Small to medium businesses (SMEs) are facing tough “green tape challenges”, according to a recent study by the NSW Business Chamber. But the future may be more streamlined, says Business Chamber CEO Kevin McDonald.
Released on 17 September 2007, the study Environmental Law and Small to Medium Enterprises in Australia predicts one of the major challenges facing Australian businesses over the next decade will be “green tape”.
In a statement released at the time of the report, the NSW Business Chamber said the major trends highlighted by the report include:
- Environmental law in Australia is the one of the “fastest growing areas of law both in terms of scope and complexity”.
- Regulatory penalties are becoming “more severe” and regulatory bodies and local councils are gaining “greater power” to monitor and prosecute businesses.
- The traditional regulatory focus on large businesses and industry is shifting to also cover SMEs.
- SMEs in resource-, energy- and waste-intensive industries will be at the “greatest risk” of increased costs of compliance in a tighter regulatory environment.
- NSW has the most red tape relative to other jurisdictions, with 68 Acts relating to the environment passed since 1986. According to the report, this is almost equal to the other states combined (84 Acts) and surpassing new Commonwealth legislation (19 Acts).
- SMEs will be further impacted as local governments across Australia continue to tighten environmental conditions in their planning controls.
- The burden on businesses is tightening with an emerging trend of “vicarious liability” and “strict liability”. “Vicarious liability” is where the corporation is deemed to have breached an act through the actions of one its directors or managers. “Strict liability” arises where an offence can be imposed without proof of fault or intent.
“SMEs should prepare for increased regulation in the use of energy by businesses so they are in a position to be competitive when an emissions trading scheme is introduced,” the report says.
“The disparate nature of environmental law across its many jurisdictions makes it difficult for small business, which by their nature are heterogeneous and diffuse, to be aware of the environmental regulations impacting their business,” the report added.
NSW Business Chamber CEO Kevin McDonald highlighted that Australian businesses are currently dealing with five levels of intervention in environmental regulation:
- international law;
- national law;
- state law;
- local councils; and
- various arms of the judiciary.
“It is no surprise that we are seeing the emergence of “green tape” as a real business issue,” he said. But he stressed governments have recently made “real progress” in streamlining the traditional areas of “red tape”, without “compromising” the underlying purposes of regulation.
Consequently, Mr McDonald highlighted the report is a way to learn from past red tape burdens on SMEs to ensure green tape is administered more efficiently in the future.
"This study should not be seen as an attempt by business to unwind regulation,” he said. “Rather it should be seen for what it is - a warning to learn from the "red tape" lessons of the past and ensure that the administration of "green tape" is done in the most efficient and streamlined way possible.”