Government’s deregulation agenda an ‘abject failure’, says new book

A new book by two free-market thinkers at RMIT University has declared Australia’s deregulation agenda an abject failure.

Darcy Allen is the co-author of Australia’s Red Tape Crisis.

Thou shalt not mandate. A new book by two free-market thinkers at RMIT University has declared Australia’s deregulation agenda an abject failure, urging governments to adopt a novel Canadian approach to unclogging the ­nation’s economic arteries.

Launched by the Institute of Public Affairs today in Canberra, Australia’s Red Tape Crisis, edited by Christopher Berg and his colleague Darcy Allen, has found mounting regulation is costing the economy $176 billion a year.

“Every elected Australian government over the past two decades has declared they would cut back on unnecessary regulation and red tape,” Dr Allen said.

Dr Berg said: “The first year of the Abbott government was good but overall the deregulation project has failed and slowed and stalled. This book is the first academic analysis of why Australian red tape continues to grow, the impact this has on our society and economy, and outlines a path to solve the problem.”

GRAPHIC: Red tape nightmare

The 14-chapter book, subtitled ‘The causes and costs of over-regulation’, recommends ditching traditional money-based metrics to measure the cost of regulation.

“You hear politicians say they’ve reduced regulation by $1bn, but what does that mean?” Dr Berg said sceptically, adding that such figures were based on vague surveys of bureaucrats.

The book recommends governments instead focus on cutting “restrictiveness clauses” in legislation and regulations. “If a law or regulation says ‘must’ or ‘shall’ or ‘cannot’, you get rid of it,” Dr Berg said. In British Columbia, the number of restrictiveness clauses has fallen from 330,000 in 2001 to 170,000 last year.

“What’s really significant about this is it coincided with a big jump in growth in British Columbia compared to the rest of Canada. It was before then one of the worst-performing provinces,” he said.

“This method, interestingly, was briefly tried by the Queensland government under Campbell Newman, but it collapsed when he lost government,” he added.

The previous Labor government passed 975 acts, adding up to 38,874 pages of legislation. Over the past eight years, Australia has tumbled down closely watched international competitiveness rankings, dropping seven places to 22nd in the World Economic Forum Competitiveness Index and from fifth to ninth in the Fraser Institute’s Freedom index.

The book presents evidence that the number of pages of federal environmental law has surged from about 500 in the mid-1970s to almost 5000 pages in 2016, which inevitably slows development and adds to legal, administrative and business costs.

It suggests the spread of block-chain technology — a distributed ledger that can be updated simultaneously for all users with the permission of a central authority — offers further hope of reducing regulation. “For instance, the consumer can come to know more about the goods and services they are purchasing, so quarantine and health-and-safety regulation might be curbed,” Dr Berg said.

“The Netherlands and Sweden in the 1990s did some really interesting things, and still occasionally have successes, but most Western governments have significant red-tape reduction programs but very few are successful.”

In December, responsibility for Australia’s “deregulation agenda” was shifted from the Prime Minister’s Department to Small Business. Mandatory processes such as regulatory impact statements and performance frameworks are meant to ensure all regulation meets relevant cost-benefit tests.