Identifying unnecessary and ineffective
regulations
Report to the Council of Australian Governments
December 2012
Purpose
To provide a report on the actions of the Commonwealth and States and Territories to
address the outcomes from the Council of Australian Governments (COAG) April 2012
meeting to identify examples of unnecessary regulations frustrating small businesses.
Key findings
Ineffective regulation in the first instance is the key concern for small business. Small
businesses are frustrated and overwhelmed with the regulatory burden impacting their
business operating environment and there is no one policy area or specific piece of
regulation causing this frustration. Rather, it is the cumulative effect of a myriad of
regulations and compliance requirements. Whilst the root cause of small business
frustration is the perceived lack of engagement by governments with small business at the
policy development stage, the impact of industry specific regulation was identified as an
unnecessary burden followed by the impact of broader matters such as local government
matters, work health and safety, taxation and employment regulations. Small business also
voiced concerns relating to the implementation of some regulatory frameworks with less
focus on risk assessment and outcomes-based regulation, and the role of regulators in
assisting parties achieve compliance.
Background
On 13 April 2012, following the inaugural meeting of the COAG Business Advisory Forum,
COAG agreed that the Commonwealth Minister for Small Business, and the relevant State
and Territory Ministers, would engage the Small Business Advisory Committee, the Council
of Small Business of Australia and State and Territory chambers of commerce to identify
examples of burdensome or unnecessary regulations that frustrate businesses on a day to
day basis, and to report back to COAG.
In June 2012, I provided a progress report – in my capacity as the Commonwealth Minister
for Small Business – to the Prime Minister, as Chair of COAG.
This final report has been informed by the State and Territory Ministers for Small Business.
Interaction with the COAG Business Advisory Forum Taskforce
There are strong parallels between these bodies of work and the policy direction of the
cross-jurisdictional Taskforce on Competition and Regulation Reform. The Taskforce, chaired
by the Commonwealth Department of Finance and Deregulation and comprising senior
officials from central agencies of all jurisdictions, will report to COAG in December 2012 on
specific ways to remove overlaps in Commonwealth and State and Territory reporting
obligations, including the expanded use of online business reporting.
COAG Final Report – December 2012
1
COAG agreed to progress an ambitious new regulatory and competition reform agenda,
comprising:

reforms to lower costs for business and improve competition and productivity in the
following priority areas:
o environmental approvals;
o streamlining the process for approvals of major projects;
o rationalising carbon reduction and energy efficiency schemes;
o energy market reforms;
o improving assessment processes for low risk, low impact developments; and
o lifting regulatory performance.

