Untangling the regulatory web: Businesses’ perspectives on Australia’s regulatory burden

18 July 2025

Australia's economic engine is sputtering and our productivity growth has stalled, with Australian workers estimated to having lost $500,000 of potential pay rises over the past 25 years because of the economy’s poor productivity performance and policy paralysis.(1) The Australian Government has tasked the Productivity Commission (PC) with a five pillar review aimed at rekindling our economic dynamism:

  1. Creating a more dynamic and resilient economy

  2. Building a skilled and adaptable workforce

  3. Harnessing data and digital technology

  4. Delivering quality care more efficiently

  5. Investing in cheaper, cleaner energy and the net zero transformation.

Central to the first of these five reviews, is the challenge of reducing the regulatory burden on businesses, a key element for fostering a more dynamic and resilient economy. According to the PC’s consultation paper, regulation can help to achieve important economic and social objectives, but excessive or inappropriate regulation can stifle business dynamism, resilience and productivity. Done well, reducing regulation can lower the costs of doing business, allow more firms to enter the market, lower prices for consumers and support innovation.

But what do the businesses themselves say? Recent submissions to the Productivity Commission from a cross-section of Australian enterprises paint a clear, if concerning, picture of a regulatory landscape hindering, rather than helping, growth.

We reviewed submissions from 23 businesses and peak bodies and compiled the following summary.

The growing regulatory burden

The overwhelming sentiment from businesses is that the regulatory burden is growing, leading to increased complexity, duplication, and significant compliance costs. The Australian Chamber of Commerce and Industry (ACCI) highlights that regulatory compliance costs businesses "millions of dollars, and hundreds of hours", diverting resources from innovation and growth.(2) The Financial Services Council (FSC) notes that the cumulative regulatory burden on the financial services industry has grown, leading to increased compliance costs and operational inefficiencies.(3) The Australian Institute of Company Directors (AICD) notes that the collective rate, complexity, and cost of regulatory additions are having a negative impact on business dynamism and competitiveness. According to an AICD survey, 70% of directors believe a major business deregulation agenda would positively impact Australia's productivity and economic growth.(4)

Smaller businesses in particular feel it; the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) underlines that small businesses, representing nearly 98% of Australian enterprises, bear a disproportionate share of the burden.(5) Master Builders Australia highlights that the mounting regulatory and administrative burdens, particularly for small businesses, are pulling time and focus away from on-the-ground delivery and hinders profitability and investment. This sentiment is shared by the Council of Small Business Organisations Australia (COSBOA), which states that the regulatory burden has increased over the last 5 years, consuming resources that could otherwise be used for productive purposes.(6)

Regulatory complexity, inconsistencies, gaps and constraints

What specific areas are causing the most headaches? The submissions point to several critical areas where regulation stifles dynamism:

Financial services regulations: The Financial Services Council (FSC) identifies significant regulatory burdens impacting the financial services sector and advocates for reforms to boost productivity. Key issues include the breach reporting regime, where Positive Economics Advisory’s analysis showed simplification could save businesses an estimated $183 million in net compliance costs over 10 years. Additionally, barriers to rationalising legacy superannuation and managed investment products, such as capital gains tax implications, prevent consumers from moving to more modern, efficient options; a product modernisation regime could add an additional $16 billion to retirement savings by 2050. The FSC also highlights that restrictive education requirements for financial advisers are exacerbating a shortage of advisers, leading to increased costs for advice – which rose by 58% between 2018 and 2023 – and limiting access for Australians. All up, the 12 priority reforms identified by the FSC, including the recommendations above (in modelling by Positive Economics Advisory) are estimated to lead to: a boost in GDP of an additional $19 billion; almost $2 billion a year in increased export revenue from financial services; and a combined boost in productivity of $800 million annually as a result of reducing costs, lowering fees and increasing returns to consumers.(3)

Environmental approvals: A recurrent frustration, particularly for large infrastructure projects. The Civil Contractors Federation (CCF) points out that "A clearer national framework for environmental approvals… is essential to improving civil delivery outcomes and lifting productivity".(7) The AICD echoes this, noting that "prolonged approval timelines (often exceeding two to three years) are a significant barrier to investment in infrastructure and clean energy projects".(4) Civil contractors report that project delays of 12-36 months are not uncommon due to drawn-out state and Commonwealth planning processes, particularly for projects that span multiple jurisdictions. The Crookwell 3 Wind Farm civil works were completed in under a year, but the approvals process took over a decade.(7)

Industrial relations: ACCI warns that recent changes to Australia's industrial relations legislative framework, including the Secure Jobs Better Pay, the Protecting Worker Entitlements and the Closing Loopholes, have imposed complex new obligations on businesses, diverting focus and resources away from innovation and R&D.(2) The COSBOA highlights that recent regulatory changes to Industrial Relations laws have resulted in "additional complexity for small businesses and costs related to compliance".(6) The Institute of Public Accountants (IPA) agrees that "the myriad of overlapping regulatory regimes relating to employment is burdensome and costly for businesses and take vital resources away from productive uses."(8)

