skip to content
National Farmers' Federation

Home About NFF Media Centre Policy & Issues Farm Facts Commodities Our Members Our Partners

Counting the cost of red tape

7 August 2007

IN NEW analysis commissioned by the National Farmers’ Federation (NFF) to quantify the financial burden of bureaucratic red tape on farm businesses, agribusiness consultant Holmes Sackett & Associates found that up to 15% of net farm profit is being stripped away each year.

“The findings, in the shadow of the current Australian Government Productivity Commission Red Tape Review, are alarming and dramatically demonstrate what farmers have been saying about red tape for years… the costs are out of control,” NFF Vice-President Charles Burke said.

Holmes Sackett & Associates’ report ‘The Cost of Bureaucratic Red Tape on Agriculture’, found for 1998 to 2006, on a nominal basis, the average of ‘all farms’ analysed suffered:

  • A total expense of $22,542 a year owing to bureaucratic red tape requirements – of which $19,412 was for overheads and $3,130 was for wage expenses associated with red tape.
  • Approximately 18 lost days, taken up on tasks associated with red tape – equating to 3.6 full working weeks or 7.5% of the total working year.
  • The total expense of $22,542 per year on red tape relates to 3% of farm income, 4% of total farm expenses and 14% of net farm profit.

Holmes Sackett & Associates also stratified their study by farm activity, with the breakdown over the same period of 1998 to 2006 for ‘grazing farms’ finding:

  • A total expense of $14,134 a year owing to bureaucratic red tape – of which $11,414 was for overheads and $2,718 was for wage expenses associated with bureaucratic red tape.
  • Approximately 16 lost days taken up on tasks associated with red tape – 3 full working weeks or 6.6% of the working year.
  • The total expense of $14,134 per annum relating to red tape on grazing farms equates to 3% of income, 4% of total expenses and 13% of net farm profit of these farms.

For ‘mixed farms’ the report found:

  • A total expense of $34,367 a year owing to bureaucratic red tape – of which $30,659 was for overheads and $3,708 was for wage expenses associated with bureaucratic red tape.
  • Approximately 20 lost days taken up on tasks associated with red tape – 4 full working weeks or 8.5% of the working year.
  • The total expense of $34,367 per annum relating to bureaucratic red tape equates to 3% of income, 4% of total expenses and 15% of net farm profit of these farms.

“The total cost of bureaucratic red tape on mixed farms is higher than grazing farms in each year over the nine-year period,” Mr Burke noted.

“There is no apparent explanation why this is the case, so we are asking the Productivity Commission to find solutions for government to implement.

“The total cost of complying with red tape has risen almost 80% over the last four years… farmers are understandably frustrated and concerned about the mounting cost of regulation.

“While not all regulations are bad, the staggering weight of the costs – which continue to escalate at an alarming rate – are clearly unsustainable. Every effort should be made to eliminate unnecessary compliance burdens.

“The NFF’s submission to the Productivity Commission’s Red Tape Review, which highlights the outrageous impositions on farmers, calls for a more flexible, commonsense approach... one-size does not fit all. Regulation imposed on such a basis is grossly inappropriate and heavy-handed.

“In those areas where regulation is required, streamlining the current out-dated system, by making regulations uniform across state borders, is essential.

“The increase in business activity between states has also intensified the practical problems farmers face. Rationalisation of the processing sector means farmers have to move their produce further afield, often interstate, complicating their businesses as red tape obligations between states are often radically different.”

The NFF’s Productivity Commission submission demonstrates the problems excessive red tape causes in the following areas:

  • Transport infrastructure regulations.
  • Environmental regulations.
  • Livestock Traceability.
  • Food safety regulations.
  • Taxation Security sensitive chemicals.
  • Barriers to adjusting business structure.
  • Drought support access.
  • Pension access.
  • Workplace relations regulation.
  • Occupational Health and Safety.

The NFF’s submission is available online at: Submissions to Government, while the Holmes Sackett & Associates’ report ‘The Cost of Bureaucratic Red Tape on Agriculture’ is also available online at: Farm Business & Economics.

[ENDS]

Media Enquiries: Brett Heffernan on (02) 6273 3855 or 0408 448 250

« A smooth transition to Next G™ essential for the bush


< Media Releases