Does red tape strangle an economy or provide a safety harness?

| June 5, 2012

It can be hard to tell when red tape has grown out of control and when it is the glue that is holding things together. Fergus Neilson says that removing red tape could leave Australia open to corruption and commercial opportunism.

Open the pages of any publication of even the slightest ‘rightest’ hue and you will trip over demands for an immediate removal of red tape.

Bureaucratic interference and rule setting is generally categorised as sugar in the petrol tank of commercial and economic progress.

Yet, hold it for a moment. Weren’t these rules prepared and enacted as a consequence of rightly perceived wrongs, inequities and downright dishonesties?

Plain paper packaging rules for tobacco have been rightly introduced as a consequence of the undeniable damage done by an addictive drug. You don’t need to have two family members die of emphysema to wish the tobacco industry had a dose of its own medicine.

Planning laws are enacted so that Sydney doesn’t end up looking like Palermo, Italy. Strict engineering standards have ensured (so far) that Qantas jets don’t fall out of the skies as frequently as those operated by Air Nigeria or Aeroflot.  Speed cameras, safety belts and drink-driving laws have driven absolute numbers of road deaths down to levels not seen since the 1950s.

Yes, it is entirely possible that a purely capitalist society as envisaged by Ayn Rand might throw up rewards for the privileged or connected. Think the early stage capitalism as exemplified by late-19th century America or early 21st century Russia. But you wouldn’t want to be poor in either of those societies. We should not forget that around 60% of personal bankruptcies in the present day United States are, in whole or part, as a consequence of an inability to pay medical bills. Or that life expectancy in Russia has declined considerably since the collapse of the Soviet Union.

Perhaps we would be better served by recognising that Melbourne, Sydney, Perth and Adelaide are all in the top ten most liveable cities in the world (Economist Intelligence Unit’s Global Liveability Report 2011). That corruption rankings place Australia at 8th least corrupt out 182 nations; with New Zealand in first place. That Australia is expected to deliver the highest rate of economic growth in the developed world through 2012/13. That government debt is inconsequential. And that Australia consistently ranks in the top category as regards satisfaction with life.

I remain unconvinced that taking an axe to red tape will do any more than wedge open the door to more corruption and commercial opportunism – generally at the expense of the consumer.

Fergus Neilson is Co-Founder of The Futures Project. Fergus brings a wide range of business and life skills gathered from a career in the armed forces, investment banking, the United Nations, McKinsey & Company and private equity investment. Always sceptical of solutions imposed ‘top-down’ and increasingly frustrated by the default position that invariably sees cleaning equipment bought in only after the proverbial has hit the fan.

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