Performance Benchmarking of Australian Business Regulation : Submission to the Productivity Commission

CRC Construction Innovation (2006) Performance Benchmarking of Australian Business Regulation : Submission to the Productivity Commission.

Abstract

The need to “reduce red tape” and regulatory inconsistencies is a desirable outcome (OECD 1997) for developed countries. The costs normally associated with regulatory regimes are compliance costs and direct charges. Geiger and Hoffman (1998) have noted that the extent of regulation in an industry tends to be negatively associated with firm performance. Typically, approaches to estimation of the cost of regulations examine direct costs, such as fees and charges, together with indirect costs, such as compliance costs. However, in a fragmented system, such as Australia, costs can also be incurred due to procedural delays, either by government, or by industry having to adapt documentation for different spheres of government; lack of predictable outcomes, with variations occurring between spheres of government and sometimes within the same government agency; and lost business opportunities, with delays and red tape preventing realisation of business opportunities (OECD 1997). In this submission these costs are termed adaptation costs. The adaptation costs of complying with variations in regulations between the states has been estimated by the Building Product Innovation Council (2003) as being up to $600 million per annum for building product manufacturers alone. Productivity gains from increased harmonisation of the regulatory system have been estimated in the hundreds of millions of dollars (ABCB 2003). This argument is supported by international research which found that increasing the harmonisation of legislation in a federal system of government reduces what we have termed adaptation costs (OECD 2001). Research reports into the construction industry in Australia have likewise argued that improved consistency in the regulatory environment could lead to improvements in innovation (PriceWaterhouseCoopers 2002), and that research into this area should be given high priority (Hampson & Brandon 2004). The opinion of industry in Australia has consistently held that the current regulatory environment inhibits innovation (Manley 2004). As a first step in advancing improvements to the current situation, a summary of the current costs experienced by industry needs to be articulated. This executive summary seeks to outline these costs in the hope that the Productivity Commission would be able to identify the best tools to quantify the actual costs to industry.

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ID Code: 27545
Item Type: Other
Refereed: No
Additional Information: Submission
Keywords: CRC for Construction Innovation, Program A : Business and Industry Development, Project 2004-032-A : Construction Industry Business Environment (CIBE)
Divisions: Current > Research Centres > CRC Construction Innovation
Copyright Owner: Copyright 2006 Icon.Net Pty Ltd
Copyright Statement: The Participants of the CRC for Construction Innovation have delegated authority to the CEO of the CRC to give Participants permission to publish material created by the CRC for Construction Innovation. This delegation is contained in Clause 30 of the Agreement for the Establishment and Operation of the Cooperative Research Centre for Construction Innovation. The CEO of the CRC for Construction Innovation gives permission to the Queensland University of Technology to publish the papers/publications provided in the collection in QUT ePrints provided that the publications are published in full. Icon.Net Pty Ltd retains copyright to the publications. Any other usage is prohibited without the express permission of the CEO of the CRC. The CRC warrants that Icon.Net Pty Ltd holds copyright to all papers/reports/publications produced by the CRC for Construction Innovation.
Deposited On: 24 Sep 2009 00:34
Last Modified: 09 Jun 2010 14:02

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