Red tape Is Strangling Small Business

Australian small businesses are being strangled by red tape according to a new report, The decline of small business: How red tape is undermining opportunity, prosperity, and community, released this week by IPA.

The report, authored by IPA Research Fellow, Matthew Lesh, featured in a front page story in The Australian yesterday in a news story titled ‘Push to throw out baseless unfair dismissal claims’

The report comes as the Institute of Public Affairs, a free-market think tank, releases a separate analysis today showing the number of Australians employed by small businesses fell by 330,000, or 7 per cent, over a decade. In that time, small businesses stopped being the majority employer of Australians, while the average number of employees per Australian business increased by 14 per cent, reflecting the shift towards bigger businesses. Small businesses were almost twice as likely to shut down as large businesses between 2013 and 2017.
IPA research fellow Matthew Lesh said the falling number of small business employees was “a warning sign about the future of Australia’s prosperity” and attributed the fall to the profusion of red tape faced by small businesses. He noted the commonwealth had passed 61,615 pages of legislation over the decade.

The report was featured in The Australian editorial ‘Cut red tape for small business’.

Small business, one of the main generators of national prosperity, is struggling under a profusion of red tape and other time-consuming and costly bureaucratic compliance costs. In the past 10 years, the commonwealth alone has passed more than 60,000 pages of legislation covering health and safety, environmental and industry-specific rules and other regulations, adding to the burden of paperwork faced by every business. That burden, as the Institute of Public Affairs points out in a new report, The Decline of Small Business, is one of the main reasons the number of workers employed by small businesses has fallen by 330,000, or 7 per cent, across a decade. In an alarming trend, small businesses were almost twice as likely to close as large businesses between 2013 and last year. The onus is squarely on the Turnbull government, which is supposedly pro small business, and government agencies to help reverse the trend.