The Regulatory Bonfire and Other Stories

I have a piece in the AFR this morning on the government’s deregulation initiative.  The piece was a cut-down version of the following.

 

Mr Abbott and his energetic Parliamentary Secretary, Josh Frydenberg, have delivered the present government’s much vaunted first bonfire of regulations, together with guidances designed to arrest the flow of new regulations.

Deregulation in the modern era started with President Reagan in 1981, who required a systematic appraisal of new regulations and a deregulatory oriented review of existing ones.

In 1985 Bob Hawke copied the US initiative in an apostasy for an ALP whose guiding principles entailed greater government control of the economy.  In those days, the prevailing view among all but a handful of politicians (Liberal Party members who became the Modest Members group) was that competition was wasteful and that government controls, or at least industry guidance, were essential for productivity. The Hawke Government did not abandon those philosophies and alongside its baby steps to deregulation were corporatist plans for the motor vehicles, clothing, information technology and other industries.

Even so the Hawke government introduced barriers to the creation of new business regulations and nominated eleven areas of existing regulation to be reviewed.  Among these were export controls over minerals, controls over chemicals, building regulations, transport and aviation regulations, and controls on financial institutions. The focus in some cases was uniformity rather than reduced government intrusions.

Over the past 30 years has been mixed. Giant strides have been made in terms of price regulation, tariffs, export controls, access to markets and privatising government firms that previously had been provided a competitive edge.   A more mixed outcome has been seen in labour market controls. We have however gone backwards in terms of social regulation, especially that covering environmental restraints, consumer protection and corporate controls.

One, albeit imperfect, measure of the growth is the number of new pages of regulation each year.  When Bob Hawke had his epiphany in 1984 the number had doubled from its early 1970s average of 1000 a year.  It has since climbed irregularly and totalled 4,400 last year.  Thus, while every government in recent years has continued to pay lip-service to a deregulatory agenda, the outcome has been, on balance, disappointing.

The ALP has been reverting to its pre-Hawke approach.  Kevin Rudd made vacuous statements against economically damaging regulation but these were invariably trumped by an overweening faith that every regulatory opportunity he confronted was an exception.  Julia Gillard never lost faith in the inherent merits of the regulatory state and Anthony Albanese and Kim Carr are carrying that torch.

The Abbott government’s new impetus through its regulatory bonfire comprises discarding thousands of pages of unused regulations together with modest retractions of the regulatory state including in ten specific areas.  These ten areas are mainly relatively non-controversial.  Will anyone object to simplified regulation of computer games, to longer approval durations for agricultural and veterinary approvals or to a changed means of administering paid parental leave?  It does seem there is opposition from the charities industry to the demise of their presumably pliant regulator.  And the ALP is supporting the union controlled union superannuation funds’ opposition to re-allowing salespersons’ remuneration through commission systems (rather than through bonuses and promotions that reward staff in union super funds and every other industry that does not use commissions).

Perhaps of greater benefit will be the proposed short-circuiting of regulatory duplication in new project approvals between Commonwealth and State governments and between different Commonwealth Departments.  In all $700 million of annual savings is claimed and although many are housekeeping, and others like savings from repealing the carbon tax, are dependent on other reforms, some are genuine deregulations that may not have proceeded without the initiative.  But we are unlikely to return to the 1960s nirvana when Western Mining, having discovered a valuable ore intersection at Roxby Downs, started work on what became one of the world’s most productive mines within six months. (Correction: It was Kambalda, the mine that essentially transformed Western Mining from a minnow that was up and being constructed within 6 months of its discovery in 1966.  Partly because of the regulatory increments in the following 9 years, Olympic Dam took thirteen years before it shipped material).

In addition to the regulatory bonfire, the Prime Minister has released a 60 page Guide to Regulation and the Productivity Commission (PC) has issued a 40 page Regulator Audit Framework.

The Guide to Regulation reiterates, albeit in strengthened language, stipulations that new regulations should be really, really necessary, provide net benefits, have been subjected to wide consultation, be implemented “with common sense, empathy and respect”, and so on.

The PCs Regulatory Audit Framework is likewise full of wise, anodyne guidances.  It calls for improvements to regulators’ performances by audit plans, rewarding good performance and sanctioning poor performance, selecting good practice indicators, minimising cost impositions on businesses, facilitating feedback, requiring auditors to “triangulate” information, oh and did I mention, selecting good practice indicators?

So where does this leave the Abbott Government deregulation initiative? At the present stage it warrants “excellent” for effort but performance has to be described in words apocryphally used by the Communist Chinese about whether the French Revolution was a success, “Too early to say”.

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19 Responses to The Regulatory Bonfire and Other Stories

  1. Rabz

    Window dressing.

    They should have started with the Rudd/Gillard 2008-13 omnibus repeal bill if they were really serious.

