Christian Porter MP

Parliamentary Secretary to

the Prime Minister

Red tape reduction as a key productivity driver

Pages of new Federal Parliament legislation by decade

1

Source: Institute of Public Affairs, Deloitte Access Economics found in Deloitte: Building the Lucky Country #4

The rise and rise of Australia’s compliance culture – and workers

2

Source: Australian Bureau of Statistics found in Deloitte: Building the Lucky Country #4

0

20

40

60

80

100

120

140

160

0

20

40

60

80

100

120

140

160

($ billiions) ($ billiions)

Public sector Self-imposed regulations

Public sector vs self-imposed regulations

3

Source: Deloitte Access Economics found in Deloitte: Building the Lucky Country #4

3.6% of GDP

2.0% of GDP 2.0% of GDP

4.2% of GDP

3.2% - 1.6% of GDP

Untied Kingdom Netherlands Denmark Belgium Australia

Estimates of Regulatory Stock

4

Source: Deloitte: Building the Lucky Country #4 Note: Different costing methodologies were employed throughout these separate costing exercises.

5 7 10 14

10

19 19 18 15 16 20 20 21 22

54

68

85

66 60

75

96

128 124

0

20

40

60

80

100

120

140

0

20

40

60

80

100

120

140

2001-02 2005-06 2009-10 2013-14

Rank Rank

GCI Rank* Burden of Govt Regulation Rank*

Australia’s Global Competitiveness

5

Source: World Economic Forum – Competitiveness Rankings

Labour productivity

Labour Productivity = Total Output (GDP) / Total Productive Hours

Total factor productivity

Y = A x Kα x Lβ

The TFP equation above in Cobb-Douglas form shows total output (Y) as a function of:

• total-factor productivity (A),

• capital input (K),

• labour input (L),

where:

• K and L’s respective shares of output (α and β) are the capital input share of contribution for K and L respectively.1

Productivity

6

1 An increase in either A, K or L will lead to an increase in output. Capital (K) and labor (L) are relatively tangible BUT total-factor productivity (A) is more intangible including things such as technology to knowledge/health of worker (human capital).

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1973-74 to 1981-82

1981-82 to 1984-85

1984-85 to 1988-89

1988-89 to 1993-94

1993-94 to 1998-99

1998-99 to 2003-04

2003-04 to 2007-08

2007-08 to 20013-14

Per cent Per cent

Multifactor Productivity Growth in Australia

7

Source: 5260.0.55.002 Estimates of Industry Multifactor Productivity, Australia – Table 5: Productivity growth cycles - Selected industries aggregate

Productivity Comparisons

8

‘Economic Performance’ is a composite of the following indicators: employment-to-population ratio (ages 25+); elasticity of total employment to total GDP; and labour productivity growth. Source: Economist Intelligence Unit Workplace Flexibility Index 2011

Is a RIS required? 1. Agencies contact the OBPR for all Cabinet Submissions and non-Cabinet

proposals with regulatory impacts. 2. OBPR advises whether a RIS is required and if so, the appropriate RIS type.

Early Assessment Agency provides OBPR with at least the first four RIS questions, regulatory costs

and offsets, and consultation plan for assessment.

Final Assessment Agency provides OBPR with all seven RIS questions and regulatory costs and

offsets for final assessment.

Transparency Following a final decision, RIS and OBPR assessment of the RIS published.

Regulation Impact Statement Process

9

12

16

9

2 1

0 60%

70%

80%

90%

100%

0

3

6

9

12

15

18

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 (YTD)

Non-compliant RISs (LHS) Compliance ratio (RHS)

No. Per cent

Non-compliant RISs and Compliance Ratio 2009-10 to 2013-14

10

4

14

5

8

1 0

0

3

6

9

12

15

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 (YTD)

Prime Minister's exemptions

No.

