Driverless cars are zipping people through the streets of Berlin and Tokyo. The latest fashion accessory is a pair of virtual reality wi-fi sunglasses. In the US, doctors have delivered the first transplant of a 3D-printed liver and Google considers an AI machine for its corporate board of directors.
Fantasy or reality?
While we can speculate on the world of tomorrow, some things appear more certain than others. The pace of technological change and innovation will intensify business competition and transform our global economy.
To keep Australian businesses competitive in a dynamic global environment, Australia will need better regulatory signposts and fewer barriers to enable businesses to successfully navigate through the challenging period ahead.
The World Economic Forum’s Global Competitiveness Index ranks Australia’s burden of government regulation at 77th out of 136 countries. While index rankings have their limitations, many of our main competitor countries are clearly miles ahead of the game, with the US and Singapore tussling between the first and second position for regulation that best facilitates business.
Regulation has an important role to play in enabling growth and productivity.
Without a set of known rules and regulatory boundaries, there would be much less certainty and fewer successful businesses and jobs.
However, for many businesses, particularly people in small business who employ five million Australian workers, the red tape burden can leave them overwhelmed by paperwork that soaks up time they could be using to work on their business or spend with their families.
For every page of legislation created in Australia, eight pages of regulations and guidelines are added. This creates a drag on our economy.
Good regulation can help guide business owners in the right direction while opening opportunities and allowing them to invest and grow across borders. Designing smarter regulation means that the government has a key role to play in not only eliminating costly and burdensome regulatory impost but also erecting sign posts that nudge businesses in the right direction.
This allows business owners to free up time to focus on the things that matter, including training their staff, attending to their customers, innovating new products and services and expanding their market opportunities.
As more and more people go online, customers will be more knowledgeable, less loyal and expect more from the products and services they purchase. This means that businesses will need to collaborate across industries to deliver new products and services to an increasingly demanding and sophisticated global consumer.
In this new dynamic business environment, regulations will have a different role to play than in the past. Businesses will need to adapt, innovate and integrate with value chains across domestic and international jurisdictions to keep pace with consumer demands.
To enable this, regulations will need to be harmonised across borders and between states. Regulations shouldn’t unfairly advantage some businesses at the expense of others. And as a matter of principle, regulation should be agile and adaptable to change rapidly as circumstances demand.
Australia’s health and medical industry is identified as a major growth area yet it is fraught with state and federal regulatory duplication and overlap. Procurement practices by state and territory health departments means the sale of medical devices in Australia is limited by burdensome process and regulation.
The additional cost of compliance to suit different requirements across our states means smaller economies to scale, higher costs and less growth opportunities.
For example, medical device regulators world-wide have been adopting a unique device identification standard to improve the identification and traceability for medical devices. Yet Australia is using outdated IT systems creating problems for a highly-regulated industry that is limiting innovation and growth in a key growth sector.
While harmonisation will continue to be a priority, regulations to trade and business investment will also need to be reviewed to allow us to attract and retain more talent and capital.
While we have managed to ratify Free Trade Agreements with some of our largest trading partners, the regulations associated with complying with the new agreements are making it too hard for many businesses to take on new markets.
Resolving conflicting compliance arrangements caused by overlapping and competing trade agreements can be achieved by harmonising the rules of origin across trade agreements and rationalising the number of agreements.
Further, the Foreign Investment Review Board operates within guidelines that select thresholds and references that preference investors from some countries over others and subject them to a lengthy and costly application process.
This stifles investment opportunities and puts a handbrake on the expansion of growth areas in infrastructure, agriculture, energy, tourism and education.
Problems like this can feel like a ball and chain to business growth and productivity. The Morrison Government has recognised the importance that regulation can play in delivering a boost to productivity, wages and economic growth by establishing the regulatory reform taskforce.
Here is Australia’s chance to eliminate out-dated and burdensome regulation and create better sign posts and harmonisation.
Smarter regulation will allow businesses to innovate, grow, improve productivity and create jobs. It will attract more capital, talent and create more growth and opportunities to the benefit of all Australians.
At a time when the future is less certain and increasingly competitive, a comprehensive review of Australia’s regulatory environment is more important than ever. In a world where businesses are racing through a maze, Australian business should not be left behind.