Dialogue: Red tape is strangling our economy

By TONY RYALL*

National wants business to make money and employ people. We want business people to have time to think, plan and do business.

People do not want to waste time filling in forms, complying with endless regulations and worrying about the penalties for forgetting something.

National wants the considerable resources spent on meeting regulations to be better-invested in productive activity. What is needed is political leadership; to reverse the conveyor belt of regulation. The present regime is, in fact, speeding up that conveyor belt.

Along with the Business Herald, National has made the case that the economy is under-performing. Our relative position continues to slip against many of our trading partners.

Yet the recent report from the Global Entrepreneurial Monitor found that we have the world's highest level of voluntary entrepreneurs. You would think that would make us one of the best-performing economies in the world.

Think again. The report also found that we have one of the worst rates of turning those small ventures into significant companies.

There are many reasons: education, an anti-business attitude, the tall poppy syndrome, and excessive compliance costs. It is on the latter issue that the Government is letting the side down.

Compliance costs are another area where it is easy for the Government to talk the talk, but walking the walk is increasingly difficult.

It is quite clear from its response to Al Dunn's business compliance cost report that the Labour/Alliance Government views compliance costs as a necessary evil in order to achieve its policy aims.

Why can't they stop the conveyor belt?

First, they are unable to deal to existing regulations. The Resource Management Act usually takes the prize for the most reviled piece of legislation in the country, blamed for delaying and causing the demise of many business projects.

In 1999, National introduced legislation to tackle the main concerns about this act.

But this Government sent the legislation back to the select committee, gutted it and inserted its own changes which, when passed, will make the act worse. The legislation is now languishing as the Government sorts out its internal problems.

Secondly, they are giving business more headaches. New regulations covering workplace safety, local government, the Securities Act, the Hazardous Substances and New Organisms Act and the renationalisation of ACC have been introduced by this Government - all adding extra cost to doing business.

And most frightening of all, this year the Government plans to ratify the Kyoto Protocol, which will impose huge costs on business. Worse than that, it intends ratifying Kyoto before our trading partners - implying a significant loss of international competitiveness.

National believes that part of the answer to improving the performance of the economy is to unshackle business from the constraints of excessive regulation. We're working on specifics.

For a start, we will fix the Resource Management Act. This does not mean lowering standards, but getting decisions made quickly.

We are also considering a red-tape commission similar to the one that is working successfully in Ontario, Canada. During the past five years, Ontario has passed 13 red-tape reduction bills; repealed more than 50 outdated acts; amended a further 200 and eliminated more than 1700 unnecessary regulations.

What has made the difference in Ontario is that politicians are leading the process, not the bureaucrats.

A group of National MPs are looking at the concept of compliance-free zones - businesses of a certain size not having to comply with the full set of regulations and red tape.

Businesses with a turnover of less than $40,000 do not have to register for GST. Why not extend this principle to other rules? For example, in parts of Europe small businesses are exempt from personal grievance provisions during probationary periods.

We are also looking at business tax rates compared with our trading partners.

National's fundamental principle is that any new regulation must prove that it is necessary and will do more good than harm. That is a very rigorous test to pass.

We believe it is important to do more than pay lip service to the issue of compliance costs.

* Tony Ryall is National's commerce spokesman.