Performance benchmarking of Australian business regulation: Quantity and quality / Cost of business registration

Quantity and Quality

Research report

Released 12 / 12 / 2008

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Key Points

The quantity of regulation that business must comply with is one indirect indicator of compliance costs:
- as regulation is not classified in any jurisdiction by who is regulated, only the total quantity of regulation can be measured
- significant differences were found across jurisdictions in the number of acts and other regulation and their size, and the relative use of different regulatory instruments.
The number and scale of regulators, and the extent of their interaction with businesses is another such indicator. Estimates provided by business regulators showed considerable differences in the number of regulators, their average size, the number of business licences issued and the value of fees and charges collected, not fully explained by the relative sizes of the jurisdictions.
The quality of the processes for developing and administering regulation was used as a proxy for the quality of regulation itself. There are significant variations across jurisdictions in the processes for developing and reviewing regulations and in the way regulators interact with businesses. However, some common patterns emerged:
- there are few mandatory requirements for consultation on regulatory proposals
- the proportion of regulatory proposals actually subjected to regulatory impact analysis or compliance cost estimation is generally low
- few regulators have facilities for online lodgement of forms, renewal of licences, and payment of fees and charges
- few regulators will allow businesses licensed in another jurisdiction to operate in their jurisdiction without obtaining a separate licence.
Local governments play a major role in business regulation. Limited survey responses meant benchmarking quality and quantity of regulation was only possible for the capital cities. Large capital city councils appear to exhibit similar characteristics to business regulators of similar size.
The exercise points to significant differences across jurisdictions in the quantity and quality of regulation. These reflect some inherent differences, such as in business structures and industry intensity, as well as different approaches to regulation by the jurisdictions.
Indirect indicators have limitations in providing a measure of comparative regulatory burdens across jurisdictions. However, the lessons from this study are that such benchmarking could be improved:
- for quantity indicators, by targeting more closely business regulation
- for quality indicators, by assessing the application of best practice principles in each jurisdiction's regulatory decisions.

Media Release

Performance Benchmarking of Business Regulation

The Productivity Commission has released two companion reports, benchmarking business regulation across jurisdictions: one on the Quantity and Quality of Regulation, the other on the Cost of Business Registrations.

The first report provides indicators of the stock and flow of regulation and regulatory activities, and quality indicators for a range of regulatory processes, across all levels of government. The indicators provide some baseline information for each jurisdiction, against which trends in the quantity and quality of regulation might be assessed in the future. It is apparent that there are significant differences across jurisdictions, reflecting different regulatory approaches as well as the characteristics of the jurisdictions themselves.

The second report provides estimates of compliance costs for business in obtaining a range of registrations required by the Australian, state, territory and selected local governments. The registrations include generic requirements for incorporation, taxation and business name registrations. In addition, the Commission benchmarked specific registration costs incurred for five types of business (a café, builder, long day child care, real estate agent and winery). It emerged that the estimated time costs of business registrations were generally relatively low, with most costs and differences across jurisdictions relating to fees and charges.

These reports are the first instalment of a series of studies benchmarking Australian business regulation across jurisdictions. They have also served to test the usefulness of different survey techniques and benchmarking indicators and provided lessons for future exercises. In particular, the business registrations study highlighted the potential challenges in obtaining adequate data from individual businesses.

The reports should facilitate a more informed discussion about comparative performance and help jurisdictions identify where they might improve their regulatory performance.