Red tape is rubbish, compliance is essential

Distinguishing between red tape and necessary compliance isn’t an ideological exercise, it’s critical to efficiency, job security and safer workplaces.

Why do we in small business focus so much on removing red tape and making compliance achievable?  Why is the government set on a “Repeal Day” on March 26 where it aims to repeal 8000 bits of legislation or red tape that we don’t need?  Josh Frydenberg, the Parliamentary Secretary to the Prime Minister, has been tasked by the Prime Minister with removing unnecessary demands on business - demands that get in the way of doing business.  COSBOA will be working hard to gather as much information as Frydenberg needs and totally supports this approach from government.

This is not about politics or some ideology around red tape.  It isn’t about making workplaces or products less safe.  It is about efficiency, job security and indeed safer workplaces and communities.

Indeed we in small business are often dependent on compliance for survival. 

Compliance involved with contract law and competition policy for instance should make business fairer; licensing demands assist to maintain the integrity of businesses in industry sectors such as real estate and financing. As always achieving compliance must be easier and governments should not go overboard, but compliance has a place.

Small business people do not have easy access to experts and support, it’s just us and our employees. There is only so much we can do in a days’ work.  Put simply, the more red tape the less efficient a small business owner can be.  The more difficult it is to comply the less efficient a business owner can be. That means that job security and safety for employees is decreased and communications with customers and suppliers, and business planning becomes harder.

For the sake of clarity let’s call red tape compliance that isn’t necessary and then we’ll call compliance a necessary process to keep people safe, transparent, honest etc.

So when a small business person has to do red tape tasks or undertake clumsy compliance processes it means that they will focus less on the essentials of business.  There will be less time thinking about new products, better communications, improved business processes or manufacturing processes.  A business owner who spends Sunday mornings on wasted activity like superannuation collection is spending less time on his or her own health or less time on keeping their business viable.  Multiply this by some 2.5 million people who employ over 4.5 million other people and the negative drag on the economy becomes profound. This impacts on us all. It is important that the compliance that is essential is easy to achieve.

The red tape that should be totally removed is:  superannuation; any role in management of government funded paid parental leave; specific processes for communication between employees and employers on discrimination issues, which are nonsense in the world of small business; annual returns and license renewals which can be completed less frequently; any forms that cannot be completed online; and others that COSBOA and its members will document as part of our work with government to remove unnecessary burdens on business.

The compliance that is essential is: tax collection (which mainly involves GST and PAYG but includes many others depending on the industry sector); safety for workplaces and products; license applications and renewal; machinery safety and inspections; signage management and others. It is essential for our safety, the safety or workers and customers and consumers that these compliance demands are in place.  It is also essential for the financial security of the nation that we collect and lodge tax on sales and wages.  So the processes associated with these compliance demands must be easy to understand and easy to do.  This is not just about respect for the great group of tax collectors, it is also about the economy.

When some 2.5 million people are not concentrating on their business efficiency then productivity suffers, innovation becomes more difficult and safety and job security is compromised.

Who should be supporting the removal of red tape and the continuous improvement of compliance processes?  The people who will benefit the most, besides the business person, will be the employees of small business, the customers and suppliers to small business and also the regulators who, by streamlining and making compliance easier, will also make their own tasks easier. Big business will also benefit as their suppliers become more efficient. 

Removing red tape will add to the job security of every worker in small business and make workplaces safer.  More power to Mr Frydenberg. And we will be supporting his role by asking our members for information on what can be removed and what can be improved.

Peter Strong is the executive director of The Council of Small Business Australia.