7 April 2006

Government Response to the Report of the Taskforce on Reducing the Regulatory Burdens on Business

The Australian Government is announcing immediate actions to address a number of the recommendations of the Report of the Taskforce on Reducing the Regulatory Burdens on Business – Rethinking Regulation.

Over-regulation is a major concern to all businesses and especially small businesses. Effective regulation is also an important tool for delivering Australia’s social and economic goals. We are committed to getting the balance right.

The comprehensive report, guided by the views of stakeholders representing industry, small business, consumers and government, makes 178 recommendations on actions to reduce red tape.

While the report focuses on areas that are predominantly the responsibility of the Australian Government, it recognises that all three levels of government contribute to the regulatory burdens on business, and seeks to identify areas where there is overlap. The state and territory governments, along with local government, need to follow the lead of the Australian Government and tackle the issue of reducing the regulatory burden on business. A failure to do so will have a negative impact on the Australian economy through its impact on large and small business.

Today we are announcing an interim response which addresses, in full or in part, 86 of those recommendations. A final comprehensive response addressing all recommendations will be provided by the end of July 2006.

This interim response is a downpayment on our commitment to reduce regulatory burdens on business. It responds to a range of recommendations of the Taskforce aimed at reducing business red tape, including:

  • an increase in the minor fringe benefits exemption threshold from $100 to $300, effective from 1 April 2007;
  • an increase in the fringe benefits reporting exclusion threshold from $1000 to $2000, effective from 1 April 2007;
  • a halving of the incorporation fee from $800 to $400, at an estimated cost of $216.4 million over the Budget forward estimates period; and
  • allowing companies to make annual reports available on the internet and to send hard copies on request.

The Australian Government is also introducing “smart form” technology to pre-populate forms with previously provided information and will also enhance www.business.gov.au at a cost of $30.8million over three years to implement the use of electronic signatures so that electronic forms can be verified.

We will also work with the financial sector regulators, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission, to clarify the Government’s expectations in the performance of their functions and identify where they can adopt common approaches to help reduce business compliance costs, as well as being more responsive to their stakeholders.

Furthermore, the Parliamentary Secretary to the Treasurer, the Hon Chris Pearce MP, will today release a consultation paper on corporate and financial regulation to seek comment on a range of proposed technical changes to reduce the regulatory burden.

The Productivity Commission will be requested to undertake an inquiry into the consumer policy framework with a view to promoting greater national consistency in this area and reducing unnecessary regulatory burden.

In many areas regulation reform and red tape reduction is best achieved through cooperation between governments. The Australian Government will seek the cooperation of states, territories and local government to deliver widespread and significant regulatory reform.

Building on the landmark COAG meeting on 10 February 2006 where all governments committed to a renewed focus on regulation reform, we will seek COAG’s agreement to:

  • give high priority to developing national consistency in occupational health and safety standards and request a mid year progress report;
  • directly oversee the implementation of a National Mine Safety Framework;
  • work together to streamline eight different business registration processes, and
  • work on harmonising administration of a range of state and territory taxes and charges.

The Australian Government will also ask COAG to build on the work underway in the areas of occupational health and safety, national trade measurement, chemicals and plastics and building regulation to incorporate the specific issues raised by the Taskforce. Importantly, the Workplace Relations Ministerial Council and Australian Safety and Compensation Council have been asked to move forward on more nationally consistent workers’ compensation arrangements.

In addition to the new measures we are pursuing, there are already some twenty actions or reviews under way, or that will shortly commence that address a number of the Report’s recommendations. For example, the Board of Taxation is conducting a scoping study to identify the more important areas where small business compliance costs might be reduced. The Ministerial Council on Energy is considering the need for non-vertically integrated pipeline owners to maintain separate accounting records under ring-fencing regulation, and the Productivity Commission is to undertake a study of how to benchmark regulatory performance across jurisdictions.

The report also makes important recommendations on how best to address the underlying causes of over regulation. COAG agreed to commitments to improve regulation making and regulation review processes, including improved regulation impact analysis, the targeted annual review of existing regulatory ‘hot-spots’ to be undertaken for the Australian Government by the Productivity Commission and improved consultation with stakeholders on regulatory proposals. The Government will consider further changes to improve the process of making and reviewing regulation for the final response.

To demonstrate how serious we are about addressing the flow of regulation, we will provide an additional $1.1 million for further development of the Business Cost Calculator, a mandatory tool for public servants and industry to work out the costs to business of compliance. The Australian Government has also taken the initiative of looking at its internal procedures to reduce red tape within government.

The Australian Government welcomes the report and we commend the work of the Taskforce members, GaryBanks, RichardHumphrey, AngelaMcRae and RodHalstead, as well as the supporting Secretariat.

The Australian Government’s interim response can be found at www.pm.gov.au and www.treasurer.gov.au. The Report of the Taskforce can be found at www.regulationtaskforce.gov.au .

MELBOURNE
7 April 2006

Contact: David Alexander Treasurer’s Office 03 9650 0244
  Ben Mitchell Prime Minister’s Office 02 6277 7744

 

Australian Government Crest

Rethinking Regulation: Report of the Taskforce on Reducing Regulatory Burdens on Business

Australian Government’s Interim Response

Contents

RETHINKING REGULATION:
AUSTRALIAN GOVERNMENT’S INTERIM RESPONSE

The Government’s interim response to Rethinking Regulation: Report of the Taskforce on Reducing Regulatory Burdens on Business addresses 86 of 178 recommendations. The Government’s final response to the report will be available by the end of July 2006.

