Kevin Rudd's challenges: regulation and tax
There is only one opportunity to reduce business regulation – when a new government comes to power. When governments are in power for a couple of years the bureaucrats get into their ear and are constantly feeding them with ideas on how to implement more regulation and increase the number of public servant jobs.
John Howard's government started out with many lofty ambitions but by the time they got to the fourth term most had been forgotten and Howard's ministers believed in lots of regulation and big government.
I am impressed with finance minister Lindsay Tanner and I think he is going to take an intelligent look at better business regulation. He will face enormous pressure from public servants and "do gooders” in the community who are pushing for more regulation but if he wants inspiration then he should look to what is happening in New York. In the wake of Enron, the Americans imposed a long string of useless and time consuming regulations that went under the broad banner "Sarbanes-Oxley” . The regulations were so stupid that they are now causing New York to lose the mantle of financial capital of the world and it is now being replaced by London. In Australia, because no work has been done in business deregulation for such a long time, Tanner can make a real difference to the prosperity of the business community and I think he will do it.
It is clear from the minutes of Reserve Bank board's meetings that the Howard government's tax cuts and failure to cut spending have boosted interest rates. With inflation now on the rise and the Labor government having almost matched another round of Costello tax cuts, pressure will be on Tanner to cut spending. There will be also be some second thoughts about the tax cuts.
To read the first three parts of Robert Gottliebsen's seven-part series on Kevin Rudd's challenges, see:
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