Mercatus research shows link between regulations and budgets

New research, by the RegData team at the Mercatus Center in the US, sheds light on the strong correlation between ‘government agency budgets’ and ‘regulatory restrictions’.

Mercatus has graphed the number of ‘restrictions’ – defined as the number of restrictive clauses in regulations (such as ‘prohibited’, ‘must not’, ‘shall’) – against government agency budgets producing those regulations. The strong correlation below is both unfortunate and unsurprising:

Mercatus Graph 1

Patrick McLaughlin and Oliver Sherouse describe their graph as follows:

These two lines – total agency restrictions and total agency budgets – move in the same direction. In fact, over the period for which we have data (from 1975 to 2014), the simple correlation between total of all regulatory restrictions and total of all agency budgets equals 0.91. (A correlation of 1 would indicate a perfect match.)

The scatterplot reveals more of the detail via agency through time:

Mercatus Graph 2

It seems the Environmental Protection Agency (EPA) is the clear winner, followed closely by the Occupational Safety and Hazard Administration (OSHA) and the Federal Communications Commission (FCC).

Note that while the data above shows a correlation, it doesn’t quite answer a number of other questions about causation:

While the correlation between agency budgets and the levels of agency restrictions is clearly high, the question of whether one causes the other remains unanswered. If budgets are increased, does regulatory output correspondingly increase? Do budgets change in response to changes in regulatory output? Or is a third factor—such as new legislation directing agencies to regulate or deregulate—the driving force?

This means the safest bet is probably just to stop doing both.


Tax compliance burden reaches new heights

Research by an Australian law firm to develop a ‘tax compliance index’ is a sobering reminder that government efforts to cut red tape have much work to do. As reported in the Australian Financial Review yesterday:

Some 7500 pages of new tax rules have been imposed since the election of the Abbott government…

Law firm Mills Oakley has created its own index for tracking the amount of new tax legislation and regulations introduced each month by federal, state and territory governments and has found that while red tape might be being cut in other areas, the volume of new tax rules has not let up.

The firm’s private advisory partner, John Storey, said after a slight lull in the volume of new tax laws after the last federal election, the amount of tax compliance continues to increase.

While state and territory government revenue offices account for some of the paperwork, the federal government is the biggest offender…

“It’s this constant stream of new tax rulings – but I’m only talking about tax; in other areas of red tape it might be doing better,” Mr Storey said.

That the measure of regulatory burden in this area has grown so substantially is particularly concerning in light of multiple omnibus repeal days, as well as IPA research which showed that, since the election of the Coalition government in 2013, the pages of Commonwealth legislation passed annually has dropped by 43 per cent.

laws_passedThis demonstrates that efforts, critical as they are, to combat over-legislation can only form part of the deregulatory agenda. Regulations and delegated legislation are a significant part of the red-tape problem, which must be dealt with to ensure businesses are able to focus their efforts on actually conducting business.


You can’t plain package the facts


new paper by Ashok Kail and Michael Wolf clearly demonstrates that there is an “absence of any plain packaging effect” on the sale of tobacco. For Nanny Staters, it isn’t pretty reading.

As the graph to the right shows, the introduction of Nicola Roxon’s plain packaging laws had no statistically significant effect on the sale of tobacco in Australia.

I wasn’t in the room when they wrote the policy, but I don’t think this the outcome they were hoping for.

This is the second blow for the policy’s supporters this week. On Monday, the Sydney Morning Herald reported that sales of cigarettes to retailers had risen slightly last year, the first full year of plain packaging.

In 2013, the first full year of plain packaging, tobacco companies sold the equivalent of 21.074 billion cigarettes in Australia, according to industry data provided by Marlboro maker Philip Morris International.

That marks a 0.3 per cent increase from 2012, and reverses four straight years of declines.

Four straight years of decline comes to an end. But why?

“When you commoditise a product, people go after the price,” said Eoin Dardis, director of corporate affairs for Philip Morris in Britain.

“If people are buying cheaper stuff, maybe they’re smoking more of it, I don’t know … It’s definitely a point of interest and that’s something that absolutely needs to be explored because that’s the counter of what this policy was seeking to achieve.”

So now that it’s clear that the policy is an absolute failure, I will wait patiently at my desk for Nicola Roxon’s public apology.


Charities drowning in red tape

red-tape-2_729-420x0Red tape is not only stifling businesses but also drowning charities in paperwork. Meals on Wheels in Wagga Wagga is having more and more volunteers tied up with administration work, instead of delivering food to the elderly. Volunteers face increasing responsibilities that they weren’t expecting, putting added pressure on those who just want to help out the needy.

Fortunately local federal MP Michael McCormack is seeing how red tape quickly becomes a “recipe for disaster”:

It is unnecessary and burdensome…we certainly want to end the nanny state mentality and revisit legislation to ensure it is easier for them to get the job done.

I’ve written before about how too much red tape kills charities, depriving the most vulnerable in our society from the help they desperately need. The more sinister aspect of these laws is that governments benefit where charities fail. Big government steps in to fill the role previously occupied by charities overburdened by regulation. This creates a culture of dependency where people instinctively turn to politicians to solve their problems, instead of trying to remedy them through their own community’s initiative and benevolence.


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