Red Tape Or Crisis, It's The Coalition's Choice


Australia is getting a “repeal day”. Like so much of the Coalition’s ideological agenda, the idea is borrowed from the US Republican Party, whose visceral hatred of government is strong enough to reach across the Pacific.

The goal of repeal day, pushed by up-and-coming Parliamentary Secretary Josh Frydenberg, is to clean up the thicket of legislation that afflicts Australian business. He thinks it will save “up to $1 billion” a year in compliance costs.

In an op-ed for The Australian today, Frydenberg lauds the benefits of striking out “inefficient, ineffective and unnecessary regulation.” The Abbott Government, Frydenberg explains, is preparing an “omnibus bill” which will repeal around 8,000 “redundant legislative instruments.”

On the face of it, cleaning up outdated laws and regulations sounds like a good idea. Australia has many complex and largely pointless laws on the books, a lot of which of which can and should be repealed.

But like any spring clean, we need to be careful of what we’re throwing out. Exactly which laws you would like to see removed may well depend on your political persuasions.

Civil libertarians would like to see repressive terror laws introduced by the Howard government repealed. Refugee advocates would love to see the bizarre anti-boat people amendments introduced to the Migration Act struck out. Indigenous and social welfare groups would like to see the discriminatory and paternalistic income management regulations for welfare recipients introduced by Jenny Macklin killed off.

It’s a fair bet we won’t be seeing any of these laws repealed. Instead, the red tape reduction will be almost wholly to the benefit of big business.

The carbon tax and environmental regulations of all kinds are at the top of the Coalition's agenda. The Abbott Government seems to equate any curb on the power of corporations to pollute the environment as a hand-break on the wealth of the nation. Stripping away a modest tax on planet-warming greenhouse gases is just the first bit of “green tape” slated for removal.

For instance, the Federal Government wants to introduce a “one-stop shop” for environmental approvals with the states and territories. This sounds very efficient, until we remember that that the states often have lower levels of regulatory safeguards than the Commonwealth.

National parks for the oceans apparently also fall into the category of “green tape”. The Abbott Government has so far been assiduous in its efforts to wind back Labor’s impressive achievements in extending Australia’s marine parks.

Frydenberg also tells us he has been meeting with top executives such as Incitec Pivot’s James Fazzino. Incitec Pivot wanted to set up two fertilizer plants, one in the US and one in Australia.

“In Louisiana, approval was granted in six months” he writes, approvingly. “In Australia, it has taken more than two years, with the approval process still ongoing.”

The United States has less green tape than Australia, but it also has a troubling record of major spills, explosions and environmental disasters. Just last week, a devastating chemical spill in West Virginia caused drinking water to be cut off to more than 300,000 people.

According to the New York Times, the site of the huge chemical spill into West Virginia’s Elk River, a storage tank run by a firm called Freedom industries, has not been inspected since 1991. The coal-rich state has long been known to have lax environmental safeguards, due to the power of the coal and gas industries there.

Lousiana, the state whose low levels of red tape so enthuse Frydenberg, also has a poor record for toxic spills. In December, a huge chemical fire broke out at a plant in Westlake, Lousiana. An investigation by local television station KATC found that the company that operated the plant had a long history of previous spills and environmental violations. Despite these, it was neither shut down nor forced to undertake remedial action.

The massive Deepwater Horizon spill off the coast of Louisina in 2010 was one of the worst oil spills in history. The state is still suffering the effects of the debacle which was, in part, a failure of regulation. The deadly explosion on the drilling rig has been blamed by the US Coast Guard on lax oversight from the Marshall Islands, the tiny Pacific nation under which the platform, for reasons entirely related to profit and convenience, was registered.

The US Department of the Interior’s final report on the disaster also implicitly admitted regulatory failure, recommending new regulations to force offshore drillers to report leaks to their blow-out preventers (the expensive piece of equipment that failed, causing the explosion).

Environmental controls aside, Frydenberg wants to cut Labor’s Future of Financial Planning regulations. These modest reforms to financial planning and superannuation advice were implemented under Labor by Bill Shorten.

Frydenberg claims that junking the financial planning reforms will save the industry “costs of about $90 million, and an annual compliance bill of $190 million.” But, as Ian McAuley noted here at New Matilda yesterday, the costs to ordinary people with superannuation accounts will be much higher.

One report on the reforms argued that, by cutting fees into retail superannuation funds, the reforms would collectively lead to $144 billion in extra super by 2027. McAuley concludes that scrapping the reforms “would not only reward the financial services industry, but would also allow the re-emergence of firms unconstrained by any investor ‘best interest’ rule – firms like Storm and Westpoint which wiped out many depositors’ life savings.”

That’s the thing about regulations. They are usually introduced in the wake of disasters that are all too often caused by firms that cut corners. The reason they are introduced is that parliaments act to try and prevent future disasters.

Yes, bad regulation is a drag on company profits, and therefore on the economy. But good regulation saves lives and protects people’s life savings. The cost of Deepwater Horizon runs into tens of billions of dollars. The cost of the global financial crisis now runs into the trillions.

A few extra safeguards in the offshore drilling and US mortgage industry might just have been a worthwhile investment. Let’s pray that the consequences of the Government’s attack on red tape isn’t a similar environmental or financial disaster in Australia.

Ben Eltham is New Matilda's National Affairs Correspondent.