New modelling reveals regulatory fragmentation will wipe $26 billion from national GDP over the next decade and add more than $9 billion to Australians in household costs.
The new Australian Retail Council (ARC) report, ‘The Fragmentation Tax’, prepared with Mandala, exposes the “hidden tax” on businesses and households, acting as a “persistent drag” on productivity, investment and consumer prices.
ARC CEO Chris Rodwell says regulatory inconsistency is inflating costs across the economy.
“Retailers operating interstate are forced to run parallel compliance systems, fragmented logistics models and jurisdiction-specific supply chains,” he says.
“Businesses are spending more time and money navigating different rules when they could be investing in jobs, innovation and growth.”
The report highlights transport and logistics, and environment and waste regulation as major sources of avoidable cost. Fragmented heavy vehicle standards, accreditation regimes, duplicate fatigue management rules, delivery curfews, container deposit schemes, and single-use plastics rules are said to be collectively costing the economy hundreds of millions of dollars annually.
“The good news is there are obvious solutions and significant financial upside for all Australians if we seize the moment and tackle the problem,” says Mr Rodwell.
ARC Chief Economist and Chief Policy Officer Glenn Fahey says unless governments tackle these inefficiencies, unnecessary price pressures will persist.
“Right now, a truck carrying a legal load in Sydney can be forced to stop at the border and transfer that load onto a different vehicle simply to continue to Brisbane,” he says.
“Retailers are sourcing different packaging and coffee cups for different states. Delivery schedules are dictated by mismatched local rules and different council curfews. This friction ultimately ends up in the price on the shelf that every Australian pays.”
The compliance burden from Commonwealth regulation alone has ballooned to more than $160 billion annually, up from just $65 billion a decade ago. When state and territory requirements are layered on top, the total regulatory compliance burden approaches $240 billion per year. For a nationally operating sector like retail, fragmentation is a powerful handbrake on productivity.
Recommendations
The report makes three key recommendations:
1. Allocate $260 million of the National Productivity Fund to create a dedicated retail harmonisation incentive scheme.
2. Establish a National Harmonisation Council to drive cross-jurisdiction decisions and delivery.
3. Deliver the first harmonised regulatory package within 12 months.
Mr Rodwell says the report identifies practical, achievable steps governments can take within the year to begin harmonising regulation.
“This has been done before and we can do it again. Our action plan draws directly from the National Competition Policy reforms of the 1990s. Those reforms added 2.5% to GDP and $5000 to household incomes,” he says.
“The blueprint exists. What’s required now is political commitment.”
