The deadweight cost of regulations

Read and weep.

Mary Thompson, managing director of contractor McLeod Rail, blamed government rules for shackling employers and creating a “bureaucratic and just plain timid” approach to getting projects built.

“The central problem in terms of wage costs isn’t the poor mine electrician or haul truck driver getting $150,000 a year, it is the 20 people in the project office doing compliance,” she said.

“Each person probably spends between 25 per cent and 80 per cent of their available time on compliance paperwork, checks, inspections, meetings and correspondence.”

Sinc Update: Adding to this post – have a look at the Lend Lease submission to the Productivity Commission inquiry into Public Infrastructure:

One of the larger contributors is the increase in staffing numbers on a site. The following percentages are the salaries of staff (nonblue collar) in proportion to the ‘design and construction’ cost of a project. There are variances in these numbers project to project but the number below is a fair representation of the situation.

1993 – 4% typical job – one safety staff; one consultant; three Quality Assurance = five staff

2003 – 8% typical job – one environmental staff; two safety staff; three Quality Assurance = six staff

2013 – 11% typical job – five environmental staff; six safety staff; two community officers; four QA, one human resource, one Systems Manager, two planners (as start), one Traffic Manager, one Landscape; one Rail Interface Manager = 24 staff

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54 Responses to The deadweight cost of regulations

  1. I work on projects. Paperwork in private industry typically makes up more than 50% of human resources. In the public sector it is worse. Of course, not all of it is compliance and some of the paperwork is of value, but there are still huge savings to be made in areas such as compliance.

  2. Louis Hissink

    One reason I decided to retire – complying with the deluge of OH&S and Mining lease/tenement conditions and whatever was becoming simply insane.

    Since no human action is undirected, just what all this compliance burden is meant to achieve causes dark thoughts verging on conspiracies.

  3. Oh boy do I relate to this post!
    One person at my place has the job title “Compliance Officer” this is ridiculous in a country pub.

  4. Gibbo

    A good friend of mine is a chook farmer. Out of the blue they now need to comply with some sort RSCPA accreditation to sell their chooks. Their farm practices have not changed in relation to how the chooks are dealt with as they were already meeting the standard, but this new accreditation has added roughly two extra days a week of work to their already busy life just in complying. The chooks are just as happy but the poor bloody farmer can’t charge any extra for being accredited. He can, however, lose business if he is not. This is happening everywhere.

  5. Docket62

    No steve… I have a client who joined local government with the job title ‘litter champion’. FMD. I’m completely serious, and it pays 80k a year, and all the job is doing is managing compliance. In finance the compliance introduced by the labour government has virtually precluded brokers joining the industry it is so onerous – because , you know, brokers were responsible for the GFC, not the banks actually lending….. I am so over the compliance shit……. Sigh

  6. Ant

    In my profession we’re getting screwed with the tidal wave of ever changing planning & building regulations, quality management, environmentally sustainable design and OH&S – much of it useless or counterproductive, except for the army of consultants and government departments who enrich themselves through it.

  7. Tintarella di Luna

    Since no human action is undirected, just what all this compliance burden is meant to achieve causes dark thoughts verging on conspiracies.

    Death by regulation

  8. Badjack

    So where was this person when the previous Coalition Govt tried to change the IR rules. With her buddies who could not muster the balls to support Howard.

  9. Paul

    Complaints about the rising cost of health care? Thank a lawyer, or fifty. Almost crippled with issues of “compliance” with multiple, and ever-growing regulatory demands. When they pretend to be concerned about costs and start sacking, is it the compliance crowd that get touched? Not on your life.

  10. 2dogs

    what all this compliance burden is meant to achieve causes dark thoughts verging on conspiracies

    There are many people who trade on simply being obstacles. Compliance is their bread and butter.

    The worst are those who browse notices of upcoming major projects, and who simply declare that they will be the voice of the local community/environment/Aboriginals/whatever, often having had scant involvement with it previously. They are in it for the money, but on top of their payoff, they cause a huge compliance burden on their victim.

    Such behaviour should be a tort.

  11. Motelier

    One person at my place has the job title “Compliance Officer” this is ridiculous in a country pub.

