Red tape and Australia’s economic malaise

Michael Potter
07 February 2018 | OP164
Red tape and Australia’s economic malaise

Australia is in a period of economic malaise. GDP per person has been growing slowly ever since the GFC. Australia’s performance is mediocre compared to other developed countries; by contrast, we outperformed before the GFC. Household incomes and wages are also growing at slow rates, though some of this is caused by the end of the mining boom.

One likely cause for this poor economic performance is the ongoing proliferation of poor quality regulations across the economy. The causes of flawed regulation are many. One important cause is the harmful incentives for state-level reform created by the GST distribution formula. This formula should be reformed to reduce the penalties imposed on regulatory reform.

The gatekeeping on regulatory processes also needs significant strengthening, including by reintroducing incentive payments to states that reform; introducing an Inspector-General of Regulation; mandatory sunsetting of existing regulations; and broadening the requirements to publish comprehensive estimates of regulatory impacts.

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