Australian regulators are unnecessarily burdening small businesses with ineffective advice, complex requirements and lengthy, costly compliance processes, the Productivity Commission has found.
In a report titled Regulator Engagement with Small Business, released today, the Commission argued that small businesses lacked the staff, time and resources to adequately understand and fulfill their compliance obligations.
The Commission said regulators should be more simple, clear, brief and accessible in communicating regulatory requirements to small businesses, highlighting a gap in how useful regulators and businesses found various communication channels.
From the report:
“A small business is not just a big business on a smaller scale but one that operates in a fundamentally different way, and may lack the time, knowledge and often motivation to distill the relevant compliance requirements,” the Commission reported.
Productivity Commissioner Warren Mundy recommended that regulators use risk assessments to determine the audit frequency, guidance, information required, fees and charges they imposed on businesses.
The Commission added that governments should “provide regulators with explicit guidance on regulatory priorities, given limited resources”, warning that without proper guidelines, communities were either left at risk or costs were pushed onto businesses.
“There is scope for increased targeting of those businesses and activities which present a higher risk to communities, and for adoption of lesser compliance cost approaches for lower-risk business, such as less frequent inspections or less onerous reporting requirements,” the Commission reported.
“When done well, such targeting is likely to achieve outcomes at a lower cost than an engagement approach based on strict application of a small business definition.”
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