Digital and data regulation: Amazon Australia highlights that "overly-specific and non-internationally aligned regulatory requirements can limit an organisation's ability to offer new services to customers, use new technologies, or develop new businesses in Australia, relative to other jurisdictions".(9) Block Inc. also points to the evolving payments regulatory landscape, urging for reforms that truly drive efficiency for small and medium sized enterprises.(10) Telstra's submission points out that the already heavily regulated telecommunications sector faces an increasing number of new regulatory requirements, such as the Telecommunications (Customer Communications for Outages) Industry Standard and the Scams Prevention Framework Act, which are diverting capital from much-needed investment in digital infrastructure. Telstra also believes the mandatory Consumer Data Right (CDR) regime is overly complex and onerous, with high implementation costs and negligible consumer uptake.(11)

Overlapping and inconsistent regulation: This is a pervasive issue. Croplife Australia points to inconsistencies in chemical regulation across states and territories as a major barrier,(12) while the Australian Financial Markets Association (AFMA) highlights fragmentation in financial market regulation, leading to duplication and inefficiencies.(13) The IPA notes that a lack of harmonised occupational licensing and skills recognition across states acts as a significant barrier to labour mobility and business expansion.(8) The Independent Payments Forum (IPF) notes inconsistency in regulation with "large parts of the payments industry are currently unregulated including participants with significant market share such as Apple, Google, Square, Stripe, Zeller, SmartPay, and the New Payments Platform".(14)

Planning approvals: The Property Council of Australia and Master Builders Australia both note that lengthy and complex planning and environmental approval processes are a major drag on productivity.(15)(16) Master Builders Australia reports that approvals for a greenfield house and land package in Sydney can contribute up to 49% of the total price due to regulatory costs, statutory taxes, and infrastructure charges.(16) Telstra highlights that many sites for its Mobile Black Spot Program are stuck in ongoing loops of local and state planning approvals, with some dating back to 2019, while power connections for some sites can take up to two and a half years.(11) The Property Council of Australia adds that these processes have become "fiendishly complicated and lengthy," increasing costs for homebuyers.(15) Meanwhile, the Large Format Retail Association (LFRA) states that "the majority of planning jurisdictions contain lengthy development assessment processes, and where rezoning is required to remedy restrictive planning controls and insufficient supply, rezonings can take anywhere between 1-3 years".(17)

Building and construction industry specific regulations: Master Builders Australia identifies the increasing burden of regulation as a factor in the industry's declining productivity. They state that ambitious targets in the National Construction Code (NCC) for accessibility and sustainability are adding layers of regulation that divert focus from core building processes. Master Builders Australia also points out that charging for Australian Standards puts a "paywall on legal obligations," which hinders compliance for small businesses and sole traders.(16) The National Electrical and Communications Association (NECA) echoes this sentiment, recommending that any Australian Standards required by regulation be freely accessible. NECA also expresses concern over the prevalence of illegal phoenix activity, which undermines market integrity, harms legitimate businesses, and increases construction costs.(18)

Healthcare sector regulations: The Pharmacy Guild of Australia states that layers of Commonwealth, state, and territory regulation create complexity and inconsistency in healthcare. They note that the inconsistent and often reactive use of Continued Dispensing arrangements for medicines during emergencies is confusing for pharmacists and creates government inefficiencies.(19) NewDirection Care adds that differing quality and safety regulations across sectors and jurisdictions create significant costs and complexity, hindering the provision of cohesive care.(20)

The regulator's role: Hits and misses

Businesses offered mixed reviews of regulators. While some acknowledge efforts towards engagement, a common criticism is a perceived lack of commercial understanding and an overly risk-averse approach.

Good job:

  • The Pharmacy Guild of Australia praises the Therapeutic Goods Administration (TGA) for producing Serious Scarcity Substitution Instruments (SSSI) that allow pharmacists to substitute medicines in short supply. They note these instruments are automatically recognised across all jurisdictions, providing a positive example of regulatory efficiency.(19)

  • The Property Council of Australia commends the New South Wales Housing Taskforce for helping to unlock over 13,000 homes by resolving approval delays. They also mention the State Agency League Tables and the Housing Delivery Authority as welcome mechanisms for improving transparency and accountability.(20)

  • Senex Energy provides a positive example from Queensland, where the government worked with the industry association to develop "streamlined model conditions for petroleum activities". This collaboration has improved decision-making timeframes and provided transparency and consistency while maintaining high environmental standards.(21)

  • The Property Council of Australia also welcomes Western Australia's comprehensive reform of its planning system, which has created a new Significant Development Pathway, streamlined the Development Assessment Panel system, and mandated local governments to delegate decision-making for single houses to planning staff.(15)

  • The AICD cites reform efforts during the COVID-19 pandemic to allow digital corporate meetings and electronic document signing as a good example of a pragmatic and responsive approach.(4)

  • The Australian Financial Markets Association (AFMA) highlights the Treasury's introduction of the Regulatory Initiatives Grid as a positive step towards enhancing transparency and strengthening engagement with the financial sector.(5)

