Introduction

The potential for productivity growth to generate higher incomes makes it a natural and important consideration for decision-makers. Productivity is the only driver of income growth that is unlimited, as opposed to resource exploitation or increases in population and labour force participation, each of which faces natural limits. The continuing need to stimulate productivity growth rightly remains at the forefront of government policy, and is a key priority of the Australian government.

Almost all regulations have the potential to impact on productivity, either through the incentives which they provide to businesses to change operating and investment decisions, or more directly through their impacts on compliance costs. It is inconceivable to think of a modern economy functioning without regulation. However, the challenge for government is to deliver effective and efficient regulation. Good quality regulation is critical to a well-functioning economy, while poor regulation can cause frustration and unintended consequences, or simply add red tape that adds nothing useful to the economy.