HEALTH-RELATED REGULATION

Recommendation 4.1

  • The Australian Government should implement the outstanding recommendations of the Productivity Commission’s 2003 report, General Practice Administrative and Compliance Costs, and those of the Red Tape Taskforce, in particular in relation to:
    • Supporting cross-government initiatives to make government forms available electronically;
    • Adopting information collection principles to help standardise information collection and form design;
    • Remunerating GPs for providing medical information;
    • Coordinating programs and communication affecting GPs; and
    • Introducing monitoring arrangements to ensure government agencies continue to reduce red tape.

Response

As an initial response to this recommendation, the Minister for Human Services recently announced a new simpler provider number application form for new practices. The form was made available on Medicare Australia’s website from April and from mid-May can be completed and submitted online. A new dental provider number application form was made available from April, which reduces seven forms to one form and isavailable from Medicare Australia’s website. TheMinister forHuman Services is also currently conducting a review of all Medicare Australia forms and letters. The Australian Government is considering further options to address this recommendation in the final response.

Recommendation 4.14

  • Medicare should redesign the reconciliation report to group rejected prescriptions.

Response

Changes to redesign the reconciliation report to group rejected prescriptions are being implemented for online pharmacies as part of the PBS Online project. The redesign will enable an online pharmacist to easily identify rejected prescriptions as the rejects will be grouped together in the report. The anticipated timeframe for implementation is 30June2006.

LABOUR MARKET REGULATION

Recommendation 4.26

  • COAG should implement nationally consistent standards for occupational health and safety (OH&S) and apply a test whereby jurisdictions must demonstrate a net public benefit if they want to vary a national OH&S standard or code to suit local conditions.

Response

The Australian Government supports the recommendation and notes that COAG agreed on 10February2006 to progress a range of OH&S reforms. The Australian Government will ask the Workplace Relations Ministers’ Council (WRMC) to consider the recommendation in the context of COAG’s decision. WRMC is to report back to COAG by the end of 2006, and the Australian Government will suggest COAG seek a progress report in mid-2006.

Recommendation 4.27

COAG should request the Australian Safety and Compensation Council (ASCC) to examine the duty of care provisions in principal occupational health and safety Acts as a priority area for harmonisation. In undertaking this work, the council should give weight to recent reforms in Victoria.

Response

The Australian Government supports the recommendation and notes that it will be progressed by the ASCC, as agreed by COAG on 10 February 2006, as a priority area for harmonisation. WRMC is to report back to COAG by the end of 2006, and the Australian Government will suggest COAG seek a progress report in mid-2006.

Recommendation 4.28

  • COAG should give responsibility for developing national occupational health and safety training to relevant industry training and skills councils, and ensure that accredited induction training programs are developed for all major industries, within a defined framework of in-the-job training and lifelong learning. The aim should be better educating employers and employees about the duty of care responsibilities relevant to their workplace, and embedding and continuously improving workplace health and safety knowledge and practices.

Response

The Department of Education Science and Training and the Department of Employment and Workplace Relations are working closely with industry and State Training Authorities to ensure that the embedding of OH&S is enhanced in industry developed training packages. Generic training units on OH&S awareness are included in national training packages, and are available for use to inform OH&S workplace induction training. Induction training in high-risk occupations where it is essential to have OH&S training prior to the employee entering the workplace already occurs. For the construction industry, a nationally consistent approach to induction training is well-advanced.

Recommendation 4.29

  • COAG should direct the ASCC to examine the capacity of occupational health and safety bodies to respond to direct requests from business for advice on compliance and provide options for removing any impediments.

Response

The Australian Government will seek the co-operation of COAG to ask the ASCC and WRMC to consider this recommendation further, including exploring the programs already available in states and territories to ascertain if there is capacity to do more to assist businesses with their OH&S obligations.

Recommendation 4.30

  • COAG should establish a high-level representative group to oversee the National Mine Safety Network (NMSF). This group should work closely with the Ministerial Council on Minerals and Petroleum Resources (MCMPR) to oversee the next stage of reform, including the delivery of a single national regulatory body.

Response

The Australian Government supports the recommendation and through COAG will pursue the implementation of a NMSF, including exploring a single national regulatory body.

A process is already underway through MCMPR to partially deliver the recommendation. However, the Australian Government is concerned at both the slow progress in implementing the NMSF, and the considerable dilution of the potential use of a NMSF as a powerful instrument to deliver national best practice occupational health and safety in the mining sector. The Australian Government will seek the cooperation of COAG to request MCMPR to provide a progress report by June 2006, and subject to that report, will consider establishing the high-level representative group.

Recommendation 4.31

  • COAG should request the ASCC to develop a model for achieving national consistency in workers’ compensation arrangements. It should ensure the following areas are addressed as a matter of priority:
    • Return to work requirements, including reporting and documentation;
    • The definition of a worker for the purposes of workers’ compensation;
    • The definition of wages for renewal of workers’ compensation insurance;
    • The level and timing of premium payments for businesses operating across borders; and
    • Self-insurance arrangements.

Response

The ASCC was created for the purpose of leading national consistency in OH&S and workers’ compensation arrangements. The Australian Government considers the ASCC’s work to be very important. State and territory members of the ASCC are generally heads of OH&S and/or workers’ compensation authorities.

