Regulatory Reform Could Boost Australia’s Economy by $20 Billion a Year

Key Points

• Australia’s productivity growth has fallen to 0.1% a year, compared with 2.2% during the 1990s, according to new research by Mandala Partners for the Australian Institute of Company Directors (AICD).
• The report says Australia’s measured regulatory burden is 33% higher than the OECD average, while productivity growth has been 85% slower than the OECD average over the past decade.
• Cutting the federal regulatory burden to levels seen in the late 2000s could generate at least $20 billion in additional annual GDP over the next decade, equivalent to about 0.7% of GDP each year.
• The research identifies declining business creation and exits, weaker job mobility, reduced investment, falling innovation and increasing industry concentration as signs of weaker economic dynamism.
• Business R&D spending as a share of GDP fell from 1.3% in 2010 to 0.9% in 2022, while non-mining investment declined from 11% of GDP in 1996 to 8% in 2025.
• The AICD says the federal regulatory compliance burden has reached $160 billion a year, or almost 6% of GDP, according to its 2025 research.
• AICD policy proposals include a joint government-industry taskforce, implementation of Productivity Commission recommendations, expanded competition and productivity programmes, changes to climate reporting requirements and wider automatic mutual recognition of occupational qualifications.

Australian News Today (ANT) October 8, 2026 – New research into Australia’s economic performance has linked the country’s declining economic dynamism with a growing regulatory burden, arguing that reforms to federal regulation could generate at least $20 billion in additional annual GDP over the next decade. The report, The Stagnant Nation: Lifting Australia’s Dynamism, was prepared by Mandala Partners for the Australian Institute of Company Directors (AICD). It says Australia’s productivity growth has fallen to 0.1% a year, its lowest rate in more than 60 years, compared with 2.2% during the 1990s. The research also finds that Australia’s measured regulatory burden is 33% above the OECD average, while productivity growth has been 85% slower than the OECD average over the past decade.

The report’s central finding is that reducing regulatory burdens could form a significant part of a broader effort to restore economic dynamism, alongside measures aimed at investment, innovation, competition and labour mobility.

What does the new Australian economic report say about regulation and productivity?

The Mandala Partners research examines changes in Australia’s economic dynamism over the past two decades and identifies deterioration across all five elements measured by the report.

The report links weaker dynamism with several developments affecting the economy, including fewer new businesses entering the market, fewer businesses exiting, reduced movement between jobs, lower investment, weaker innovation and increasing industry concentration.

According to the research, these trends have coincided with a prolonged slowdown in productivity growth.

The report states that productivity growth is now only 0.1% annually, compared with 2.2% in the 1990s. It places the current rate at its lowest level in more than six decades.

Australia is also described as falling behind developed-country peers in areas including investment and business research and development.

The research estimates that returning the federal regulatory burden to levels recorded in the late 2000s could produce an annual GDP uplift of at least $20 billion over the next decade.

That represents about 0.7% of GDP annually and approximately one-fifth of the report’s estimated $101 billion annual economic opportunity from restoring economic dynamism more broadly.

How large is Australia’s regulatory burden compared with other OECD economies?

The report says Australia’s measured regulatory burden is 33% higher than the OECD average.

At the same time, Australian productivity growth has been 85% slower than the OECD average over the past decade.

The research does not present regulation as the only factor behind Australia’s economic performance. Instead, it places regulatory complexity within a wider set of structural developments that have weakened investment, innovation, business formation and labour mobility.

The findings are particularly significant because the AICD’s latest research follows an earlier assessment of the cost of complying with Commonwealth regulation.

In its 2025 report, $160 billion and counting: The cost of Commonwealth regulatory complexity, the AICD estimated that federal regulatory compliance costs Australian businesses and the wider economy around $160 billion each year.

That figure was described as almost 6% of GDP and compared with an estimated $65 billion, or 4.2% of GDP, in 2013.

The latest research therefore builds on an earlier argument that regulatory complexity represents a substantial economic cost rather than simply an administrative issue for individual businesses.

What did AICD chief executive Mark Rigotti say about the findings?

AICD Managing Director and Chief Executive Mark Rigotti said the new research provides strong evidence of an association between increased regulation and material decreases in economic dynamism.