    It is usually Mrs M or myself. Both of have to be able to read and understand government officialise. If one of does not understand it we then sit down and have a look at it together and then get on the phone to the specific government/semi-government office for more information. Usually this takes the form of entering a computer generated waiting list of other business seeking information. Time on the waiting list can be up to 90 minutes. This applies to Local, State and Federal Governments.

  12. Rabz

    Death by regulation

    Comply or die.

  13. calli

    If it wasn’t for Complying Development (CDC) my business would be closed. Whenever I have to involve local government, I shudder – it adds about six weeks to the build time and untold $$$ for the customer (or me, as usually I have to absorb the cost).

    I would love to be paid for all the Statements of Environment Effects, Waste Management Plans and Landscape Plans that I have had to do to satisfy the ravenous beast, but that would price me out of the market. So hours of work go in gratis, time that would be better spent winning work and…heaven forbid…building it.

  14. H B Bear

    And you can bet that every one of these “jobs” in the private sector has been duplicated on the other side of the fence in government.

  15. Alfonso

    ‘One of the larger contributors is the increase in staffing numbers on a site.’
    Sounds like Lend Lease’s tormentors are inspired by the Union and 1:6 “supervisory” positions at the late unlamented crony capitalist operator, Holden.
    Yet Lend Lease complies rather than takes out full page political ads and fights real time……. some tummy tickling we need know about still in the system, possums?

  16. Tel

    Two workers turned up at the park first thing in the morning and pulled out their spades. One started enthusiastically digging and pretty quickly got a nice round hole dug, then he moved along a bit and started another hole. The second worker quickly filled in the first hole and the two of them went at it hammer and tongs making a neat and tidy row of holes dug and filled in again.

    An old man sitting on a bench went to talk to the two workers as they took a break for lunch, “Allow me to introduce myself, I’m a Keynesian Economist and I just want to thank you for the excellent work you are doing. With a few more like you two, we would be achieving full employment and the country would be booming.”

    The hole digger looked up and said, “As it turns out we are actually a team of three, but the guy who plants the trees is taking the day off.”

  17. Tintarella di Luna

    Little wonder productivity is round the S-bend

  18. Tintarella di Luna

    The hole digger looked up and said, “As it turns out we are actually a team of three, but the guy who plants the trees is taking the day off.”

    Is that how a command economy works?

  19. Tel

    Tint, by the sound of the other comments on this thread, that’s exactly how our economy works.

    Government hires people to make life pointlessly difficult for everyone, then private industry hires compliance officers to fill in forms to hand back to government workers who tick a few boxes, rubber stamp and file them. When either side starts to get ahead of the game more regulations are introduced to consume yet more resources.

  20. Myrrdin Seren

    Tel

    Government hires people who like to make life pointlessly difficult for everyone

    Fixed it for you.

    I am serious – government departments, local councils and parliamentary offices are awash with people who want to shut down the areas they hold regulatory power over. As I have mentioned before – we aren’t broke enough yet for anyone to have the cajones to tackle the bureaucratic capture.

  21. Motelier

    Comply or die.

    That is usually the case.

    Food Safety Inspectors are some of the worst at the above statement. They also are some of the most unintelligent beings employed in Government.

    I tender item A for examination. We do a fair bit of bulk cooking in both motels, bolognaise sauces and the like. They are cooked, chilled in the cold room (temperature alarm equipped) then portioned and frozen for later use. The Food Safety Inspector for one motel was concerned that the placing of hot pots in the cold room would raise the temperature in the cold room, thus giving other foods in the cold room a chance to spoil. So she said she was giving us a downgrade for poor handling and storage of food. I argued a case against it but had to wait for the certificate and yes there it was written up.

    So I get onto the phone. Call the Local Government department and speak to the head of the Food Safety Inspectors. I ask two questions. Did Ms …… ask me what is the capacity of the cold room to remove heat? Did Ms ….. ask me if the cold room is alarmed? The silence on the other end was so enjoyable. A new certificate of compliance arrived in the mail 2 days later.