  2. ar

    the Rudd/Gillard 2008-13 omnibus repeal bill

    When it suits them Labor pretends 2007-2013 never happened… make it so…

  3. CameronH

    What a complete WOFTAM this will all turn out to be. The Parliament long ago lost control of the bureaucracies and their numerous regulators. This is why they are really only touching areas that mean nothing. The first port of call in all of this should be to close down all of the so called independent commissions and other extra parliamentary bodies. This would save a significant amount of money and the effect would not be noticed by anyone. Honestly, would anybody but the few rent seekers in the grievance industries miss the Human Rights Commission?

  4. johanna

    Picking this low hanging fruit will not change anything substantial. It does not begin to attack the structural causes which include:

    – too much legislation;

    – poorly drafted legislation. This is a dry and boring topic, but the fact is that quite often regulations are a consequence of the head legislation being so murky that regulations are required to provide certainty to those affected by it. The Office of Parliamentary Counsel needs a clean-out, with a program to recruit people who can draft clear and unambiguous legislation;

    – as you point out, a focus on process rather than substance. I vividly remember my experience in trying to reduce the regulatory burden in a particular area. The Office of Regulatory Review treated this proposal as if I had deposited a turd on their collective desk, and gave me hell for months, despite full support from the Minister and the affected industry. Their tick-the-boxes approach couldn’t deal with the concept of removing regulations, only with introducing them.

    Without specifying the details of the abovementioned experience (the Crimes Act looms) I can say that it involved rationalising an industry levy which applied equally to giant companies and tiny businesses, by applying a threshold. Many companies were levied less than a dollar a year, and most less than $100, but it all had to be calculated, levied, collected, reconciled and companies pursued for non-payment of miniscule amounts. The big players didn’t object, because they saw it as good policy and the increases they faced were a tiny drop in a very large bucket. The total amount collected remained unchanged, and the administrative burden for both government and industry would be significantly reduced.

    ORR behaved as though I was trying to undermine the entire tax system, and either were too stupid or too bloody-minded about “equity” (as they described it) to understand what I was trying to do. They almost succeeded in blocking it – in the end my Minister had to talk to their Minister to get them to back off.

    So much for “best practice” in the regulatory watchdog.

  5. Rabz

    – too much legislation;

    – poorly drafted legislation.

    This is deliberate. Think about who benefits from poorly drafted legislation, in particular.

  6. rodney

    I am licenced to operate a fork lift truck. When my licence was issued it was a lifetime licence. At the request of big business licencing was transferred to the Commonwealth. Lifetime licences were cancelled (often without telling the holder) and replaced by 5 year licences. There are now 3 or 4 different fork lift licences(who Knows?). Mine is a National Licence to perform High Risk Work. So there.
    There used to be a bus drivers licence. Now the are 3 or 4? Who knows.
    Unemployed and low income workers are continually told if they get some licence( often at their own expense ) they will get a job. This is more and more futile.This mire of regulation, qualification and confusion is very nasty to those who really want to work.
    Cats looking for work should bear in mind it is a four day course to become a Lollypop Person. Cost $600.

  7. Alex Davidson

    In his introduction to the ‘Guide to Regulation’, Josh Frydenberg writes “We therefore seek better regulation, not more regulation.” And here’s me thinking repeal meant removal or reversal of a law. So I read on. On page 18:

    “There are a relatively small number of situations that justify direct government intervention … Are you addressing an imbalance of market power generating inefficient outcomes?” Doesn’t sound promising. Then on page 22:

    “When markets are functioning well, they tend to allocate resources to the most valuable uses. When this doesn’t happen, for example, in the provision of policy outcomes like justice or services in rural or remote areas—there can be good arguments for government intervention, to improve efficiency or equity or both.”

    That’s enough. ‘Policy outcomes like justice’ (properly defined as protecting property rights, not the Left’s ‘social justice’) I can agree with, but the rest, no. This isn’t about repeal in the sense they have been promoting it. No, it’s housekeeping to make it easier to keep us all under control, barely touching on restoring the massive loss of rights and freedoms suffered from all the regulations and laws now on the books.

    Because markets are the result of voluntary and mutually-agreed exchanges between parties always seeking the best outcomes for themselves, they always allocate economic resources to their most highly-valued uses. While some may be unhappy with the aggregate result, it cannot be argued that government is somehow omniscient enough to deliver anything better; nor is it just, as every intervention involves coercion and violation of property rights.

    A genuine repeal would recognise this, not argue for ‘better’ regulation to overcome the myth of market failure.

  8. Scott

    Just a few historical corrections. The ore deposit at Olympic Dam was found in 1975. Production at the mine started in 1988. Roxby Downs is the town built to house those that worked at the mine.

  9. .

    Rabz
    #1233340, posted on March 21, 2014 at 9:38 am
    Window dressing.

    They should have started with the Rudd/Gillard 2008-13 omnibus repeal bill if they were really serious.

    I will build many Mosques in Allah’s honour if this is done.

  10. Squirrel

    “The Guide to Regulation reiterates, albeit in strengthened language, stipulations that new regulations should be really, really necessary, provide net benefits, have been subjected to wide consultation, be implemented “with common sense, empathy and respect”, and so on.”

    Those principles should be extended to State, Territory and Local Governments, too.

