At the outset, I want to mention that I am feeling a bit stiff this morning. On Saturday, I played rugby for the first time for about five years. I am feeling very much worse for wear. There is not much to report from the game except that the refereeing standard on Saturday was much better than on Friday night, unfortunately. As a Queensland senator, I just wanted to put that on record.
I also want to say that we are here to talk about regulation. Regulations are a bit like refereeing—you cannot live with them and you cannot live without them. Unfortunately, the referee’s decision can be very frustrating. Sometimes regulations are very frustrating, too, but we do need them. We need regulations in our economy. We need regulations for a variety of things. It is very important that we take stock from time to time to make sure the regulations we have are fit for purpose and are not redundant because all regulations come at some cost to small businesses.
Unlike Senator Bilyk, I am not going to question the motives, ethics or objectives of the other side. I am not going to call them childish or say that we want to take things away from not-for-profits. Apparently all of us on this side of the chamber are evil. We come in here every week just to see what we can do wrong to the Australian people. I do not think the other side are like that, not at all. I think they come in here with fine objectives. I think the crossbenchers come into this place with fine objectives. We all come here to try to do the best for our nation but I think those on the other side sometimes fall short of those objectives. It is not a question of their motives; it is a question of their competence. That is why we have had to do things like introduce the Omnibus Repeal Day (Autumn 2014) Bill 2014.
There is an old saying: if you take care of the pennies, the pounds will take care of themselves. The previous speaker has forgotten the merits of such a saying. Yes, some of these changes are small and minor, but if in your business, your family or your personal life you do the small things right, the bigger results will take care of themselves. Correcting a comma might be a small thing to Senator Bilyk, but it is about getting it right. If we get the small things right, the sum of those parts will make for a better result. To refer back to the disastrous game on Friday night when the Cowboys were very much dudded by refereeing decisions, they have to take some responsibility themselves because they did not get the small things right in the game, particularly in the first half. They missed some crucial tackles and they lost the game as a result. It is the same with this bill. We need to take care of the small things, even if we do not think they are important because they make a big difference and small changes over time can add up to a lot.
Someone I used to work with at the Productivity Commission came up with a statistic which I think is quite indicative of the problem we have here. Back in 1936, the parliament enacted a bill called the Income Tax Assessment Act, which is still with us today. Back in 1936, it took 120 pages to administer income tax in this country. Today it is just over 6,000 pages—it has come back a bit. When this statistic was done, it was just over 7,000 pages. It had increased to 7,000 pages in 80 years. If that growth rate were repeated over the next 80 years, if we continued to grow the tax act at that rate, by the end of this century the tax act would amount to 830 billion pages.
Senator Ludlam: Billion?
Senator CANAVAN: Yes, billion, Senator Ludlam. It will take three million years to read and it will weigh the equivalent of 20 aircraft carriers—I am reliably informed by Mr Ralph Lattimore of the Productivity Commission. That is the power of compound growth of course. Fortunately, I do not think we are going to end up with a tax act by the end of the century of $830 billion pages, partly because, over the last decade, we have realised as a nation that we have been regulating too much, that red tape has gone up too significantly and there has to be a response. As I said earlier, in the case of the Income Tax Assessment Act, that has started to come back in terms of page length.
We have also had in the last decade or so the commissioning of a red tape reduction task force by the former Howard government. It is now known as the Bank’s report, chaired by the former chair of the Productivity Commission, Gary Banks. It was really the start of the process which said: Look. We’ve done all those other reforms in the economy. We reduced tariffs. We deregulated financial markets. We have floated the dollar, but there was another big agenda there and that was getting rid of some of the regulation which had accumulated over time.
That report found that there could be $7 billion of savings, if we tackled these issues. By no means have we done everything that that report recommended, but we have made a start by including it in the national reform agenda in the last couple of years of the Howard government and then, as a previous senator said, the last government came to power with great plans to deregulate. They created a deregulation portfolio. They moved the Office of Best Practice Regulation from the Productivity Commission to the Department of Finance—I am not sure if that was such a smart move—and they came up with a seamless national economy agenda with 27 regulatory hot spots and nine areas of competition reform that they wanted to focus on.
They did do some things—some of that agenda did come through and some of it was worthwhile. For example, they removed some overlapping regulation on wine labelling in the last government. I remember the former chairman of the Productivity Commission giving credit to them on that. He gave a speech in late 2009 where he said:
… while there is now a commendable focus on advancing reforms to some 27 regulatory ‘hot spots’ that add to the costs of doing business across jurisdictions …
but
… no reforms (other than wine labelling!) have yet been implemented. Less than half are on track for completion within the original timeframes.