    Exhibit B 12 months later. Time for the annual Food Safety Inspection. Not Ms …… this time but her supervisor. Mr M….. was concerned about the plastic bulk food storage containers that we use. They did not have the new embossed images for food, drink, microwave and dishwasher. Again the tick was down. A new inspection was required this time to ensure that we had replaced all of the bulk containers. Mrs M went looking for the said containers and we could only find ones with stickers on them for food, drink, microwave and dishwasher. The second inspection was hilarious. Mr M….. noticed that we were still going using the containers he had observed before. Mrs M handed him a new container with the sticker on it showing its compliance. She asked him if it complied and the reply was “Yes”. She then ripped off the sticker and handed it to him and asked the same question. His reply was no. The resulting argument/yelling match was interesting to watch. HOWEVER. The new certificate was issued.

    This year I await the Manager of the Food Safety Inspectors to do the inspection.

    Next year I await the Mayor of the Local Government to do the inspection.

    Dummies the lot of them.

  22. DrBeauGan

    We are running at well over fifty percent unemployment. This creation of non-jobs is how our wise governments are dealing with the situation.

  23. Eyrie

    You folks haven’t had to deal with the Civil Aviation Safety Authority have you?
    It has always been like that. It is staffed by aviation wannabes who couldn’t make it in the industry and ex military dickheads who have never paid for a flying hour in their lives out of their own pocket. They are the ones who were considered not suitable for higher rank so were edged out.
    If you are feeling masochistic just spend an hour or so perusing the Civil Aviation Safety Regulations.

  24. Motelier

    If you are feeling masochistic just spend an hour or so perusing the Civil Aviation Safety Regulations.

    Are they like the Food Safety Act. And applied “equally” across the jurisdiction?

  25. JohnA

    Both of have to be able to read and understand government officialise.

    Couldn’t you call that a qualification for a Second Language?

    :-)

  26. Sean

    Government hires people to make life pointlessly difficult for everyone, then private industry hires compliance officers to fill in forms to hand back to government workers who tick a few boxes, rubber stamp and file them.

    Unfortunately the private sector hires plenty of these people too.

  27. struth

    At the moment I would dare say this particular issue is the biggest problem Australia has.
    It has infested every industry and we can’t compete.
    It has left a whole new generation compliant dumb arses with no common sense.
    It is a very great tragedy for many reasons.
    Whatever we do, Australia will never get over the last six years of labor, with government basically controlling businesses. They don’t own the businesses, but they run them , now like government departments. Basically, just like the Nazis. (I know, sounds over the top, but is it?) The power they have to shut businesses down for nothing is pure corruption .

  28. struth

    Most of these people complaining on behalf of aborigines wouldn’t know one if they fell over him. Time to take this back to the cause.
    The education system.

  29. thefrollickingmole

    Im just gone bust in my business due to the tender minstrations of my franchise and government regulation.

    See my Franchisor has a plan, they say yes to every piece of legislation or new rule put in place, then they audit us, and remove our franchise license due to “breaches” which didnt exist when the franchise was set up.

    They get hundreds of thousands in assets, ASIC is happy because a “rouge” operator was put out of business, its just the franchisee who gets screwed… One hand washing the other, Im the 6th in this particular franchise to get this “treatment”..

    Its government death by regulation.
    One of the other franchises has 2 sales/business staff and 4 people keeping up with the paperwork requirements.

  30. About a year ago I raised this topic on a “centre-left” blogsite. There wasn’t derision so much as mystification.
    They didn’t understand what I meant, and assumed that I was griping about the “small amount of paperwork” that I’d have in a pub.
    Patiently it was explained to me that compliance for me is nothing more than putting up a few “exit” signs, making sure my fire extinguishers are serviced, submitting a BAS every few months, and remembering to pay all my bills on time. (So they didn’t even understand what compliance is – how stupid can you get?)
    I was treated like a halfwit (aren’t all business operators a bit simple?) and talked to as if I were a child. When I didn’t thank them for explaining how simple compliance is, they turned quite nasty.

    These dickheads don’t even understand what their ilk has done to those in this nation who actually do some work.

  31. Frollicking Mole, I feel your pain. Talk to somebody.

  32. Andrew of Randwick

    I imagine that most have seen this – but it’s worth repeating.

    Pythagoras’ Theorem 24 words
    Lord’s Prayer 66 words
    Archimedes’ Principle 67 words
    Ten Commandments 179 words
    Gettysburg Address 286 words
    US Declaration of Independence 1,300 words
    US Constitution with all 27 Amendments 7,818 words
    EU Regulations on the Sale of cabbages 26,911 words
    Obama care 50,000+ words

    I blame Microsoft. If the Parliamentary Legislative Drafting office had to create with manual typewriters, don’t you think they would very quickly find ways to write with fewer words.

