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In the late 1950s, cinema audiences worldwide were terrified by a mythical monster from outer space known as The Blob, which was shown oozing its way to destruction and mayhem across small-town USA.
On the big screen, police and citizens couldn’t find a way to kill the blob. In fact, the best they could achieve was putting this snail-paced assassin into long-term hibernation somewhere in the Arctic circle.
On 13 December 2016, the haunting spectre of The Blob made a brief re-appearance in central Sydney, for the Menzies Research Centre’s inaugural business breakfast.
About 100 business leaders gathered at Doltone House to discuss the impact of excessive bureaucracy and regulation on jobs and growth.
The event heard compelling evidence that many public servants and political leaders –particularly in the nation’s capital – had in recent years developed unfortunate Blob-like tendencies to unnecessarily slime the life out of business.
On stage were:
- Menzies Research Centre Executive Director Nick Cater
- Business Council of Australia (BCA) Chief Executive Jennifer Westacott
- Australian Chamber of Commerce and Industry Chief Executive Officer James Pearson; and
- Former BCA chair and current Infrastructure Partnerships Australia chair Tony Shepherd AO.
The event was titled "Business vs The Blob: How enterprise can triumph over bureaucracy"
Proliferation of regulation to “appease the few”
Ms Westacott was the first panellist to speak and said there were now more than 1,200 Australian Government agencies and bodies, with this number increasing over the last three years. Collectively, she said, these agencies contributed to regulation costing Australians some $65 billion a year.
“We are seeing a proliferation of regulation to appease the few with consequences for the many,” Ms Westacott said. “And we are seeing a proliferation of regulation where the unintended consequences of the rule outweigh the risks being managed.
“Let’s think about a few: gas bans, absurd retail trading hours, greyhound bans and lockout laws.
“When governments run out of money, they turn to regulation because it is cheap to regulate. Problem comes up in the media, let’s have a rule.
“The cost of regulation is a hidden cost: it is hidden by the worker who loses or can’t get jobs…or hidden by businesses that don’t open or passed on to consumers who pay more.”
Ms Westacott argued there needed to be a more thorough process to assess the cumulative impact of existing and proposed regulation.
“If you look at the burden on retail, for instance, it is staggering. We need a systemic way of going through regulation already on the books that is crippling private enterprise,” she said.
“We also have to eliminate the duplication between the State and Federal governments, including in consumer affairs, anti-discrimination and environmental protection.
“Companies have choices about where they put their money.
“If we don’t get regulation and bureaucracy and the cost of doing business under control, we will see businesses deciding to take their activities somewhere else and that is a cost to wages and government revenues.”
The role of a new breed of powerful and wealthy lobby groups actually in favour of the “bureaucratic Blob” was a hot topic of debate.
Rise of the “shadow public service”
“One of the things we are seeing grow rapidly alongside the Blob is, if you like, a shadow public service – the lobby groups and pressure groups – which barely existed 50 years ago. This includes organisations such as the obesity coalition and the animal rights crowd and the massive, huge multi-national environmental groups,” Mr Cater said. He asked the panellists how this could be countered.
In response, Mr Pearson admitted that business groups had been caught out by this trend.
“I think this is starting to approach an existential threat for business lobby groups. I think the operating environment which we face has never been more difficult,” he said.
“I think we are at least five years behind where we should be.
“I think that businesses as individuals and collectives have been slow to recognise the rise of this threat. Businesses have looked on an individual basis to try to manage and protect their reputations, often through increasing investment in corporate social responsibility.
“That is all very well but something bigger and badder is happening and individual businesses have not actually come to grips with just how large this threat is.
“The organised, international and heavily funded nature of the opposition to specific Australian resources developments ought to be a concern at a national level, and arguably because the potential threat to our national well-being is so significant, arguably it is a national security issue.
“But I doubt it is seen by government and the broader community in those ways.
“Business is going to have to decide (if it is) prepared to spend the money and time which is required to reassert itself and what we believe in.”
New Zealand a role model for Australia
Mr Shepherd argued that Australia did not need to look too far for a role model when it came to tackling The Blob.
“What the Kiwis did was focus, in terms of hiring their public service chiefs, on people who were good at doing things. In the past, and in Australia, the heads of departments tend to be the people who can get the most money out of Treasury.
“The senior public servants with the capacity to milk Treasury were the ones that were rewarded or promoted.
“In New Zealand, they changed that over – it is the ones that can deliver the same level of service, or a better level of service, at the same budget cost, who were promoted.
“So what you are really looking for in the public service are efficient managers, not people who are good at writing Cabinet minutes for more money.”
Public service “risk adverse culture” and other points
A number of other points were made during the day, including the following:
- Mr Pearson said a “risk adverse culture” was infecting the bureaucracy and its political leaders, which was manifesting itself in governments being very quick to rule out policy improvements
- Ms Westacott said business groups were often only consulted about regulatory proposals after they had gone to Cabinet. “Instead, you should co-designing with business, by saying ‘here is the problem we are trying to solve and what are our options to solve it’,” she said.
- Ms Westacott said many regulations – such as mooted cyber security controls – should be avoided given the fact they were likely to soon be rendered redundant due to a rapidly-changing environment.
- Mr Shepherd said the Australian Government should remove itself from matters which were the responsibility of the States, such as school and trade education.
- Mr Shepherd said despite the terms of trade moving against Australia, and the fact the resources sector had now stalled, the appetite towards economic reform had “gone backwards”.
Economic crisis may finally force economic reform
On this point, Mr Pearson said it may need an economic crisis to force Australia’s hand.
“I think we are getting to the situation where we need a crisis. I think it requires significant external pressure in the form of a shock,” he said.
“I think the increasingly likely loss of the Triple-A credit rating ought to be used by the government of the day to drive home more meaningful economic reform and put pressure on the Parliament to that end.
“I think the likelihood of a Trump-led American administration and UK administration making significant cuts to company tax rates ought to be used by the Australian Government to add pressure on the Australian Parliament to deliver a meaningful tax cut here.
“We often still take a close look at what the rest of the world does, and that is pressure we react to. I think external pressure is what is required to drive meaningful change in policy.”
Based on the forceful arguments presented during the morning, it was clear that many in the business community believe that the Blob has emerged out of its 1950s hibernation and remains an ongoing creeping death to modern-day jobs and growth.
Business versus the Blob summary video from Menzies Research on Vimeo.