasise the point that governments have an obligation to achieve a balance when it comes to regulatory policy. Reducing red tape is a worthy objective and should be pursued in earnest.
However, government also has an important role to play in ensuring the efficient regulation of markets, the promotion of competition, the protection of consumers, the conservation of the environment, the safety and welfare of its citizens and fairness in the workplace – to provide just a few examples.
The excesses and irresponsible behaviours of some market participants in the lead up to the Global Financial Crisis have reminded us of the need to ensure effective and appropriate regulatory frameworks are in place in order to protect the stability and integrity of the global economy.
Clearly, in an advanced, democratic market economy reductions in the regulatory burden must balance the need to promote growth and economic efficiency with the need to avoid some of the social, environmental and economic costs that may otherwise flow from the excesses of self-interested participants transacting in a completely unfettered marketplace.
Accordingly, regulatory reform should focus on creating better, more efficient regulatory frameworks and I am proud of the record of this Labor Government over the past five years in pursuing this objective.
In fact, we have taken on a task that was largely left untouched in the decade preceding our Government's election to office.
It's not a task that necessarily captures the public's imagination on a daily basis – those more cynical might even call it thankless.
It's hard reform that relies on the cooperation of State and Territory Governments and the constructive contribution of stakeholders.
But it's hard reform that had been ignored for too long and it is hard reform that this Labor Government has been committed to tackling.
National Partnership Agreement to Deliver a Seamless National Economy
Through the Council of Australian Governments (COAG), we are currently progressing the largest and most comprehensive productivity- enhancing regulatory and competition reform agenda since the landmark microeconomic National Competition Policy reforms, commenced by the Keating Government in 1995.
This agenda, the National Partnership Agreement to Deliver a Seamless National Economy, was initiated by the Government in 2008, and comprises an ambitious package of 27 deregulation priority reforms, 8 competition reforms and reforms to improve regulatory performance.
The National Partnership will conclude on 31 December 2012. It is worth reflecting, as the National Partnership reaches its conclusion, on the very significant achievements to date.
Seventeen of the National Partnership's 27 deregulation priorities are now operational. Many of these priorities have been on COAG and other reform 'to do' lists for many years, and have required significant and concerted efforts by all jurisdictions to complete.
As a result of these reforms:
- Australians are now protected by a single national Australian Consumer Law (replacing 20 separate Acts), providing improved protection for consumers;
- A national consumer credit regulation framework has been established, including a comprehensive licensing regime, responsible lending requirements and stronger consumer protections;
- A Commonwealth scheme has commenced to regulate the licensing and supervision of trustee corporations, replacing eight complex state and territory regimes and resulting in improved consumer protection and reduced compliance costs for trustee companies; and
- A single national Personal Property Securities Register, which commenced operation on 30 January 2012, provides a national system for the registration of all security interests in personal property.
Implementation of the remaining ten Seamless National Economy (SNE) deregulation reforms is progressing and the majority are scheduled for completion over the coming months.
With a concerted effort and continued commitment from all parties, the benefits of the remaining reforms will be delivered in full.
The SNE agenda has already delivered significant results. There are three particular reforms I would like to focus on today, which I have been closely involved with in my current and previous ministerial roles in the Treasury portfolio.
Directors' Liability
Firstly, directors' liability reform, which aims to achieve national consistency in the imposition of criminal liability for directors and corporate officers in cases of corporate fault.
Previously, there were around 700 different legislative provisions relating to the personal criminal liability of directors and corporate officers spread across all jurisdictions. Notably, the vast bulk of these provisions were contained in State and Territory legislation.
These inconsistent laws and differing standards of fault and responsibility resulted in significant complexity and uncertainty for business.
Substantial work has now been undertaken by all jurisdictions to improve the situation.
All jurisdictions are working to ensure this reform is delivered, resulting in a nationally-consistent and principles-based approach to directors' liability, which will:
- reduce, using five of the jurisdictions implementing this reform as an example, the number of underlying offences from 6,700 to 2,400 – a reduction of over 60 per cent; and
- halve the number of Acts which include directors' liability provisions, from 287 to 148.
Earlier this week, the Queensland Government announced that it will be proceed to implement this reform.
It is interesting however that the impression was given that this is some bold new policy – but it is actually just Queensland announcing that they will finally deliver on this important Seamless National Economy reform.
I very much doubt Queensland would have moved on this reform had it not been for the leadership of the Commonwealth and other States and Territories who have been working hard to ensure the reform momentum is maintained. Of course it's better late than never.
Australian Consumer Law
A second reform delivering significant benefits is the Australian Consumer Law initiative.
In 2005, consumer policy and product safety laws were identified as priority areas of reform by the National Competition Council.
In 2009, COAG agreed to implement a national framework for consumer policy, to increase consumer protections through additional safeguards and reduce business compliance costs by removing jurisdictional differences. In my previous role as Parliamentary Secretary to the Treasurer, it was pleasing to be able to preside over the commencement of the Australian Consumer Law on 1 January 2011, one national law which replaced provisions set out in 20 Commonwealth, State and Territory statutes.
