Red Tape Killing Mid-Tier Construction Firms

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Thursday, October 3rd, 2013
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The chief executive of a key compaction equipment firm in Australia has joined the chorus of business leaders calling for a reduction in red tape and compliance requirements on construction and other businesses.

Ian Coleman, managing director of compaction equipment business Conplant, a New South Wales based sales and hire firm of rollers, soil compactors and other equipment, says red tape is preventing mid-tier firms in Australia from reaching their full potential.

Coleman says mid-market businesses (turnover of $10 to $250 million) within the construction sector offer significant potential but are being hampered by unduly burdensome compliance requirements, adding that the recent change of government provides an ideal time to address this.

“For instance, businesses in the sector are increasingly being made responsible for the regulation of their sub-contractors” Coleman said.

“Changes to the Immigration Act, for instance, make Conplant responsible for informing their sub-contractors about their legal obligations when employing their staff or risk civil and criminal proceedings. They also have 11 pages of guidance for managers on managing their relationships with sub-contractors. Administering these and many other requirements such as those imposed by the Personal Property and Securities Act (PPSA) takes up a lot of time.”

Coleman says private enterprise in Australia is taking on an increasing burden in terms of regulatory requirements but many mid-tier businesses do not have the capacity to manage this without being distracted from other areas of their businesses.

He is just the latest in a chorus of business leaders throughout the country calling for a reduction in requirements relating to business administration as well as a simplification of environmental approval processes – in response to which the Coalition promised to cut $1 billion from annual compliance costs.

In the lead-up to the election, for instance, Master Builders Australia listed reducing the compliance burden on contractors in the industry as one of its six policy that were fundamental to building a strong construction sector and economy.

Particular areas of concern to the industry in recent times include new requirements relating to 457 visa rules, new  requirements under a recently revised Fair Work Act, duplication of environmental approval processes at federal and state levels and new reporting requirements which force contractors to report payments made to sub-contractors to the tax office.

Coleman’s comments also follow a recent report from GE Capital showing that mid-tier firms contribute around $425 billion to the Australian economy each year and employ around one in four workers throughout the country.

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