  33. .

    Andrew,

    I think that may show something I’m interested in – feedback manifesting itself in Jevon’s Law (in toto). There may even be a viscious cycle, where we get even more “efficient” word processing.

    (I’m interested how this may apply to subsidies and general efficiency in ag, where abundance leads to epigenetic effects of alrger appetities over time…)

    Anyway, anyone who says we are not being impoverished by high costs of taxation and regulation is either lying or deluded.

  34. goatjam

    “Since no human action is undirected, just what all this compliance burden is meant to achieve causes dark thoughts verging on conspiracies.”

    I have been fomenting a theory over the last few years that the government is creating all these jobsworth positions deliberately. It is advantageoous to the government, especially leftist governments in a couple of ways.

    If you force businesses to employ vast numbers of useless prats to do nothing of value then voila! Lower unemployment figures. The obvious problem of businesses failing and/or moving offshore is just the usual “unforseen consequences”

    Also, the more churn that there is in the economy the more the government gets to pocket via taxes. So again, if you force businesses to employ vast numbers of dead wood, you then the dead wood which might otherwise be on the dole is now paying tax. Which is to say paying money to the government. It’s even better than that because the same dead wood is now also be able to afford a Chinese made flat screen telly. Cha-ching! Slabs of heavily taxed alcopops. Cha-ching! A car to commute to their jobsworth “career”. Cha-ching! Petrol excise. Cha-ching! Cha-ching! Cha-ching!

    Every time money moves the government takes a cut. It’s like having your very own money tree. We ignore that this economic house of cards is highly un-competitive and doomed to fail because to do anything about it now would be political suicide. It’s not like we have a B-Ark to put them all on is it?

    I reckon that if you pulled all the able bodied people off the “disability pension” and got rid of all the totally useless compliance nonsense, not to mention the 50%+ of dead weight from the public service the unemployment rate in this country would approach 40%.

    We’re gonna need C and D Arks too, I think.

  35. struth

    Frollicking Mole, sorry to hear about it. As I said, this is the single biggest issue keeping Australians down now. My industry as well. It’s also the reason I am writing on this blog.
    I have the time.
    I have scaled things right back in my business because I was sick of feeling like an escaped prisoner on the run (or a bikie in Qld) every time I took my truck on the road.
    Even though I did everything right and as legal as I could it was just taken for granted that if you got inspected, you know you would come out at least a grand lighter.
    In my business the government vultures are overwhelming and incompetent.
    When dealing with wide loads and border crossings, sitting millions of dollars of equipment around due to the unrealistic demands of a newby transport bureaucrat can send you broke in an instant.
    The rules change every five minutes and the fines and harrassment is beyond belief.
    And alot of times I work with the police.
    They , by the way, are the most expensive part of any oversize load cost.
    What they charge to escort loads is astronomical and unbelievable.
    They also now must stop work every two hours and sit around for about 45 mins due to their OH@S.
    Because you must use them, they have been corrupt in availing themselves to businesses they like.
    Yes, it’s true, they were availing themselves more to me than some other businesses, but that doesn’t make it right.
    My industry, you are a criminal until you can prove you are innocent, but they know the unlikely scenario of you making it to court in the state the problem occurred in is highly unlikely.
    Transport is an industry geographically divided so easily conquered.
    Now they can’t get decent people into my industry. No wonder.
    So now after all this government intervention, all under the banner of safety, we have more cowboy truckies and inexperience drivers on crumbling roads that don’t even get repaired properly when they are worked on (due to corruption). Too many public servants to pay for , and left wing activists in the ABC, and in education etc, to have safe roads.
    Australians bend over and take it. That’s our culture basically. We don’t stand up and say “that’s wrong”. We try to find ways around things. Once a blessing and a characteristic that helped build a great nation. Now a curse ruining it.

  36. motherhubbard'sdog

    At this rate, the hangers-on will be 100% of the staff on a typical job by the end of this century. The State will have won a great victory.