reforms to reduce red tape, particularly for small and medium enterprises, including
reducing the reporting burden on business.
How governments are working together
All governments are committed to reducing the red tape burden on small business.
Senior small business officials from all jurisdictions continue to maintain cooperative
working relationships that have been developed among officials over time. In July 2012,
senior small business officials met via the Small Business Officials Group to discuss issues of
mutual interest impacting the small business operating environment.
This work of senior small business officials informed my discussions in October 2012, with
State and Territory Small Business Ministers concerning the key areas of regulatory burden
impacting small business.
The Commonwealth and State and Territory governments have well-established stock
review mechanisms and the identification of specific, immediate examples of unnecessary
regulations which frustrate small business are routinely identified through these extensive
regulatory reform initiatives. Governments in this regard embrace continuous
improvement; regulation reform is ongoing and there is a strong commitment to reducing
the red tape burden on business.
Reducing small business red tape however is an ongoing process. Regulation reform
facilitates continuous improvement in a government’s regulatory management
arrangements and governments utilise varied mechanisms in this regard. Jurisdictions are
increasingly adopting broad approaches to regulatory reform, which are often much more
effective in addressing areas of unnecessary regulatory burden.
Attachment A outlines the jurisdictions ongoing regulatory reform activities.
Identifying unnecessary regulatory burdens
Consultation process
In order to identify unnecessary regulatory burdens on business, the Commonwealth (as the
lead jurisdiction) put in train an extensive consultation process with the States and
Territories. This consultation extended to the State and Territory chambers of commerce
and industry, the Australian Chamber of Commerce and Industry, the Council of Small
COAG Final Report – December 2012
2
Business Australia, the Small Business Advisory Committee and a range of sector specific
industry associations.
Nature of the small business sector
Small business is very diverse and covers all areas and sectors of the economy. Small
businesses are impacted by a range of regulatory requirements depending on the nature of
their activities, their location, and the stage of their development. Regulations can vary
significantly from business to business.
While all businesses generally have taxation obligations, employing small businesses must
also consider issues such as superannuation, workplace relations, insurance and work health
and safety.
In addition, industry specific regulatory requirements can vary significantly. Small businesses
operating in the retail sector for instance are likely to face a number of state and territory
based requirements including retail trading and licensing, and planning and zoning
regulations. Small businesses in the building and construction sector must meet specific
requirements under the Building Code and a range of licensing, planning and zoning
regulations, work health and safety, and insurance obligations. Small businesses in the
hospitality sector need to meet specific food safety requirements. These businesses are also
required to meet local government regulations. Local councils can have their own specific
requirements, for example, regulations governing the operation of home-based businesses,
signage, planning and zoning, waste management and parking. In many cases, local
governments are enforcing State and Territory based laws.
The capacity of Commonwealth, State and Territory and Local governments to impose
regulatory requirements on small business, and the ensuing difference in interpretations and
duplication in requirements, combine to impact on the business operating environment of
small business. These impacts have a cumulative effect and contribute to the unnecessary
regulatory burden frustrating small business.
Consultation findings
Reducing the red tape burden is an important issue for small business.
Small businesses are frustrated with regulation which they see as overbearing, developed
with a lack of an understanding of industry concerns and which is not always applied
consistently across Australia. Small businesses are also frequently irritated with the
duplication of regulatory requirements – an issue which is widespread within Australia’s
cross-jurisdictional regulatory regime – and the generally limited use of IT and web-based
solutions to reduce small business reporting and compliance burdens.
The cost of unnecessary regulation to small business is most visible in the form of increased
paperwork and compliance obligations. The indirect impacts of unnecessary regulation have
a far wider reach. Inefficient regulations and unnecessary red tape stifles business
productivity; it distorts the efficient allocation of resources and takes small business
operators away from the running of their business. Inefficient regulation can also increase
prices, impede employment growth and reduce the flexibility of small businesses to respond
to change.
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The key areas of concern identified by small business are cross-jurisdictional in nature and
they are not new; they are longstanding concerns. The areas include: work health and
safety; taxation (including general paperwork requirements, GST/BAS reporting and payroll
tax); and employment regulations (including workers’ compensation and workplace
relations).
A summary of the findings from the consultation process is at Attachment B.
The capacity of small businesses to identify specific examples of unnecessary regulation
within these policy areas was challenging. This does not suggest that there is no red tape
impeding the business operating environment. Governments know that red tape is not a
myth; it does exist and in this regard small business continues to struggle with the
compliance costs of government regulation.
The consultation process further found that small business identified two additional
regulatory factors which have a significant impact on their operating environment. They are,
the perceived lack of engagement by all levels of government with small business in the
policy development process and the role of local government as a regulator.
Key messages - challenges for government
The outcomes of the consultation process suggest that a focus on identifying and addressing
specific regulations may not reflect the fundamental issue of policy development and
introducing regulations only where absolutely necessary. There are broader issues at play in
terms of the cumulative regulatory burden and a lack of consultation with the small business
sector in the policy development process. One of the key messages to governments from
small business is that all regulations need to be carefully scrutinised before they are
introduced. This requires not only sound regulatory impact analysis, but also genuine, welltargeted consultation with the small business sector.
Understanding the regulatory burden also requires an appreciation of the diversity of small
businesses and their capacity to understand and meet regulatory requirements. The small
business sector is not homogenous. It covers a range of activities across many industries and
professions, but also reflects a range of different skills, attitudes and behaviours. This is a
key consideration in the development of appropriate education and awareness raising
activities about regulation and compliance issues.
Lack of engagement with regulatory impact analysis
Small businesses identify that a significant source of unnecessary regulatory burden is
imposed through governments’ perceived lack of engagement with small business as part of
the regulatory impact analysis (RIA) undertaken in the policy development process. All
jurisdictions have well-established RIA processes to promote well designed regulation. Small
businesses however have inherent concerns about the governments’ ‘real-world’
performance against these processes. The seeming lack of transparency, contestability and
accountability from governments’ regulatory processes were identified as playing a
significant role in the excessive regulatory burden on business. Ultimately small businesses
recognised that regulation would be more effective and deliver more efficient outcomes if
the impacts on small business were given greater weight in the decision-making process.
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Small Business Ministers’ agreed principles
The need to develop and maintain good regulatory processes has been an ongoing aim of
COAG. Under the National Partnership Agreement to Deliver a Seamless National Economy,
COAG agreed to deliver more consistent regulation across jurisdictions and address
unnecessary or poorly designed regulation, to reduce excessive compliance costs on
business, restrictions on competition and distortions in the allocation of resources in the
economy1.
To this end, a small business sector, unimpeded by burdensome regulation and free to
operate without the constraints of excessive red tape, is vital to the Australian economy.
Government leadership plays a crucial part in doing this by setting the right conditions for
industry action. A best practice regulatory framework that is effective and efficient is critical
to the support of productive and internationally competitive Australian small businesses.
Governments are committed to minimum effective regulation whereby regulations are welldesigned, enacted only where absolutely necessary and at minimum cost to business.
Governments in this regard acknowledge that a comprehensive analysis of the impacts of a
regulatory proposal in the first instance will generate the greatest reduction in the
regulatory burden on small business.
COAG is continuing to identify best practice approaches to regulation through the COAG
Lifting Regulatory Performance reform. Jurisdictions have developed reform proposals to
strengthen regulatory practice across all stages of the regulatory policy cycle –
problem/issue identification; analysis and assessment; implementation; regulator behaviour
in administration and enforcement; and evaluation and review. Specific reform proposals
have been developed on a jurisdiction-by-jurisdiction basis for consideration by COAG in
December 2012.
The primary focus of the measures is to strengthen governments’ adherence to rigorous RIA
frameworks; provide greater assurance that regulation and regulator behaviour is risk-based
and proportionate, and that consultation is timely and thorough; and bring additional rigour
to mechanisms for monitoring and evaluating regulation. Progressed by the COAG Business
Advisory Forum cross-jurisdictional Taskforce on Competition and Regulation Reform, this
reform is one of the six priority areas to lower business costs and improve competition and
productivity.
Insufficient consultation
A specific concern of small business with the RIA process is government consultation; both
before and after the event. In the first instance, as part of the policy development process,
consultation enhances awareness and appreciation of the impacts on business of a
government decision. Small business identified that governments can improve this element
of the RIA process.
1
Council of Australian Governments’, 2008, National partnership to Deliver a Seamless National Economy
COAG Final Report – December 2012
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Small Business Ministers’ agreed principles
Developing policy that is consistent with a government’s long-term strategic policy priorities
helps sustain economic growth through improved productivity and participation. A key
element in ensuring this outcome is the consideration of policy impacts on small business;
consultation with small business is vital to the policy development process.
Governments have committed to a think small first approach to identify how policy can
accommodate small business. Regulations impacting the business operating environment
should be created with a small business mindset; policy makers should think small first.
Regulation should not be designed with a one size fits all mentality. While it may seem
obvious, large businesses are different to small businesses. When regulation is designed for
large business, it creates disproportionate and often unnecessary burdens for small business
as a small business lacks the resources (time, finances and staff) to cope with a changing
regulatory environment.
Larger businesses have the advantage of economies of scale; smaller businesses do not. This
is the underlying philosophy of thinking small first. If regulation is required, the full
consideration of small business impacts should be paramount. In adopting a think small first
approach as early as possible in the policy development stage, small business should be
identified and engaged to facilitate the design of policy to accommodate small business
needs.
In this regard, Achieving Best Practice Guide to Consultation with Small Business: a Guide for
Government has been developed. The guide, which has been informed by the
Commonwealth and the States and Territories, reinforces the awareness of governments
that new regulation or policy should minimise the adjustment or compliance costs imposed
on small business and should only impose obligations on small business which are proven to
be necessary. The guide ultimately intends to change the thinking of governments to
accommodate small business. The guide is at Attachment C.
Information and communication
Of equal importance to small business is the capacity of government to inform them of
regulatory change. One of the key challenges for government is getting information to small
businesses. While small businesses acknowledge governments’ commitment to raising
awareness this has contributed to a degree of ‘information saturation’ which ultimately
inhibits the capacity of government to reach small business. Small businesses increasingly
want information to be made available online and in one place, so they can find what they
need to know quickly, easily and in their own time and such information needs to be simple,
compelling and relevant.
Governments recognise the need to adopt a multi-faceted communication approach utilising
communication channels receptive to small business. Best practice communication with
small business involves a multi-faceted approach utilising influencers (established trusted
networks) such as industry and professional associations and chambers of commerce;
intermediaries such as tax agents and accountants; business enterprise centres, local
business networks and key advocates such as Small Business Commissioners.
COAG Final Report – December 2012
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Local Government
The role of local government as a regulator was further identified by small business as a
source of unnecessary burden. The inconsistent interpretation of regulation by
neighbouring councils, the lack of a streamlined approach to regulation and the compliance
with additional (or duplicative) requirements are factors contributing to the regulatory
burden imposed on business.
Governments acknowledge that these are broad issues and that the cultural and structural
arrangements differ between specific councils. While noting that some of the regulatory
variations among jurisdictions may be warranted, this does not diminish the importance of
maximum effort being made to deliver the greatest degree of national consistency possible.
Local governments in their regulatory capacity are often enforcing the regulations of State
and Territory governments. There is scope therefore to improve regulatory processes in the
first instance, through improved impact analysis at the State and Territory government level.
This impact analysis should take into consideration the enforcement capacity of local
governments. Given the range of specific regulatory regimes for which local governments
have responsibility, there is considerable capacity to improve processes at this tier of
government.
While the Commonwealth has limited jurisdiction with respect to local government
regulation, the Commonwealth is committed to working with the States and Territories to
identify leading practices at the local government level for the benefit of small business.
Small Business Ministers’ agreed principles
Following the release of the Productivity Commission 2012 Research Report, Performance
Benchmarking of Australian Business Regulation: The Role of Local Government as Regulator,
the Commonwealth and the States and Territories recognise the benefits in working
together outside of the COAG framework to identify leading practices at the local
government level which if implemented, could reduce the regulatory burden on business.
A key outcome of this combined effort will be to reduce duplication and unnecessary
inconsistency between local governments, particularly neighbouring councils.
Conclusion
The continuous reform of government regulatory processes (including changes to the
regulatory culture) will ensure that the business operating environment in which small
businesses function does not impede their productivity and growth.
Ultimately, the best thing that any government can do is to not impose any unnecessary red
tape in the first place. While there are occasions where small businesses face unintended
impacts from regulation, there are effective mechanisms (such as post-implementation
reviews) in place to ensure small business has the opportunity to raise concerns about the
regulatory burden with Government.
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Recommendations to COAG
1. That COAG agree to endorse the guide Achieving Best Practice Consultation with Small
Business as a minimum standard for consulting with small business.
2. That COAG agree that Small Business Ministers will disseminate this guide via their
jurisdiction’s online Best Practice Regulation portal.
3. That COAG note that Small Business Ministers will continue to collaborate to identify
opportunities to reduce the regulatory burden on small business.
COAG Final Report – December 2012
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Attachment A
Progress on Reducing the Regulatory Burdens on Small Business
Commonwealth
The Commonwealth Government is committed to fostering a business operating
environment devoid of unnecessary regulation to allow small business to thrive.
The Commonwealth has a crucial role in setting the right conditions for small business
and is committed to the robust analysis of regulatory proposals and regular reviews of
existing regulation to ensure they are effective and efficient. The Government has an
ongoing commitment to strengthening the Regulatory Impact Analysis process as
evidenced by the 2012 Independent Review of the Government’s Regulatory Impact
Analysis Process.
Additionally, the Government’s amendments to the Legislative Instruments Act 2003 (the
LIA Act) introduced bulk repeal mechanisms that will make it easier to repeal instruments
that are no longer required from current law. It is expected that as many as 12, 000
legislative instruments will be repealed as a result of amendments to the LIA Act.
At the inaugural Business Advisory Forum in April 2012, all participants agreed they
shared a common goal – to improve national productivity growth to boost the prosperity
of all Australians. The new reform agenda comprises six priority areas, including reforms
to lift regulatory performance. Participants at the BAF also committed to reduce
business reporting burdens and to identify ways to reduce overlaps in Commonwealth,
state and territory reporting obligations and to further expand the use of online business
reporting.
The National Partnership Agreement to Deliver a Seamless National Economy is a large
and comprehensive productivity-enhancing regulatory and competition reform agenda.
Significant progress has been made in delivering the 27 deregulation priority reforms,
with 17 reforms now operational.
In May 2012, the national system of business names registration commenced and is
delivering major benefits to small business. This national system, one of the COAG
Seamless National Economy reforms, is saving small businesses significant time and
money. It provides for one online registration process and a low fee – $30 for one year
or $70 for three years – to register a business name throughout Australia, saving
businesses time and money. It also provides for a whole of government online service
with customised information about licences, registrations, permits and other relevant
information.
The Commonwealth Government continues to foster innovation and entrepreneurship
through reduced red tape. In April 2012, the Commonwealth passed into law an
amendment to intellectual property (IP) laws to help small to medium sized businesses to
make the most of their IP. The reforms will reduce red tape and have harsher penalties
to stop competitors from copying their registered logos and brands.
From January 2013, the Australian Small Business Commissioner will be a direct voice for
small business to the Government. The Commissioner will act as a high level advocate
within Government to represent the interests of small business, including identifying
opportunities to reduce red tape.
COAG Final Report – December 2012
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The Commonwealth Government is increasingly focused on small business’s ability to
access information in a timely and efficient manner. The Commonwealth is aware that
small businesses are time poor; they want the ability to develop their knowledge at a
time and pace that suits them. Through business.gov.au and the Small Business Support
Line, small businesses can get to know and comply with government requirements more
simply and conveniently and find services to help them grow and develop.
Illustrating the Commonwealth’s ongoing commitment in this regard, the Government in
November 2012 released an online resource to help business owners manage their
finances this week. The Business Finances topic includes practical information on
managing and seeking finance, from setting up a bookkeeping system to managing loan
refusal.
Further in regards to cash flow, the Commonwealth has strengthened its Procurement
On-Time Payment Policy for Small Business to require agencies to automatically pay
penalty interest for payments overdue by more than 60 days.
The Commonwealth Government is ongoing in its assistance for small businesses to
establish and grow. Australian Government Skills Connect is an integrated approach
designed to help link eligible small businesses with a range of skills and workforce
development programs and funding to help them build productivity and improve the
future of their business.
The Superannuation Clearing House, established by the Commonwealth Government in
July 2010 enables small businesses to pay all their employees’ superannuation to a single
location in one simple electronic transaction, rather than to different individual super
funds. This has significantly reduced the compliance burden for thousands of small
businesses with 33,000 employers having signed up to the Clearing House as at October
2012.
New South Wales
New South Wales is driving a cultural change across government to reduce the overall
stock of legislation and is committed to reducing red tape for business and the
community by 20 per cent by 30 June 2015 which equates to an annual cut of $750
million in the regulatory burden. A key element of New South Wales’ regulatory reform
strategy is the establishment of a 'one on, two off' policy for all new principal legislation.
Under the policy, each calendar year, the government, is working to repeal at least twice
the number of new principal legislative instruments introduced. To further ensure that
the regulatory burden on business is reduced, the government requires that any new
principal legislative instruments introduced is less burdensome than those instruments
repealed.
The New South Wales Small Business Commissioner is working with small business to
further reduce the regulatory burden and cut red tape. This includes establishing the Red
Tape Troubleshooter Taskforce which will address key government administrative and
regulatory burdens as they are raised by small businesses. Under this initiative the Office
of the Small Business Commissioner, the NSW Business Chamber and industry specific
agencies are working with small businesses at a grass roots level to identify unnecessary
regulatory burdens and administrative practices that can either be removed or
streamlined in order to minimise the impact on the small business sector.
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The New South Wales Customer Service Commissioner is overseeing major service
delivery reforms across the NSW public sector. These reforms include the establishment
of Service NSW, a new customer-centric government organisation that will become the
main interaction point for the customers of the NSW Government. Service NSW will
operate as a service provider on behalf of client agencies and deliver non-complex, highvolume transaction on behalf of the NSW Government through three primary service
channels:

One-stop-shops across the State,

A 24/7 telephone service, and

A customer friendly internet portal.
The Service NSW initiatives are designed to give easy access to consumers and business
across more than 210 Government services and are expected to save NSW businesses
$4.8 billion a year in lost productivity.
New South Wales continues to reform the development approval and planning process.
The government is pursuing a risk based approach, and in this regard has increased the
number of developments that are approved without the need for detailed assessment,
reducing the time delay and paperwork burden for many businesses. Building on this
reform, the NSW government has launched the Electronic Housing Code Pilot Project, an
online system for the electronic lodgement of complying development applications.
Victoria
Victoria advocates the adoption of best-practice approaches to regulation that balance
business efficiency with regulatory outcomes. Victoria has committed to cut red tape by
25 per cent by July 2014 – to deliver ongoing savings of $715 million per year – with a
particular focus on the impact of red tape on small businesses.
Inquiry into Victoria’s Regulatory Framework
Victoria’s approach to regulation reform is ongoing. In March 2012, the government
released its response to the final report of the Victorian Competition and Efficiency
Commission (VCEC) inquiry into the regulatory framework Strengthening foundations for
the next decade.
The VCEC inquiry explored areas of the regulatory framework including: optimising
impact assessment; achieving consistent implementation of regulation; administration
and enforcement; evaluation and review; and reducing the regulatory burden on
business. Of the 42 recommendations made by the VCEC, Victoria supported 35 in full or
in-principle while a further four recommendations are subject to further review.
Red Tape Reduction Strategy
The Victorian Government’s Red Tape Reduction Strategy forms part of its response to
the VCEC report. The Strategy will streamline regulatory processes, improve the scrutiny
of new regulations, and ensure that regulators are more efficient, responsive and
accountable. It recognises not only the importance of how regulation is developed but
also how it is enforced.
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In implementing its response to the VCEC inquiry, the Victorian Government will develop
a stronger and more focused whole of government framework for ensuring regulation
occurs in a culture of continuous improvement. The new framework will incorporate
improved consultation and stakeholder input in policy development and improved
evaluation of regulatory outcomes. There will also be a stronger emphasis on identifying
and developing non-regulatory and market-based approaches as an alternative to
regulation. In addition, a regulator performance framework will be introduced by the
end of 2012. This will reduce unnecessary costs and make regulators more accountable
for their actions.
Planning reform
The Victorian Government has implemented a number of key reforms to the Victorian
planning system in response to a recent Ministerial Advisory Committee review. Reforms
include reducing the number of steps and the length of time involved in the re-zoning
process; a code assessment track for simple, low-impact permit applications; and an
increase in performance accountability for local councils and state referral authorities. A
metropolitan planning strategy to streamline the regulatory framework for land-use
planning across Melbourne is also being developed, and is expected to be released in
2013.
Procurement
The Victorian Department of Business and Innovation is piloting a streamlined
procurement quotation process for small and medium business through its eQuotation
system. The eQuotation system provides suppliers with a quick and easy registration
process, email notification of current quoting opportunities and online quote submission.
This reform applies to non-complex contracts valued between $10,000 and $150,000,
and has reduced the burden that many small businesses face accessing and participating
in government procurement opportunities.
Queensland
The Queensland Government has committed to cutting red tape and regulation by 20 per
cent to reduce the regulatory burden on Queensland businesses. To spearhead this
regulatory reform agenda, Queensland has established the Office of Best Practice
Regulation (OBPR) within the Queensland Competition Authority (QCA). Key functions of
the OBPR are:

assessing the adequacy of regulatory impact statements in accordance with the
Regulatory Impact Statement System Guidelines;

communicating with government agencies and providing advice on how to ensure
regulatory approaches minimise the burden of regulation; and

undertaking reviews of policies and regulations that create a burden for business,
government and the community.
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The Queensland Government has directed the QCA to report on a framework for
measuring and reducing the burden of regulation. The OBPR is due to release its interim
report on 1 November 20122.
The Queensland Government is undertaking a range of other reform initiatives to reduce
the regulatory burden on business. One key initiative is the adoption of a risk based
approach to the licensing of environmentally relevant activities through the introduction
of a standard application process. Under the reform, lower risk environmentally relevant
activities that meet set eligibility criteria will be automatically approved to operate under
a set of standard conditions. Small and medium-size businesses will receive the most
benefit, with approximately 50 per cent of all applications proposed to become standard,
making it easier and cheaper for businesses to obtain certain environmental approvals.
Queensland is also pursuing a project to streamline mining approvals aimed at improving
the efficiency of the regulatory framework for the resources sector. A key outcome for
the project is a package of measures to simplify application processes and remove
ongoing administrative processes and fees for the sector.
Additionally, Queensland is working to cut red tape for real estate businesses by
streamlining home sale contracts and warning statements so that existing warning
statements are incorporated in standard contracts without the need for separate
documentation.
Plumbing and drainage approval process are also being reformed to cut costs and red
tape for plumbers, consumers and local governments. The proposed changes include
updating the Standard Plumbing and Drainage Regulation 2003 (SPDR) to specify the
scope of each category of plumbing and drainage work. This includes the introduction of
a new category of work known as ‘notifiable work’. The revised SPDR schedules expand
the amount of work that can begin without the need for a local government permit or
mandatory inspections.
Other important regulation reduction initiatives which Queensland has implemented
include expanding of the payroll tax exemption threshold to $1.6 million over the next six
years (which will result in 90 per cent of Queensland employers not having to pay payroll
tax); establishing a monitoring system to ensure all bills from suppliers to Government
involving contracts of up to $1 million are paid within 30 days; and abolishing the
Commercial Waste Levy – a $35 a tonne tax which would have hit small businesses hard
with additional costs.
Western Australia
The Western Australian Government is committed to improving the quality of its
regulation and to reducing the burden on the small business community. A system of
Regulatory Impact Analysis (RIA) was introduced in Western Australia in December 2009,
which is a two-tiered process for assessing new and amended regulatory proposals to
determine their impacts on business, consumers and/or the economy.
The Small Business Development Corporation plays a role in the State Government’s RIA
process by way of:
2
As at 23 October 2012
COAG Final Report – December 2012
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
reviewing Preliminary Impact Assessments and Regulatory Impact Statements and
providing feedback on regulatory proposals from a small business perspective; and

