Driving Regulatory Reform Forum 2017

Good morning, everyone. It’s great to see so many of you here.

You’re here because you’re interested in learning more about regulation — how to lessen the burden in your respective departments and, even more importantly, the end users. 

What’s more, every one of you has the ability to make a real difference; to drive reform. And that’s a great thing.

So let’s start with my take on dealing with regulation: It’s not easy.

It sometimes seems like you’re in a losing battle. You make progress in one area, you scrap one regulation, and another pops up somewhere else.

And you know why? It’s because of fear. It’s because of a lack of trust. It’s because there are some who are unwilling to cop the consequences if something — however unlikely — goes belly-up.

So we regulate. We wrap people in red tape as if it were a safety blanket. And then we tighten it until they can’t function. 

Of course, regulation does have its place. Done properly, it can make things easier — and better. It should be efficient, and never veer into the territory of red tape.

But that’s too often the exception rather than the rule.

Regulatory burdens are costing Australia’s economy about $70 billion each year. And business — particularly small business — has a right to be critical.

Making our country tick

Time and time again — in cities and regions alike — I hear the same thing:

“Michael, you’ve got to do something about the red tape.”

And I know their frustration. As a former small business owner, I’ve been there.

It’s that feeling – long after your work has supposedly finished, when the dishes from dinner are cleared and the kids are bathed and put to bed – that only then do you turn your mind to BAS statements, to GST, to the piles of paperwork that sit there staring.

I know firsthand that red tape stops small businesses from getting on with the job — from earning that extra dollar which, as important as it is for them, also gives our economy a boost.

It’s the enemy of excellence. And that’s the last thing we should want. 

Small businesses, after all, make this country tick. They enrich our communities. They bring jobs to our cities and towns. They’re the brains behind so many innovations.

And, as the Government, it’s our job to make it easier for them.  

That’s why, since coming into the small business ministry, regulatory reform has been high on my list of things to wrestle with.

So in the short time I have with you now — before taking questions — I want to talk about exactly that.

First, what the Government is doing to cut red tape. And, as our agenda is broader than that, I’ll also touch on how we’re promoting competition through reform, and other important steps we’re taking in my portfolio.

Cutting red tape

Now, when we came to office in 2013, the Government had a very clear strategy for cutting red tape.

We began by putting together the first-ever stocktake of regulation in Australia — giving us an unprecedented, bird’s-eye view of the challenge — and created a framework for calculating the costs of red tape.

We also rolled out a Regulator Performance Framework to give regulators incentives to minimise the burden they impose.

What’s more, we made sure we listened to the people who know the most about red tape: small businesses people. The owners, the operators, the risk-takers who live and breathe this paperwork every day. 

And when you look at the numbers, it’s clear this approach — and the various measures extending from it — has been a roaring success.

Three years ago, we said we would reduce the costs of complying with red tape by $1 billion every year.

And so far we’re well ahead of target — we’ve already removed more than $4.8 billion worth of red tape on an ongoing, annual basis.

Simplified Business Activity Statement reporting:

But those are topline numbers — the headline-grabbers, I’d call them. And what I’m most interested in is how it’s working in practice.  

So let me give you a quick example: the simplification of Business Activity Statement, or BAS, reporting. Remember that story about staying up late, after kids are in bed and dinner is done – I say that because it’s my experience, something I have lived, just like thousands of small business owners across the country.

And it’s something the Coalition wants to simplify.

Back in 2015, a MYOB survey found that two-thirds of the time spent by small and medium enterprises on tax administration comes from the GST.

And the average cost for them to comply with GST reporting - almost $7,000. Every year! 

That’s a stunning figure. Stunning, and unacceptable.

That’s why in last year’s Budget, the Government simplified the reporting requirements to reduce those costs.

It means that, from 1 July this year, small businesses only need to report GST information on their BAS for GST on sales, on purchases and total sales.

Additionally, a simpler BAS reduces GST bookkeeping and reporting requirements — making things easier, quicker and simpler for small business. And this will, in turn, deliver time and cost savings.

Promoting competition

I want to change direction slightly now and say a few words about competition and regulatory reform.

It’s important to cover this, because regulatory reform is bigger than numerical targets.

It’s also about fostering an entrepreneurial culture; about knocking down barriers so that Australians can take advantage of new, exciting opportunities.

That’s why competition reform is one of the Government’s priorities.

It’s a spirit of competition that encourages the innovators among us to try something different. And that’s good for the economy and good for jobs.

But for it to work as it should, it’s got to be fair competition. And it’s vital that regulation only constrains competition where there’s a clear public interest in doing so.

That’s what the Government is aiming to do with our implementation of many of the recommendations made in the Harper Competition Policy Review.

And to me, there’s none bigger than the reform to replace the misuse of market power provision — or Section 46 — of the Competition and Consumer Act.

I’ve long thought this needed changing.  It creates a roadblock for new and innovative firms, delays the entry of new technologies into Australia, and hampers growth.

This is something small business owners – in the city, in the suburbs, in the country and the coast – have all told me. They need a fairer playing field.

And this soon will happen.

On 1 December, we introduced legislation into Parliament to strengthen Section 46.

And together with other changes — including broadening the definition of ‘competition’ — all businesses, large and small, will be on an even footing.

And that, undoubtedly, is a very good thing.

Fit for purpose

Now, so far I’ve spoken a lot about what the Government’s done, and the targets we’ve hit.

But regulatory reform is just as much — if not more — about the continuous review of our regulatory stock.

We need to make sure it’s working as it should, and is fit for purpose.

That’s what the Government is doing, and before I finish I want to flag some of the activity that’s happening across the Treasury portfolio.

Now, the Treasury portfolio has the largest regulatory footprint of all Commonwealth portfolios. 

Back in 2013, it accounted for around two-thirds of the total regulatory burden imposed by the Commonwealth — and $40 billion of it was because of the compliance costs of the tax system.  Now, some of this will be necessary to ensure tax is collected.  But $40 billion is a big number.

What’s more, almost half of these costs fell on small businesses.

Since then, the Treasury portfolio has announced more than $1.3 billion in regulatory savings.

But, clearly, more needs to be done.

So in the 2016–17 Budget, the Government announced Treasury has committed to a rolling series of reviews of regulatory frameworks.

This program includes, for instance, making sure original regulatory objectives are sound, and that the regulation is working efficiently and effectively.

That’s a great step forward. And I’d also add that what’s particularly encouraging is the program’s focus onevaluation.

Too often in policy making, we forget to look back. 

But the fact is, there’s enormous value to be gained from going back and evaluating regulation — to work out whether the decisions we’ve made have achieved the objectives.

And that’s an idea I hope you’ll unpack in more detail during this forum.

Concluding remarks

So with that, let me wrap up.

As I said at the beginning, small businesses keep Australia ticking. In my opinion, they’re heroes.

It’s because of their risk-taking, their spark, that some of the greatest contributions — to jobs, to innovation, to our economy — are made.

These are the people we need to be encouraging and rewarding. And that doesn’t happen if there’s inefficient, outdated regulation — or energy-sapping red tape.

That’s why the Government is so committed to reform. We’re making good progress. We’ll continue to do so. 

And this forum — which is all about driving regulatory reform — is definitely encouraging.

I’m looking forward to hearing how this forum progresses.

Please let me or my office know if you have any examples of regulation, especially those impacting small business, where you think we can live without it or lower its impact.

I need your help so together we can take the burden off small business, grow the economy and create jobs.

And this isn’t just federal government regulation, this includes state and local regulation too.

On that note I thank you all for being here.

I am very happy to answer any questions you may have. 

Cristy Houghton