ATO cited as worst NSW red tape offender

A new survey has revealed 70% of NSW businesses have experienced an increase in compliance costs in the last two years, with the Australian Taxation Office topping the list as the worst red tape offender.

The NSW Business Chamber recently surveyed 373 businesses for its third annual Red Tape Survey, revealing 78% of businesses believe the ATO has a moderate to high level of red tape.

The ATO was followed by local councils, WorkCover NSW, the NSW Department of Planning, and the Federal Department of Education, Employment and Workplace Relations.

The tax office has come under fire recently for its crackdown on SMEs, with various industry experts expressing concern over the fairness of the system and the ATO’s level of compassion.

NSW Business Chamber chief executive Stephen Cartwright says many of the organizations identified in the top five will come as no surprise to business owners who deal with reporting and regulatory requirements “day in, day out”.

“Local council regulation and decision-making continues to be a cumbersome nightmare for business. Business wants certainty… Even if the answer is no, business owners want to know where they stand,” Cartwright says.

“The business environment is becoming more heavily regulated and that stifles creativity and innovation. Red tape is an impediment to growth,” Cartwright says.

According to the survey, 62% of respondents believe complying with government regulatory requirements has, to some extent, prevented them from making changes towards growth.

The latest ABS data on innovation in Australian businesses indicates that in 2008-09, 11.9% of Australian firms found that government regulations or compliance was a barrier to innovation.

Compliance costs are not the only business barrier, with 73% of businesses surveyed by the chamber saying they have experienced an increase in the time it takes to comply with government red tape.

The survey shows 13% of businesses spend more than 20 hours a week on red tape, while 21% spend between six and 10 hours, and 42% spend at least five hours.

According to the survey, 45.8% of businesses say preparing information is the most costly stage of the compliance process. For example, 22.8% of businesses spent more than 50 hours preparing their last tax return.

Cartwright says he is particularly concerned by the fact that 26% of businesses believe red tape is preventing the growth of their business, with a further 36% worried about the impact of red tape on future growth.

The chamber has advised the NSW Better Regulation Office of a number of strategies to reduce the red tape burden on business including:

• Adopt the Standard Cost Model to both measure the aggregate red tape costs of compliance and the savings from red tape streamlining.

• Restrict the net growth of new regulations by implementing a “one in, one out” approach to red tape.

• Commit to pay all small business suppliers within 30 days, and pay penalty interest when this target is not met.

• Pilot regional economic zones to overcome cross-border regulatory issues through improved regulatory harmonisation.