Australian businesses are continuing to be shackled by costly red tape, a new scorecard by the Business Council of Australia has found.

The BCA has released its 2010 Scorecard of Red Tape Reform, providing an assessment of the regulation-making processes of federal, state and territory governments.

The scorecard shows that in general more needs to be done by all jurisdictions to ensure processes are in place to curb unwarranted regulatory overreach in Australia. It follows a 2007 scorecard that found considerable scope existed to improve all jurisdictions' regulatory review systems.

"While commitments have been made by governments across Australia, there is a continuing failure to establish robust checks on new regulation to ensure outcomes are efficient and effective," BCA Chief Executive Katie Lahey said.

"Regulatory responses must be balanced and operate in a way that does not impede growth and productivity."

"Poor regulatory processes not only impose unnecessary costs on business, which can stifle investment and job creation, but they also can lead to policy-on-the-run decisions that often have unintended consequences across the economy.

"Most jurisdictions have yet to establish a truly independent agency to measure the effectiveness of their efforts to reduce red tape. Ongoing reviews by these agencies can also identify shortcomings in regulation-making processes.

"In the case of the Commonwealth, the necessary independence frameworks appear to have been compromised over time.

"Where reforms are being made, there continues to be a large inconsistency in improvements across the country, which in turn is impeding the creation of a national approach to fixing the problem.

"Regulatory responses must be balanced and operate in a way that does not impede growth and productivity," Ms Lahey said.

The 2010 scorecard was based on an assessment of responses from governments to a series of questions. These included their principles for regulation-making; their accountability mechanisms; the transparency of regulatory policy processes; and mechanisms for reviewing regulations. Jurisdictions were benchmarked against ratings from poor to excellent.

The scorecard finds:

  • Victoria is again the highest-rated jurisdiction - receiving an assessment of 'good'.
  • The Commonwealth is the second highest rated. However, its regulation-making performance is assessed as having weakened between 2007 and 2010 from a 'good' to an 'adequate/good' rating.
  • This assessment was significantly influenced by the BCA's interpretation of the decision to shift the location of the Office of Best Practice Regulation (OBPR) from the Productivity Commission into the Department of Finance and Deregulation. This is considered to have diminished the perception of independence of the OBPR.
  • Although many jurisdictions have introduced reforms that improve regulatory processes, many of the improvements have been from a low base. For example, both New South Wales and Western Australia have improved their regulation-making systems from a 'poor' rating in 2007 to an adequate/good rating in 2010.

"Our scorecard highlights that no jurisdiction has achieved an excellent rating for its regulation-making regime," Ms Lahey said.

"In terms of the assessment of the Commonwealth's performance, we do acknowledge the appointment of a Cabinet-level Minister for Deregulation and note her recent Ministerial Statement to Parliament which re-affirmed a commitment to a comprehensive regulatory assessment process and the independence of the OBPR.

Nonetheless the Commonwealth, which administers some of the most important regulations that impact on business, the community and the economy, must be at the head of pack. Over the past few years there have been several instances of poor regulation making - most notably on changes to the tax treatment of employee share plans - which suggests there is considerable scope for processes to be improved.

"We acknowledge that since the last scorecard, effort has been made in some jurisdictions such as New South Wales, Queensland and Western Australia to respond to business calls for improved red tape performance. However, the 2010 scorecard shows that all jurisdictions need to improve.

"It's well known that a strengthened regulatory process will be fundamental to boosting Australia's productivity.

"All governments should use this scorecard as a timely wake-up call to get serious about genuine red tape reform across Australia," she said.