Economic reforms run the risk of ‘dampening productivity’

A RAFT of economic changes taking effect from Wednesday will place even more pressure on Australian businesses, according to the Housing Industry Australia.

“Australian businesses are entering a new phase of regulatory change, with a significant suite of reforms taking that will add further complexity and cost to operating environments already under strain,” HIA chief executive industry and policy Simon Croft said.

The changes include increases to the minimum wage, the introduction and expansion of anti money laundering obligations, payday super, taxation changes, new environmental regulatory frameworks, enhancements to paid parental leave and higher business name and company registration fees.

“The HIA warns that while each reform may be well-intentioned in isolation, their cumulative impact risks dampening productivity growth, increasing compliance burdens and constraining business investment at a critical time for the economy,” Croft said.

“The breadth of changes taking effect simultaneously means businesses must adapt across multiple fronts from workforce costs and financial compliance to environmental approvals and administrative obligations.

“It’s the layering effect acting simultaneously, which results in businesses diverting time, capital and effort away from productive activity.”

Croft said the growing regulatory burden is also undermining efforts to meet Australia’s housing supply targets.

“We are now two years into the National Housing Accord and, with each month that passes, the target of 1.2 million new homes is drifting further out of reach,” he said.

“The compounding nature of these reforms is making the task harder for builders to get on site and build the homes Australians need.

“Instead of focusing on delivery, too many are being forced to navigate a continually changing regulatory landscape.

“With national productivity growth already subdued, the added administrative and compliance requirements risk further constraining output across the building sector.”

He said small and medium enterprises across the building industry are particularly exposed, often lacking the internal resources to efficiently respond to simultaneous reforms.

“For many builders and trades, these changes translate directly into higher project costs, longer timelines, and reduced capacity to deliver housing,” Croft added.

“HIA is calling for governments to adopt a more coordinated, whole-of-system approach to reform design and implementation, which includes better sequencing of reforms to avoid regulatory overlap, greater assessment of cumulative impacts on business and transitional pathways to support compliance.

“We need a regulatory environment that supports productivity and enables businesses to get on site, build efficiently and deliver the homes Australians need.

“Australia’s housing supply challenge cannot be solved if the industry is constantly adjusting to overlapping policy changes.

“Getting the balance right is essential to ensuring businesses can focus on what matters most – building more homes, faster.”