Red Tape Strangling Opportunity

Written by:
25 July 2016

Australia is supposed to be the land of the fair go. When someone wants to take on a new challenge, most of us cheer them on. This spirit is one of the things that makes Australia so great.

But the decision by the Baird government on Wednesday to retain red-tape barriers to becoming a hairdresser is the latest example of how unnecessary regulation deprives far too many Australians of the economic opportunity and fair go they deserve.

To legally operate as a hairdresser in NSW you need at least a Certificate III from TAFE (unless you are an apprentice). The only other Australian state that has similar requirements is South Australia.

And getting this qualification isn’t a walk in the park. It can take years and cost thousands, making it out of reach for many on who are on a low income.

A discussion paper released by the government that looked into the issue floated two options: retain and update or repeal the certification requirement. All signs pointed toward repeal.

But unfortunately the Baird government decided against this and went with a third option: leave things as they are. No one would be happier with this decision than unions and industry lobby groups.

Premier Baird certainly understands the cost of red tape. Institute of Public Affairs research found red tape costs the economy $176 billion a year in lost economic output. It is unfortunate the NSW government didn’t take on an opportunity to get this number down. But perhaps even more important than the economic costs are the disastrous effects this red tape, and others like it, have on some of the poorest in society, who need job opportunities the most.

By making it harder for outsiders to get a job, red tape on working bolsters the wages of workers who already have a job and props up industry profits. It’s little wonder that unions and industry groups were the most vocal in opposition to the changes. But what is so shameful is that these higher wages come as a direct result of keeping others out of a job.

It is precisely those who don’t have a job – or want a better one – who are in desperate need of opportunity and a fair go. In the main they have lower incomes and are less educated than those who are certified. And they are less likely to be able to afford education, or take time off work or from carers duties to find the time to study.

This red tape is disastrous for them.

Some claim this deprivation of economic opportunity serves a much more noble purpose. The lobby groups tell us this red tape is for our own good – a necessary evil to uphold quality and safety. This red tape is needed to save us from ourselves, they say. But people are pretty discerning. We know when we’ve had a bad haircut (and so does everyone else). If you end up looking like Boris Johnson for a week you won’t go back to that hairdresser.

But a large and growing body of research shows certification and licensing does nothing to improve quality and safety. In fact, some studies show it actually worsens it. Why? Because red tape stunts competition, which is vital to keeping quality high and consumers safe. No, this concern about quality, health and safety is just a masquerade put on by lobby groups whose members privately benefit from suffocating everyone else with red tape.

It is disappointing the Baird government didn’t push ahead with these very sensible changes.


This article appeared in the Daily Telegraph on the 25th of July, 2016.

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