WHAT IS A REGULATORY BURDEN ON BUSINESS?

Regulatory burdens arise from the costs imposed by regulation and enforcement that would otherwise not arise for businesses. Where requirements from regulation create a change in business behaviour and practices, a regulatory burden can be said to exist. Regulations can adversely impact on businesses in various ways. Most fall under the following four categories of cost impacts:

  • administrative and operational requirements, such as:
    • reporting, record keeping
    • getting legal advice, training

 

  • requirements on the way goods are produced or services supplied, such as:
    • prescriptions on production methods
    • occupational registration requirements, requiring professionals to use particular techniques

 

  • requirements on the characteristics of what is produced or supplied, such as:
    • being required to provide air bags in all motor vehicles
    • requiring teachers or trainers to cover particular topics

 

  • lost production and marketing opportunities due to prohibitions, such as:
    • when certain products or services are banned.

 

UNNECESSARY REGULATORY BURDENS

While it is usually necessary that some burden is placed on business for regulation to achieve objectives, where regulation is poorly designed or written, or it is not administered or enforced well, it may impose greater burdens than necessary. In reviewing existing regulation, it is those regulatory burdens which can be considered ‘unnecessary’ that are of primary interest.

types of unnecessary regulatory burdens

It is important to note that the relative burden placed on small businesses may be greater than that imposed on larger businesses as they may have to devote proportionately more effort to achieve equivalent compliance. They may also be disadvantaged where regulations are anti-competitive.

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