Interest rate cut welcome, but regulatory reform needed to boost productivity
- Rate cut provides relief, but red tape continues to choke the economy.
- CPA Australia calls for wholesale review and reform of existing regulations.
- Urgent cultural shift is needed to create a more business-friendly environment.
Today’s decision by the Reserve Bank of Australia (RBA) to cut the official interest rate provides some encouragement for business. However, reducing the regulatory burden remains critical to improving productivity and stimulating growth.
“This long-awaited rate cut is welcome news for businesses after operating in a challenging high inflationary, high interest rate environment since 2022,” said Gavan Ord, CPA Australia’s Business Investment Lead.
“But to really improve business opportunities and growth, the federal government must prioritise creating a more business-friendly environment through reducing the regulatory burden and improving policy development.
“Many business owners feel that government doesn’t fully appreciate the challenges their policies create.”
Mr Ord said the volume of red tape has become overwhelming, especially for SMEs.
“The sheer volume of regulation is choking the economy,” he said. “Businesses understand the need for robust regulatory frameworks, but all governments need to shift their focus towards meaningful deregulation.”
CPA Australia is calling for a formal wholesale review of existing regulations to identify ineffective or inefficient laws and regulations that could be improved or axed. New regulatory proposals must also be carefully assessed to ensure they do not simply replace old red tape with new, unnecessary restrictions.
In its 2025 pre-budget submission, CPA Australia set out five key recommendations to reduce the regulatory pressure on businesses:
- Increase investment into technology and data to improve digital interactions between business, their advisers and government.
- Fund ongoing reviews of existing laws and regulations to identify ineffective or inefficient rules for removal or improvement.
- Improve public consultation to ensure business concerns are better considered before new regulations are introduced.
- Incentivise the development of RegTech solutions to streamline compliance.
- Strengthen the assessment framework for industry levy proposals.
“If done effectively, business will have more time and resources to focus on business priorities rather than onerous compliance,” said Mr Ord. “We need governments that foster economic growth. Governments cannot regulate the economy into prosperity.
“Hopefully today’s rate cut will be the first of many over the next couple of years, but this alone won’t solve the systemic issues holding business back.
“Governments often wage battles against red tape and celebrate the occasional win, but this usually just consists of rolling back regulations introduced by previous governments.
“The cumulative effect is that the regulatory burden continues to grow, adding to the complexity businesses face.
“Regardless of who forms the next federal government, a complete cultural shift is needed – one that prioritises creating a more business-friendly environment and delivers practical solutions to regulatory challenges.
“CPA Australia will contribute its market-leading expertise to any initiatives that are aimed at improving regulatory and policy settings. Ultimately, reducing unnecessary complexity helps grow our economy, curtail cost-of-living pressures and help businesses thrive.”
About us:
About CPA Australia
CPA Australia is Australia’s leading professional accounting body and one of the largest in the world. We have more than 174,000 members in over 100 countries and regions. Our core services include education, training, technical support and advocacy. CPA Australia provides thought leadership on local, national and international issues affecting the accounting profession and public interest. We engage with governments, regulators and industries to advocate policies that stimulate sustainable economic growth and have positive business and public outcomes. Find out more at cpaaustralia.com.au
Contact details:
Simon Downes, External Affairs Lead, [email protected] or 0401 461 503
