CPA Australia told a federal parliamentary committee that red tape is a direct drag on productivity, and small businesses are feeling it most.
What’s happening: CPA Australia has warned a federal parliamentary committee that Australia’s productivity crisis is no longer a slow-burn problem.
Why this matters: For small business owners, this is not abstract. CPA Australia says regulatory overload is imposing significant and growing costs on smaller operators, while lagging technology adoption risks widening the gap further.
Australia’s largest accounting body is done waiting for incremental change. In a submission to the federal government’s Select Committee on Productivity in Australia, CPA Australia has delivered a pointed warning: the productivity crisis is serious, it is worsening, and small businesses are paying a price governments have been too slow to acknowledge.
No quick fix
CPA Australia’s Business and Investment Lead, Gavan Ord, was direct in his assessment.
“Australia is running out of time. If productivity continues to stagnate, living standards will go backwards and the economy will struggle to sustain growth,” Ord said.
“This is not an abstract policy debate. Weak productivity ultimately means lower wages growth and fewer opportunities for Australian businesses and workers.”
The submission, which draws on recent work with the federal government and the Productivity Commission, argues that piecemeal reforms and short-term political thinking have failed to arrest the decline.
“Productivity will not recover through tinkering around the edges. It requires sustained, coordinated reform across tax, regulation, fiscal policy and business capability,” Ord said.
Red tape’s real cost
For small business owners, the regulation burden is where the frustration is most acute. CPA Australia’s submission singles out regulatory overload as a direct and growing drag on productivity, not a side issue.
“Red tape is not just an inconvenience, it is a direct drag on productivity. Governments must stop treating regulation as the default response and start proving that non-regulatory options have been exhausted,” Ord said.
The body also flags the tax system as compounding the problem, arguing it has become too complex and misaligned with where the economy is heading.
“Our tax system is increasingly complex, uncompetitive and misaligned with where the economy is heading. Continuing to avoid meaningful tax reform is a deliberate choice to accept weaker productivity and slower growth,” Ord said.
Beyond regulation, CPA Australia raises a concern that will resonate with many smaller operators: the assumption that technology will solve the problem on its own.
The submission points to Australia’s lagging technology adoption, particularly among small businesses, and calls for better targeted support rather than a hands-off approach.
“We cannot assume technologies like AI will magically lift productivity. Without proper support, many small businesses will be left behind, and the productivity gap will widen,” Ord said.
What needs to change
CPA Australia’s submission also calls for action on young entrepreneurship, arguing Australia has too few young business owners relative to its population.
“If Australia wants a more dynamic and productive economy, it must make it easier for young Australians to start, grow and acquire businesses,” Ord said.
With the federal Budget approaching, CPA Australia says the opportunity to act is now. The body argues the government has rightly placed productivity at the centre of the national conversation, but warns that rhetoric alone will not be enough.
“Excessive public spending can pull capital and labour away from more productive uses and ultimately make the problem worse,” Ord said.
CPA Australia is Australia’s leading professional accounting body and one of the largest in the world. More at cpaaustralia.com.au
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