Red tape is costing $250 billion a year and draining productivity – Deloitte infographic
Deloitte is waging a war against self-imposed red tape, which it says is costing the country $250 billion a year and draining productivity in all sectors.
The issue is uncovered in detail in the ‘Get out of your own way: unleashing productivity’ report and accompanying website, including the below infographic. Not-for-profits and NGOs are spending more than six hours a week dealing with self-imposed red tape, the report says.
The report states the ‘real annual cost of rules’ as including:
- $94 billion to administer and comply with public sector rules,
- $155 billion to administer and comply with self-imposed rules and regulations,
- unquantifiable losses from forgone incentives, enterprise and innovation, and
- at least eight weeks of work to cover the cost of administering and complying with rules.
Report co-author, Deloitte Access Economics’ Chris Richardson says Australia has created a ‘compliance sector’ that employs more people than construction, manufacturing or education. “Where rules don’t exist, we create them. Where they already do, we make more. They overlap, they contradict, they eat our time and they weigh us down.”
Deloitte NFP partner Gaile Pearce says NFPs waste time on self-imposed red tape in areas such as:
- Requiring decisions to be ratified by multiple committees,
- duplicating work in different states but under separate legal entities and without sharing services, knowledge and information across states,
- following internal frameworks and KPIs that do not align with strategies, and
- failing to define role definitions for boards and management, leading to boards focusing too heavily on operations rather than managing strategy and risk.
Richardson says organisations in both the public and private sectors should reassess their approaches to managing risk.
“Taking a long, hard look at the rules that individual organisations operate within will reduce the cost and complexity of doing business in Australia.”