The ASCC has developed a workplan for workers’ compensation based on the priorities identified by the WRMC, including psychological injury claims, return to work, the ageing workforce, comparative performance monitoring, labour force participation, definitions of employee and disease, self-insurance, and scheme design.

The ASCC and WRMC will consider the matters raised by the Taskforce at its meetings in April and May respectively.

Recommendation 4.36

  • The Department of Education, Science and Training and other relevant agencies should work with the Australian Vice Chancellors Committee to address issues identified in the PhillipsKPA report to reduce red tape.

Response

The Government will work with the AVCC to examine the report’s recommendations when it becomes available, with a view to implementing any that reduce unnecessary reporting or regulation where they are of an administrative nature and to consider any that raise significant policy matters.

Recommendation 4.42

  • The Australian Government should:
    • Consider implementing broader arrangements for governments to jointly collect compliance information, avoiding the need for employers to answer separate queries from Centrelink and other agencies; and
    • Examine avenues to further streamline work visa checks undertaken by employers

Response

Centrelink is currently conducting research with a range of businesses to improve how they do business with Centrelink. For example, Centrelink is piloting electronic collection and transfer of employee information (required to assess payment entitlements) from employers. Research results will be used to develop and progressively implement initiatives to meet the needs of a broad range of businesses, by December 2008.

Centrelink already undertakes data matching programs with other agencies (such as the Australian Taxation Office) to avoid duplicate data requests on employers. While some of the information collected by Centrelink is unique to Centrelink requirements (eg period covered and calculation of income), Centrelink will continue to explore opportunities for consolidating data collection with other agencies.

Compliance activities are focusing increasingly on education of employers and labour suppliers on the need to check the work rights of prospective employees. The success of this activity is reflected in the rapidly increasing use of Employment Verification Online by these organisations. The Guide to work rights Employer Awareness Kit is being revamped with a greater emphasis on Employment Verification Online.

The Department of Immigration and Multicultural Affairs continues to focus heavily on improvement to client services. As part of this, constant improvements are being made to Employment Verification Online to minimise the burden on employers and labour suppliers.

CONSUMER-RELATED REGULATION

Recommendation 4.44

  • COAG, through the Ministerial Council on Consumer Affairs, should initiate an independent public review into Australia’s consumer protection policy framework and its administration.

Response

The Australian Government will ask the Productivity Commission to undertake a public inquiry into Australia’s consumer policy framework. It is envisaged that the review of Australia’s consumer policy framework and its administration would take 12 months.

Recommendation 4.54

  • The Australian Quarantine and Inspection Service (AQIS) should investigate the merit of extending the use of performance-based inspection levels for the lower risk categories of food under the Imported Foods Inspection Scheme.

Response

This recommendation is, in effect, the same as Recommendation 3 of the National Competition Policy Review of the Imported Food Control Act 1992 (the Tanner Review) with which the Australian Government agreed. In consultation with industry, AQIS has begun developing a strategy to implement the Tanner Review’s 23 recommendations.

Recommendation 4.62

  • The Australian Government, through the Standing Committee of Attorneys-General (SCAG) should develop and implement options to harmonise state and territory Evidence Acts and, in particular, examine the merit of the requirement to retain original documents as proof of contents.

Response

The Australian Government supports the goal of harmonisation in evidence laws. A working group established by SCAG is currently considering recommendations arising from the recent review of the uniform EvidenceAct regime. The Australian Government will encourage other jurisdictions to adopt the uniform Evidence Act regime as part of the SCAG process.

ENVIRONMENTAL AND BUILDING REGULATION

Recommendation 4.65

  • The Australian Government should seek to expedite the signing of environmental assessment bilateral agreements with all remaining states and territories, and all bilateral agreements should be extended to include the approval process. Further, in implementing these agreements, the Australian Government should provide national leadership aimed at achieving efficiencies in state and territory administrative and approval processes.

Response

The Australian Government agrees to the recommendation and will continue work to encourage all states and territories to sign assessment bilateral agreements under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) and approval bilateral agreements, where appropriate. In the interim, the Australian Government will continue using the case-by-case accreditation and cooperative assessment processes in the EPBC Act to avoid duplication with states and territories, and continue to encourage best practice in all administrative and approval processes.

Recommendation 4.66

  • The Australian Government should enhance information and consultation processes related to operation of the EPBC Act so that affected (or potentially affected) parties better understand the associated regulations and their requirements. In particular:
    • that proposals can be referred for consideration under the Act at any stage, including in parallel with other planning and approval processes; and
    • to ensure that affected parties are consulted about any new triggers considered for inclusion as matters of national environmental significance under the Act.

Response

The Australian Government agrees to the recommendation and will continue to work with project proponents to ensure they understand both the obligations and opportunities associated with the EPBC Act.

Recommendation 4.67

  • The Australian Government should improve the guidance it provides on application of the ‘significant impact’ trigger, particularly, in relation to the issues and reporting requirements that arise where a referral trigger is engaged.

Response

The Australian Government supports the recommendation, and will continue to work on providing guidance on the practical application of EPBC Act.

Recommendation 4.68

  • Concerns regarding the role of Native Title Representative Bodies and ‘right to be informed’ requirements should be considered in the current round of consultations associated with the reform package foreshadowed by the Attorney-General.