  11. Motelier

    A good place to start if the are serious is any legislation with the word “tax” in it.

    Even officers of the ATO do not know all of the rules and regulations.

  12. Alan Moran

    Scott,

    You are right. It was Kambalda, the mine that essentially transformed Western Mining from a minnow that was up and being constructed within 6 months of its discovery in 1966. Partly becauseof the regulatory increments in the following 9 years, Olympic Dam took thirteen years. I’ll make ancorrection on the piece.

  13. Menai Pete

    The problem is that Regulations are ancillary to the Acts which they support and most Acts of Parliament include the following or something similar:

    The Governor General may make regulations, not inconsistent with this Act, prescribing all matters which by this Act are required or permitted to be prescribed, or which are necessary or convenient to be prescribed for giving effect to this Act, and, in particular, prescribing penalties not exceeding a fine of … penalty units for offences against the regulations.

    While Bills of Parliament are debated, scrutinised and publicised before they become law, Regulations are made by bureaucrats and they are usually endorsed by the Parliament with little or no scrutiny.
    For example, consider the history of Regulation 45(2) of the Taxation Administration Regulations 1976 which deals with “Presumption As To Signatures”.
    Under the arrogant do as I say, not as I do provisions of this Regulation, officers of the ATO can issue documents without a signature or any authorising mark and those documents have full legal effect on the recipient. In other words, the ATO can issue unsigned form letters with impunity and anyone who ignores them can be summonsed to appear in court, found guilty and fined for refusing or failing to obey a direction contained in an unsigned document which can even direct a person to submit to the ATO a document or form which is “duly signed” by that person!
    The Regulation did not exist until September 2001 when it was included in Statutory Rules No. 289 of 2001 which comprises 15 pages and contains numerous amendments to the Taxation Act Regulations. It was signed by the Governor General and tabled in Parliament on 27 September 2001. The Regulation was subsequently gazetted on 5 October 2001.
    These dates are significant as the election was held on 10 November 2001, the last Parliamentary sitting day before that election was 27 September 2001 (the day the Governor-General authorised these 15 pages of Regulations and they were tabled in Parliament) and the House of Representatives was dissolved on 8 October 2001 (the next working day after the offensive Regulation was gazetted). Parliament did not sit again until 12 February 2002.
    Where was the parliamentary scrutiny of this, or all of the other Regulations which were included in the 15 pages of Statutory Rules No. 289 of 2001 which were (surreptitiously) submitted to the Parliament for endorsement.

  14. johanna

    Menai Pete, if it had been signed by the GG on 27 September, it means that it would previously have been tabled in Parliament and subject to disallowance. The GG doesn’t sign until it has been presented to the Executive Council, and that doesn’t happen until after the disallowance period has expired.

  15. tomix

    Cats looking for work should bear in mind it is a four day course to become a lollypop person. Cost $600.
    If you mean Traffic Controller, i renewed my licence last year. Time taken c. 1 hour, cost $250 + $170 gouge from Qld Transport for a 3year licence. I was offered permanent work by the trainer, but declined. As with everything else, it pays to look around.

    Also bear in mind Traffic Control doesn’t require any skill, but momentary distraction or loss of focus can be fatal.

  16. Elizabeth (Lizzie) B.

    Da Hairy Ape, in one of his mining and agricultural business moments, came across a very dangerous and complex new processing installation in Tasmania. The sign-off on the project was delayed by the signage not including braille and the facility having no toilets for the disabled, as per all ‘new build’ regulations, even though employing a blind or wheel-chair-bound person in such a facility would be tantamount to facilitating their sudden death.

  17. rickw

    Regulatory Bonfire:

    National Firearms Agreement – John Howards most disgraceful act, inserting the Federal Government into a State issue.

    - Scrap firearm registration and the associated registries. What does all the inaccurate registry data actually do? Clearly no impediment to criminals.

    - Normalise our firearm laws to cut back on the amount of pointless Policing that gets done on them. ie. take them back to pre-1996 and then stop tinkering. ie. something like NSW had pre 1996. The IPA already did a cost benefit on this from memory, all cost and bugger all benefit.

    Do this and you would make a lot of Australians happy, there would be a lot of wealthy and skilled Americans who would then be happy immigrate.

  18. Habib

    A most modest start, better than the alternative- this is unfortunately the biggest selling point to this government. It used to send be into a paroxym of blind rage ever time that ferret-faced fist magnet taking a break from the rub and tugs of Marrickville announced yet again his pride in the success of his government, faced with a hung parliament they managerd to pass nearly 500 pieces of moronic, intrusive, enterprise-strangling and bureaucracy-expanding legislation. Odd to be proud of fucking up peoples livelihoods and freedoms.

  19. Alan, those figures on how mining started about 6 months after the discovery of the Kambalda ore deposit in the 1960s are astonishing. Now takes decade and more.

    What you make of it is from your perspective.
    • An environmentalist would be horrified at the lack of checks and balances back then.
    • A classical liberal would be curious as to whether any harm was actually done because of the rapid opening of the 1960s mine.

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