providing direct assistance to agencies in assessing the significance of negative
impacts on small businesses in Western Australia and facilitating stakeholder
consultation with the sector.
In reducing the regulatory burden on small business, Western Australia has adopted a
risk-based approach to environmental protection regulations. Under the reform, small
businesses not considered a significant risk to the environment are no longer required to
hold a registration and pay a licence fee of $624. Removing this requirement has
reduced duplication and unnecessary red tape and eased the financial burden for more
than 700 small businesses, while still maintaining high environmental protection
standards.
Western Australia continues to promote tax reform and the $128 million small business
payroll tax rebate is a further catalyst in reducing the tax burden on small businesses.
This reform is targeted at small businesses, with annual payrolls of between $750,000
and $1.5 million eligible for a full rebate on their 2012-13 Western Australian payroll tax
liabilities, up to a maximum of $41,250. The rebate will gradually phase out payroll tax
obligations for Western Australian small businesses with payrolls between $1.5 million
and $3 million in the 2012-13 financial year.
The establishment of Western Australia’s Small Business Commissioner and the
alternative dispute resolution (ADR) service for small business has further enhanced the
operating environment for the sector. One of the main functions of the Commissioner is
to receive and investigate complaints about unfair market practices affecting small
businesses and provide ADR services for small businesses in dispute. Since the ADR
service commenced at the end of March 2012, the Small Business Commissioner has
received more than 1300 dispute-related enquiries. The service is benefiting small
business by providing a low-cost, uncomplicated means of resolving business-to-business
and business-to-government disputes without the need to go to court.
Reforms to Western Australia’s planning system continue to cut red tape for small
business. The comprehensive planning reform agenda has ensured greater clarity and
consistency of policy requirements, improved timelines, better community planning
outcomes and measures to reduce the cost of red tape associated with the production of
land and housing.
The Western Australian Government has also continued to incrementally reform the
regulation of retail trading hours in the State. All general retail shops in the Perth
metropolitan area can now operate between 11am and 5pm on Sundays and public
holidays (with the exception of Good Friday, Christmas Day and ANZAC Day) as well as
trade until 9pm weeknights.
South Australia
In April 2012, South Australia completed a two-phase red tape reduction program that
has delivered an improved regulatory environment for small business. Operating under
the direction of the then South Australian Competitiveness Council3, and supported by
3
The Competitiveness Council was wound up on 30 June 2012 having completed its primary task of
reducing red tape for business in South Australia.
COAG Final Report – December 2012
14
Red Tape Champions (senior officers within each South Australian government agency)
the program sought to reduce business costs, streamline development processes and cut
red tape. This burden reduction program has reduced red tape costs by around $320
million per annum.
The red tape reduction program targeted the broad categories of paperwork compliance
(including form-filling and providing information); non-paperwork compliance (such as
staff training, changing production processes or costs associated with regulation-induced
delays in business projects); and financial costs (including government fees, permits and
licenses). The Red Tape Champions were specifically responsible for examining
legislation, regulation and business processes and the impact they have on business.
South Australia will further ensure that all current rules and regulations are working as
intended by requiring that all agencies prepare five-year work plans. The aim is to
maintain a close watch on any regulation of significance to business and the community
to keep red tape under control for the long-term. This is a major, ongoing project, to
improve the business operating environment.
Also, under recently introduced guidelines, State Government agencies must consider
the regulatory impact of changes to business and the community. Any agency responsible
for regulatory proposals that add unnecessary new costs must offset them through other
red tape savings of an equivalent value.
South Australia is committed to a sustainable delivery mechanism for the provision of
services to the small business sector, particularly digital online content available via
multiple mediums including mobile devices. In this regard, South Australia has
implemented an upgrade of the internet based tax interface RevNet. The payroll tax
upgrades increase the functionality of the website to make tax compliance more
accessible and flexible for business.
Further reducing the regulatory burden, South Australia has made doing business with
the government easier following changes to the procurement guidelines. Businesses are
now required to provide only one verbal quote for work costing less than $11,000.
Previously, businesses were required to provide three written quotes; this reform has
reduced the paperwork burden and generated significant cost savings for business
South Australia continues to collaborate with the Commonwealth and other state and
territory governments to deliver the Business Online Service program as part of the
National Seamless Economy, in particular the Australian Business Licence Information
Service.
The development of the South Australian Small Business Strategy further reinforces the
government’s approach to facilitating an efficient business operating environment.
To enhance small business access to information, and reduce the time spent searching
for their obligations, South Australia is improving the provision of services to the small
business sector, particularly digital online content available via multiple mediums
including mobile devices.
Tasmania
Tasmania supports the COAG initiative to reduce the regulatory burden for businesses.
COAG Final Report – December 2012
15
The Tasmanian Government Economic Development Plan and Small Business Strategy
outline Tasmania’s commitment to improving the business operating environment by
reducing the compliance burden and simplifying access to information for Tasmanian
businesses. Central to the Strategy is the Business Tasmania initiative which aims to
streamline and improve interactions between government and business through, the
completion of a Compliance Burden Review and the introduction of a Smart Forms
service.
The Small Business Strategy will be supported by agency and sectoral action plans for
cutting unnecessary duplication and converting significant paper based forms to online
Smart Forms.
Tasmania has initiated a whole-of-government project to establish Smart Forms
development and cost modelling, and to build Smart Forms development capacity within
agencies. The first phase of this body of work, scheduled for completion by 2012, will
comprise a pilot project of 12 Smart Forms.
The new Business Tasmania website will make it easier for businesses to interact with
government and to find the information they need, complete transactions and obtain
services. Operating as a centralised online portal it will improve the business-enabling
environment for all enterprises and will be enhanced with the first set of Smart Forms
scheduled for deployment in February 2013. Business Tasmania is based on the Victorian
Government model and links to new Australian Government online initiatives.
Tasmania has initiated a Compliance Burden Review Project to review the administrative
burden for business in complying with existing regulations across state and local
governments on a sector by sector basis. This project involved a systematic review of the
paperwork, processes, time and costs for businesses complying with these regulations.
This work will identify key themes and industry hotspots, and provide recommendations
and actions to make it easier for Tasmanian businesses to meet their compliance
requirements. It will also provide a baseline to indicate the costs to business in
complying with regulation. . The baseline report is scheduled for public release in the
first quarter of 2013.
Tasmania has undertaken this work in close consultation with relevant government
agencies and the industry representative bodies and associations to identify areas of
greatest concern to business operators and will work on ways to reduce or simplify these
burdens.
Tasmania has committed to improving small business access to government tenders. The
government is working to improve communication with Tasmanian business at all levels
on tendering requirements and is working with the Industry Capability Network to
improve communications, training and information events regarding tendering by small
business. This has included making online materials available, delivering training sessions
for small businesses that want to become suppliers to government, and a ‘Meet the
Buyers’ event where business operators can meet and speak one-on-one with
procurement decision-makers from government agencies.
Northern Territory
The Northern Territory Government is actively working to reduce the red tape burden on
small business.
COAG Final Report – December 2012
16
The previous government established the Streamline Business Taskforce which worked
with the business community to identify unnecessary areas of regulatory burden
impeding business productivity. Adopting a whole-of-government approach, the
Taskforce identified specific areas of regulation, red tape and associated administrative
practices that impede productivity and economic growth and unduly impose costs and
resource burdens on business.
As an outcome of Taskforce action, reforms were made to Northern Territory
procurement policy to make the tender process more accessible for small business. From
1 July 2012, a 5-point procurement approach was introduced to streamline and simplify
procurement documentation including tenders and quotes, conditions of contract,
guidelines and directions to reduce red tape. An additional tender category targeted at
small business was also introduced and aimed to make the tender process less
complicated for work valued between $200 000 and $1 million was also introduced. The
tenderer information requirements were also streamlined, with the removal of the need
for repetitious entry of standard data through the Tenderers Information Database. This
database enables tenderers to pre-record their standard details, requiring only the
project/tender specific information to be updated for each tender opportunity.
Following the Northern Territory general election in August 2012, the Northern Territory
Government has reiterated commitments to reduce the red tape burdens on business
and to improve the Northern Territory business operating environment. The Business
Policy released by the Government prior to its election commits to the establishment of a
Small Business Task Force to consult with small business and a Red Tape Task Force to
review legislation, regulation and administrative arrangements and recommend changes
to reduce the red tape burdens on business.
The Northern Territory Department of Business is continuing to invest in the
development of more efficient practices to enhance on-line payments and reporting
requirements for small business across government as well as to embrace the benefits of
the national business reforms.
Australian Capital Territory
The ACT Government’s support for a strong, viable business sector is reflected in its new
business development strategy Growth, Diversification and Jobs - A Business
Development Strategy for the ACT. The Strategy sets out key themes to encourage
economic growth and diversification of the private sector economy, and contribute to job
growth. The three key themes of the strategy are: the right business environment,
supporting business investment, and accelerating business innovation.
A key initiative of the Strategy is the establishment of a Red Tape Reduction Panel, a
whole-of-government taskforce, designed to investigate, identify and remove regulatory
impediments to Canberra businesses. The panel is outcome oriented, focusing on
specific problems facing individual businesses, and has a mandate to engage with
agencies and fix specific issues. In its initial phase, the Red Tape Reduction Panel has
focused on municipal regulatory issues. Early reforms that have been agreed by the
Panel will see the ACT Government:

