Too Many Laws?
The bookshelf of an average lawyer.
‘Regulation,’ defined by the Cambridge Dictionary as an official rule or the act of controlling something, [1] permeates various aspects of our lives in the form of laws. [2] The aim of such regulations is to pursue public policy, to promote trust in the government, and ensure predictability, [3] however, this poses the question: How much is too much? There has been an increase of regulation over the past decade; in 2011, a study by the Productivity Commission showed that there were 1,279 Acts and 18,000 statutory regulations that created over 90,000 pages of regulations. [4] The effectiveness of such regulations have been difficult to assess due to their volume and have been deemed unnecessary, opaque, and unjustifiable, adversely affecting various sectors who do not have the adequate resources to understand and implement the complexity of such laws. Over time, these excessive regulations have been referred to as ‘red tape’ and today, the government aims to implement policies to minimise any ‘unnecessary burden’ through regulation reforms.[5]
The Childcare Sector
The childcare sector has changed and grown significantly as governments aim to improve the affordability and accessibility of childcare for families. These include mechanisms such as increasing the regulation of childcare and early learning to ensure the safety, health, and wellbeing of children. [6] In 2009, the Australian Government and all state and territory governments agreed to sign a national reform agenda for childcare and early learning, implementing the ‘National Quality Framework’ (NQF). The NQF sets ‘National Quality Standards’ (NQS) that raises quality in long day care, family day care, preschools and outside school hours care services in Australia nationally, as opposed to having nine different regimes across Australia. As such, the NQF establishes an assessment system to monitor services that is compared with the 58 elements under the NQS for seven quality areas including ‘relationships with children’ and ‘physical environment’. However, Goodstart Early Learning, Australia’s largest provider of early childhood education and care, argue that the assessment system varies across the jurisdictions, resulting in different resources and different staffing practices. [7] The multiple regulatory bodies that Goodstart contend with all have different approaches and interpretations; ‘while some jurisdictions have adopted a practical, risk-based approach to regulation that seeks to build partnerships with providers, others have adopted a rigid, “letter of the law approach.”’ [8] In addition, studies have identified over 350 information obligation requirements associated with the NQF, causing stakeholders to commit to longer work hours. As one commentator argues ‘most weeks I do a minimum of ten hours unpaid overtime, and many weeks I do twenty or more hours unpaid in addition to my paid hours. The children should come first, not the paperwork …’. [9] Ultimately, whilst the NQF has harmonised jurisdictional regulation, [10] this excessive regulation has created more inconsistencies across jurisdictions and further contributed to more time devoted to regulatory paperwork.
Small Businesses
Excessive regulation upon small businesses is taxing. A lot of the concern with creating and running a business includes the strenuous cost of paying taxes, construction permits, and the registration of property—all of which take weeks to finalise. [11] A 2012 survey conducted by the Australian Chamber of Commerce and Industry notes almost one-half (44 percent) of business owners reported that they spend 1 to 5 hours per week complying with regulatory requirements, with a further 11.7 percent of respondents spending more than 20 hours per week. [12] This is despite 45.4 percent of businesses indicating that they comply with regulations that ‘make no sense to them’, particularly in the areas of workplace health and safety and wages and conditions of employment. [13] Such regulations create an uneven playing field between small and large businesses since larger companies can absorb compliance over a higher volume of output by hiring compliance teams to address government regulations; in contrast, small companies cannot afford this and are, therefore, at a natural disadvantage. [14] In a post-pandemic world, overseas investor funding for start-up small businesses is also declining due to specific requirements that act as regulatory barriers. For instance, the Significant Investor Visa scheme, designed to attract more investment into Australia, provides that applicants are required to invest at least $500,000 (AUD) in small private companies which has made investing ‘less attractive for many globally-mobile entrepreneurs’. As such, one major recommendation from the ‘Australia as a Financial and Technology Centre Advisory Group’ was to remove overly prescriptive requirements regarding investing and visas as such excessive regulation impeded job-creating and productivity. [15] Ultimately, excessive regulation impedes the productivity of small companies due to a lack of understanding regarding regulations and restricts job growth.
