Western Australians are wrapped up in self-imposed red tape
29 October 2014: Rules are costing Western Australians $37 billion every year, and the average Western Australian spends more than eight hours a week complying with ‘self-imposed’ red tape.
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 rules and regulations at $250 billion annually across the private and public sectors.
That 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 Western Australia Office Managing Partner, Michael McNulty, 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 our State, and placed a brake on our potential productivity and innovation.
“Our State is proud of its ‘can do’ attitude, yet Western Australians spend more time complying with ‘self-imposed’ red tape than any other State except Queensland.”
Hours spent complying with ‘self-imposed’ red tape per week
Note: Australia is not a weighted average of State results, as many survey respondents operate in more than one State
A survey of Australian business leaders revealed that, on average, Western Australians spend a remarkable – and costly – 8.4 hours a week complying with rules that organisations set for themselves.
Western Australia ranks highly in a comparison of compliance burdens by State, but that isn’t because our State is strong in sectors such as mining and construction. Although compliance burdens are rising fast in those two sectors, they aren’t yet particularly high.
Rather, it seems that WA’s workers are the victim of the ‘branch office syndrome’, with the same survey showing that organisations operating across States had compliance burdens more than half as time consuming again as those faced by organisations operating in just the one State.
So, with corporate HQs in New York, London, Sydney or Melbourne sometimes calling the shots, local compliance costs are huge. 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 – are $37 billion in Western Australia.
Examples of ‘dumb’ rules uncovered by Deloitte include:
- A firm which insisted employees use an expensive ‘preferred’ hotel, then required multiple approvals to switch to a non-preferred hotel that was more convenient and cost less than half the preferred one
- Mines where OH&S managers filled in different reports for each contractor and subcontractors, rather than simply preparing a common report
- The global HQ that told a newly acquired Australian subsidiary that it couldn’t put an Excel spreadsheet on its website, even though the new subsidiary’s line of business was selling data in Excel format to its clients
- Delays in critical decisions of up to three months due to a requirement for consensus, while a combination of leave, business travel and diary management leads to key meetings being cancelled or delayed many times.
Deloitte has taken a dose of its own medicine, asking its employees to identify ‘dumb rules’ that get in the way of innovation, collaboration and creativity, with a ‘Dumbest Things’ internal campaign.
“Every few years over the past decade we ask our people ‘What are the dumb things we do? What is stopping you doing your job?’ And each time we identify a disappointing level of unnecessary rules, which we have to remove,” McNulty said.
“We only did this recently, for the fourth time, and still we are finding rules that slow us down.
“For us, our Dumbest Things campaign is the beginning of a purposeful and programmatic unleashing of productivity across the organisation. It’s about actively reminding all our people that innovation comes from building a culture that focuses on what must go right, not what could go wrong.”
He concluded: “Australia’s compliance culture is cluttering our cost base and choking our innovation. That is coming at a massive and rising cost to our nation and to our ability to innovate.
“Understanding and taking advantage of our competitive strengths as a State is as important as ever, but the value of doing so pales before the potential efficiency gains of ‘ruling ourselves’ more effectively.
“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.
A Get out of your own way infographic and the report are available on request.
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