develop a new business feedback mechanism on red tape, to be delivered through
Canberra Connect via a new online “fix my red tape” reporting capability;

abolish motor vehicle registration stickers; and
COAG Final Report – December 2012
17

provide for e-lodgement of rental bonds.
In an ongoing commitment to reducing the regulatory burden on small business the ACT
Government is facilitating an annual Listening to Small Business Dialogue Process to
better understand the issues and opportunities for small and micro business sectors.
This builds on the ACT Government Small Business Focus Groups initiative, which
consisted of ten sector groups that were consulted for the development of the new
business development strategy. The Small Business Focus Groups provided an insight
into the perceptions of small business and identified a number of areas of unnecessary
red tape warranting government action.
The ACT Government through its payroll tax reform has further reduced the regulatory
burden on business. Increasing the payroll tax threshold from $1.5m to $1.75m has
resulted in approximately 115 local businesses no longer having to pay payroll tax.
Further tax reform through the abolition of duty on short term subleases has eliminated
the charges imposed when a business is transferred to a new owner. This amendment
has removed a nuisance tax on the ACT business community, reducing compliance
burdens and streamlining the asset transfer processes.
To minimise compliance burden and to provide better access for local SMEs to ACT
Government purchasing the ACT Government has committed introducing a new
evaluation criteria for local content for all goods and services tenders. This will build on
the reforms to the Government Procurement Act to improve administrative efficiency
and streamline the reporting of ‘reportable contracts’. The new evaluation criteria will
be included in ACT Government goods and services tender processes from 2013.
As part of the ACT’s involvement in the Council of Australian Governments’ Business
Names reform, changes were recently made to the Business Names Registration
(Transition to Commonwealth) Act 2011, which will allow ACT businesses to register their
name only once under an electronic national scheme. Previously, businesses were
required to register in both the ACT and NSW if they operated in both jurisdictions.
Under the new Bill, businesses will only be required to register once to trade in both
locations.
COAG Final Report – December 2012
18
Attachment B
Consultation findings
Work health and safety
Work health and safety (WHS) regulation affects every workplace in Australia. All
states, territories and the Commonwealth have WHS laws that aim to prevent
workplace death, injury and disease. Industry specific laws covering workplace safety
and laws regulating particular hazards, for example the transport and storage of
dangerous goods, also exist in most jurisdictions.
Work health and safety and workers’ compensation are commonly cited concerns for
small businesses when discussing red tape burdens. In general, small business appears
to be most concerned with requirements for documents or records to be prepared,
maintained and kept and for certain incidents to be notified to regulators.
Examples include requirements for:

documented emergency plans;

safe work method statements for high-risk construction work;

confined spaces entry permits;

maintenance and inspection records for certain higher risk registered plant; and

training records for workers undertaking certain high risk work.
Historically all Australian governments adopted a broadly similar approach to regulating
for safer workplaces. The approach involved a principal WHS Act codifying common law
duties of care supported by detailed regulations and codes of practice and a system of
education, inspection, advice, compliance activities and where appropriate prosecution.
Despite this commonality differences in form, detail and substantive matters remained
creating unnecessary compliance costs for businesses operating nationally or across
state and territory borders.
On 20 December 2007, COAG agreed:

that national harmonisation of WHS laws is a priority

to the development of model legislation as the most effective way to achieve
harmonisation of WHS laws.
The commitment to a harmonised system of WHS laws is reflected in the Intergovernmental Agreement for Regulatory and Operational Reform in Occupational
Health and Safety (the IGA).
Under the IGA harmonisation has been co-ordinated and overseen by Safe Work
Australia. Safe Work Australia comprises representatives from the Commonwealth,
each state and territory, peak employer organisations and unions.
The IGA makes it clear that a key priority of harmonisation is to eliminate the
inconsistency in WHS regulation that has historically created compliance costs for
businesses operating nationally or across state and territory borders, while ensuring no
diminution in pre-existing safety standards for workers.
1
Under the IGA Safe Work Australia developed a ‘model’ WHS Act supported by ‘model’
regulations and ‘model’ codes of practice that could be mirrored in each jurisdiction.
On 1 January 2012, the new WHS laws developed by Safe Work Australia came into
force in the majority of jurisdictions: New South Wales, Queensland, the Australian
Capital Territory, the Northern Territory and the Commonwealth. The new WHS laws
did not include mines-specific regulations. The new WHS laws will commence in
Tasmania on 1 January 2013. In relation to the other jurisdictions (at the time this
paper was prepared):



South Australia’s Bill to give effect to the new WHS laws was passed by both
houses of Parliament on 1 November 2012 and will take effect on 1 January 2013.
Victoria: on 1 May 2012 the Victorian Government released the Victorian Budget
2012-2013 announcing that:
[t]he Government will not sign up to the current proposal for harmonised
legislation for occupational health and safety…4
Western Australia: the Western Australian Government is conducting a statespecific consultation process and will prepare a state-specific Regulation Impact
Statement (RIS).
Safe Work Australia has an ongoing role in maintaining and evaluating the new work
health and safety (WHS) laws—including assessing their impact on small business. Safe
Work Australia monitors implementation of the new WHS laws and has a role in
ensuring that technical issues and inadvertent workability issues with the new WHS
laws are quickly identified and addressed in a consultative and co-ordinated way.
While regulation impacts for businesses operating nationally or across state and
territory borders is a clear priority under the IGA, Safe Work Australia is aware that
further consideration is also being given to the impacts for small business that operate
within a single jurisdiction by a number of jurisdictions.
On 13 April 2012 COAG agreed that the current WHS laws would also be reviewed by
the end of 2014.
Taxation
Taxation is a perennial concern for small businesses when discussing red tape burdens.
It is not the payment of tax that small business identifies as burdensome. Rather, it is
the costs associated with tax reporting, the regulatory compliance and the associated
paperwork requirements. Small businesses further identify the inherent complexities in
the taxation system reflected in the myriad of taxes levied at the both the
Commonwealth and jurisdictional level. The costs associated with tax compliance were
both financial, in the form of extra costs, as well as time, in the form of increased hours
being taken away from the running of their business.
4
Victorian Budget 2012-13 Treasurer’s Speech, Budget Paper No. 1 (Presented by Kim Wells MP, Treasurer of the State of Victoria),
p 13.
2
Governments are cognisant of these issues with taxation. The Commonwealth Business
Tax Working Group and the State and Territory Treasurers, through the Council for the
Australian Federation, are working to identify potential reform directions for the
business tax system.
At the October 2011 Tax Forum, the New South Wales and former Queensland
Treasurers indicated they would develop a state tax reform plan through the Council for
the Australian Federation for discussion by the Standing Council on Federal Financial
Relations in late 2012, in advance of consideration by COAG.
On 4 April 2012, South Australia agreed to replace Queensland and work in
collaboration with New South Wales to develop the state tax reform plan. Options for
reform of taxation arrangements continue to be developed through these processes.
Specifically, the Commonwealth’s work on business tax reform will continue through
the Business Tax Working Group and the States and Territories’ work on tax reform will
also continue through the process led by the New South Wales and South Australia
Treasurers and the Council for the Australian Federation.
Issue
Summary of concern
PAYG withholding
The current threshold has not been increased since 2000 and
increasing numbers of small business are required to remit
monthly, increasing their reporting/paperwork burdens.
Fringe Benefits Tax
Concerns centred on the time and paperwork required to comply
with FBT, ultimately stemming from the complexity of calculating
the taxable value of fringe benefits; understanding the ‘exempt
components’, the application of the ‘reasonableness’ test and
determining the GST payment on employee contributions.
Contractor reporting
obligations
The requirement for businesses in the building and construction
industry (BCI) to report payments to contractors in the BCI
annually. Small businesses in the building and construction
industry identified this as an unnecessary increase in paperwork
and compliance, noting that there are government systems in place
to monitor tax compliance already.
Division 7A (and the
The tax treatment of entitlements paid by small businesses
tax treatment of trusts) (operating as trusts) to a beneficiary, as a result of Taxation Ruling
TR 2010/3, have created unnecessary burdens.
Payroll tax
The inconsistent definitions and interpretations of payroll tax
legislation were identified as burdensome to small business.
Employment regulations
The Fair Work Act
The regulatory burden imposed on small business employers in complying with their
employment obligations under the Fair Work Act 2009 is commonly identified as a
source of unnecessary burden. Some particular concerns of small business relate to
making individual flexibility arrangements (in part due to the difficulty with quantifying
non-monetary benefits under the better off overall test); the uncertainty with unfair
dismissal including vexatious claims; the requirements pertaining to the minimum
3
engagement period for casual employees; and the payment of penalty rates under
modern awards.
Both penalty rates and minimum engagement periods are matters provided for in
modern awards, and vary between industries. For some industries these issues are
being examined as part of the review of modern awards, currently being undertaken
by Fair Work Australia and set to conclude by mid 2013. Additionally, and separately to
this process, any party can request a variation in the terms of the modern award from
Fair Work Australia.
Arrangements in relation to individual flexibility arrangements and unfair dismissal are
included in the Fair Work Act 2009. In early 2012, an independent three person panel
undertook a post implementation review of the Fair Work Act. In their final report the
panel made 53 recommendations, including recommendations in relation to individual
flexibility arrangements and to improve the handling of unfair dismissal claims.
On 15 October 2012, the Commonwealth Minister for Employment and Workplace
Relations announced the first tranche of the Government response to the review. The
Government has initially actioned around one-third of the review’s recommendations,
including most of those relating to unfair dismissals. In particular, the Government will:

align the time limits for unfair dismissal applications with the time limit for a
general protections claim involving a dismissal;

lower the threshold at which Fair Work Australia can issue costs orders against
vexatious unfair dismissal applications; and

give Fair Work Australia more flexibility to dismiss unfair dismissal matters in
certain circumstances.
The Commonwealth Government will continue to consult with stakeholders in
developing its response to the remainder of the review panel’s recommendations.
Issue
Summary of concern
Application of the Better Off
Overall Test
Quantifying non-monetary benefits is difficult for small
business operators and the cost of non-compliance can be
significant. This detracts from the confidence and capacity
of small business owners to make individual flexibility
arrangements with their employees.
Minimum hours of
engagement for temporary
employees
An inability to hire workers for shifts less than 3 hours limits
the capacity for small businesses to employ workers for
short periods.
Unfair dismissal and dealing
with vexatious claims
The cost and time burden for employers defending vexatious
claims is a concern for small business operators.
The 15 employee threshold ‘head count’ definition of small
business for the qualifying
period for unfair dismissal
protections
Small business noted that this was a deterrent to hiring
employees with some small businesses changing their
structure specifically to get around this issue. It is noted that
the qualifying period for access to unfair dismissal
protections is 12 months for businesses employing fewer
than 15 employees and 6 months for businesses employing
15 or more employees.
4
Workers Compensation
Issue
Summary of concern
Deeming provisions
The uncertainty concerning the requirements and
obligations surrounding contractors.
Inconsistent definitions
The principles for defining an employee’, ‘principal
contractor’, and ‘return to work’ cause uncertainty for
employers.
Local Government as Regulator
The enforcement and administration of regulatory responsibilities by local governments
materially affect costs incurred by business, both within and between jurisdictions.
Small businesses perception of local government regulation is that it is duplicative, not
transparent and costly to comply with. That said, it was the fundamental process of
regulatory development in the first instance – which was not considered to be effective
nor efficient – and which was the underlying cause of regulatory burden. It should be
noted in this regard that local governments for the most part are simply enforcing
regulations on behalf of the States and Territories. Accordingly, there is the potential to
improve the setting of policy parameters at both the Commonwealth and State and
Territory to facilitate best practice approaches at the local government tier.
Issue
Summary of concern
Time delays in seeking
change of land use approval
The convoluted process creates unnecessary costs and restricts
innovation.
Development applications
and planning approvals
process
Concerns identified the inherent delays in the approvals process
and the unrealistic charges imposed on business as a source of
unnecessary red tape.
Inconsistent interpretation of Different compliance requirements increase the cost of business
regulation by neighbouring
(for instance one council requiring a permit and an impact
councils
assessment in order for a business to engage in building work,
whereas a neighbouring council simply requires notification).
Inefficient processes (i.e. no
streamlining or collaboration
with other agencies)
Concerns were expressed about the need to engage a council on
multiple occasions (be it for applications, permits or licenses)
and the ensuing time and cost delays this imposes on business.
Inspections by regulators
(too frequent)
The broad approach by regulators whereby there is no
distinction between low-risk and high risk businesses subjects a
large number of small businesses (generally low-risk) to
unnecessary audits and inspections.
Local government contracts
Navigating overly burdensome, complex contracts and the
subsequent need to engage with local government on multiple
occasions in this regard was identified as particularly onerous for
small business.
5
Regulatory Impact Analysis
The key, fundamental concern of small business in discussing regulatory burden was the
policy-making processes and the actions of regulation making institutions. Small
businesses identified that regulation was often inefficient, ineffective, and did not
support well functioning markets nor facilitate innovation. Moreover, it was found that
despite governments’ commitments to improved regulatory impact analysis, including
improved quantification of small business costs, the perception was that there was no
evidence to suggest that this had resulted in positive outcomes for the small business
operating environment.
Issue
Summary of concern
Lack of engagement with
Concerns with the lack of transparency, accountability and
regulatory impact analysis at contestability with Commonwealth, State and Territory and Local
the policy development stage governments’ regulation impact statement processes meant that,
despite the existence of best practice frameworks, end results
(outcomes) often did not reflect the process.
Insufficient consultation
(both ex-ante and ex-post
regulation)
Concerns were raised with the lack of consideration/awareness of
small business needs in policy development which were borne
through inadequate consultation with small business.
The lack of risk-based
approaches to regulation
Regulation developed with a ‘one size fits all’ philosophy or
regulation geared towards larger businesses, which does not take
into account the resourcing capacity of small businesses, imposes
increased, and often unnecessary obligations on ‘low risk’ small
businesses.
Prescriptive regulations
Concerns identified the high level of prescription, record keeping
and reporting requirements embedded in regulation restrict the
flexibility in how small business can comply.
Regulators enforcement and
administration
Small businesses identified inconsistencies between the intentions
of a policy, and the administering of a regulation, which leads to
unnecessary burdens imposed on small business.
6
Attachment C
Achieving
best practice
consultation
with small business:
A guide for government
This document aims to assist departments and regulatory agencies in developing
strategies for consulting with small business.
Why consult with small business?
Why is this important?
The benefits of consultation
When should I consult?
How do I consult with small business?
What do small business want?
What should I be asking small business?
Where can I get more information?
New South Wales
Victoria
Queensland
Western Australia
South Australia
Tasmania
Northern Territory
Australian Capital Territory
WHY CONSULT WITH SMALL BUSINESS?
Proportion of Australian Small business (by
number) and other business



Australia has approximately 2.05 million active small
businesses; (also include ATO figure of 3 million
business)
This equates to almost 96 per cent of all businesses;
Small business contributed close to 34 per cent of
private industry value added in 2010-11 and provided
employment for 4.8 million people (at June 2011),
around 46 per cent of private sector employment.
Small businesses are different to larger
businesses. Small businesses:



can be disproportionately affected
by the costs of regulatory decisions
and unnecessary red tape;
have fewer resources – be it time,
information, money or staff – at
their disposal to cope with their
regulation obligations; and
are very diverse and cut across all
sectors of the economy, up and
down the supply chain.
Although in some instances,
legislation may define small
business differently (for example,
taxation, which distinguishes
business size by turnover volume).
What is a small
business?
The Australian Bureau
of Statistics defines
small businesses as
those with less than 20
full time employees
The Tax law defines
a small business as
one with a
turnover of less
than $2 million
WHY IS THIS IMPORTANT?
Developing policy that is consistent with a government’s long-term strategic policy
priorities helps sustain economic growth through improved productivity and
participation.
Considering the impacts of policy on small business is a key element in ensuring this
outcome; consultation with small business is vital to the policy development
process.
The cumulative effect
When a new policy is developed in
isolation, without consultation, it is easy
to think that it is no big deal and that the
regulatory impact will not be significant.
On the other hand small businesses will
be looking at this new regulation, adding
it to the pile of everything else they are
required to do.
The cumulative
effect is
underestimated
by governments.
But it is a major
concern for small
business.
Consultation can help to achieve efficient and effective regulation and inform debate
by examining the costs, benefits and appropriateness of regulatory options,
especially if consultation occurs early on in the policy development process. Any
issues of concern and potential deficiencies can be identified in the consultation
phase, and can then be addressed in the development and design of regulation.
Consultation also increases stakeholder buy-in and promotes better compliance.
Think small first
Governments need to work with the small business community and listen to what
they have to say.
Many government departments and agencies ask, ‘How do we consult with small
business?’
It is intended that this document can help to change the thinking of government
departments and agencies by inviting them to think small first. That is, ‘how can
your policy accommodate and affect small business?’ New regulation or policy
should minimise the adjustment or compliance costs imposed on small business and
should not unnecessarily impose further obligations on small business.
Creating a culture within government agencies to develop an in-depth
understanding of small business issues is a key element of this guide.
All jurisdictions have dedicated small business policy units committed to the
development and enhancement of the small business sector. These small business
policy units can help you establish an ongoing culture of accommodating small
business. Refer to the small business office within your jurisdiction for more detail.
The Australian and State and Territory governments are committed to improving
processes for consultation with business and supporting appropriate consultation
with relevant stakeholders.
All governments have in place whole-of-government policies on consultation that set
out best practice principles that need to be followed by all agencies when developing
regulation.
While the advice in this publication is focused on achieving effective consultation
with small business, the benefits of consulting on regulatory change and
development apply to all stakeholders affected by regulation on a wider scale.
This document should be read in combination with the Best Practice Guide to
Regulation, which all jurisdictions have in some form, as part of their regulation
framework.
Commonwealth
New South Wales
Victoria
Queensland
Western Australia
South Australia
Tasmania
Northern Territory
ACT
THE BENEFITS OF CONSULTATION
The benefits of consultation with small business include:

bringing perspectives and ideas for alternative options from small business and
giving a voice to this less easily identifiable group of stakeholders;

facilitating a risk based approach to regulation ensuring that small business are
considered differently to large business and therefore not unnecessarily
regulated;

changing the culture of regulation to be more inclusive of the needs of small
business by using open and transparent methods to develop and adopt
solutions to a public problem;

improving government awareness of the regulatory needs of small business
and enabling faster responses to changing conditions;

identifying interactions between different sets and types of regulations
impacting upon the operating environment of small business;

providing a check on the regulator’s assessment of costs and benefits to small
business and whether the proposed option will work in practice;

enhancing voluntary compliance from small business through greater
understanding and acceptance of a proposal, and thereby reducing reliance on
enforcement and sanctions, and

ongoing consultation processes may aid in the development of an open and
trusting relationship between small business and government.
WHEN SHOULD I CONSULT?
The answer is ‘when you are considering changes to a regulation’ or thinking about
‘developing a new regulation’. And the earlier you consult, the better.
Early consultation is one of the best ways to reduce the regulatory burden on small
business. By talking to and engaging with small business before a regulation is
designed, it actually provides an opportunity to get first hand insights into the reallife workings of a regulation and its impacts.
As a policy maker within government, you can use this information to influence the
final design of a regulation. By understanding the real world impacts, you can ensure
that small businesses will not be exposed to any unnecessary burdens.
At the end of the day, the best way to reduce the red tape burden on small business
is to not impose the burden in the first place.
HOW DO I CONSULT WITH SMALL BUSINESS?
Small businesses want to be consulted.
They are however, time poor.
This means that you have to take a considered approach in
how you engage with small business.
When you consult with small business there are four areas
you should be looking to tick off.
Simply uploading a 25
page document
outlining your
proposed policy to
your agency website
will have limited reach
within the small
business community.
Your consultation should involve:

sharing relevant information with small business;

giving small business a reasonable opportunity to express their views, raise
relevant issues and contribute to the decision making process;

taking their views into account; and

providing information on the results of the consultation.
The Best Practice Consultation Principles outline this in more detail.
WHAT DO SMALL BUSINESSES WANT?
When you engage with small business, the information you provide needs to be

