Can you remember any wannabe government not promising to cut red tape? Like kissing babies and rorting entitlements, it’s standard parliamentary fare. The next question is whether you can think of any government that left behind less regulation. No, I can’t either.
Which makes the Coalition’s bold promise – reiterated by assistant Treasurer Arthur Sinodinos over the weekend – to cut $1 billion worth of red and green tape each year a very brave decision indeed, Minister. What it overlooks is that the private sector’s red tape burden often is a revenue source for one or more of our three levels of government.
Making lots of noise ... Assistant Treasurer Arthur Sinodinos.
The immediate get-out for the promise is how “$1 billion worth” might be measured. From Tony Abbott’s viewpoint, repealing the carbon tax could be claimed to represent several years’ worth of red-and-green tape reform – as long as you overlook the mess that “direct action” promises to be.
On a smaller scale, Senator Sinodinos’ speech to the Association of Financial Advisers faithfully repeated the advisers’ claim that “red tape overreach” in the previous government’s Future of Financial Advice (FoFA) reforms will cost $700 million, plus an annual $375 billion compliance burden. There’s a quick billion then if the government is prepared to give advisers what they want in watering down the conflict of interest reforms at the heart of FoFA.
With few members of the outer ministry allowed to say anything much, Sindonos’ speech is worth closer scrutiny than it received in a couple of brief “FoFA too complex” stories. It contained hints of some interesting threats and promises.
Sinodinos has a great deal on his plate as assistant treasurer, never mind whatever role he will play in the Independent Commission Against Corruption’s investigation of Eddie Obeid’s Sydney Water Holdings investments. The senator’s direct role in the government’s overall anti-tape crusade has been somewhat reduced by Josh Frydenberg taking over responsibility for the deregulation agenda as parliamentary secretary to the prime minister, but Sinodinos’ previous public service experience puts him streets ahead of his colleagues in understanding tape’s intractability.
A key hint from Sunday’s speech was in the sentence: “But we are only too well aware, from talking with business and not-for-profits, that the cumulative effect of Commonwealth law, State law, and local regulation is stifling innovation and creativity – ultimately it is holding back Australia's economic development and prosperity.”
It’s easy for a federal politician seeking government to rail against red tape, but the reality is that most of the burden on small businesses in particular comes from state and local governments with their plethora of licences, fees, duties and permits. What’s more, a great deal of that state and local government red and green tape is state and local government revenue – and both of the lesser layers of government are desperate for money. The regulation monster that has developed over the past several decades feeds its local and state masters. They have become dependent on it and won’t willingly give it up without compensation that the “budget emergency” feds won’t want to pay.
Of course there’s federal stuff the feds can deal with. Hope springs eternal that a new broom might actually do some sweeping. Sinodinos trotted out the promises:
“As part of our deregulation agenda, the Government will also overhaul the process for creating, implementing and reviewing new regulations. To this end, we will implement a process within Government where we carefully balance the costs and benefits of additional regulation.
“We will also drive cultural change throughout government. That includes the Cabinet and Parliament, as well as the public service. We are establishing Ministerial Advisory Councils in every portfolio, made up of business people, consumers, and not-for-profits who are impacted by regulation. They will be charged with providing concrete examples of unnecessary red tape and solutions on how the Government can remove it. The performance of senior public servants will be assessed, inter alia, on their success in identifying and reducing unnecessary red tape.
“We will set aside at least two Parliamentary sitting days each year for the express purpose of repealing counterproductive, unnecessary or redundant legislation.”
Which all sounds wonderful, but doesn’t actually mean much. Oh, those two parliamentary sitting days will be nice, but they’re likely to be dealing with mainly low-hanging fruit of the mentioned redundant legislation. Business will always live in hope.
As a quick measure of commitment, ASIC is a source of federal red tape and regulation – and a valuable revenue source. All those forms generate a very healthy profit for Canberra, even while ASIC is repeatedly found under-resourced and asleep at the wheel when it comes to corporate skulduggery and investor fraud. If Senator Sinodinos is genuine, one might suspect either ASIC’s many fees would be cut to a level of user-pays, or the revenue generated would be fully invested in getting ASIC up to speed. I’ll bet neither happens.
Any genuine red tape reform across all levels of government therefore is likely to await the outcome of the government’s taxation review, however brave it might prove to be. The ease with which even the possibility of GST reform was abandoned doesn’t bode well for maintaining the fire in the belly necessary to push major reform.
Still, it sounds like Sinodinos will be up for a fight, even if the prime minister and treasurer are not. With an eye to the states’ financial problems and the nation’s infrastructure needs, he sent a clear privatisation message to the premiers, especially those running scared of it (take a bow, Campbell “Casino” Newman):
“The effective deployment of state balance sheets…should start with the sale of existing assets to fund higher priority greenfield investments. It is important to optimise the use of existing infrastructure and send the right signals for new investment.”
Within his own assistant treasurer territory of superannuation, Sinodinos is no doubt hearing from what he identified as the industry’s three distinct components – the retail, industry and self-managed sectors. There’s a question though about to whom he might be most listening.
“We strongly believe in competition. Greater competition in the superannuation sector through increased transparency and a more informed market can only lead to better outcomes for fund members. I want a superannuation sector that operates on a level playing field for all stakeholders in the industry.”
A level playing field? The Big End hates SMSFs being able to borrow and gear into property when they can’t – you see, it’s not a level playing field. And then there’s the matter of industry funds enjoying default privileges under awards – that’s not a level playing field either. And there’s a matter of transparency about trustees’ costs and fees…
Roll on the reforms where the desire is greatest.
Michael Pascoe is a BusinessDay contributing editor