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Small businesses should be considered during the development of new legislation, regulations, rules and other requirements, according to the NSW Small Business Commissioner.
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Rightsizing regulation report calls for ‘crucial’ SME consideration
18 October 2024
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A new report by the NSW Small Business Commissioner identified opportunities to ensure small business perspectives were accounted for during rightsizing regulation.
The report, Rightsizing Regulation: reviewing small business experiences with regulatory processes, highlighted the benefits of accounting for the specific intended and unintended consequences for SMEs in designing new regulations and the importance of inclusive consultation.
NSW small business commissioner Chris Lamont said stakeholder feedback showed that small businesses were burdened by complex regulations.
Lamont said he was concerned SME requirements were not being thoroughly considered and that new regulation was adding significant costs in a tough economic climate.
“One of the most frequent complaints I hear is the impact of red tape,” he said.
“More than half of the small businesses responding to this review told us that regulation has become harder to navigate in the past year, while only 2 per cent said it had gotten easier.”
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The rightsizing regulation report included nine recommendations to support best practice policy development.
It included a two-stage regulatory impact assessment, tiered regulation by default, SME consultation strategies, reporting on stakeholder feedback and a regulatory impact assessment registry.
Other recommendations were a small business impact statement requirement, post-implementation and ex-post reviews, establishing an independent oversight body and capability uplift and acquisition of an external enterprise.
Lamont said a key recommendation in the report was adding a Small Business Impact Statement into the policymaking process.
“This will ensure that small businesses’ unique needs are explicitly considered and factored into policy design,” Lamont said.
“Embedding small business impact statements into policy design would assist both regulators tasked with compliance as well as small business as it would better quantify the potential costs and benefits of proposed regulation.”
The NSW Small Business Commissioner received feedback from over 1,000 small businesses as it wrote the report.
Seven per cent said they felt regulations were tailored to them and 13 per cent believed the cost of regulation was justified by benefits.
The commissioner said only 15 per cent of respondents felt listened to and trusted their feedback was used to inform policy decisions.
Lamont said the motivation behind the report was to understand the real-world impact on small businesses and use that to design policies “that work for everyone.”
“It’s crucial for small businesses to feel empowered and represented when new regulations are being developed and my recommendations provide a pathway for this to occur.”
“Further recommendations call for exemptions or tiered regulations, improvements to regulatory impact assessments and independent oversight, building on best practice approaches implemented in other jurisdictions.”
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