Senator Bilyk referred to the COAG Reform Council’s report and, finally, they were a little bit tardy in meeting those time frames, as the former chair of the Productivity Commission said in that comment; however, they got around to completing 20 out of 27 of the hot spot areas but they left seven off. Some of those seven were very, very important. They were worse on the competition reform areas—less than half of those were dealt with, according to the COAG Reform Council, so there was a lot of unfinished business left by the former government.
One of the seven that was left off was the changes to the EPBC Act, which we debated in the last sitting period which now I see, after the Labor Party identified that area as a regulatory hot spot as long ago as 2008—six years ago they identified that area as something that needed a change: more bilateral agreements, less overlap between jurisdictions—they are now opposing those changes. That is to great regret, because it was one of the areas identified by the Productivity Commission, by the Business Council of Australia, that needs significant reform and reduction in red tape. At the moment, those changes are held up by those members on the other side, by Senator Bilyk, who spoke earlier; they are being held up by their opposition.
In the former government there was a process by which you could remove yourself or get around the requirements to do a regulatory impact statement before a regulation came in. The former government had 80 breaches of that standard. They did not prepare a RIS properly or fully 80 times, and that included some very important changes, including the carbon tax, the financial advice reforms—that you would know well, Mr Acting Deputy President Dastyari—and that led to come problems, because we had to change those things. When we came to government, they were not done.
Because we have that unfinished business, we have had to take some action coming into government to try to keep that going. I know the senator said, ‘This is a stunt. Why are we putting aside a day or two days a year?’ I say: ‘Sometimes in business and life, you’ve got to set yourself goals and you’ve got to set aside specific time frames to meet those goals.’ We all agree across this chamber that we need to reduce red tape and we need to reduce regulation. The best way to do that is to try and set aside some time to actually do it. That is what I find in my life: if I want to lose weight—and I need to lose a few more kilos—I need to set aside some time to do exercise. If I want to improve the relationship I have with my kids, which I certainly do as well, I need to set aside some time to spend with the family. Likewise, as a good administration does, we want to reduce red tape so we are setting aside some time to reduce red tape. We are doing two days a year and we will start those reductions with this bill that we are here to talk about today—it is one of those bills, among many, that we have introduced.
When you talk about regulation, there are two main things you want to try and focus on. When you think about red tape, we often focus on the stock of red tape. We want to reduce that. When I spoke about the Income Tax Assessment Act, that is an example of the stock of regulation. That does need to be reduced, certainly, and this bill tries to do that in a number of ways, which I will talk about in a second.
The other thing we must be always mindful of is to reduce the flow of bad regulation. The 80 breaches of the regulatory impact guidelines of the former government is an example of not taking account of that flow of bad regulation. We also introduced some reforms recently in the first year of this government to tackle the flow of regulation, not just the stock.
Coming back to the stock, the omnibus repeal bill that we are debating today is an example of dealing with that stock. It removes a number of things which will benefit people across our economy and in business. For example, it will remove building certification requirements in the aged-care sector that duplicate requirements at the state level, so we will get rid of that overlapping regulatory burden. That will save about $3.42 billion in annual compliance costs. These are the kinds of commas and rounding areas apparently that the senator said we are doing here today, but the $3.24 million saving is a pretty good saving in my book.
We are also making changes to the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989 to reduce the burden on low-volume importers. That will save about $420,000 in compliance costs—not as much, but still I would not sneeze at $420,000, even if the Labor Party would. We are also making changes to the telecommunications sector, which I think has been mentioned by previous speakers.
So there are changes here that will make a difference. Overall, this omnibus repeal bill will streamline 14 acts, repeal 43 acts and amend 27 acts. So it is a start; it is only a start but it is a good start. There are other changes we have made in this first year which have made a difference. I think the previous speaker, Senator Bilyk, said that there are not many people jumping up in the streets and lauding us for our changes. But that is the wont of most governments; most governments do not get a pat on the back.
But I have spoken to people in the agriculture sector that are very happy that we have changed the egregious and very destructive legislation regarding the agricultural and veterinary chemicals sector. That was a terrible bill, introduced by the former Labor government at the insistence of the Greens. It was only done, I believe, because they were in partnership with the Greens. It was going to force all agricultural chemical companies to go through a new regulation process every seven years. So, even if a chemical had not had any bad effects or any reports of health or safety issues, it would have to go through another set of regulatory hurdles every seven years.