Bad job (or areas for improvement):

  • The Tax Institute notes that significant technical gaps in the new thin capitalisation legislation remain despite stakeholder feedback, leading to uncertainty for taxpayers. They also state that delays in obtaining private rulings and refunds from the ATO add to the compliance burden.(22)

  • Senex Energy highlights "regulatory creep" from existing energy market bodies, with the ACCC and AER taking on expanded roles that blur boundaries and create duplication. They report that this has added significant regulatory burden and cost without adding to market transparency.(21)

  • NECA states that inconsistent workplace health and safety regulations across states, such as with silica regulation, are haphazard and unrealistic. They also report that persistent weaknesses in the Distribution Ring-Fencing Guidelines allow Related Electricity Service Providers (RESPs) to unfairly leverage Distribution Network Service Providers' (DNSPs) resources, leading to anti-competitive behaviour and inflated energy prices for consumers.(18)

  • The Property Council of Australia notes that the lack of uniform adoption of the National Construction Code (NCC) and the overlaying of state-specific variations by governments has unrealised productivity gains.(15)

  • The IPA points out the lack of harmonisation in occupational licensing across states, which creates a fragmented system that constrains labour mobility and business expansion.(8)

Charting a path forward: Major areas for change

To reignite Australia's productivity, businesses are calling for significant regulatory reform, focussing on:

  • Harmonisation and simplification: A unified national approach to regulation, particularly in areas like workplace health and safety and environmental approvals, would reduce compliance costs and complexity.

  • Prioritising net benefit: A renewed commitment to robust regulatory impact assessments that rigorously demonstrate net benefits before new regulations are introduced.

  • Proportionate and risk-based regulation: Moving away from a "one-size-fits-all" approach, ensuring regulations are tailored to the size and risk profile of businesses. The AICD, citing the Australian Law Reform Commission (ALRC), suggests that the high legislative complexity does not lead to better compliance or enforcement.(4)

  • Enhanced regulator awareness: Encouraging regulators to better understand business operations and the impact of their decisions.

Australia's economy faces a productivity challenge. By systematically addressing the regulatory impediments identified by businesses, the Productivity Commission can establish the foundation for a more dynamic, resilient, and prosperous future.

Sources:

  1. Kehoe, J. 16 July 2025. ‘Ken Henry says you should be half-a-million dollars richer’, Australian Financial Review.

  2. Australian Chamber of Commerce and Industry, 2025. Five Pillars of Productivity Inquiry ACCI Submission.

  3. Financial Services Council, 2025. Australia's Productivity Pitch Consultation - The Important Role of Financial Services in Boosting Australia's Productivity.

  4. Australian Institute of Company Directors, 2025. Productivity Commission inquiry on the five pillars of productivity - priority reform areas.

  5. Australian Small Business and Family Enterprise Ombudsman, 2025. Five productivity inquiries.

  6. Council of Small Business Organisations Australia, 2025. Re: 5 Pillars.

  7. Civil Contractors Federation Australia Ltd, 2025. Productivity Commission Pillars.

  8. Institute of Public Accountants, 2025. Five Productivity Inquiries.

  9. Amazon Australia, 2025. Submission to Productivity Commission '5 Pillars' Productivity Inquiries.

  10. Block Inc., 2025. Submission to the Productivity Commission Consultation on Creating a more dynamic and resilient economy - Block inc..

  11. Telstra Group Limited, 2025. Productivity Commission: Five Pillars of Productivity Inquiry Telstra public submission.

  12. CropLife Australia, 2025. Productivity Commission 5 Pillars Inquiries.

  13. Australian Financial Markets Association, 2025. Pillar 1: Creating a more dynamic and resilient economy.

  14. Independent Payments Forum, 2025. Have your say on a more dynamic and resilient economy.

  15. Property Council of Australia, 2025. Property Council of Australia submission to the Productivity Commission's 5 productivity inquiries.

  16. Master Builders Australia, 2025. Submission to the Productivity Commission's consultation on the Five Pillars for Productivity Reform.

  17. Large Format Retail Association, 2025. A More Dynamic and Resilient Economy.

  18. National Electrical and Communications Association, 2025. AUSTRALIA'S PRODUCTIVITY PILLAR 1: CREATING A DYNAMIC AND RESILIENT ECONOMY.

  19. The Pharmacy Guild of Australia, 2025. Productivity Commission consultation on 5 Productivity Inquiries.

  20. NewDirection Care, 2025. Submission to the Productivity Commission inquiries into Australia's Productivity.

  21. Senex Energy, 2025. Pillar 1 Creating a more dynamic and resilient economy Consultation questions.

  22. The Tax Institute, 2025. Pillar 1: Creating a more dynamic and resilient economy.

Other submissions reviewed:

  • Business Council of Australia, 2025. Consultation on five productivity inquiries.

  • Group of Eight Australia, 2025. Group of Eight Universities (Go8) submission to the Productivity Commission Five-pillars Productivity Productivity Inquiries.