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Cutting the Red Tape Trap: How Smarter Regulation Will Supercharge Australian Small Businesses

Small businesses are the heartbeat of Australia’s economy. Yet, despite their enormous contribution, they are shackled by layers of outdated, excessive, and often confusing regulations. Reducing red tape for small businesses is no longer a nice-to-have — it is essential for driving growth, sustaining jobs, and building resilient communities.

At SBAAS, we understand that every extra form, every unclear compliance obligation, and every hour lost to bureaucracy directly saps the entrepreneurial spirit that Australia depends on. It’s time for a smarter, simpler approach.

Why Reducing Red Tape for Small Businesses Matters

Reducing red tape for small businesses is more than an administrative clean-up. It is a powerful economic lever. Small businesses employ around 42% of Australia’s private workforce and contribute nearly one-third of the national GDP. They are also more agile, innovative, and rooted in their communities than many larger enterprises.

The entire economy benefits when small business owners spend more time on growth activities and less on compliance paperwork. Productivity rises, jobs are created, and local communities flourish.

Yet today, small businesses shoulder a disproportionate burden of regulation. Unlike larger corporations, they lack teams of lawyers and compliance officers. Every piece of extra red tape hits harder in time, money, and lost opportunity.

Reducing red tape for small businesses isn’t about eliminating necessary protections. It’s about clearing away the barriers that serve no genuine public benefit, freeing business owners to do what they do best: innovate, employ, and grow.

Understanding the Red Tape Challenge

For small businesses, red tape typically manifests in four ways:

  • Cumbersome licensing requirements spread across multiple levels of government.
  • Inconsistent regulations between states, causing confusion and duplication.
  • Excessive reporting obligations that consume disproportionate resources.
  • Unclear or shifting compliance rules that create uncertainty and risk.

While regulations are crucial for safety, transparency, and fairness, complexity for its own sake delivers none of these goals — only cost and frustration.

Reducing red tape for small businesses must be about intelligent design, leveraging modern technology, and maintaining trust while making compliance painless.

The Economic Cost of Inaction

Australia’s regulatory compliance cost is projected to hit nearly $13.7 billion annually by 2025–26. If left unchecked, by 2030, red tape could cost the economy over $66 billion in lost productivity and growth.

Small businesses, operating on slimmer margins, are least able to absorb these costs. Every dollar wasted on unnecessary compliance is not invested in hiring, training, new equipment, or marketing. Worse, excessive red tape drives many promising entrepreneurs to exit or never start.

Reducing red tape for small businesses isn’t a minor technicality; it’s an economic imperative.

How Technology Can Slash Compliance Costs

Technology offers the fastest and most effective pathway for reducing red tape for small businesses. Real-world examples show what is possible:

  • Standard Business Reporting (SBR) allows businesses to lodge information once across multiple government agencies, saving over $1 billion annually.
  • Single Touch Payroll (STP) has simplified employer reporting, reducing errors and saving valuable time.
  • Licence NSW has digitised licensing processes, delivering faster approvals and saving small businesses thousands of days in processing time.

Artificial intelligence and robotic process automation are already being deployed to streamline government services, automate application reviews, and reduce the need for endless paperwork.

By investing further in user-centric digital platforms, Australia can dramatically reduce compliance costs without compromising regulation quality.

Reducing Red Tape for Small Businesses: Lessons from Past Reforms

Australia has a mixed history with regulatory reform efforts. The Abbott Government’s “Repeal Days” initiative removed outdated regulations, but the savings were more symbolic than substantive.

In contrast, the 1990s National Competition Policy boosted GDP by liberalising restrictive regulations, showing that deep structural reform delivers real results.

Key lessons include:

  • Focus on the most significant bottlenecks, not just easy wins.
  • Embed continuous review processes to prevent regulatory creep.
  • Ensure reforms are co-designed with small business input, not handed down from bureaucratic towers.
  • Build bipartisan support to ensure reform survives changes in government.

Why Reducing Red Tape for Small Businesses Also Matters Politically

Small businesses are economic engines, community pillars, and influential political voices. Their owners, employees, and customers often live in the same communities, creating a powerful influence network.

At recent federal elections, small business policies have played pivotal roles in swinging undecided voters. Policies that genuinely focus on reducing red tape for small businesses resonate because Australians understand the connection between vibrant local businesses and vibrant communities.

Political parties that ignore this reality do so at their peril.

Practical Steps Forward: Smarter, Simpler, Fairer Regulation

Based on economic reasoning and case studies, here’s what Australia should prioritise:

  1. Build a One-Stop Digital Compliance Hub

Integrate business licensing, tax, employment registration, and compliance reporting into a single online platform. Make compliance as easy as internet banking.

  1. Automate Approval and Reporting Processes

Use AI to pre-approve low-risk applications and machine learning to target inspections intelligently. Reduce the burden on compliant businesses.

  1. Harmonise State and Federal Rules

Small businesses operating nationally shouldn’t face different rules for the same activity. Align work health and safety laws, licensing requirements, and environmental approvals.

  1. Introduce a “One-In, Two-Out” Rule

Every new regulation requires two to be removed. Embed this rule in legislation to ensure lasting reductions.

  1. Co-Design Regulations with Small Business

Mandate usability testing and consultation with small businesses before launching new compliance requirements.

  1. Sunset Old Regulations

All regulations should come with expiry dates unless explicitly renewed. This ensures continuous review and relevance.

Unlocking the Potential: What’s at Stake

Reducing red tape for small businesses could unleash billions of dollars in additional economic output, thousands of new jobs, and hundreds of new enterprises. It would lift regional economies, help marginalised communities access work, and keep Australian innovation competitive globally.

Most importantly, it would return control and confidence to those who have invested their dreams, savings, and livelihoods to build something valuable.

We can no longer afford to let red tape strangle this vital energy.

 

SBAAS is leading the charge in supporting Australian small businesses by championing smart regulatory reform. If you are ready to cut through complexity and unlock growth for your business, we invite you to read the paper and have your say.

Sources

Picture of Eric Allgood

Eric Allgood

Eric Allgood is the Managing Director of SBAAS and brings over two decades of experience in corporate guidance, with a focus on governance and risk, crisis management, industrial relations, and sustainability.

He founded SBAAS in 2019 to extend his corporate strategies to small businesses, quickly becoming a vital support. His background in IR, governance and risk management, combined with his crisis management skills, has enabled businesses to navigate challenges effectively.

Eric’s commitment to sustainability shapes his approach to fostering inclusive and ethical practices within organisations. His strategic acumen and dedication to sustainable growth have positioned SBAAS as a leader in supporting small businesses through integrity and resilience.

Qualifications:

  • Master of Business Law
  • MBA (USA)
  • Graduate Certificate of Business Administration
  • Graduate Certificate of Training and Development
  • Diploma of Psychology (University of Warwickshire)
  • Bachelor of Applied Management

Memberships:

  • Small Business Association of Australia –
    International Think Tank Member and Sponsor
  • Australian Institute of Company Directors – MAICD
  • Institute of Community Directors Australia – ICDA
  • Australian Human Resource Institute – CAHRI
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