Response

The Australian Government accepts the recommendation, and notes that concerns raised in relation to native title will be considered in the context of the reform package announced by the Attorney-General on 7 September 2005. Consultation on the reforms is continuing, and it is anticipated that the legislation necessary to give effect to the reforms will be introduced into Parliament by the middle of 2006.

Recommendation 4.70

  • The Australian Government should implement the recommendations from the 2005 review of the National Pollutant Inventory, with the following exceptions:
    • Reporting for greenhouse gases should remain outside the National Pollutant Inventory framework;
    • Consideration of including agricultural and veterinary chemicals should be deferred pending the outcome of other work underway in this area; and
    • The inclusion of waste transfers should be deferred and reconsidered when the capacity of the National Pollutant Inventory to deliver existing requirements has been improved.
  • The Australian Government should ensure that in considering the inclusion of additional pollutants, scientific evidence is used to establish that pollutant emissions are occurring at levels that pose a potential health and safety risk, consistent with the intent of the National Pollutant Inventory.

Response

The Australian Government does not support the inclusion of greenhouse gases in the current National Pollutant Inventory, however Environment Protection and Heritage Council (EPHC) will be deciding the scope of a National Pollutant Inventory National Environment Protection Measure Variation in June 2006. Following, and contingent upon, this consideration the statutory public consultation process will be undertaken in the second half of 2006 with final consideration by the EPHC scheduled for April 2007.

As part of COAG's new national Climate Change Plan of Action, the Australian Government supports the acceleration of work by Ministerial Councils to investigate options to streamline and strengthen energy and emissions reporting.

Recommendation 4.71

  • In the context of the current review of the Assessment of Site Contamination National Environment Protection Measure, the Australian Government should examine and report on:
    • The need to ensure adequate training/guidelines are provided to staff of state and territory regulators on the use of investigation and remediation trigger levels in site assessments;
    • The need for risk-related considerations to inform decisions about the merits of site remediation, particularly when the relocation of contaminated material is being considered;
    • The adequacy of procedures to verify compliance with remediation actions; and
    • The capacity to account for historical contamination in determining the necessary action.

Response

The matters raised in this recommendation will be referred to the Committee which was established by the National Environment Protection Council (NEPC) to review the Assessment of Site Contamination National Environment Protection Measure.

The review is due to be completed in August 2006. The NEPC Committee will consider the review report in September, with a final report to be presented to the Environment Protection and Heritage Council in late 2006.

Recommendation 4.72

  • The Australian Government should undertake further analysis to assess the merits of the Product Stewardship National Environment Protection Measure proposal. This analysis should consider the findings of the Productivity Commission Review of Waste Generation and Resource Efficiency, particularly in relation to the potential merits of a self regulatory regime compared to any feasible alternatives.

Response

These issues are being dealt with by the peak body of Australian, state and territory environment ministers – the Environment Protection and Heritage Council. With key industry sectors, the Council is developing a collaborative approach to product stewardship which can include co-regulation in the form of a National Environment Protection Measure (NEPM). Where a majority of industry favours a national voluntary take back and recycling scheme, a NEPM can provide support by regulating companies that opt not to participate in the scheme.

The potential impacts of this approach for specific sectors will be analysed during the second half of 2006, taking into account the findings of the Productivity Commission Inquiry into Waste Generation and Resource Efficiency. Following this the Council will invite public comment on a draft NEPM and accompanying analysis.

Recommendation 4.73

  • The Australian Government should continue to work collaboratively with the states and territories to implement the recommendations from the recent Productivity Commission review to enhance the effectiveness of regulatory arrangements for native vegetation and biodiversity.

Response

The Australian Government will continue to work with the states and territories through the Natural Resource Management Ministerial Council – a body which aims to promote the conservation and sustainable use of Australia’s natural resources. The Australian Government will work to improve regulations for native vegetation and biodiversity in line with the recommendations of the Productivity Commission Report.

Recommendation 4.74

  • The Australian Government should continue to provide national leadership and work with state and territory governments to develop nationally consistent regulation of the plantation timber industry.

Response

Plantations for Australia: The 2020 Vision, which was revised in 2002 and is being implemented by the Australian and state and territory governments in partnership with the plantation growing and processing industries, promotes the continued development of a regulatory framework that supports and compliments the policy framework to maintain investor confidence and maintain plantation sector investment. While much of the regulatory framework relating to land use planning is the responsibility of state, territory and local governments, the Australian Government will continue to play a leadership role in implementing the 2020 Vision.

Recommendation 4.75

  • The Australian Government should ensure the timely implementation of the recent Australian National Audit Office recommendations on biosecurity and quarantine services that have already been agreed by the relevant departments, with a specific focus on the efficiency and timeliness of approval and risk assessment processes.

Response

The Australian Government has agreed to the recommendations of the Australian National Audit Office report no. 19, Managing for Quarantine Effectiveness – Follow-up, and is proceeding with the timely implementation of these recommendations.

Recommendation 4.76

  • The Australian Government should ensure that, through assessing the relative merits and effectiveness of different regulatory regimes, the Regulation Impact Statement covering regulation of salt content in laundry detergent clearly demonstrate why self regulation would not be an appropriate mechanism to achieve the desired policy goal.

Response

The Australian Government supports this recommendation. Options for any national approach to salts in detergents are expected to be presented to the Environment Protection and Heritage Council (EPHC) for consideration in June. Consideration of any Regulation Impact Statement requirements will depend on the outcome of the EPHC’s deliberations.

