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Annual Review of Regulatory Burdens on Business: Social and Economic Infrastructure Services (2009)

Research report

This research report was released on 15 September 2009.

Download the report

  • Key points
  • Media release
  • Contents
  • Regulation of the social and economic infrastructure services sector is particularly heavy. This resort to a heavy regulatory presence arises because:
    • regulation is used to promote competitive behaviour where natural monopolies exist, for example, telecommunications and energy
    • of considerable government funding of service delivery, for example, aged care
    • there is information asymmetry with service users, for example, medical services
    • some service recipients, for example, the frail and aged and young children, are seen as vulnerable and requiring protection
    • many businesses in the sector operate across jurisdictions, for example, transport and energy retailers.
  • Many industries in this sector are subject to review or reform activity, for example, transport, energy, higher education, telecommunications, aged care and child care. It is important to ensure that the reforms are implemented in a timely fashion and in a way that minimises the regulatory burdens. Much of the reform agenda relies on co operation between governments. Reforms need to move beyond high level agreement on guiding principles to genuinely reduce the regulatory burden at the individual business level.
  • This review has identified seven main areas - aged care, child care, information media, telecommunications, energy, air transport and education - where regulations can be made less burdensome.
  • Regulation in aged care
    • without tackling the underlying policy framework that constrains the supply of aged care services, it is unlikely that the regulatory burden in the industry can be substantially reduced. To reduce the burden associated with regulation and price controls, and to improve the quality and diversity of aged care services, the government should explore options for: relaxing supply constraints in the provision of aged care services; providing better information to older people and their families so they can make more meaningful comparisons in choosing an aged care service; and removing the restriction on bonds as a source of funding
    • the aged care regulatory framework is fragmented due to regulation by numerous government agencies. This should be addressed by the current reviews of the accreditation process and standards in consultation with state and territory agencies. There also needs to be more effective communication with the industry on the delineation of responsibilities between the Department of Health and Ageing and the Aged Care Standards and Accreditation Agency regarding monitoring of provider compliance with these standards.
  • Regulation in child care
    • clarify regulations to ensure a provider can have its Child Care Benefit approval removed if it is not accredited by the National Childcare Accreditation Council
    • streamlining of the accreditation arrangements should take place now, prior to the implementation of the proposed COAG reforms.
  • Regulation in information media
    • the anti-siphoning regime imposes regulatory burdens because of the protracted commercial negotiations required for listed events. This burden should be reduced by substantially reducing the anti-siphoning list
    • radio local content rules and disclosure standard should both be made more flexible and associated reporting requirements reduced
    • additional local presence and content requirements triggered by ownership changes of radio stations should be abolished
    • the Australian Communications and Media Authority should have broader discretion to not investigate some code complaints.
  • Regulation in telecommunications
    • the telecommunications consumer information obligations should be streamlined
    • the identity check requirements for prepaid mobile phones should be revised to lower costs to business while achieving their policy objective of allowing law enforcement agencies to identify mobile phone owners.
  • Regulation in the energy sector
    • the Ministerial Council on Energy should commission work to consider the practicalities of implementation of the recently agreed pass-through to consumers of cost increases associated with the Carbon Pollution Reduction Scheme
    • governments should amend the Australian Energy Market Agreement to ensure clearer commitments to competition reviews by the Australian Energy Market Commission and ongoing price monitoring by the Australian Energy Regulator
    • all levels of government need to work cooperatively to reduce the burden associated with excessive reporting obligations, including through the adoption of a methodology consistent with Standard Business Reporting (SBR).
  • Regulation in air transport
    • shift from a 'one size fits all' approach in aviation security regulation and develop arrangements that satisfy regulatory requirements at lower compliance cost.
  • Regulation in education and training
    • reforms to streamline reporting obligations in the education sector, including in response to recommendations from the Bradley Report and the anticipated changes to reporting by schools, should be undertaken consistent with the methodology of the SBR initiative. Electronic reporting and secure on-line sign-on to the agencies involved should be introduced.
  • Many industries complained of overly burdensome, duplicative and redundant reporting requirements. Extending the SBR principles and methodology to many of the sectors covered in this review could substantially reduce the reporting burden.
  • The best practice regulation requirements should be strengthened by increasing transparency and providing greater scope for consultation with business.