The Future of Red Tape
Over the last few years, there has been a lack of clarity between necessary and unnecessary regulatory burdens that has blurred the roles of the state and its relationships with business and the community. Thus, excessive regulation has created difficulties for various stakeholders including, as discussed, the childcare sector and small businesses. Freiberg, Pfeffer, and Heijden extensively discussregulation reforms and recommend as follows: (1) to consider regulation as an asset and (2) to dynamize good regulation as opposed to bad regulation that fosters collaboration and trust, rather than being burdensome. [16] Firstly, regulatory systems should be viewed as a valuable asset to the public in advancing its leadership, culture and capability. For example, in New Zealand, regulatory reforms since the late 1980s emphasise ‘regulatory stewardship’ in which regulators are statutorily obliged to keep track of the performance of regulatory systems, ensuring that they are ‘fit for purpose’ and are properly implemented. [17] Secondly, there must be bodies that emphasise the importance of regulation as opposed to organisations such as the Institute of Public Affairs that ‘wage a relentless campaign against regulation’. By implementing these schemes, this would thus improve regulatory performance and capability.
Conclusion
Regulation is not something that we should eradicate nor conflate, as this will not yield regulatory improvement, rather, it must be seen as a public good that has crucial value in society: having conscience and good regulations will ensure that Australia has a ‘well-functioning economy, society, environment, and democracy.’ [18]
[1] Cambridge Dictionary (online at 11 Jan 2024) ‘regulation’.
[2] ‘Red Tape Committee’, Parliament of Australia (Web Page) <https://www.aph.gov.au/select_redtape>.
[3] Arie Freiberg, Monica Pfeffer and Jeroen van der Heijden, ‘The ‘forever war’ on red tape and the struggle to improve regulation’ (2021) 81(3) Institute of Public Administration Australia 436 (‘Forever War’).
[4] The Productivity Commission, Identifying and Evaluating Regulation Reforms (Final Report, December 2011) 16 (‘Regulation reforms’).
[5] Better Regulation Taskforce, Better Regulation (Report no. 220089, May 2022) 6-7.
[6] Department of Education and Training, Submission No. 10 to Red Tape Committee, Parliament of Australia, Senate Select Committee on the effect of red tape on child care: Submission of the Department of Education and Training (April 2018) 5 (‘Department of Education and Training’).
[7] The Productivity Commission, Childcare and Early Childhood Learning (Vol. 2 no. 73, 31 October 2014) (‘Childhood Learning’).
[8] Ibid 274.
[9] Ibid 285.
[10] Ibid 250.
[11] Tim Mazzarol, 'What is red tape and why is it a problem for small firms?', The Conversation (online, 23 April 2012) <https://theconversation.com/what-is-red-tape-and-why-is-it-a-problem-for-small-firms-6601>.
[12] Australian Chamber of Commerce and Industry, ACCI National Red Tape Survey (Report, October 2012) 6-7.
[13] Ibid 11.
[14] Matthew Lesh, The decline of small business: How red tape is undermining opportunity, prosperity and community (Report, July 2018) 17.
[15] The Significant Investor Visa regime mandates specific investment requirements for those overseas seeking to invest in an Australian start up. See Australia as a Financial and Technology Centre Advisory Group, Making Australia an Internationally Competitive Financial Centre and attracting asia-pacific business headquarters to Australia (Report, January 2021) 70.
[16] Forever war (n 3) 449-450.
[17] Jeroen van der Heijden, ‘Regulatory Stewardship: the challenge of joining a virtue and a mechanism’ (2021) 17(1) Policy Quarterly 57, 58.
[18] Forever war (n 3) 451, quoting Ben Morton MP.
This article was originally published under the title ‘Too Many Laws? The Concept and Opacity of 'Red Tape'’ in The Brief Edition 1, 2024 — Through a Glass, Darkly.