To underline how stupid that was: it was going to be a more onerous regulatory regime on our agricultural chemical sector than the regime for pharmaceutical drugs and medicines. They can obviously be much more harmful to our community, but they do not have to go through hoops every seven years. But the former Greens-Labor government decided that that needed to happen to our agricultural sector, and our farmers paid the cost. Fortunately—in the last sitting period or the one before that—we removed those changes. I applaud the Labor Party for actually supporting that removal. It showed quickly how stupid that was, because the Labor Party, in less than a year, changed their mind on that bill.
Other changes are very important too. I have already mentioned the EPBC Act changes which we are pushing through which are going to unlock billions of dollars’ worth of projects and approvals. There are also changes to personal property securities legislation, which is an arcane piece of legislation. If you lease equipment or have some kind of hire-purchase arrangement with it, you need to make sure that goes on a register—in the case that someone is facing foreclosure by banks. At the moment you have to do that within 90 days. We are going to extend that out to a year.
That is actually quite important. I just spoke to a grazier in North Queensland a few weeks ago who was falling foul of that legislation because he had not registered some cattle that were on agistment. The banks turned up and subsequently sold the cattle. But they were not owned by the owner of the property; he just had them on agistment. This change we are introducing would have saved him. So there is another change which benefits people out there, Senator Bilyk. There are some positive things we are doing here in this legislation.
As I mentioned earlier, you have to deal with the flow of regulatory changes to make sure red tape does not accumulate over time. We are doing things to tackle that. We are going to make sure that cabinet submissions now have regulatory impact statements attached to them, and the deregulation function of government is being moved into the Department of the Prime Minister and Cabinet, to make sure that process works. All ministers have established deregulation units within their departments—tasked with the deregulation focus. And, very importantly, we are linking remuneration to senior executives in the Public Service to meeting their deregulation targets. In my view, in my experience, from my time at the Productivity Commission, this is an important change, because the accumulation of bad regulation is largely the result of bad incentives in the Public Service. It is not a consequence of bad intentions. There are not people in the Public Service who want to punish business—at least, not in my experience—they want to do a good job, but the incentives are not really there at the moment within that framework.
One of the worst incentives in government is that—for a government and for the Public Service—regulation can seem costless. Often there are two ways to tackle a policy problem: you can introduce a regulation or you can spend some money. If you take the latter course, if you spend money, then you have to make a budget submission for that money and it requires a huge amount of bureaucratic effort to get that money assigned to you. But, if you come up with a regulation, all the costs are not on the Public Service or the government; they are then borne largely by the private sector or the not-for-profit sector. Those incentives ask you—and there does need to be a very specific focus on making sure that, when regulations are made, they are fit for purpose and are designed with the external costs, if you like—the costs that are being imposed on the business sector—that those are taken into consideration.
Despite all this good work that I think we are doing, there is no doubt that there is more to be done. I was listening closely to Senator Bilyk’s contribution and hoping that she would come up with some ideas, because she did say she wants to deregulate and the Labor Party want to deregulate. But I did not hear any ideas of actual bills that should be deregulated or changes. I just heard complaints, I heard our motives being impugned, and I heard us being called ‘pathetic’—and ‘childish’ I think was another one.
But I do have something positive to contribute in my own small way. I think that a few more things need to be done. We have not had a proper stocktake of all of our regulations since the national competition policy process finished in 2005. That process went through 2,000 regulations, and a recommendation of the Productivity Commission after that process in their NCP review in 2005 recommended that we should do another stocktake, a priority stocktake, of some very important areas. I believe that has not properly been done. It should be done. We should focus on that and take up that recommendation of the Productivity Commission.
I also think that, going forward, with making these changes—and they are good changes; they are changes I support—but they may not work as well as we intend, and we must recognise that. And we must recognise that there is some scrutiny of what is happening after we make these changes. I think we would benefit from some more independent advice on those changes; whether it is regular Productivity Commission reports—or some other organisation or some other review—that needs to be kept in mind, in my view.
Ultimately, this is a very important change because, as other speakers have alluded to, we have had declining productivity performance over the past decade. And it has not just been declining here in Australia; it is also declining relative to other countries in the world. We must realise that while many of those reforms from previous decades like opening up the economy and like deregulating financial markets have reduced costs for our country and enabled us to be more competitive. The over-burdensome regulations in this country have been something we have not quite tackled as well. When you open up an economy to the rest of the world, like we have done in the last 20 or 30 years, the costs of those regulations become even more keenly felt because those businesses now are not just competing against someone down the road; they are competing with someone over the oceans. Those countries might not always have the same regulatory restrictions. We need to always keep in mind that we as a government do not make people’s lives out there harder than they need to be and that we do not put unnecessary barriers in the way of people who want to make a buck and employ people.
