Dozens of Australian industry groups have called on all levels of government to slash regulatory costs by 25 per cent by 2030, warning the compliance burden on small and medium businesses has reached a tipping point.
The Alliance of Industry Associations – which represents nearly 30 organisations and represents millions of workers from every part of the economy – made the plea in a joint pre-budget submission, ahead of the May 12 Federal Budget. It cites an Australian Institute of Company Directors report that estimates federal regulatory compliance costs businesses $160 billion a year, which is more than the federal government spends on education and Medicare combined.
The submission comes as the federal government makes available $6.15 billion in grants and zero-interest loans to help support Australian industry and supply chains through economic uncertainty exacerbated by the conflict in the Middle East. National Reconstruction Fund. Together, the two developments signal growing recognition that cost pressures on Australian businesses require urgent attention.
Small and Medium Businesses Feel The Weight Of Compliance
For larger organisations, compliance is a consideration in a departmental budget. But in many SMEs, complying with regulations and legislation from three levels of government is a major drain on energy and resources.
Skye Cappuccio, CEO of the Council of Small Business Organisations Australia says small business owners are spending hours each week on compliance instead of running their operations. “That’s time taken away from customers, staff and growth,” she says. “Reducing duplication would ease costs and support stronger productivity growth across the economy.”
The Alliance’s submission argues that businesses without dedicated compliance teams, which describes the vast majority of Australian SMEs, are disproportionately affected because the same regulatory obligations apply regardless of company size.
Chris Freeland, CEO of CPA Australia, agrees SMEs are spending far too much time navigating complex reporting requirements, outdated processes and inconsistent rules, and the broader economy is suffering as a result. “Excessive and poorly targeted regulation continues to be a major contributor to Australia’s weak productivity growth and declining international competitiveness,” he explains. A recent CPA survey found Australian businesses were lagging behind Asia-Pacific counterparts for growth and innovation and compliance complexity was to blame.
The AICS’s $160 billion estimate only represents federal regulatory compliance costs. When state and local government requirements are added, the total burden is likely significantly higher, a reality that plays out daily for business owners juggling employment law, workplace health and safety, tax reporting and industry-specific licensing.
Triple Layers Of Red Tape Create Costly Double Ups
The submission suggests this regulatory duplication across federal, state and local governments is a key driver of unnecessary cost and complexity. This double-up hits businesses that operate across borders or jurisdictions hardest.
Business Council of Australia CEO Bran Black highlights stark examples in hospitality, construction and logistics. “In Victoria, a café owner needs 37 separate licences and approvals before they can pour the first coffee, while a tradie on the Gold Coast needs to pay hundreds of dollars in permits just to fix a tap over the NSW border,” he explains. “That kind of red tape adds cost, slows things down and makes it harder to keep goods moving and shelves stocked. With global volatility already pushing up prices, cutting that duplication would help bring down costs for Australian households and businesses.”
The Alliance is calling for a national regulatory reform agreement between federal, state and local governments to eliminate duplication, harmonise rules where possible and reduce the number of touchpoints businesses must manage.
The costs of inaction would be enormous, says Chris Rodwell, CEO of the Australian Retail Council. “Modelling shows regulatory fragmentation will wipe $26 billion from national GDP over the next decade and add more than $9 billion to the cost of living,” he reveals.
Regulation Is Necessary But It Should Be Smarter
Industry leaders behind the submission have been careful to point out they are not calling for deregulation. Rather, they argue that poorly coordinated and duplicated rules, that add cost without improving outcomes for workers, consumers or communities, should be removed.
Such is the burden, growth in compliance-related roles has outstripped wider labour market job growth, according to Mark Rigotti, CEO of the Australian Institute of Company Directors. “The balance is clearly wrong,” he says. “Charities are feeling the pain just as much as businesses. Too many resources are being dedicated to onerous compliance obligations when they could be diverted to delivering vital services to the community.”
The Alliance cites international reform efforts as a benchmark. The European Union has set a target of reducing regulatory burden by 25 per cent, rising to 35 per cent for small businesses specifically, an acknowledgement that smaller operators face proportionally larger compliance costs.
For SME owners who already serve as their own HR manager, payroll administrator and compliance officer, the distinction matters. Smarter regulation could mean fewer forms, fewer duplicate reporting obligations and more time directed toward customers, staff and growth.
“Imagine what could be achieved with smarter policy settings and less red tape,” wonders National Farmers’ Federation CEO Mike Guerin. “Cutting duplication would allow farmers to be more nimble in responding to global shocks, spending less time in the office and more out in the paddock, keeping Australian agriculture competitive on the global stage.”
Less Regulation Would Allow For More Growth
Several leaders have highlighted the potential for growth in their sectors if businesses were relieved of admin friction. Housing has been singled out as a victim of ‘regulatory creep.’
“Volume Two of the National Construction Code, which started out as a ‘glove box compendium’ for house builders, has grown from 93 pages in 1993 to 889 pages,” says Denita Wawn, CEO of Master Builders Australia. “The Productivity Commission estimates that each new home bears regulatory costs of up to $320,000. Builders are ready to build; they just need to be free from the red tape that has built up over the years.”
Property Council CEO Mike Zorbas agrees red tape is worsening the nation’s housing shortfall. “30 years ago, you could build a new home twice as fast as today,” he says. “It must be national priority number one to weed out the duplication and inconsistencies that hold back the new housing and new commercial and industrial projects our nation needs.”
Minerals Council CEO Tania Constable argues slow and complex regulatory approvals encourage investors to look overseas to countries with faster and smoother approvals processes. Navleen Prasad, CEO of the Australian Investment Council agrees complex corporate tax settings put a handbrake on growth and deter investment.
Even universities are feeling the pinch. “Australia cannot afford regulatory duplication that slows research and delays solutions,” says Group of Eight chief executive Vicki Thomson. “When research intensive universities face multiple approvals for the same work, innovation stalls – and the cost is ultimately felt in higher prices for households, including energy bills.”
Federal Government Moves $6.15 Billion Into Industry Support
While SMEs will need to wait until May 12 to learn whether there will be red tape relief, the federal government opened up $6.15 billion in funding, through the National Reconstruction Fund, to Australian businesses.
Minister for Industry and Innovation Tim Ayres says the government is fast-tracking three funding streams to strengthen critical supply chains. “In an increasingly volatile global environment, strong domestic supply chains matter more than ever, and this funding is about backing the industries Australia relies on, from farming and manufacturing to housing and heavy industry,” he says.
The package includes $1B in zero-interest loans through the Economic Resilience Program for businesses that produce and transport fuels, plastics, fertilisers and agricultural chemicals, in recognition that these sectors underpin the economy.
The $5B Net Zero Fund is available for to help businesses in high-emission sectors improve energy efficiency. It’s also open to companies building domestic clean energy supply chains and supporting the manufacture of low-emissions technologies such as wind, solar and energy storage solution.
To address the housing shortfall, the $150M Forestry Growth Fund will support timber processing for wood used in housing construction.
