The secret report showing how Victorian businesses are being stifled

A secret government report has revealed Victorian companies are suffering under the highest red-tape burden in the country, as business leaders call for firms to be freed from a stifling patchwork of licences and permits.

Versions of the confidential National Australia Bank survey commissioned by the state government have previously been released, but Labor chose to keep the latest results under wraps as small, medium and large businesses all reported red tape was holding them back.

The report – released under freedom of information laws to the opposition – shows large manufacturers carried the heaviest regulatory burden, with smaller and medium-sized businesses in the property, tourism and hospitality sector also complaining about the crippling impact of overregulation.

It has prompted a warning from manufacturers that more businesses were preparing to leave the state, while the Victorian Chamber of Commerce and Industry called for immediate reforms such as faster approvals and simplified processes.

“Victorian businesses are the engine room to drive the state out of debt, but they can’t do that if their hands are tied with red tape,” chief executive Paul Guerra said.

The report revealed the negative impact from regulation grew Australia-wide in 2023, but Victorian businesses were more heavily affected by state regulations than others. The Age revealed in June that South Australia and Queensland were targeting businesses unhappy with the economic situation in Victoria.

The results – reported as a net balance of the businesses that were positive minus those that were negative – show Victorian businesses reported the state’s regulations were harder to comply with than in other states.

Guerra told The Age that while appropriate regulations were important, they needed to be “streamlined and enabling business growth”.

“Our regulatory environment must be smart, competitive, and characterised by minimal red tape,” he said.

Among the state’s larger firms, every industry reported a deterioration in the regulatory impact of government policies compared to the previous year. The manufacturing sector recorded the biggest red-tape burden, followed by the retail sector.

Caravan Industry Victoria chief Daniel Sahlberg fears manufacturers will leave Victoria due to the burden of doing business in the state.Credit: Jason South

Caravan Industry Victoria chief executive Daniel Sahlberg said the state’s tax settings were also putting pressure on businesses and manufacturing just as interest rates had put a handbrake on the economy.

The association estimates at least 90 per cent of the nation’s caravans are made in Victoria, but the body fears more businesses will leave the state for other jurisdictions where it is easier to do business.

“I’ve seen our members shutting up shop and going somewhere else, or people that were looking to come here are now saying they won’t,” he said.

“They’re going to Queensland and other states now saying ‘it’s easier there’. We’re actually losing business to other states.”

Victoria’s small and medium businesses reported a negative red-tape burden. The property industry reported the most negative impacts at minus 73 index points, followed by manufacturing at minus 72.

For small and medium businesses, the cost of complying with regulation was the most burdensome aspect of doing business in the state. Victoria recorded a net score of minus 47 index points, compared with an Australia-wide average of minus 39.

The report comes just weeks after The Age revealed an internal state government review had identified that Victoria had the second-highest number of business licences and permits in the nation. Treasurer Tim Pallas has sought advice from his own department on how to encourage government departments to reduce the number of business licences in Victoria.

The review found that reducing the regulatory burden would benefit businesses and government by between $820 million and $1.6 billion each year.

Opposition finance spokeswoman Jess Wilson described Victoria as the red-tape capital of Australia and called on the Allan government to fast-track its regulatory reform program.

“Labor’s record taxes and burdensome regulatory environment are driving businesses interstate, which means fewer jobs and poorer economic opportunities for Victorians,” Wilson said.

“Victoria must urgently slash red tape and transform our economy from the hardest to the easiest place to start, grow and run a business.”

The annual NAB survey measures the impact of state government regulations on businesses, compliance difficulties and how effectively any regulatory changes are communicated to businesses.

The survey, which has been undertaken for almost a decade to gauge business sentiment, had previously been released to the public, but the state government has chosen to keep more recent reports secret, instead just providing it to department heads and relevant ministers.

A Victorian government spokesperson said business investment in Victoria was almost 6 per cent higher than in the rest of Australia last year, and it was predicted that Victoria would “lead the nation in economic growth over the next five years”.

“Our Economic Growth Statement will be released later this year and focus on making sure Victoria remains the best place in Australia to do business.”

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