  37. thefrollickingmole

    Whats got me befuckled is its only taken 3 years to go from a one man show, to impossible to manage without a substantial backoffice..

  38. Tator

    Paperwork, don’t talk about paperwork to me, back in the dark ages when dinosaurs roamed the earth, when I first graduated from Bullshit Castle and was let loose on the unsuspecting public, when you locked someone up, the basic paperwork was a brief cover, a complaint/information court document, the apprehension report, your typed brief which included the typed interview and a list of witness contact details. for a simple drink drive offence for over .08, add in the Breath Analysis operators proforma brief and a few certificates. Now an arrest brief is war and peace by the time all the appropriate paperwork is included. DNA records, forensic procedures for searching people, entering all the crooks personal details on to several different databases which required the entry to be done seperately for each individual database, entering the details for the brief onto the offender records management system etc etc etc, and this gets worse as the offences get more complicated like a complex fraud. In SAPOL, they have created 2 positions, one at sergeant level and an assistant who is of lower rank for each Local Service Area just on brief quality control. SAPOL is scared of having to pay defence costs so are ensuring that each brief that goes to court is good enough so that the defence cannot pick at the paperwork for a technicality. Makes me glad that I am now totally non offender contact in my new role as a road safety educator.

  39. Tator

    Another beside, there is all the changing legislation that we have to keep in mind. When I graduated, the Criminal Law Consolidation Act was 111 pages long, it is now currently 260 pages long, and that is in 23 years with various offences being repealed as well.

  40. Tator

    Hey Struth,
    I understand your frustration as I have worked with the PEG here in SA, the rules and regulations have changed so much in the 5 or so years I was there. There has been more changes in the last 2 years with escorting guidelines changing with many more loads not requiring escorts here in SA, but the crap really came down to the different requirements the same loads needed in different states. I took one load from Iron Duke to the NT border. In SA, the load needed 2 prime movers because of the weight, and subsequently needed 2 pilots and 2 police escorts. Once we hit the NT border, one prime mover unhitched, one pilot turned around and both escorts turned around and the load was able to drive off into the territory unescorted. Here in SA we can escort loads in convoy but in NSW you can’t and we have waited for loads at Cockburn and they turned up with 3 pilots and one police escort per load and we were able to take both loads with just 2 pilots and 2 police and 4 pilots went home.
    As for the fees, these are set by Government and not by the units themselves. As for corruption, they regularly audit the processes in PEG and found that all decision making was above board and that there were no corrupt practices in the allocation of the escorts to either the companies or the escorting members. The OH&S has been foisted on the police via regulations imposed on them by the Governments as well and due to the onerous penalty provisions if one breaches OH&S provisions with regard to their own safety, would have meant that they would not have been covered by Workcover if they had been involved in an accident, let alone been personally liable for any injuries caused to third parties. These days in todays litigious society, that risk is just not worth taking. I am currently out of that game and now in the Road Safety field.

  41. Tator

    Struth,
    In addition, my brother in law scaled back his transport company because he was getting too old to be hauling stock and the company couldn’t find anyone competent and willing to drive a stock crate around even for a wage around $80k because of all the regulations implented by the ALP Rann and Weatherill govts. It was just too much of a head F#$k and as they needed to employ a farm hand on the family farm as well, he sold off his stock crates and a couple of spare prime movers and went and worked on the farm, a lot less stress on the old bugga now.

  42. struth

    Yeah Tator, I know it’s not the individual cop’s fault.
    However, my point is, the police are all part of the expensive public service we deal with.
    I know many good fellows on the bikes that escort in SA.
    But just like every other state, it is just getting impossible to move.
    When things were booming there in SA for a while, they would not expand the escort department and everyone was just waiting for police. Again not the cop’s fault.
    The hierarchy is to blame.
    Anyway, that’s just one thing to deal with, and the SA police are at least pretty well trained I believe. That’s because they still have an escort division. QLD is a whole different ball game.
    Anyway others get the shits on this blog if I talk work.

  43. struth

    But in saying that I’ll just add one other thing.
    I can prove there have been times when we have booked qld police only to be told that they will only do us when they hear back from Mcaleese, as they haven’t decided things yet.
    I wanted to book them and had all permits and the job was a goer.
    S A was always pretty good in that respect, just hard to get police escorts sometimes, but jobs have to be big in SA to need them as well.

