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Red tape is costing households almost $20,000 every year

Red tape costs the Australian economy $176 billion every year.

That’s a concerning enough number on its own but it’s even more worrying in the context of the broader Australian economy.

$176 billion a year equates to 11% of Australia’s gross domestic product. That’s a larger share of the economy than any single industry. Mining is our largest primary industry at 7%. Manufacturing is 6%, and agriculture is 2%.

At $176 billion red tape costs every household in Australia just shy of $20,000 every single year.

And it’s not just a problem because of foregone economic output. This overwhelming regulatory burden strangles businesses and individuals. Every layer of bureaucracy makes it harder for individuals to make choices about their own life. And it kills entrepreneurialism and opportunity.

According to the latest figures from the 2016 Competitiveness Index released by the World Economic Forum in October places Australia 80th in the world for burden of government regulation. Every other Anglosphere country is way out ahead of us – United States (12), New Zealand (21), United Kingdom (32), Canada (38). We have got a long way to go before we can even think about catching Singapore at number 1.

Important research conducted by the IPA’s Daniel Wild recently also highlighted the fact that business investment as a percentage of GDP is now lower than it was under the Whitlam government. His analysis found that red tape is one of the biggest constraints on investment, and that removing this significant constraint would lead to a faster growing economy.

The key message out of all of this is straight-forward: cut red tape to unleash prosperity.

Simon Breheny
Director of Policy
Institute of Public Affairs


The Australian Business Executive (The ABE) provides an in-depth view of business and economic development issues taking place across the country. Featuring interviews with top executives, government policy makers and prominent industry bodies The ABE examines the news beyond the headlines to uncover the drivers of local, state, and national affairs.

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