The Growth Of Red Tape – Causes And Solutions

At a time when Australia faces a broad range of economic challenges, red tape remains a significant barrier to economic recovery and opportunity.

• This report finds that the volume of regulatory restrictions in federal law is at its highest level in recorded history, with 371,514 regulatory restrictiveness clauses.
  
• The number of regulatory restrictions in federal law has increased by 88 per cent since 2005. It has grown by 18 per cent since 2014, the last period in which a federal government made a concerted effort to cut red tape.
  
• Red tape is now demonstrably undemocratic. Laws made by ministers and regulators, rather than those passed by the elected parliament, have accounted for almost 97 per cent of new regulatory restrictions since 2005. For every one regulatory restriction introduced in primary legislation at the federal level between 2005 and 2022, 28 regulatory restrictions were created in delegated legislation.

This report explores five ideas to reduce red tape which have been successfully adopted either in Australia or by governments abroad:

1. Scheduling parliamentary repeal days where parliament sets aside a sitting day to only remove legislation.
   
2. Implementing the one-in-two-out rule requiring ministers and regulators to remove at least two existing regulations when creating a new regulation.
   
3. Establishing red tape e-hubs as a communication channel for individuals, businesses, and regulatory bodies to identify and address excessive regulation.
   
4. Expanding the use of regulatory sandboxes whereby businesses can test ideas under relaxed regulatory conditions.
   
5. Mandate the sunsetting of government agencies, where government bodies are scheduled to be automatically abolished unless a review recommends otherwise.

This report also explores five ideas to reduce red tape which have not yet been implemented but could meaningfully address overregulation:

6. Requiring parliament to approve all new rules created by ministers and regulators prior to commencement.
   
7. Setting a cap on regulation, whereby limits are placed on the number of new rules regulators can make in a given period, such as a term of parliament.
   
8. Incentivising regulators to cut red tape, by either penalising the creation of excessive regulation or rewarding regulators who removed red tape.
   
9. Incentivising agencies, by either adding or reducing funding depending on whether the agency added or reduced red tape.
   
10. Inserting sunset clauses in all new legislation so that new laws are periodically re-approved by parliament to remain in force.