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Productivity Commission to undertake study on regulator engagement with small business

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Senator Penny Wong Minister for Finance and Deregulation

Brendan O’Connor MP Minister for Small Business

David Bradbury MP Assistant Treasurer

Minister Assisting for Deregulation

Joint Media Release


The Productivity Commission will be tasked with delivering a report card on the impacts of Commonwealth and State regulators on small business costs, the Gillard Government announced today.

The announcement of the Productivity Commission study follows the conclusion of the second meeting of the COAG Business Advisory Forum in Canberra today.

“This wide-ranging national study will deliver a report card on how small business-friendly Australia’s various regulatory authorities actually are,” said Assistant Treasurer Bradbury.

“The way that Commonwealth and State regulators go about their operations can have a big impact on the time and costs of small businesses, and this PC study will look at which regulators are doing their jobs in the most small-business friendly way.”

A new regulatory and competition reform agenda was agreed to at COAG in April as a result of the Business Advisory Forum.

“This benchmarking study is part of the Government’s ongoing commitment to work with small business to cut red tape and improve productivity,” Senator Wong said.

“This report will complement the role of the first Australian Small Business Commissioner, Mark Brennan, who starts work next month,” said Minister O’Connor.

“It provides a great opportunity for people in small business to voice their concerns about how regulators interact with them and the final report card will be useful in improving practices and lead to small businesses spending less time and resources dealing with those regulators.”

The Commission will seek public submissions and release a draft report. The final report is to be provided to the Government within nine months of receiving the terms of reference.

The terms of reference for the study are attached.

6 December 2012

Media contact: Justin Koek 0400 126 939

(Assistant Treasurer)

Evelyn Ek 0412 887 853

(Minister Wong)

Maria Hawthorne 0407 015 986

(Minister O’Connor)


Productivity Commission Act 1998

I, David Bradbury, Assistant Treasurer, pursuant to Parts 2 and 4 of the Productivity Commission Act 1998 hereby request that the Productivity Commission undertake a research study to benchmark the extent to which the different approaches to regulator engagement with small business have the potential to affect the costs (including time and effort) incurred by these businesses. This request follows agreement by COAG's Business Regulation and Competition Working Group that the Productivity Commission undertake a study of this type.

Small business stakeholders consistently raise with Governments their view that compliance approaches and the regulatory posture adopted by regulators with respect to small business, and the degree to which regulators recognise and accommodate the particular circumstances of small business, can have a significant impact on regulatory burden.

Approaches to the regulation of small business can be wide ranging, with some regulators adopting a facilitative role, assisting small businesses to meet their compliance responsibilities, recognising that regulatory compliance activities impose a disproportionate cost on smaller firms. Other regulators adopt a more traditional compliance based regulatory posture.

In undertaking this study, the Productivity Commission is asked to:

 identify the nature of the regulatory posture of Commonwealth and state and territory regulators with respect to small business, including the extent to which facilitative and educative approaches are appropriately combined with compliance based approaches, and the extent to which approaches vary according to the nature and objectives of the regulations;

o in doing so, the Commission should draw where appropriate on examples of the various approaches that are used in shaping regulatory culture (including by incorporating regulatory objectives into legislative instruments).

 identify the levels of assistance and education that jurisdictions provide to small business and consider whether this could be better targeted;

 identify the extent to which regulators apply a risk based approach to enforcement and compliance, including the mandating of information requirements, in regulating small business;

 clarify the extent to which regulators consider the size and nature of a business when undertaking compliance and enforcement and compliance based information-gathering activities;

 identify whether particular approaches to the exercise of regulatory roles have the capacity to reduce unnecessary compliance costs incurred by small business, while sustaining good regulatory outcomes, and could therefore be described as best practice; and

 have regard to leading practices in overseas jurisdictions.

In order to undertake this study, the Commission will also need to consider and determine a definition of what constitutes a small business, noting that different regulators and jurisdictions use different definitions. As a starting point, the Commission may wish to consider whether there would be benefit in broader adoption of the Australian Bureau of Statistics (ABS) definition of a small business to provide for ease of comparison with ABS data.

A report is to be completed within nine months of the receipt of this Terms of Reference. The Commission is to provide both a draft and final report, and the reports will be published.