Recommendation 4.77

  • The Australian Government should:
    • Encourage the remaining states to become signatories to the Intergovernmental Agreement on a National System for the Prevention and Management of Marine Pest Incursions; and
    • Expedite collaborative work with the states and territories to develop nationally consistent legislation and management requirements for domestic ballast water that accord with Australian Government requirements for managing foreign ballast water.

Response

The Australian Government is actively working with the states and the Northern Territory through the Natural Resource Management Ministerial Council and the Australian Transport Council to develop consistent national ballast water management requirements. The Australian Government wants outstanding issues resolved and agreement on the requirements reached by October 2006. However, the states and the Northern Territory will need to commit resources to develop and implement legislation in a reasonable timeframe.

FINANCIAL AND CORPORATE REGULATION

Recommendation 5.1

  • The Treasurer’s Statements of Expectations should provide specific guidance to the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) about the appropriate balance between pursuing safety and investor protection and market efficiency.

Response

APRA and ASIC are statutory authorities with operational independence. The Treasurer’s Statements of Expectations to APRA and ASIC will convey the Australian Government’s expectations with regards to performance, objectives, values and broader government policies. In this context the Statements of Expectations will provide guidance, consistent with the legislative framework, on the expected approach of the regulators as they perform their functions. The Australian Government expects to provide its statements of expectations to APRA and ASIC by July 2006.

Recommendation 5.2

  • APRA and ASIC, in consultation with the Australian Government, should develop additional performance indicators to measure the outcomes they achieve, having regard to all their respective statutory objectives, including efficiency and business costs. These indicators should be developed in the context of the Statements of Expectations received from the Treasurer.

Response

The Treasurer’s Statements of Expectations to APRA and ASIC will address the need for the regulators to identify and develop measurable performance indicators across their objectives, which should be done in consultation with government. The Australian Government expects to provide its statements of expectations to APRA and ASIC by July 2006.

Recommendation 5.3

  • The Australian Government should review the penalties for breaches of directors’ duties to ensure that they strike an appropriate balance between promoting good behaviour and ensuring business is willing to take sensible commercial risks.

Response

The Australian Government will address penalties for breaches of director duties as part of a broader review of criminal penalties and the underlying offences in the CorporationsAct2001 to be completed in 2007.

Recommendation 5.5

  • APRA and ASIC should review their guidance material to ensure it provides effective guidance on good practice in meeting regulatory requirements and does not impose additional or inflexible regulatory requirements.

Response

The Australian Government will encourage APRA and ASIC to review their guidance material to ensure it provides effective guidance on good practice in meeting regulatory requirements and does not impose additional or inflexible regulation requirements.

Recommendation 5.8

  • The Australian Government, in consultation with APRA and ASIC, should amend the breach reporting requirements to improve consistency and reduce the compliance burden.

Response

As an initial response to this recommendation, the Australian Government will seek industry views through the Corporate and Financial Services Regulation Review.

Recommendation 5.10

  • The APRA corporate governance requirements should be consistent with the principles of the Australian Stock Exchange Corporate Governance Council regime and incorporate a similar level of flexibility. There should also be scope to update the requirements to reflect contemporary corporate governance practices.

Response

The Australian Government notes that APRA is in the process of revising its proposed corporate governance prudential standards following industry consultations in 2005. The Australian Government will refer this recommendation to APRA for consideration prior to finalising its standards.

Recommendation 5.11

  • The Australian Government, in consultation with the relevant agencies and industry stakeholders, should review the data collection and regulatory reporting obligations imposed on regulated entities to ensure the information obtained is essential for supervision and other economic functions. There should be a particular focus on eliminating overlaps in information provided to the regulators.
  • The review of data collection and regulatory reporting should also assess the scope to establish an integrated data collection portal to ensure that regulated entities have to provide information only once.

Response

The Australian Government agrees to consult with relevant agencies and industry stakeholders on these issues through the Corporate and Financial Services Regulation Review.

Recommendation 5.12

  • APRA and ASIC, in consultation with the financial services industry, should convene a joint industry consultative body. This standing body should be empowered to:
    • Meet regularly to discuss emerging supervisory issues that are the responsibility of the regulators;
    • Contribute to the development of regulation by APRA and ASIC; and
    • Review aspects of the financial and corporate supervisory regimes (including regulatory coordination) and recommend possible reforms to APRA and ASIC.

Response

The Treasurer’s Statements of Expectations to APRA and ASIC will encourage the regulators to cooperate and liaise with each other to manage areas where their responsibilities intersect. The Australian Government will encourage APRA and ASIC to establish a joint forum to provide industry with an opportunity to raise issues concerning how regulatory coordination operates in practice. The Australian Government expects to provide its statements of expectations to APRA and ASIC by July 2006.

Recommendation 5.13

  • APRA and ASIC should, in consultation with the Australian Government and industry stakeholders, develop industry charters that set out the rights and responsibilities of the agencies and their regulated entities in the course of their dealings. Performance against these charters should be reported in annual reports.

Response

The Australian Government, via the Treasurer’s Statements of Expectations to APRA and ASIC will encourage them, in consultation with the Australian Government and industry stakeholders, to develop industry charters that set out the rights and responsibilities of the agencies and their regulated entities in the course of their dealings and report against these charters in their annual reports. The Australian Government expects to provide its statements of expectations to APRA and ASIC by July 2006.

