Talk to any small business owner and they’ll tell you the cost of compliance runs deep. Red tape isn’t just extra paperwork anymore – it’s changing how people hire and invest and it’s eroding confidence across the SME community.

It’s something Bruce Billson spoke about in a recent article titled “Why corporate compliance is becoming a $160bn nightmare for small business.” His argument struck a chord because it resonates strongly with what we see every day working alongside Australian employers. In fact, some recent economic estimates suggest the true cost of complying with Commonwealth regulations has surged even higher, toward $176 billion annually, nearly 6 per cent of our GDP. At Employment Hero, we work with hundreds of thousands of small and medium businesses across Australia. These are employers who want to do the right thing. What they struggle with is not the intent of regulation but the cumulative complexity of managing it.

The business of managing employment in Australia is, unfortunately, a daunting and complex task. One that we unfortunately believe actually affects whether or not businesses hire more staff (ie create more jobs) because they are intimidated by the complexities of the compliance overhead that exists with managing employment.  

Employment Hero’s Annual Jobs Report 2025 found that around one in three Australians now works multiple jobs. While our data showed resilient employment growth of 6.4 per cent (ie more people hired) year-on-year for SMEs, what sits beneath that headline is telling. While headcount is up, hours worked have softened and businesses are increasingly relying on casual arrangements.

This is the ‘hedging’ effect in action, and it is now being felt at the highest levels of our economy. Australia’s productivity challenges are multi faceted but well documented, including in relation to other developed economies. In its August 2025 Statement on Monetary Policy, the Reserve Bank of Australia effectively ‘threw in the towel’ on a productivity rebound, significantly downgrading its long-term labor productivity growth assumption from 1.0% to just 0.7%.This revision isn’t just a technical adjustment; it is a recognition of a persistent, long-term stagnation. 

And unfortunately it confirms what we see on our platform every day; that employers are hiring, but they are balancing opportunity against a compliance maze that constrains their ability to truly invest and scale. 

This is the hidden cost of compliance. It is not only measured in dollars or hours. It shows up in the “capital shallowing” that economists like EY’s Cherelle Murphy warn about, where businesses spend their finite energy on navigating complexity rather than investing in the tools and training that drive efficiency. It shows in roles that are never created and businesses that choose stability over expansion because growth feels harder than it should.

We really believe in Australia’s businesses and their capacity to drive productivity growth. It logically follows that making regulation easy to comply with allows businesses to fulfil their compliance obligations while focusing on driving their business and increasing the number of people they employ.

If small businesses are the engine room of the Australian economy, we should be asking whether our compliance frameworks are enabling participation or quietly constraining it. Are we designing systems around institutional boundaries or employer reality? Are we making it easier to employ someone or unintentionally raising the barrier?.

Supporting small business growth is not about removing responsibility. It is about recognising that complexity has consequences. If we want a more productive, resilient economy, and most important of all more jobs for people, we need to ensure that employing Australians feels manageable, not intimidating.

Bruce Billson is right to call this out. If we’re serious about productivity and growth, government and industry alike need to design compliance systems that work for small business, encourage their growth and ultimately encourage the creation of vital job opportunities.