Cutting Red Tape in Infrastructure Services

The Productivity Commission's latest report, Annual Review of Regulatory Burdens on Business:Social and Economic Infrastructure Services Sector - identifies ways to reduce the regulatory burdens on businesses in aged care, health, child care, education, information media and telecommunications, energy and transport.

The Commission found that much of the regulation in the sector has the desirable objective of managing risk and ensuring service quality. But it can have the unintended consequence of reducing businesses' flexibility in responding to consumer and user requirements, as well as adding a cost burden to their operation.

Inconsistency of regulations across jurisdictions in the transport, education and energy sectors remains also a continuing concern, despite governments' agreements for reform. There needs to be a movement beyond these high level agreements to substantially reduce the regulatory burden faced by businesses, according to the Productivity Commission.

'Reducing red tape in these sectors is not just a matter of reducing business costs - it will improve business flexibility and allow for better, cheaper and more responsive services for consumers and users of those services', Commissioner Angela MacRae said.

The Commission identified several key areas where regulations can be made less burdensome for business while maintaining or improving services. These include exploring options to free up the supply constraints on aged care services. Also the responsibilities between regulatory bodies should be clarified and a more targeted risk-management approach adopted in administering regulations in aged care and child care.

The Commission has concluded that significant benefit would arise from increased regulatory flexibility of local presence and content requirements for radio, and reducing the TV sports antisiphoning list. Similarly, the announced reforms in the education sector should include approaches to streamline reporting requirements across the sector.

The concerns with regulations raised by business to this review are varied, but many stem from broader ongoing deficiencies in regulatory processes. The Commission has recommended that there be greater transparency and consultation with stakeholders when developing and administering regulations.

Further information

Leonora Nicol (Media, Publications and Web) 02 6240 3239 / 0417 665 443

  • Preliminaries
    Cover, Copyright, Foreword, Terms of reference, Contents and Abbreviations
  • Overview - including key points
  • Recommendations
  • Chapter 1 About the review
    1.1 What the Commission has been asked to do
    1.2 Industry characteristics
    1.3 The regulatory reform context
    1.4 The approach and rationale of this review
    1.5 Conduct of the study
    1.6 Structure of the report
  • Chapter 2 Aged care
    2.1 Aged care industry background
    2.2 Overview of aged care regulation
    2.3 Concerns about regulation of aged care
  • Chapter 3 Child care
    3.1 Child care industry background
    3.2 Overview of child care regulation
    3.3 Concerns about regulation of child care
  • Chapter 4 Information media and telecommunications
    4.1 Industry structure
    4.2 Overview of regulation
    4.3 NBN regulation reforms
    4.4 Regulatory environment
    4.5 Interaction with telecommunications consumers
    4.6 Sports anti-siphoning regulations
    4.7 Broadcasting — local content and facilities
    4.8 Broadcasting content
    4.9 Other concerns
  • Chapter 5 Electricity, gas, water and waste service
    5.1 Industry background
    5.2 Electricity and gas supply
    5.3 Water supply, sewerage and drainage services
    5.4 Waste collection, treatment and disposal services
  • Chapter 6 Transport
    6.1 Road transport
    6.2 Rail transport
    6.3 Water transport
    6.4 Air transport
    6.5 Other transport issues
  • Chapter 7 Education and training
    7.1 Industry background
    7.2 Overview of regulations
    7.3 Concerns — independent schools
    7.4 Concerns — higher education, VET and international education
  • Chapter 8 Other concern
    8.1 Medical services
    8.2 Construction
    8.3 Public administration and safety
    8.4 Other issues
  • Chapter 9 Improving regulatory impact analysis
    9.1 Regulatory impact analysis requirements
    9.2 Business concerns about processes followed for recentregulatory proposals
    9.3 Suggestions for improving the processes
  • Appendix A Consultation
  • Appendix B Standard Business Reporting
  • Appendix C Reviews of regulation
  • References