Recommendation 5.14

  • ASIC, in consultation with industry stakeholders, should examine ways to improve the accessibility of officers dealing with complex regulatory issues raised by large regulated entities.

Response

The Australian Government will undertake industry consultation on this issue through the Corporate and Financial Services Regulation Review.

Recommendation 5.15

  • ASIC, in consultation with the Australian Government and industry stakeholders, should examine options to provide more specific guidance on meeting regulatory obligations in areas where concerns have been raised. The effectiveness of this guidance should be reviewed in two years.

Response

The Australian Government will encourage ASIC to examine options for providing more specific guidance on meeting regulatory obligations, before consulting more widely in the public arena.

Recommendation 5.17

  • The Australian Government should establish a further process to enable additional refinements to be made to the operation of the financial services reforms regime in outstanding areas of concern.

Response

As an initial response to this recommendation, the Australian Government will consult with industry through the Corporate and Financial Services Regulation Review.

Recommendation 5.19

  • The Australian Government, state and territory governments, APRA and ASIC, should, in consultation with industry stakeholders, develop a mechanism for rationalising legacy financial products. This mechanism should balance achieving greater operational efficiency with ensuring that consumers of the products are not disadvantaged.

Response

The Australian Government will consult with industry and state and territory governments on this issue through the Corporate and Financial Services Regulation Review.

Recommendation 5.20

  • The Australian Government should introduce amendments to allow companies to make annual report available on the internet and require hard copies to be sent only to investors who request them.

Response

The Australian Government agrees to the recommendation and will ask the Treasury to effect the necessary legislative amendments as part of the next appropriate legislative vehicle.

Recommendation 5.21

  • The Australian Government should raise the thresholds for the definition of a large proprietary company. The thresholds should be subject to periodic review to ensure that only economically significant proprietary companies are defined as large proprietary companies.

Response

The Australian Government agrees to the recommendation and will consult with industry on the most appropriate thresholds for the definition of a large proprietary company through the Corporate and Financial Services Regulation Review.

Recommendation 5.22

  • The Australian Government should review incentives for small businesses to incorporate, including the level of fees and reporting requirements. At the latest, these issues should be considered in the 2007 review of corporation fees and charges.

Response

The Australian Government agrees to the recommendation and will halve the incorporation fee from $800 to $400, effective from 1 July 2006, at an estimated cost of $216 million over four years.

Recommendation 5.24

  • The Australian Government should consider removing the requirement for the executive remuneration report to be included in the concise report.

Response

The Australian Government will undertake further consultation with industry on this recommendation through the Corporate and Financial Services Regulation Review.

Recommendation 5.25

  • The Australian Government should review the requirement to provide a prospectus when issuing shares and options to employees.

Response

The Australian Government will consult with industry on this recommendation through the Corporate and Financial Services Regulation Review.

TAX REGULATION

Recommendation 5.30

  • The Australian Government should increase the threshold for FBT reporting from $1000 to $2000 and exempt a wider range of benefits from reporting.

Response

The Australian Government agrees in principle to the recommendation and proposes to increase the reportable fringe benefits exclusion threshold from $1,000 to $2,000. This change will take effect from 1 April 2007.

Further consideration will be given in the final Government response in relation to exempting a wider range of benefits from the fringe benefits reporting requirement.

Recommendation 5.31

  • The Australian Government should increase the FBT minor benefits threshold from $100 to $300.

Response

The Australian Government agrees to the recommendation, and proposes to increase the minor fringe benefits exemption threshold from $100 to $300, with effect from 1 April 2007.

Recommendation 5.32

  • The Australian Taxation Office (ATO) should review and clarify its guidelines about what is considered ‘irregular’ and ‘infrequent’ for the purposes of the FBT minor benefits exemption.

Response

The ATO is reviewing its existing guidelines and will provide further clarification about what is considered ‘irregular’ and ‘infrequent’ regarding the minor benefits exemption.

Recommendation 5.33

  • The ATO should examine and implement administrative solutions to further reduce the compliance costs of calculating FBT on road tolls and better publicise the work it has already done.

Response

The ATO is reviewing the current administrative solutions which reduce the compliance costs of calculating FBT on road tolls and will better publicise the work it has already done.

Recommendation 5.39

  • The ATO should promote its policy to allow items with a purchase price of $1000 or less to be reported on the business activity statement as non-capital items.

Response

The ATO will promote its policy to allow items with a cost of $1000 or less to be reported on the BAS as non-capital. This policy applies to acquisitions that would otherwise have to be recorded at item G10 on a BAS, if the business does not record capital acquisitions separately and expects its annual turnover to be less than $1million. The revised and updated GST Activity Statement Instructions are due to be published in July 2006. They contain advice regarding the reporting of low cost capital items.

Recommendation 5.45

  • COAG should develop measures to harmonise the tax base and administrative arrangements of payroll tax regimes across the states and territories.

Response

While the nature of the tax base and the administration of state and territory payroll tax is the responsibility of state and territory governments, the Australian Government would support any move to harmonise these across states and territories.

Therefore, the Australian Government supports the recommendation and will seek to progress this through COAG, as well as the harmonisation of the administration of like taxes and charges across the state and territory governments.

