The Red Tape State red tape research report no. 2 Dr Mikayla Novak Senior Research Fellow May 2016 cut red tape to Institute of Public Aairs THE VOICE FOR FREEDOM unleash prosperity ESTABLISHED− 1943 IPA RED TAPE RESEARCH REPORT NUMBER 2 Executive Summary As of the end of April 2016, the commonwealth government maintained an estimated 1,181 entities, bodies, and administrative relationships. Of those 1,181 entities and bodies, 497 are estimated to be involved in policy design or enforcement of the federal regulatory system. It is estimated that 444 government bodies established by the Rudd and Gillard governments continue to exist, and 198 of these involved in the regulatory system. A large number of these bodies are regulatory agencies imposing excessive and unnecessary red tape upon the Australian economy, including the Fair Work Commission, National Heavy Vehicle Regulator, Safe Work Australia, and the Workplace Gender Equality Agency. The Abbott Turnbull government has indicated it has abolished 286 bodies since the 2013 election, but sev- eral bodies previously scheduled for abolition remain in place today. Senate obstruction and other political considerations have allowed the likes of the Australian Charities and Not For Profits Commission, Australian Renewable Energy Agency, Clean Energy Finance Corporation, and the Workplace Gender Equality Agency to continue. The federal government must redouble its efforts to abolish public sector regulators and other public sec- tor bodies, to deliver budget savings and abate the tendency to overregulation. The Annual Deregulation Report series ignores state-local government compliance costs and the non-com- pliance costs of federal, state and local red tape, while the survey methodology used by the government is potentially dubious. This paper identifies 31 federal regulatory bodies that can be abolished, merged, or transferred to the states immediately, both reducing red tape costs and reducing spending pressures on the commonwealth budget. The Red Tape State 2 IPA RED TAPE RESEARCH REPORT NUMBER 2 Introduction Government is involved in the modern Australian economy and society in a major way. On a daily basis the fiscal and regulatory functions and roles of government are conducted by numerous public sector entities, bodies, and administrative relationships that are funded or maintained in some other way. From the perspective of taxpayer accountability and value for money to the community, it is essential to closely check the activities undertaken by, or through, government entities, bodies, and administrative relationships. If the scale and scope of government is becoming too excessive then the potential exists to reduce the number of organisations and relationships maintained by government. But to check public sec- tor activity and to advocate reform proposals it is necessary, in the first instance, to identify which bodies exist. This paper provides an outline of the financial and non financial entities, bodies, and administrative rela- tionships maintained by the commonwealth government. We show that there are well over 1,000 federal entities, and that many government bodies introduced by the former Rudd-Gillard government remain intact. This is despite 2013 election commitments by the present Coalition government to repair the budget and reduce red tape, including through the abolition of numerous public sector bodies. This paper also suggests reforms to further reduce the numbers of com- monwealth government regulators and other entities. The Red Tape State 3 IPA RED TAPE RESEARCH REPORT NUMBER 2 There are over 1,100 commonwealth government bodies today The commonwealth government maintains a register of financial and non financial entities, bodies, and administrative relationships, which is publicly available online.1 The last update to the register was undertaken by the government in November 2015. We make additional adjustments to the registry list to reflect decisions made in the 2015-16 Mid-Year Economic and Fiscal Outlook,2 released in December 2015, and other publicly announced changes to the end of April 2016 (e.g., the abolition of the Road Safety Remuneration Tribunal). These adjustments reflect government decisions, either announced or actually implemented, to abolish certain entities. According to the information available, it is estimated that 1,182 commonwealth government entities, bod- ies, and administrative relationships are in existence as at the end of April 2016 (Table 1). This compares to the government’s count of 1,332 entities that existed in September 2013.3 1 Australian Government Organisations Register (AGOR), http://www.finance.gov.au/resource-management/ governance/agor/ (accessed 27 April 2016). 