Make it easier to start a <a href="https://bitcomme.com/how-small-retailers-are-preparing-for-small-business-saturday/” title=”How small retailers are preparing for Small Business Saturday”>small business in Australia, Productivity Commission tells Labor as financial challenges mount
The government must make it easier for businesses to start and grow, the Productivity Commission has demanded in its latest report.
Barriers impacting business dynamism – the process where businesses start, grow, restructure and close – are hurting the economy’s ability to renew.
Productivity Commissioner Alison Roberts said Australia’s failure to foster a productive economy where dynamism flourishes was halting growth.
“Australia’s economy has become increasingly stagnant,” Ms Roberts said.
It comes as Australia’s productivity rate – which measures GDP against the number of hours worked – fell 0.2 per cent in the year to the June quarter.
This means the nation worked more but produced less.
Falling productivity is a major contributor to inflation as an economy cannot grow without heaping pressure on inflation if it does not become more productive or lifts its population size.
The rate of businesses starting and closing, alongside the rate of people moving jobs, has declined in recent decades.
Meanwhile, parts of the economy have become dominated by established players as the share of Australians working in young firms has declined.
Productivity Commission’s Stephen King said fostering new businesses was crucial for job creation.
“In Australia, firms less than five years old account for 62 per cent of new jobs,” Mr King said.
“We want skills and resources to easily move to the places where they will create the most value.”
The report recommends changes that make it easier for businesses to deal with regulation and understand their responsibilities.
Ms Roberts said the burden of regulation has surged in a major detriment to businesses.
“In 2025, boards spent 55 per cent of their time on compliance – up from 24 per cent 10 years ago. That’s time that could be spent focusing on strategy and innovation,” Ms Roberts said.
“Finding ways to safely cut back on regulation is important, but we also need to make our regulatory system easier for businesses to navigate.
“Businesses often struggle to work out which rules apply to them, where to find authoritative guidance and how different regulatory requirements fit together.
“We think regulatory guidance should be easier to find and navigate, provided at the points where businesses need it and designed so that emerging tools such as AI and business software can use it effectively.”
The report also called for a “tell-us-once” approach which ensures businesses do not have to repeatedly provide governments with information they already have.
Meanwhile, the Productivity Commission found that boosting management capability in Australia to levels seen in the US would lift productivity by 9.8 per cent.
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