The Productivity Commission's Impacts and Benefits of COAG Reforms report, released in May 2012, estimates that the increased consumer protections and associated improved confidence in purchasing decisions are expected to:
- Reduce the need for precautionary savings and raise household demand – estimated to deliver benefits of around $170 million per year to accrue progressively over a decade and be ongoing; and
- Increase competition and product innovation, raising business productivity – estimated to deliver benefits of around $760 million per year; and
- Business compliance costs are expected to fall by around $120 million per year once the reforms take full effect.
Business Names Registration
Thirdly, a national business names registration system will produce significant benefits to business.
A single national online business names registration system commenced on 28 May 2012, replacing multiple State and Territory systems and providing a convenient, efficient and fully national system, that enables businesses to register their business names and Australian Business Numbers (ABN).
While I understand there were some challenging implementation issues faced in the transition to this new system, this is an important reform that will deliver significant benefits to the national economy in the longer term.
Before the commencement of the national business names registration system, a business operating and registering in every State and Territory faced an aggregate cost of more than $1,000 to register for three years. Under the new system, businesses have only one fee to pay, of around $70, to register for the same period. The $70 fee is also lower than the fees previously charged by many jurisdictions, ensuring that these reforms will even benefit some businesses that only intend to operate in one State.
It has been estimated that the new system, with other related initiatives like the Australian Business Licence and Information Service and the Australian Business Account, which will be rolled out in full over the coming months, will provide benefits of up to $1.5 billion over eight years to business, government and consumers.
Competition Reforms
The National Partnership also includes a series of challenging and complex competition reforms. These reforms are also continuing to progress:
- The legislative component of the national access regime reform is in place, giving effect to reforms that provide fair and reasonable access arrangements for national infrastructure;
- Single national frameworks for heavy vehicle regulation, maritime safety regulation and rail safety regulation and investigation are now well in hand, with COAG signing three Intergovernmental Agreements in August last year to enable the establishment of these regulators in 2013.
- The Heavy Vehicle National Law alone is estimated to generate net benefits to the economy of up to $12.4 billion.
Productivity Commission Analysis
This Labor Government has risen to the challenge of delivering national regulatory reform, and the Productivity Commission's recent analysis of the SNE reforms shows the considerable benefits derived from delivering such important change.
In fact, looking in aggregate at 17 of the 27 deregulation priorities being delivered under the SNE agenda, the Productivity Commission estimated that full implementation could provide cost reductions to Australian business of around $4 billion per year, in the longer run, and after a period of adjustment, GDP could be increased by over $6 billion.
The Challenges of Delivering National Reform
It is easy to level criticism at the speed at which reforms such as these are delivered.
However, it is important that we recognise the complexity involved in creating national frameworks, building from our many, disparate jurisdictional frameworks. To illustrate this complexity, just take these two examples of the reform challenge:
- the Personal Property Securities law replaces over 70 Commonwealth, State and Territory acts;
- the Australian Health Practitioner Regulation Agency (AHPRA), now responsible for regulating a range of health care professions, replaced over 85 health profession boards governed by 66 Acts of Parliament.
Business advocacy and constructive lobbying is invaluable in supporting and encouraging governments to develop and implement challenging areas of regulatory reform.
The SNE agenda has seen substantive reform, and will continue to produce long term benefits for the Australian economy.
Business Advisory Forum and the Next Wave of Reform
With the Seamless National Economy National Partnership concluding at the end of this year, COAG has already turned its attention to the next stage of the nation's productivity-enhancing regulatory and competition reform agenda.
On 12 April 2012 I attended the inaugural meeting of the Business Advisory Forum chaired by the Prime Minister. The forum brought together First Ministers and business leaders to discuss a new agenda and, particularly, how best to reduce red tape and the regulatory burden on business.
Responding to issues identified by business at the Forum, COAG agreed on 13 April 2012, to take forward a package of reforms.
The new agenda builds on the work of the SNE reforms, whilst recognising that a stronger, more coherent compact with business is needed to drive and sustain a national commitment to new reform measures to lift productivity growth.
Unlike the SNE reforms which required agreement by all States and Territories on national frameworks, the new agenda involves reforms that can be adopted bilaterally or multilaterally.
As part of this agenda, the Government is open to, and has committed to new flexible approaches to national reform, including leveraging competition between the States and Territories to lift overall performance.
Whilst the model of the new agenda, and our approach to national regulatory reform has evolved somewhat, the primary objectives of the new agenda remain the same: to lower costs for business and improve competitiveness and productivity.
Identifying and implementing regulatory and competition reforms that will increase productivity and competitiveness on a national scale remains a priority for the Gillard Government.
A well-targeted and substantive program of reform directed at reducing regulatory constraints, lowering barriers to competition and removing price distortions is critical to improving Australia's productivity performance.
Much has been achieved in this area already, with many of the SNE reforms now operational, and the majority of the remainder well advanced. But this is not a time for resting on our laurels. The development of the next wave of regulatory and competition reform is already well underway and by December, COAG will be in a position to commit to a range of substantive new reforms.
Conclusion
Pursuing substantive reform on a national scale is inevitably complex and will always be challenging.
It is, however, a challenge that this Government is already delivering on and will continue to do so as we pursue the full benefits of a more productive, flexible and internationally competitive economy.
Thank you.