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

The need to ‘reduce red tape’ and regulatory inconsistencies is a desirable outcome (OECD 1997) for developed countries. The cost 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, cost 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.