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”.