Rigotti said the decline in economic dynamism was contributing directly to weak productivity and economic growth.

He also said businesses and households were experiencing the consequences through lower real wages, higher relative costs and declining living standards.

Rigotti called for immediate action to improve the performance of the Australian economy and referred to the need to remove what he described as “regulatory hairballs”, echoing terminology previously used by the Productivity Commission chair when discussing complicated regulatory arrangements.

The AICD’s position is that regulatory reform should form part of a broader programme designed to make the Australian economy more dynamic, resilient and productive.

The organisation is therefore proposing institutional and regulatory changes rather than a single measure aimed at reducing compliance requirements.

Why does Mandala Partners believe economic dynamism has weakened?

Dr Adam Triggs, a partner at Mandala Partners, said the past decade had produced Australia’s weakest real-income growth in more than half a century and argued that the 2020s were performing worse on that measure.

Triggs linked weak productivity growth with a broad decline in economic dynamism.

The report identifies several indicators of this decline.

The contribution of new firms to the economy has fallen by 6% a year since 2010. At the same time, the rate at which workers move between jobs has declined from 12% in 2000 to 8% in 2025.

The report also points to declining investment and innovation.

Business R&D expenditure fell from 1.3% of GDP in 2010 to 0.9% in 2022. Non-mining investment declined from 11% of GDP in 1996 to 8% in 2025.

The research says no industry has replaced the investment contribution associated with the mining boom of the mid-2000s.

Triggs said addressing Australia’s historically high regulatory burden would be important to reversing the decline in dynamism, while also linking the issue to living standards, cost-of-living pressures and fiscal sustainability.

What changes does the AICD want the Australian government to make?

The AICD has proposed several policy measures based on the report’s findings.

One central recommendation is the creation of a joint industry-public sector taskforce.

The proposed body would be led by an independent chair and would be responsible for identifying and addressing regulatory-specific obstacles affecting economic dynamism across the economy.

The AICD also wants the government to adopt the Productivity Commission’s 47 recommendations from its five pillars inquiries.

The organisation has additionally called for the expansion of the National Competition Policy (NCP) and National Productivity Fund (NPF) so that they reflect levels seen during the 1990s.

The proposals extend beyond general deregulation and include changes to specific regulatory systems.

One recommendation concerns climate reporting requirements. The AICD proposes removing Group 3 entities from the climate reporting regime.

According to the organisation, the change would benefit an estimated 3,000 organisations and generate additional savings of about $2 billion over four years, while retaining reporting obligations for Australia’s largest emitters.

The AICD also wants the Automatic Mutual Recognition (AMR) regime to be extended to all occupations.

The organisation says wider automatic recognition could make it easier for qualified workers to move between Australian states and territories, with potential savings estimated at up to $142 million a year.

How could reducing regulation affect Australia’s GDP?

The report estimates that reducing the regulatory burden to levels recorded in the late 2000s could lift GDP by at least $20 billion annually over the next decade.

The projected gain represents about 0.7% of GDP each year.

The figure forms part of the report’s broader estimate of a $101 billion annual economic opportunity from restoring economic dynamism.

The regulatory component therefore represents roughly one-fifth of the wider opportunity identified by the research.

The finding does not mean that regulatory reform alone would deliver the entire $101 billion opportunity.

Rather, the report places regulatory reform alongside measures intended to strengthen business formation, investment, research and development, labour mobility and competition.

For businesses, the proposed reforms are intended to reduce the time and resources devoted to complying with complex rules and potentially make it easier for firms to enter markets, expand and invest.

For households, the report links stronger productivity with real-income growth and living standards.

What does the report say about Australian business investment?

Investment is one of the areas in which the report identifies a long-term deterioration.

Non-mining investment as a share of GDP has fallen from 11% in 1996 to 8% in 2025.

The report says there has been no industry capable of filling the gap created after the investment surge associated with the mining boom of the mid-2000s.

The decline is relevant to the report’s wider assessment of economic dynamism because investment is closely associated with the expansion of productive capacity.

The research also identifies Australia’s relatively weak performance in business R&D.

Business R&D expenditure represented 1.3% of GDP in 2010 but had fallen to 0.9% by 2022.

