Better regulation

In my last column, I reflected on the need to take action on regulation. In July, we also released our final policy position paper titled ‘Towards better regulation.’ We believe deregulation – stemming the growth in regulation and actually cutting back existing red tape – is a key element of the agenda for boosting national productivity and a crucial policy priority for whoever wins the election.

The growth of regulation and administrative compliance is not only costly for business, but gets in the way of boards doing their real job: improving corporate performance and shareholder returns, devising strategy and making good business decisions which lead to more investment and jobs for Australians.

We need better and more efficient regulation. The whole system of creating – and removing – regulation needs to be reformed, not just the regulations themselves.

Better understanding of business

More effort should be directed at recruiting for senior public sector management positions directly from the private sector. The next government should also institute executive exchange and secondment programs to allow government officials and ministerial advisers to work in the private sector, and to similarly allow private sector executives the opportunity to work in government.

In our paper, we also outlined reform which relates to some specific policy areas which are set out below:

Extended Statutory Business Judgment Rule

We have long advocated for an extension of the business judgment rule beyond its current limited scope. The defence should be available when directors carry out their roles honestly and with integrity. This would assist directors to take the commercial risks needed to succeed.

The need for suitable protections for directors when making forward-looking statements about the prospects for their company is also an urgent area for reform.

Australia’s insolvency laws are regarded as amongst the harshest in the world for directors. Current laws on insolvent trading sometimes prevent the best stakeholder outcomes from being achieved. The critical element to address our concerns is a extended business judgement rule defence.

Such reforms, instituted by whomever may be in government, are critically important to the future of Autralia.