Recommendation 5.46

  • COAG should encourage the elimination of stamp duties included in the Intergovernmental Agreement (IGA) and should develop measures to harmonise the administration of any remaining stamp duty regimes.

Response

The Australian Government supports this recommendation. Seven states and territories have agreed on a schedule abolish the majority of taxes listed for review in the IGA. Inefficient state taxes such as stamp duty on mortgages, leases, and credit and rental arrangements will be abolished, as was originally intended under the IGA. While the New South Wales Government has not accepted the Australian Government’s proposed timetable on the abolition of these taxes, productive discussions were held about an alternative timetable to abolish these taxes in New South Wales at the 31 March 2006 meeting of the Ministerial Council on Commonwealth-State Financial relations. These discussions will continue with the aim of reaching early agreement. The Australian Government will also continue to pursue the abolition of stamp duty on business conveyances of real property. This is the last remaining tax listed in the IGA.

Recommendation 5.48

  • The Board of Taxation should consider the following areas in its scoping study of small business compliance costs:
    • the simplified tax system;
    • trust loss provisions and family trust elections;
    • possible benefits of including additional information on activity statements to assist users;
    • ways of reducing the number of PAYG withholding tables; and
    • developing a systematic approach to adjusting thresholds in the tax law.

Response

The Australian Government has referred the five issues listed in the recommendation to the Board of Taxation for consideration as a part of its current scoping study of small business compliance costs. The emphasis of the scoping study is identifying and analysing the main costs small business (especially micro business) face in complying with taxes administered by the Australian Taxation Office.

TRADE-RELATED REGULATION

Recommendation 5.56

  • The Australian Government, through the Ministerial Council on Energy, should examine the need for non-vertically integrated pipeline owners to maintain separate accounting records under the ring fencing provisions of the Gas Code as part of its existing energy market reform program.

Response

The Australian Government has asked the Ministerial Council on Energy to consider this recommendation in the context of its current review of the Gas Code. It is expected that revised legislation will be released for public consultation in May 2006, with a view to enactment on 1 January 2007.

Recommendation 5.58

  • The Australian Government should:
    • Review the requirement for foreign acquisitions of real estate to obtain Foreign Investment Review Board approval; and
    • Raise the threshold for approval of other acquisitions.

Response

The Australian Government, in consultation with the Foreign Investment Review Board, will undertake a review of real estate screening and the desirability of maintaining existing screening arrangements for all real estate acquisitions. The Australian Government will ask that the Treasurer report to Government on the outcome of the review by the end of 2006.

Recommendation 5.59

  • The Australian Government should consider conducting a review of .com.au domain name administration.

Response

The Department of Communications, Information Technology and the Arts is examining Australia’s domain name administration and policy structures following five years of operation under a self regulatory model. The recommendation on domain names will be considered in the course of this process.

REDUCING BURDENS ACROSS GOVERNMENT

Recommendation 6.3

  • The Australian Government should develop a business reporting standard within the Australian Government sphere by 2008, based on the Netherlands model and work undertaken by the ATO. COAG should consult with state and territory governments to extend this approach to state, territory and local governments as soon as practical thereafter.

Response

As one initial response to this recommendation, the Australian Government will provide $30.8 million over three years to introduce across all levels of government a capability to validate and notarise “smart forms” and other electronic files, to significantly reduce the time required by business to access, complete and lodge forms electronically for a range of purposes. This recommendation will be considered further by the Government in its final response.

Recommendation 6.4

  • The Australian Government should:
    • Work with the states and territories to streamline business name, Australian Business Number and related licensing registration processes and report back to COAG; and
    • Improve information available to business about these obligations.

Response

The Australian Government agrees to the recommendation and will work closely with the states and territories through the Small Business Ministerial Council to streamline business name registration across Australia, and potentially other registration processes. It will also seek to improve the information available to business through these processes.

ADDRESSING THE UNDERLYING CAUSES OF OVER-REGULATION

Recommendations 7.1-7.4, 7.8-7.10 and 7.13

  • The Australian Government should introduce measures to improve its regulation making processes.

Response

The Australian Government agrees to these recommendations, is committed to best practice regulation and welcomes better measurement of all costs, including compliance costs of regulation.

On 12 October 2005 the Australian Government announced its commitment to the more rigorous use of cost-benefit analysis within government when new regulations are being considered.

The existing regulation impact statement (RIS) process is consistent with these recommendations and the Australian Government notes that recommendations to strengthen the RIS process are consistent with existing Government policy.

The Australian Government will revise its Guide to Regulation in light of its 12October 2005 announcement and consideration of the Taskforce’s recommendations. It will also use the Business Cost Calculator to measure the regulatory and compliance cost of proposals.

At its February meeting COAG agreed to a range of measures to ensure best-practice regulation making and review, with all governments agreeing to:

  • establish and maintain effective arrangements to maximise the efficiency of new and amended regulation and avoid unnecessary compliance costs and restrictions on competition;
  • undertake targeted public annual reviews of existing regulation to identify priority areas where regulatory reform would provide significant net benefits to business and the community;
  • identify further reforms that enhance regulatory consistency across jurisdictions or reduce duplication and overlap in regulation and in the role and operation of regulatory bodies; and
  • in-principle, aim to adopt a common framework for benchmarking, measuring and reporting on the regulatory burden.
  • COAG also agreed to enhance cost benefit analysis of regulatory options, such as through use of the Business Cost Calculator.

These recommendations will be considered in full in the final response.

