Red tape ready for Malcolm Turnbull to cut

Bookmark and Share Deregulation Unit | John Roskam
Australian Financial Review 23rd September, 2016

The ridiculous story of Tori Gentle and Bea Cobon and their cafe reveals how red tape threatens Australia's prosperity. Their cafe is a small business, but what's happening to them is the same thing happening to big business.

Tori and Bea are the owners of Crate Speciality Coffee cafe in Heidelberg Heights, Melbourne. In response to customer demand they recently applied to their local council, Banyule Council, to increase the cafe's seating from 15 to 30 people and extend its opening hours to 9pm on Thursdays, Fridays and Saturdays. If their application had been successful, Tori and Bea would have had to hire more staff. But it wasn't successful. The council rejected Tori and Bea's application as a result of a single anonymous objection from a member of the public. That's right. Because one person objected, the application was refused. According to the council, "the proposal needed to balance economic opportunities and amenity impacts". And apparently, according in Heidelberg Heights, one single anonymous objection can tip the scales against economic opportunity.

In the light of red tape like this it should be no surprise that according to the World Economic Forum, Australia now places 80th out of 140 countries in a ranking of the burden of government regulation on companies. The country rated as the best place for doing business was, of course, Singapore.

What Banyule Council forgets is that community amenity is a product of economic activity. If it wasn't for the rates businesses pay Banyule Council wouldn't have the money to fund its Arts Plan as outlined in a glossy 76-page full colour brochure. As part of the plan the council consulted with five-year-olds about the cultural activities they wanted in their neighbourhood. Among the things the children said they'd like to have were a chocolate mountain, "a big beautiful castle with steps that go up", a circus and dinosaurs.

We tend to think of red tape as only unnecessary or unproductive rules and regulations imposed by government. And there's certainly lots of this kind of red tape in Australia. The Institute of Public Affairs has calculated red tape costs the country $176 billion a year in foregone economic output. Some industries are hit harder than others. The consulting firm Deloitte estimated that nearly one in 10 employees in the mining sector works in compliance. The Roy Hill iron ore project in Western Australia required more than 4000 government permits, approvals and licences in its pre-construction phase alone.

Abolish bodies that create red tape

One of the ways to cut such red tape is simply to abolish the bodies that impose and implement red tape. The Rudd/Gillard/Rudd government established 497 new authorities and organisations. In the three years since it was elected in 2013, the Coalition has abolished and amalgamated just 53 of those bodies.

Another kind of red tape is the requirement for seemingly endless "stakeholder engagement". Certainly there's a role for community consultation, and there's nothing wrong with Banyule Council asking residents for their views about a cafe operating in a residential area, but the opinion of one person shouldn't necessarily decide the cafe's opening hours. In a democracy the voices for and against economic development can be heard, but left-wing activist environmental groups should not be able to use the legal system to delay projects for years. And those groups shouldn't be funded by state government to run litigation against projects. Adani has spent $1 billion and six years on community consultation and in court in an effort to build its coal mine in central Queensland. The Environmental Impact Statement for the project was 22,000 pages long. The project would create up to 10,000 jobs.

In an interview with this newspaper a few days ago the Prime Minister, Malcolm Turnbull, said "top of mind for me are jobs and growth and the critical objective for us is to deliver the economic reform measures, whether it is in the form of savings or whether it is in the form of getting rid of red tape and excessive regulation..."

If the Prime Minister is serious about cutting red tape, he should start by chatting to Tori and Bea and then he could visit the municipal offices of Banyule Council.