  44. Tator

    Struth,
    Worked at the Escort group for over 5 years, possibly did some of your loads as have done plenty for McAleese, Noskes, Rex Andrews, NHT and plenty of other companies. Problem in SA is that there were only 10 of us doing permanent escort duties, now they have the casuals and cut it back to 9, with one more (me being forcibly redeployed due to a bullshit E&D issue which workcover bit me on the arse and it basically wasn’t about anything that I had done but about how management treated me whilst on a modified work plan and some muppet in the unit made a fuss about it so I got shafted, still waiting on the lawyers to do their bit to see if they can fix this for me) so at most, PEG can cope with around 12 escorts a day due to the rostering to cover weekends and there are very few options when those resources are tied up.

  45. struth

    I reckon I know who you are. Enough said. I’ll just say on my side, RJE, RVR?

  46. struth

    I reckon your first name starts with a P

  47. Tator

    Nope,
    Was generally known by my nickname, which is different to my screen name. But my screen name derives from a word that is the screen name combined with my last name

  48. Chris M

    I’ve gotten quite adept at avoiding a lot of this rubbish paperwork. If you delay and bluff and a few other tactics it’s amazing what you can avoid (I do complete what I see at the legitimate /important bits – financial & insurance for example). The other tactic is if the issuer insists then return a lumbering bunch of paperwork with a short time-frame for them to also comply with, level things up a bit. Ask them everything – where they live, for how long and with whom, what they own, all liabilities, family details, details and proof of all qualifications, whatever you feel like.

  49. Rockdoctor

    My take. Will only cover WHS&E and management practices in the Resources game here IMO they are the biggest handbrake on expanding the sector in times of lower commodity prices. WHS&E, to criticise it or even question some of the more excessive regulations is committing Hara kiri! IMO the last 5 years has seen an explosion of regulation that hasn’t accumulated in the last 200 years! The net result is a lot of paperwork that once was done diligently is now tick and flicked to get to the next mandatory check, they have multiplied often prefixed by, “it will only take you 5 min….” Well that 5min on 5 min is taking up best part of hours now and once most of us would have crossed into our own time to complete where as now most of us refuse to do it in our time! Won’t even touch the ridiculous equipment/vehicle requirements that takes a 4×4 LV and tries to turn it into a tank! Not only that lazy workers do less and hide behind regulations, a worker who does his best but can’t make head or tail of the regulation so give up and good workers get frustrated and do only what is required viola productivity problem!

    The Safety Dept attract a lot of power trippers as well, disclaimer not all are like that, to clarify rather being a harmless minority 5 years ago it is now the majority and they have some serious power that SSE’s will not even question. The safety dept seems to have some unholy alliances with VET Trainers, inductions even to be on a site run into weeks now instead of a few days. IMO the Standard 11 is the biggest waste of time I have come across and I have told training providers that to their annoyance, the Coal Generic covered the basics enough needed till the specific site inductions fine tuned the training. IMO the absence of use of the RCC or RPL attributes of the VET by most of the big players is mind boggling as well, they want you to do their course.

    As for management, have over my time worked for all but 1 of the big players in Australia. Some of the bigger companies (will single out BHP as they are the worst offender IMO) have convoluted replicated management streams that don’t talk to each other. Have worked in other industries and was surprised at how inefficent it could get! Getting something done/approved is like pulling teeth without anesthetic very long and painful. Had high hopes the Newman Government would start culling some of the compliance stuff, he hasn’t even touched it seems it is radioactive or something, not sure if other state LNP Govt’s have been as apathetic. Right now I am looking at going offshore, if Australia don’t fix WHS&E, Green tape, royalties/taxes, worker wage compared to 3rd world and productivity. Mining over the next 30 years will contract as Africa, Brazil and North Asia start to come online without the overheads.

  50. struth

    No I don’t know then. The only one I knew with a Nickname was a big bloke on motorbikes that done his leg in, and his nickname was P….y, and he used to say “are we there yet” a lot.
    Even though many in the SAPOL used to call each other by nicknames, we in the transport side used to think too highly of our law enforcers and only referred to them by their correct title or “sir”

  51. struth

    And by the way, I have given away who I am, on another thread.

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