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msi - red tape1By Geoff Hattam, Hattam McCarthy Reeves, Accountants, Adelaide. 

Now more than ever it’s important for local, state and federal governments, individually and collectively, to review what they can do to sustain Australian businesses in tougher times and to encourage competition in the Australian economy.

Governments have a number of tools at their disposal to encourage business activity and this article simply provides some suggestions as to what they might consider:

1: Cut Red Tape

The amount of administrative effort involved in navigating through the myriad forms, procedures, rules and regulations is time consuming and costly. Local, state and federal governments all impose their own rules and regulations which in many cases duplicate each other.

The number of rules, regulations and government departments that businesses must deal with is breathtaking: whether it is workplace relations, Workcover, corporation laws, consumer protection laws, state and federal taxes – with various government departments in charge of managing compliance – the layers and complexity of red tape facing Australian businesses is mind-boggling.

Australian Governments – at all levels – need to sit down together and review their systems, legislation and operations. They need to cut out duplication and think of how the end user, (businesses) will cope with the changes.

2: Simplify Taxes

With local, state and federal levels of government, Australian businesses face a broad range of taxes.

Moreover, Australia’s income tax system is uncompetitive compared to our trading partners and provides no real incentives for business. The Australian Income Tax Act is still contained within two separate pieces of legislation while the Fringe Benefits Tax and GST Acts are separate pieces of legislation and recent changes have only tinkered around the edges. Then the states impose their own taxes (payroll tax, land tax and stamp duty) and local government adds to this by imposing their own taxes (council rates).

Taxes need to be both simple to administer and easy-to-understand. Taxes can also be used to provide a true global advantage to attract foreign investment into Australia.

3: Encourage business to employ staff

Businesses need both legislative framework and financial incentives to employ staff – as well as an Industrial Relations system that is fair to both employers and employees. The complexity of the Fair Work Act puts businesses off from employing people. The Australian Government would be well-advised to make changes to ensure that it achieves the right balance between protecting employees and stimulating employment.

Another disincentive is the high cost of employment (e.g. Payroll Tax, WorkCover). Governments need to either provide relief or remove many of these financial burdens on businesses who employ people.

4: Efficient and Effective Infrastructure

The delivery of goods and services by business is dependent on infrastructure of all types. Unfortunately, much of this is ageing and in dire need of upgrade.  For Example, High speed internet allows businesses to communicate quickly and efficiently. Modern and free-flowing roads allow goods to reach their destination faster. Investment in Infrastructure is imperative to help business prosper.

Ultimately what governments can do is simple: help business save time and hence costs. Our advice would be for them to provide targeted help in the form of tax relief, efficient infrastructure and the simplification of processes. The flow on effects would not only be a healthy bottom line for business, but also increased tax revenues from higher profits.

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