Victoria best state for business regulation

Victorian start-ups are in Australia’s most business-friendly state in terms of regulatory burden, according to a new report released by the Business Council of Australia.

The 2010 Scorecard of Red Tape reveals Victoria maintained its status of “good” with a score of seven out of 10, ahead of the Federal Government in second position.

The study assessed all Australian jurisdictions against four benchmarks: principles of regulation making, accountability, transparency of regulatory processes and review mechanisms.

The Federal Government’s rating fell from “good” in 2007 to only “adequate/good” in 2010, which the BCA attributed to “a disappointing downward performance” on regulatory practices.

The Federal Government administers prominent business regulations including tax, corporation rules, trade and competition, but the BCA says poor regulation can impede growth and productivity.

Nick Sherry, federal Minister Assisting on Deregulation, told The Australian Financial Review the government has a “comprehensive agenda” to reduce the level of unnecessary or poorly designed regulation, cut red tape, improve productivity and strengthen the economy.

But the BCA has accused the federal and state governments of failing to curb business red tape, claiming 50,000 pages of legislation were passed by Australian Parliaments last year.

BCA chief executive Katie Lahey says excessive red tape could damage the national economy.

“Poor regulatory processes not only impose unnecessary costs on business, which can stifle investment and job creation, but they also can lead to policy-on-the-run decisions that often have unintended consequences across the economy,” she says.

Other results of the report reveal Queensland improved only marginally while South Australia stayed the same.

NSW and Western Australia advanced from “poor” to “adequate/good” since 2007, scoring five and six respectively.

Steven Wojtkiw, chief economist at the Victorian Employers’ Chamber of Commerce and Industry, says there are two reasons why Victoria scored the highest.

“Victoria has had a dedicated red tape reduction program in place since 2006 under the government’s Reducing the Regulatory Burden initiative,” Wojtkiw says.

“There is a target of $500 million in regulatory reduction by 2012.”

Wojtkiw says Victoria has also had an active role in the National Reform Agenda, an agreement with COAG to reduce the regulatory burden imposed by all levels of government.

As a result of this agreement, Victorian businesses have benefitted from the harmonisation of wine labelling, the Standard Business Reporting program, nationally consistent rail safety legislation, and environmental assessment and approvals.

“Victorian businesses can operate with fewer regulations and, where regulations remain, they are less complex and simply to comply with, which saves them time, money and resources,” Wojtkiw says.

“Victorian companies have a competitive advantage over other states because regulation is a key consideration for businesses looking to invest in one state over another.”