Territorians drowning in red tape

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Territorians drowning in red tape

Deloitte report

29 October 2014: Rules are costing the Northern Territory $4 billion every year.

In a new report, Get out of your own way: Unleashing productivity, the fourth edition of its Building the lucky country series, Deloitte calculates the national cost of complying with rules and regulations at $250 billion annually across the private and public sectors.

This national cost comes in two parts:

  • $95 billion – the cost of administering and complying with public sector regulations
  • $155 billion – the matching cost of administering and complying with the rules that organisations choose to impose on themselves.

Deloitte Darwin Office Managing Partner, Hendri Mentz, said: “We often blame governments for imposing rules and regulations and forcing us to comply with them.

“Yet the dollars locked up by businesses in complying with self-imposed red tape are double those associated with government regulations.

“Rules are vitally important. They protect the likes of our health and safety and the environment. But poorly designed rules, and too little consideration for their impact and their effectiveness, have increased the cost burden on the Territory, and placed a brake on our potential productivity and innovation,” Mentz finished.

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During the recent boardroom series on Developing the North facilitated by Deloitte, NAB and Northern Australia Development office, regulatory cost was identified as a key restrictive barrier to development in the Territory.

In total, the costs of administering and complying with rules and regulations – both public sector rules and those that organisations choose to impose on themselves – come in at $4 billion in the Northern Territory.

“What I found really surprising is that for the period 2006 to 2011, we found that the NT had the fastest growth in compliance workers’ share of the workforce in Australia, driving up the total cost to the economy,” Mentz continued.

“This is consistent with the growth in compliance workers share in Construction and Mining, two of the key growth sectors in the NT economy. The Giles Government is taking the lead to drive down the cost of doing business in the Territory through the introduction of a red tape reduction unit in the Department of Business, but businesses need to do the same to cut self-imposed costs”.

Deloitte’s survey of corporate Australia found that organisations operating across States and Territories had compliance burdens more than half as time consuming again as those faced by organisations operating in just the one State or Territory.

Mentz said: “Workers in the Territory are often the victim of the ‘branch office syndrome’, jumping to the tune of rules laid down by corporate HQs in New York, Sydney or Melbourne.”

Examples of ‘dumb’ rules uncovered by Deloitte include:

  • Construction and development approvals required from up to four different regulatory bodies, causing delays in project finalisation
  • Site induction training for subcontractors that takes longer than the actual time spend working on projects
  • Businesses for which procurement processes exceed actual time required to complete a project

Some of these are examples of Red Tape issues that are currently being addressed, or have been resolved by the NT Government - but all are good examples of the compliance culture red tape, which has spread across businesses and the Government in the Territory.

“Understanding and taking advantage of our competitive strengths is as important as ever, but the value of doing so pales before the potential efficiency gains of ‘ruling ourselves’ more effectively,” Mentz said.

“Both our public and private sectors can benefit from a new approach to rules and regulations, but the biggest opportunity lies in business slashing its own red tape. By cutting or simplifying our rules, we can get out of our own way and unleash the potential of our pent-up productivity.”

Note: Separate media releases cover the red tape challenges at a national level and those faced by industry sectors.
Get out of your own way infographic and copies of the report are available on request.

Territorians drowning in red tape

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