The figures indicate that investment in research and innovation has not maintained its earlier share of economic activity.

Why does business creation and job mobility matter to economic dynamism?

The report identifies business formation and labour mobility as two important indicators of how effectively an economy adapts to changing conditions.

The contribution of new firms has declined by 6% a year since 2010.

Meanwhile, the job mobility rate fell from 12% in 2000 to 8% in 2025.

Lower job mobility can indicate fewer workers changing employers, while weaker business entry can indicate fewer new companies challenging established firms.

The report places these developments alongside increasing industry concentration.

Taken together, the indicators are presented as evidence that the Australian economy has become less dynamic over time.

The AICD argues that reversing those trends would require reforms that allow businesses and workers to respond more readily to changes in technology, demand and economic conditions.

What is the broader economic significance of the AICD recommendations?

The AICD’s recommendations extend beyond reducing individual compliance obligations.

They seek to address the wider relationship between regulation and economic activity by targeting regulatory bottlenecks, competition policy, productivity programmes, climate reporting and occupational mobility.

The organisation’s proposal for a joint government-industry taskforce would create a mechanism specifically focused on identifying regulatory obstacles.

The call to implement the Productivity Commission’s 47 recommendations would broaden the reform programme beyond the measures identified directly by the AICD.

The proposed changes to climate reporting and automatic mutual recognition are more targeted interventions.

The climate reporting proposal focuses on the regulatory obligations faced by smaller organisations, while the AMR proposal focuses on reducing barriers to workers moving between jurisdictions.

The potential savings cited by the AICD are therefore spread across different areas of the economy rather than being associated with one reform.

What is the background to Australia’s regulatory reform debate?

The latest report follows the AICD’s 2025 assessment of Commonwealth regulatory complexity, which estimated annual compliance costs at $160 billion.

The new research broadens that discussion by examining the relationship between regulation and economic dynamism.

Its findings come against a backdrop of prolonged weak productivity growth.

The report says productivity growth has fallen from 2.2% a year during the 1990s to 0.1% currently, while Australian productivity growth has been 85% slower than the OECD average over the past decade.

At the same time, the measured regulatory burden is 33% above the OECD average.

Other indicators identified by the research include falling business R&D expenditure, declining non-mining investment, lower business formation and reduced job mobility.

The report therefore treats regulation as one component of a wider structural problem affecting Australia’s capacity for economic dynamism.

What could the reforms mean for Australian businesses and households?

If the report’s estimates are realised, reducing the federal regulatory burden could contribute at least $20 billion to annual GDP over the next decade.

For businesses, the proposed reforms could reduce selected compliance costs and regulatory obstacles, particularly for organisations affected by reporting requirements and occupational licensing arrangements.

The proposed expansion of automatic mutual recognition could also make it easier for workers to move between states and territories where occupational qualifications are currently subject to different arrangements.

For households, the report connects stronger productivity and economic dynamism with real-income growth, relative costs and living standards.

However, the report’s $20 billion estimate is a projection based on reducing the regulatory burden to late-2000s levels. It is therefore an estimate of potential economic impact rather than a guaranteed increase in GDP.

What is the prediction for Australian businesses and workers?

The immediate effect of the findings will depend on whether governments adopt the recommended regulatory and competition reforms.

If the proposed measures are implemented and achieve the changes estimated by Mandala Partners, businesses could face lower regulatory costs and fewer administrative barriers, while improved competition and labour mobility could support greater economic activity.

The report also indicates that regulatory reform alone would not address every structural weakness identified in Australia’s economy. Investment, research and development, business creation, job mobility and industry concentration are all part of the wider economic dynamism challenge.

For Australian businesses, the principal potential effect is a reduction in compliance and regulatory friction, particularly for organisations covered by reporting and occupational requirements.

For workers, broader automatic mutual recognition could make cross-border employment easier if the proposed expansion is adopted.

For households, the longer-term effect would depend on whether stronger productivity and investment translate into improved real incomes and lower relative costs.

The report’s central projection is that returning regulatory burdens to late-2000s levels could contribute at least $20 billion in additional annual GDP over the next decade. The scale of that benefit will ultimately depend on the specific reforms adopted, their implementation and their effect on economic dynamism.