2Adjustments do not include Australian Pesticides and Veterinary Medicines Authority Advisory Board and Animal Health Laboratory Standards Training Working Group, slated for abolition in MYEFO, as these entities were not (clearly) identified in the November 2015 AGOR spreadsheet of bodies. 3 AGOR, op. cit.. The Red Tape State 4 IPA RED TAPE RESEARCH REPORT NUMBER 2 Table 1: Commonwealth government entities, April 2016 Type of federal government Example Number Number of entities entity of entities with regulatory sys- retained tem involvement Department of state and oth- Fair Work Commission 92 58 er non-corporate entities Corporate commonwealth Clean Energy Finance 66 23 entity Corporation Commonwealth company NBN Co Ltd. 15 1 under Corporations Act Policy and stakeholder advi- Australian Multicultural 277 157 sory bodies Council Statutory office holders, -of Anti-Dumping Commis- 196 126 fices and committees sion Separate non-statutory body Australian Small Business 36 7 Commissioner COAG bodies and other in- COAG Disability Reform 87 76 terjurisdictional ministerial Council councils Other interjurisdictional (in- Regional Development 109 10 cluding international) bodies Australia partnerships with state and local gov- ernments Subsidiaries of government Australia Post’s Star Track 203 0 companies and corporations Express parcel service Bodies with at least 50 per Investment-holding sub- 55 0 cent equity ownership by sidiaries for Future Fund government National law bodies result- National Heavy Vehicle 26 26 ing from intergovernmental Regulator agreements Other bodies linked to gov- Australian Communica- 19 13 ernment through statutory tions Consumer Action contracts, agreements and Network delegations Total 1,181 497 Table refers to government financial and non-financial bodies, entities, and relationships established between 24 November 2007 and 7 September 2013, but retained to April 2016. Last update of Australian Government Organisations Register (AGOR) was undertaken in November 2015, with adjustments made to reflect December 2015 MYEFO decisions and other changes (e.g., abolition of Road Safety Remuneration Tribunal). Source: Australian Government Organisations Register, 30 November 2015; IPA analysis. Figure 2 compares the red tape cost estimate in this paper against major forms of taxation and expendi- ture. As is shown in the Figure, red tape costs exceed the likes of income tax, company tax and GST collec- tions and also greater than combined federal-state-local spending on functions such as social security, health, education, public housing, and defence. The Red Tape State 5 IPA RED TAPE RESEARCH REPORT NUMBER 2 The accuracy of estimates for the number of commonwealth government bodies should be interpreted with some caution. Some bodies had not been captured in previous portfolio data collections, which then feed into the main register. Other bodies (for example, the Australian National Preventive Health Agency) was ceased in 2014 yet still remained on the commonwealth register as at November 2015. Additional bodies may be subject to reclassifications in later registry iterations, excising them from the register (say, if a given body is reclassi- fied to be out of scope internal management bodies). On the basis of this count of bodies, an effort is then made to assess the extent to which the common- wealth entities are involved in the regulatory process. We adopt a broad conceptualisation which encap- sulates involvement in regulatory policy development and design, as well as regulation compliance and enforcement activities. To illustrate the broad coverage of this definition, bodies involved in regulation not only include those directly responsible for rule making and/or enforcement, such as the Australian Taxation Office (ATO) or the Australian Securities and Investments Commission (ASIC). The count of entities with regulatory involvement also includes, for example, stakeholder groups organised by government that allow individuals or groups to influence any aspect of the regulation system. It is estimated that of the 1,182 commonwealth entities, bodies, and administrative relationships that exist, 497 (or 42 per cent of the total) are involved in the regulatory process. The Red Tape State 6 IPA RED TAPE RESEARCH REPORT NUMBER 2 Over 400 agencies set up by Rudd and Gillard continue to exist Further analysis of the official list of commonwealth government financial and non-financial entities, bod- ies, and administrative relationships indicates that 443 organisations established between November 2007 and September 2013 remains in place to this day (Table 2).4 It is estimated that of these 443 organisations, it is estimated that 198 (or 45 per cent of the total) have policy or enforcement involvement within the federal regulatory system.