Prime Minister’s Exemptions from the RIS process 2009-10 to 2013-14

11

Impacts as assessed by the Regulatory

Burden Measurement (RBM) framework

Regulatory Impacts

Opportunity Costs

Broader Economic Impacts

Delay Costs

Compliance Costs

Substantive Compliance

Costs

Administrative Costs

Financial Costs

Charging / Cost

Recovery

Total regulatory impact per

interaction

Number of interactions per

year

Estimated contribution to the Government’s red tape objective per annum

New reform proposal

$P Q

Regulatory

Costing Process

12

Licensing and other immediate amendments to the Safety, Rehabilitation

and Compensation Act 1988 – Autumn Repeal Day 2014

Total Regulatory Impacts

$32.83m annually

Administrative Cost Savings

$31.98m annually

National employers under one workers’

compensation regime

$19.68m annually

National employers under the

Commonwealth WHS system

$12.3m annually

Substantive Compliance Cost

Savings

$850,000 annually

Substantive Cost savings by removal of coverage for off-site

recess breaks

$850,000 annually

Quantifying Regulatory Burden

13

Project Life description

Original project net present value

($m)

Delay that would have been avoided

for this project (days)

Change in net present value ($m)

Short term 23 382 2

Example 1: Redbank Copper Exide Leach Extension 2010-11

Example 3: Cape Lambert Port B Development 2010-11

Example 2: Warkworth Mine Extension 2012-13

Project Life description

Original project net present value

($m)

Delay that would have been avoided

for this project (days)

Change in net present value ($m)

Medium term 1,426 186 56

Project Life description

Original project net present value

($m)

Delay that would have been avoided

for this project (days)

Change in net present value ($m)

Long term 2,810 175 104

$417.6m delay cost

savings

Example projects underpinning the One-stop Shop for

environmental approvals delay cost savings of $417.6 million

14

35 reform decisions each

delivering savings worth

more than $10m per year - $1,957.5m

approx. 350 reform

decisions worth less

than $10m per year

- $374.7m

A. 2014 Regulatory decreases by value ($2,332m)

three decisions delivering regulatory

cost increases of more than $10m per

year - $150.1m

approx. 83 reform

decisions worth less than $10m per year - $30.6m

38 decisions each with

an impact of more than $10m per

year - $1,807.4m

over 400 decisions with an

impact of less than $10m per

year - $344.1m

B. 2014 Regulatory increases by value

($180.7m)

C. 2014 Net deregulatory decisions ($2,151m)

Regulatory reform as of Spring Repeal Day 2014

MINUS

EQUALS

Cumulative Effect of Deregulation

16

$2,151.5 million $2,151.5 million

2014 2015

2014

$1 billion

Target

Total Net

Progress

as of

Spring

Repeal

Day 2014

2015

$1 billion

Target

2015

$1 billion Target

1. Reducing duplication through a One-Stop Shop for

environmental approvals – $426.3m

2. Streamlining Income Tax Returns using MyTax – $156m

3. National offshore petroleum safety and environmental

management authority – $120m

4. Making it easier for Australians to access government services –

$88m

5. Repealing the Carbon Tax – $85.3m

6. Implementing reforms to support responsible gambling – $81m

7. Improving the Fair Work Laws – $70.1m

8. Increasing Pay As You Go entry thresholds to reduce burdens

on taxpayers – $67.3m

Significant achievements – as of Spring Repeal Day 2014

17

1. The Biosecurity Bill – $6.9 million a year in reduced regulatory compliance

costs for businesses

2. Implementation of a cargo online management system – $5 million

3. Improved guidelines for timber importers and processors –$2 million

4. Improved the operation of the Farm Management Deposit Scheme – $1.9

million

5. Removed the expiry of agvet chemicals approvals and registrations and the

need for businesses to apply for re-approval or re-registration – $0.7 million

6. Mandatory port access code of conduct for grain export terminals – $0.6 million

7. Removed the requirement for tail tags for cattle destined for the European

Union – $0.5 million

8. Signed the Korean Free Trade Agreement and the Japan-Australia Economic

Partnership Agreement – combined $0.4 million

Select achievements for Agriculture

18