simple and

in plain English.
Many small businesses want information to be provided online so that they can deal with
it, and learn what is going on, in their own time, often after hours.
Small business also obtain information through their trusted networks – that is, industry
and professional associations; business intermediaries like accountants and tax agents;
business enterprise centres and through their local business networks and chambers.
Consultation tools
All jurisdictions have in place a suite of consultation tools to assist you in engaging with
small business. There is no magic bullet in this regard. Small businesses are very diverse
and they cut across all sectors of the Australian economy and for this reason it is often
best to adopt a multi-faceted approach.
WHAT SHOULD I BE ASKING SMALL BUSINESS?
Regulations will impact upon a small business in a variety of different ways.
If you put yourself in the position of a small business owner it will assist you to better
understand the compliance obligations of a small business and what the impacts of your
regulation may be.
Asking the right questions will help in this regard. For example:
How difficult would it be to obtain the information needed to register/apply?
Would the proposal require your business to undertake additional record keeping or incur
printing costs?
Is the information already provided to another source? If yes, how often do you report?
Would the proposal require your business to notify a regulatory authority when certain
events take place?
Would you need to change your business practices/model? For example training/
employment conditions/ costs.
Would the proposal change your relationship with your suppliers/distributers/customers?
Would your business need to purchase a service or product to comply with the proposal?
Would the proposal place any restrictions on your business? For example types of
product/service/hours of operation/client base.
If the rules were to change, where would you go to find out about the change?
CONSULTATION TOOLS / MECHANISMS
All jurisdictions have a common goal to reduce the regulatory burden on small business
and they all adopt different approaches in this regard.
Commonwealth
Business Consultation Website
consultation.business.gov.au/consultation/Common/About/Default.aspx
Annual Regulatory Plans
ris.finance.gov.au/2011/10/13/annual-regulatory-plans/
Small Business Advisory Committee
www.innovation.gov.au/SmallBusiness/Support/Pages/SmallBusinessAdvisoryCommittee.
aspx
New South Wales
Business consultation websites
www.betterregulation.nsw.gov.au/better_regulation_requirements/current_consultation
www.nsw.gov.au/haveyoursay
Victoria
Business consultation database
www.business.vic.gov.au/permits-licences-and-registrations/join-our-businessconsultation-network
Small Business Ministerial Council
www.dbi.vic.gov.au/business-units/associated-bodies/small-business-ministerial-council
Queensland
Business Consultation websites
www.business.qld.gov.au
www.getinvolved.qld.gov.au/
Regulatory Framework
www.qca.org.au/OBPR/
Western Australia
Business consultation website
www.smallbusiness.wa.gov.au/ready-response-network/
www.smallbusiness.wa.gov.au/have-your-say/
South Australia
(Information to be included at a later date)
Tasmania
www.development.tas.gov.au/economic/economic_development_plan/achieving_our_vis
ion/supporting_business/small_business
www.business.tas.gov.au (Live from February 2013)
www.development.tas.gov.au/economic/business_point:
www.treasury.tas.gov.au/domino/dtf/dtf.nsf/vecopol/13E0011D833DCF7BCA25747F00210576
Northern Territory
To ensure that the Department of Business effectively engages with the small business
community, the Department of Business has a Business Liaison Unit that maintains contact
with businesses large and small, and relays their feedback to the appropriate government
agencies. In addition, the department utilises a database and mailout program called
MAXIMIZER. The program has a list of associations, businesses and industry groups which
information can be sent to regarding developments affecting small business and business
support programs offered by the department to assist the business community of the NT.
Australian Capital Territory
Consultation (small business dialogue)
www.economicdevelopment.act.gov.au/
General
Green papers, issues papers and exposure drafts
There are specific government requirements for policy ‘green papers’ and exposure drafts.
Green papers
For regulatory proposals of major significance, a policy options paper, or ‘green paper’ is
required to be released as a basis for consultation. Like other consultation documents, a
green paper can be used to ask questions to fill information gaps and elicit specific
feedback from stakeholders. It should be made clear where stakeholder input would be
especially valued. Responses are likely to be more useful and focused if stakeholders
know where to concentrate their effort.
Issues paper
Issues papers or an information paper may be an appropriate form of consultation for less
significant proposals. Examples include draft assessments of business compliance costs or
draft Regulation Impact Statements.
Exposure drafts
Consultation and analysis of the implementation options is an important part of the policy
development process. Prior to finalisation, the details of complex regulations are required
to be tested with relevant business interests. This allows the ‘devil in the detail’ to be
made transparent. Releasing exposure drafts of complex regulations for significant matters
is one approach departments and agencies can use to allow businesses and other
stakeholders to provide more detailed comments and advice on how a regulation will work
in practice.
Where an exposure draft is required, in most cases a decision – informed by a Regulation
Impact Statement (RIS) – choosing a regulatory option has already been made.
Consequently, a two-staged decision-making process might occur. The existing RIS could
be amended for the implementation decision to include the regulatory impact analysis and
consultation processes associated with the exposure draft of the regulations. It is the
amended RIS (covering both decision stages) that would be made public to make the
entire policy development process transparent.
BEST PRACTICE CONSULTATION PRINCIPLES
Continuity
1.
Targeting
Timeliness
Accessibility
Transparency
Consistency
& Flexibility
Evaluation
& Review
Continuity
Meaningful consultation with small business should be a continuous process that starts as
early as possible in the policy development process. Consultation should continue through
all stages of the regulatory cycle, including when detailed design features are being
bedded down. This will assist in identifying and understanding potential problems, and in
designing and implementing better regulation.
Departments and agencies/regulators need to consider appropriate mechanisms for
ongoing consultation with small business. Some options to achieve ongoing consultation
may include establishing working groups, advisory/consultative councils, or local business
‘partnerships’.
Terms of reference for ongoing consultative arrangements should be clearly articulated
(for example, whether the consultative group meets on a regular or ad hoc basis). The
criteria for determining membership of the consultative groups should also be
transparent.
2. Targeting
Small businesses that are likely to be affected by proposed regulatory changes should be
carefully targeted for consultation.
Small businesses are extremely diverse with key differences including industry sector, the
size and age of the business, geographical location and the characteristics of the owner(s).
These factors will influence which issues are important, as well as the most appropriate
means to consult with small business.
Departments and agencies/regulators should consider adopting consultation strategies
that can best identify small businesses potentially affected by the regulatory proposal(s)
they administer.
The size of a small business will influence the time and resources available to consult with
government on regulatory proposals, as well as the impact of regulatory change.
Considering the size of businesses may aid in targeting an appropriate method of
consultation.
A good starting point is to contact industry associations and small business lobby groups.
However, it is worth remembering that many industry associations represent the interests
of both small and large businesses and may not have a consistent view on all aspects of a
regulatory proposal. Furthermore, regulators should recognise that not all small
businesses belong to a representative organisation. Consideration should therefore be
given to engaging a number of individual small businesses in the consultation process.
Consultation should not always take place with the same group of businesses or
representative organisations. There is a danger that agencies can be perceived to have
been ‘captured’ by the interests of a representative organisation if they consult with the
same groups on every regulatory proposal. If the consultation process is limited in this
way, it is likely that the agency will fail to gain a true picture of the needs of small
business.
If possible (and it is appropriate) agencies should work together on consultative processes.
For agencies and departments that are intending to carry out consultations on similar
projects it may be possible and appropriate for them to work together. Joint consultation
exercises may provide more efficient use of departmental resources and make better use
of stakeholders’ time.
3. Timeliness
Consultation should occur early in the regulation making process when the policy
objectives and different approaches to an issue are still being considered.
Timeliness is crucial to achieve effective consultation with small business. This ensures
there is maximum opportunity to identify the relevant issues, options and potential
impacts. In general, departments and agencies/regulators should commence consultation
at the point where options are being considered. Consultation should also occur when
proposals have been formulated and perhaps also once the regulation has been drafted.
The amount of time required for consultation will depend on the nature and detail of the
proposal (for example, the diversity of interested parties or the complexity of the issue).
However, where prompt consideration of a proposal is required, some limitations on
periods and timing of consultation may be unavoidable.
Timeframes for consultation should be realistic to allow small business sufficient time to
provide a considered response (including time for representative bodies to contact their
members). Holiday periods and the end of the financial year should be avoided - consider
whether there is scope to delay a consultation until a less busy time of year for small
business stakeholders.
Further, consultation programs are likely to be more effective if small businesses are
systematically and periodically notified of regulatory measures that regulators are
developing or plan to develop in the future. While it may not be always appropriate to
consult, even on a restricted basis, (for example, for new initiatives to deal with tax
avoidance) it may still be possible to undertake restricted ‘early options’ consultation with
specialists outside government.
4. Accessibility
Information about regulatory proposals and the consultation process should be easily
available to the small businesses that are likely to be impacted on.
Departments and agencies should inform small businesses of proposed consultation via
the most appropriate means, including, press releases and advertisements in the media;
newsletters of industry associations and lobby groups; trade and professional magazines;
and the business consultation website.
Information provided to small businesses should be easy to understand — it should be in a
format which is easy to read, be written in plain language and clarify the key issues,
(particularly where the proposed regulation addresses complex issues). Written
consultation documents should include summaries to allow those consulted to quickly
assess whether the material is relevant to them and whether they need to read further.
Where appropriate, the publication of relevant information or issues papers on the
website of the department or agency sponsoring the proposal will assist with accessibility.
The medium selected should be appropriate to effectively consult with the identified small
businesses. Alternative methods of consultation may include stakeholder or public
meetings, working groups, focus groups, surveys or web forums. The appropriateness of
each approach will depend on the issues under consideration, the nature of the groups
being consulted and the time available. Be aware that small businesses may not be well
resourced and attending meetings or digesting long consultation documents, for instance,
may not be possible.
Consultation strategies should include a range of methods. These approaches can be
combined as needed to suit the regulatory issue under discussion and within the resources
available for consultation.
An increasingly popular way for government to seek input from (and have dialogue with)
the community/stakeholders is through websites and online forums.
5. Transparency
Involving small businesses from the earliest possible stage in the policy development
process will promote transparent and comprehensive participation.
To manage the expectations of small businesses, the objectives of the consultation process
should be clear from the outset. Small business participants are entitled to know what use
is to be made of the views and information they provide. To avoid creating unrealistic
expectations, any aspects of the policy proposal that have already been finalised and will
not be subject to change should be clearly stated. For example, if a decision to regulate
has been made already, small businesses should be made aware that their views are
sought primarily on regulatory design and implementation, not on the merits of the policy
itself.
Being clear about the areas of policy on which the views of small business are sought will
also increase the usefulness of responses. For example, explicitly stating any assumptions
made about those likely to be affected by the proposed policy or identifying particular
areas where input would be valuable will encourage respondents to address these issues.
Small businesses should also be made aware that policy development is guided by a
regulation policy framework and that consultations will take place within this framework.
Departments and agencies should respect the confidential nature of information provided.
Information or issues papers — such as draft assessments of business compliance costs or
draft Regulation Impact Statements, green papers (policy options papers) or draft
legislation — should, wherever possible and appropriate, be made available to
stakeholders to enable them to make informed comments on policy proposals and
proposed legislation.
To provide credibility to the consultation process, policy agencies should also show
stakeholders how they have taken consultation responses into consideration.
A common complaint of small business is that their suggestions are rejected without
explanation by regulatory agencies that have entered the consultation process with a predetermined view of the outcome. Departments/agencies should have an open mind in the
consultation process, and be in a position to demonstrate to small business that they have
considered all suggestions and responded to specific concerns and questions.
6.
Consistency & Flexibility
Consistent procedures can make it easier for stakeholders to understand and participate in
consultation. Consistent processes also permit better coordination of regulatory quality
initiatives across a wide range of policy areas (avoiding the effect of regulatory ‘capture’ of
departments/agencies by specific interest groups). However, consistency must be
balanced with the need for consultation to be designed to suit the circumstances of the
particular proposal under consideration.
In instances where ministers have made a commitment to a particular policy, consultation
can improve the design of the proposal and help ensure that it minimises the compliance
burden on business and costs to the community.
Public consultation for some proposals may be inappropriate (for example, where there is
a need for Cabinet confidentiality, such as for national security or commercial-inconfidence matters). In some of these instances, an alternative may be for departments
or agencies to consult with stakeholders in confidence. However, in other instances, it
may not be possible to consult even on a restricted basis (for example, for new initiatives
to deal with tax avoidance) although it may still be possible to undertake restricted ‘early
options’ consultation with specialists outside government.
Consultation may not be appropriate for minor or technical amendments to regulation, for
example, amendments that remedy errors or defects in existing regulation.
7. Evaluation & Review
The consultation process should be evaluated to consider its effectiveness, and agencies
should continually look at ways of making consultation more effective. Departments and
agencies need to be careful, however, that any evaluation involving further participation
from small business is not perceived as an additional burden.
Evaluation of consultation processes may include examining the number and types of
responses; whether some methods of consultation were more successful than others; and
how consultation responses clarified the policy options and affected the final decision. For
example, better use of information technology can improve the cost-effectiveness and
timeliness of consultation processes. Departments and agencies may wish to consider
publishing consultation protocols on their website.
WHERE CAN I GET MORE INFORMATION?
Commonwealth
Manager, Regulation Reform
Industry and Small Business Policy Division
Department of Industry, Innovation, Science, Research and Tertiary Education
(02) 6276 1329
New South Wales
Office of the NSW Small Business Commissioner
1300 795 534
or
we.assist@smallbusiness.nsw.gov.au
Victoria
Small Business Victoria
Trade and Industry Development
Department of Business and Innovation
www.business.vic.gov.au
13 22 15
Queensland
Department of Tourism, Major Events, Small Business and the Commonwealth Games
www.business.qld.gov.au
13 25 23
Western Australia
Director, Policy and Advocacy
Small Business Development Corporation
(08) 6552 3300
policy@smallbusiness.wa.gov.au
South Australia
(awaiting information as at 28 November 2012)
Tasmania
Business Point:
Freecall: 1800 440 026
SMS: 0408 916 980
businesspoint@development.tas.gov.au
Northern Territory
Manager, Business Liaison
Business, Industry Development and Engagement Division
Department of Business
(08) 8999 7970
businessinfo.ntg@nt.gov.au
Australian Capital Territory
Small Business Policy
Senior Manager, Business Programs,
ACT Government Economic Development Directorate,
(02) 6205 5346