Recommendations 7.5-7.6

  • The Australian Government should enhance arrangements for meaningful consultation on regulatory proposals. (7.5-7.6)

Response

The Australian Government agrees with these recommendations. The Australian Government will consider mechanisms for enhancing the level of meaningful consultation with potentially affected businesses in developing or amending regulations. A whole-of-government policy on consultation requirements will be developed and followed by Australian Government agencies and would be included in the revised Guide to Regulation.

The Australian Government agrees that papers to assist consultation, such as a draft regulation impact statement, a ‘green paper’ or draft legislation, be made available to relevant parties on matters of major significance and that complex regulations be tested with relevant business interests.

Recommendations 7.14-7.17 and 7.19-7.21

  • The Australian Government should take steps to improve regulators’ accountability, accessibility and flexibility (7.14 - 7.17 and 7.19 - 7.21)

Response

The Australian Government agrees to these recommendations to improve regulators’ accountability, accessibility and flexibility. The Australian Government agrees that legislation should provide guidance to regulators on the policy intent and objectives of the legislation in order to facilitate a balanced approach to regulation-making and encourage risk-based implementation. Ministers will be asked to highlight policy objectives of legislation within their Statements of Expectations and in second reading speeches.

Regulators will be asked to ensure that they have internal review mechanisms in place.

The Australian Government agrees that regulators should issue protocols on their public consultation processes, which should be consistent with whole-of-government policy (refer to recommendation 7.5). Standing consultative bodies covering specific areas of regulation are already used by a number of regulators. The Australian Government will seek to implement such arrangements more broadly in accordance with its commitment to enhanced consultation with business on regulatory matters. The Australian Government agrees that regulators be asked to develop a code of conduct in regard to consultation with regulated entities. These issues will be considered further in developing the whole-of-government policy on regulation consultation and will be reported on in the final response.

Recommendation 7.24

  • COAG should consider establishing a series of reviews targeted at areas where there is significant overlap and/or inconsistency between Australian Government and state and territory government regulations.

Response

The Australian Government supports this recommendation. On 10 February 2006, COAG agreed to address six priority cross-jurisdictional hot spot areas where overlapping and inconsistent regulatory regimes are impeding economic activity. Those areas are:

  • rail safety regulation;
  • occupational health and safety;
  • national trade measurement;
  • chemicals and plastics;
  • development assessment arrangements; and
  • building regulations.

COAG also agreed to each jurisdiction initiating at least annual targeted reviews tor reduce the burden of existing regulation in its own jurisdiction through a public inquiry and reporting process (decision 5.2(a), Attachment B to the Communique from the 10 February 2006 COAG meeting refers) and these annual reviews be used to identify further reforms that enhance regulatory consistency across jurisdictions or reduce duplication and overlap in regulation and in the role and operation of regulatory bodies (decision 5.4, Attachment B to the Communique from the 10 February 2006 COAG meeting refers).

Recommendation 7.29

  • Governments should evaluate the scope to make cross-jurisdictional comparisons on a regulator basis of the efficiency and effectiveness of their regulatory regimes.

Response

The Treasurer has agreed that the Productivity Commission undertake a study of how to benchmark regulatory performance across jurisdictions. COAG also endorsed this study (decision 5.3 (a) of Attachment B to the Communiqu of 10February COAG meeting).

COMMONWEALTH-STATE INITIATIVES BEING PROGRESSED UNDER THE AUSPICES OF COAG:

Recommendation 4.32 and 4.33

  • COAG should extend its work on skills, training and mutual recognition to include both para-professional and professional occupations and consider measures to align the national training system with occupational licensing and registration regulations.

Response

The Australian Government will ask COAG to build on the work already underway on measures designed to underpin a new genuinely national approach to apprenticeships, training and skills recognition and alleviate skill shortages currently evident in some parts of the economy.

Recommendations 4.56, 4.58, 4.60 and 4.61

  • Regulation of chemicals and plastics in Australia.

Response

On 10 February 2006, COAG decided to establish a ministerial taskforce, with each jurisdiction nominating one responsible Minister, to develop measures to achieve a streamlined and harmonised system of national chemicals and plastics regulation, and reporting progress to COAG by mid 2006. The Australian Government will ask COAG to expand the work of the ministerial taskforce to include consideration of the recommendations of the Taskforce.

Recommendations 4.78-4.80 and 4.83

  • Building regulations

Response

On 10 February 2006, COAG noted the findings of the Productivity Commission research paper, Reform of Building Regulation. Governments committed to achieve a nationally-consistent Building Code of Australia based on minimum regulation and will formalise that commitment by signing the new inter-governmental agreement. COAG will also request the Local Government and Planning Ministers Council, co-opting where necessary Ministers with responsibility for building regulation, to report back by mid 2006 on the content and timetable for implementing further building regulation reforms including a nationally-consistent building code. The Australian Government will ask COAG to expand the work already underway to include the recommendations of the Taskforce.

Recommendation 5.52

  • The Australian Government should initiate an independent public review to identify practical steps to expedite the adoption of a nationally consistent trade measurement regime and streamline the present arrangements for certifying trade measurement instruments.

Response

The Australian Government will ask COAG to build on the work already underway on developing a national system of trade measurement that would rationalise the different regulatory regimes of the Commonwealth, States and Territories and streamline the present arrangements for cost recovery and the certification of trade measuring instruments.