Kelvin Thomson (Wills, Australian Labor Party) Share this | Hansard source

The Statute Stocktake (Regulatory and Other Laws) Bill 2009 proposes the amendment or repeal of almost 30 acts to remove outdated regulation. It will reduce costs incurred by business in understanding and complying with outdated regulatory requirements, giving effect to the government’s commitment to reduce the level of poorly designed and ineffective regulation on Australian business.

Well-designed and targeted regulation is essential to reduce cost and complexity for business in the not-for-profit sector. The stocktake bill is another step towards meeting the government’s commitment to continuously clean up red tape and continue a Labor tradition of microeconomic reform. It is important to consider this tradition in light of the recent debate over which political party is the authentic custodian of economic reform, as opposed to being a pretender.

The strength of Australia’s economic performance prior to the recent global financial crisis represented a marked turnaround from a lengthy period of economic malaise. During the 1970s and 1980s output growth slowed, inflation and unemployment rose and productivity growth was consistently low by international standards. By the late 1980s, Australia’s ranking on the international ladder of per capita incomes had slipped from 12th to 16th. In recognition of the policy related inhibitors on growth, from the early 1980s the former Labor government embarked on a program of extensive economic reform. According to John Quiggin, in his paper Economic governance and microeconomic reform:

The election of the Hawke Labor government in 1983 was a pivotal event in Australian microeconomic reform.

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The Labor government, and particularly Keating, used the contrast between Fraser’s cautious approach to financial deregulation and Labor’s embrace of the policy to represent the Liberals as captives of  ‘old money’ interests reliant on a cosy system of intervention and mutual protection.

The decade that followed saw the liberalisation of capital market controls, the abolition of import quotas and phased reductions in tariff assistance. The heightened competitive pressures from these changes, in turn, prompted the introduction of greater flexibility to Australia’s previously rigid and highly centralised labour market arrangements and various institutional and regulatory reforms to promote more efficient delivery of infrastructure services. The implementation of the wide-ranging National Competition Policy by the Keating government built on the reform agenda of the 1980s and delivered a premium of 17 years of economic growth. Underpinning this strong performance was a surge in Australia’s rate of productivity growth. For example, in the five-year cycle to 1998-99, productivity growth rates were the highest for at least 40 years, with the increase effectively boosting the average Australian household’s annual income by $7,000.

According to a Productivity Commission report many factors can influence productivity growth, but a number of analytical studies indicate that microeconomic reforms—including National Competition Policy—were a major contributor to Australia’s productivity surge in the 1990s and have been to the economy’s increased resilience in the face of economic disturbances. The reforms achieved this by increasing the pressures on both private and government businesses to be more productive through increased competition, while simultaneously enhancing their capacity to respond through more flexible work arrangements and the removal of unnecessary red tape and the like. One of the main ways in which National Competition Policy and related reforms have boosted total output is by reducing the costs and prices of many goods and services. Indeed, National Competition Policy has had a dual role in this regard—not only has it provided a means to improve productivity and thereby lower costs but also by promoting competitive markets it has created pressure for most of these cost savings to be passed on to consumers.

The increase in Australia’s GDP and national income also substantially boosted taxation revenue, as the National Competition Policy agreement on competition payments anticipated. This has increased the capacity of all governments to fund a range of services of benefit to the community, such as health and education, and to provide social welfare support. The party that stands at the helm of this reform agenda is the Labor Party. By contrast, the Liberal Party bequeathed to Australia Work Choices. Work Choices exacerbated red tape and created top-down bureaucratic management of industrial relations, purely to indulge the Liberal Party’s ideological obsession. An opportunity was lost under the Howard government to build on the microeconomic reforms of the previous Labor government.

As part of a microeconomic reform agenda that facilitates well-functioning market economies, efficient regulatory regimes are necessary to enhance rather than diminish the capacity of businesses to generate productivity growth. These regimes are an important tool in realising policy objectives. Since taking office, the Labor government has established an institutional and policy framework that consciously reflects the OECD’s best practice principles for regulatory quality and performance. Advocacy for better regulation has been significantly strengthened by giving it explicit cabinet level status. The government has strengthened regulatory impact assessment requirements by combining the efforts of the Office of Best Practice Regulation with a new deregulation policy function within the Department of Finance and Deregulation. A one-in, one-out policy has been adopted to ensure there is no net increase in regulatory burden. Strengthened policy oversight processes are providing greater quality assurance in respect of new regulatory proposals, improving policy design and providing a capacity to more readily target inefficient regulation.

The stocktake bill reflects the government’s systematic approach to delivering its ambitious regulatory reform agenda, which includes reviewing all pre-2008 subordinate regulation—as announced in the Updated Economic and Fiscal Outlook—to document those regulations which impose net costs on business and identify scope to improve regulatory efficiency. At the interjurisdictional level, the Minister for Finance and Deregulation is co-chairing, with the Minister Assisting the Finance Minister on Deregulation, Minister Emerson—whom I see here—the COAG Business Regulation and Competition Working Group, which is taking forward 27 regulatory reform priorities agreed under the COAG National Partnership Agreement to Deliver a Seamless National Economy and inviting the OECD to conduct a review of Australian regulatory settings and policy development processes to be completed by December this year, which will provide valuable insights to support the government’s commitment to strengthen processes for regulation making, review and better regulatory outcomes.

Regulatory reform measures that deliver benefits to business will in turn enhance productivity, and increasing productivity after it languished under the Howard government is imperative to meeting the challenges of an ageing population. According to the Productivity Commission:

Competition related and other reforms can also directly assist in offsetting the economic impact of population ageing. For instance, reforms which reduce constraints on labour supply will ameliorate one of the important aged-related brakes on Australia’s future growth potential … carefully considered market-based approaches can sometimes be employed within a managed framework to improve the cost-effectiveness (including the quality) of ‘human services’ and deliver better environmental outcomes. Given the projected escalation in expenditure in areas such as health and aged care, taking advantage of all opportunities to improve the efficiency of service delivery will be especially important.

The challenge for governments in navigating out of the economic crisis is to recognise the opportunity to embrace reform and address imbalances in the economy. This includes microeconomic reform efforts directed at enhancing productivity and economic growth facilitated by a regulatory regime that does not suffocate our recovery from the economic headwinds that have battered the globe. Again, according to the Productivity Commission:

Microeconomic reform is about providing incentives for greater productivity. Productivity growth is the key to higher living standards. This means making better use of our resources—natural, financial and human. But microeconomic reform can also deliver better value, quality and choice to the community. Microeconomic reform thus plays a part in enhancing prosperity, opportunity and social support—all of which are integral to community wellbeing.

Labor governments have demonstrated their courage in undertaking difficult but necessary reform and will continue to do so. Microeconomic reform along with Keynesian stimulus undertaken by the government is appropriate for the current economic cycle. Aggregate demand needs jump-starting. To withdraw fiscal props too early may cause a contraction similar to what happened in 1937 when there was a switch to contractionary fiscal and monetary policy. Building business confidence through reform of the like of this statute bill also forms a part of the government’s policy tool kit that creates a positive feedback loop that is good for jobs, sustaining demand which in turn finds its way back to business through sales. I commend this bill to the House.

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