Cutting Red Tape In Project Approvals Can Boost WA Jobs

Western Australia's prospects of becoming the fastest-growing, highest-potential state in Australia after the coronavirus recession was boosted by the commitment of the Commonwealth and McGowan governments to slash red tape for WA's resources sector.

Yesterday, the Commonwealth government confirmed its intention to enter into a bilateral approval agreement with WA under the Environment Protection and Biodiversity Conservation Act 1999.

This would put the WA state government solely in charge of the environmental approvals process, removing unnecessary Commonwealth duplication.

Commonwealth government approvals for big projects currently average 1013 days, or almost three years.  The bilateral agreement could reduce the approval time up to six months, and would help unlock more than $100 billion of development.

This latest initiative builds on momentum developed by the state government to cut red tape.  In 2018, the McGowan government launched a whole of government red tape reduction initiative called Streamline WA.

The initiative has already produced tangible results, such as the establishment of risk-based statutory guidelines for mining proposals and mine closure plans.

The EPBC Act, and green tape more generally, impose significant costs on the Australian economy.

My research released this year found that regulation under the Act has increased by 445% since the year 2000.  With 4,820 individual regulatory restrictions, the Act provides one of the most significant regulatory burdens to WA's most important industry, the resources industry.

According to a recent survey by the Chamber of Minerals and Energy of WA, the resources sector contributed $102 billion of value to WA's economy, including by paying $45.6 billion in wages, in the 2018-19 financial year.

Additionally, the sector directly and indirectly supported 452,229 full-time equivalent jobs in the state ― that's just over a third of total employment in WA.

The resources sector is central to WA in emerging from the COVID-19 lockdown-induced recession.

By reducing the green tape that holds this sector back, Premier Mark McGowan can ensure that WA has the best-performing economy in Australia.

According to the Australian Bureau of Statistics, 73,000 West Australians have lost their job since March and an additional 98,600 people are working fewer hours than usual because there is no work, not enough work, or they have been stood down.

These job losses are both an economic and social tragedy that will have a lasting negative impact on people's lives, from worse mental health to increased likelihood of alcoholism and drug dependency.

The experience from past recessions has demonstrated that the longer people are out of work the harder it is for them to get a job.

While West Australians should be encouraged by the latest move to cut red tape, it is up to the McGowan government to hold its Commonwealth counterparts to their word.

The WA and Commonwealth governments originally finalised a bilateral agreement way back December 2014.

The draft agreement sat in the bottom draw of a bureaucrat's desk until November last year when Mr McGowan revived interest in it, saying that "we need to do everything we can to speed up approvals and bring on these new jobs as a matter of urgency."

Indeed, we do.  But doing so means moving beyond "confirming an intention" to enter into the bilateral agreement, to actually signing that agreement.

Red Tape Holds Back Growth

The WA state government is leading the way for a post-lockdown recovery based on slashing business-crushing red tape to support small businesses.  Premier McGowan's moves to make it easier for certain businesses to change how they use their premises and streamline the process for single development applications are welcome.  However, the Government can and must go further in cutting red tape to make WA an economic powerhouse in the wake of the devastating lockdown which has smashed the productive private economy.

Red tape imposes an enormous burden, reducing economic output to the tune of $176 billion across Australian each year.  While this is a dangerous handbrake on prosperity, it is also a serious moral issue.  By preventing people from starting new businesses, innovating new products and creating opportunities for themselves and their families, red tape stifles the aspirational spirit that drives so many West Australians.

My recent analysis estimated that the private sector has been crippled by the coronavirus lockdowns, while the public sector remains relatively unscathed.  Jobs in the private sector have decreased by 7.7 per cent since the middle of March while the public sector has seen only a 1.7 per cent decline.

Despite politicians insisting that "we are all in this together", their pay and hours remain the same while 1.3 million people have had to work fewer hours and another 900,000 have lost their jobs entirely, according to data from the Australian Bureau of Statistics.

This environment, where the private sector is punished while the public sector remains unscathed, cannot be maintained if there is to be an economic recovery.  The private sector accounts for 80 per cent of economic activity, and it is only by taxing this activity that we can afford public services such as roads, schools, and hospitals ― including ICUs for coronavirus patients.  The number one priority must be maximising this wealth creation, and slashing red tape is one of the best ways to do this.

The link between red tape and economic prosperity is clear.  Cutting red tape allows for more businesses, more jobs, and higher wages.  It allows people to experience the dignity of work, and encourages people to be enterprising by reducing unnecessary compliance costs.  Most importantly, red tape disproportionately impacts small businesses, so cutting red tape will provide a boon to sole traders and family-run businesses across WA.

Small businesses are vital to the West Australian economy.  According to the most recent data from the ABS, there are 226,416 small businesses in WA.  At least there were before the lockdown started in March.

Creating new businesses is essential to the economic recovery.  Small businesses don't just provide an income to their owners and employees, they provide a sense of community and a ladder to prosperity.

WA has been incredibly successful in containing COVID-19, and has done so without carelessly treading on freedoms as the Eastern States so willingly did.  The WA government should quickly lift the remaining restrictions on businesses, while maintaining social distancing and hygiene requirements.

After allowing all businesses to reopen, Mr McGowan must slash red tape.  The tentative steps taken in this direction are encouraging, but there is no shortage of overzealous regulation that can be discarded.  WA has 107,812 individual regulations on the books, according my analysis published last year.

Food truck owners who want to set up at the local park or do the rounds of the suburbs are simply not allowed to do so.  They can only serve customers in registered areas and at certain events, all of which have been cancelled.

Chauffeurs who have seen their bookings drop by 80 per cent or more are still required to pay 10 per cent of every fare to the government's taxi plate buy-back scheme.  And that's in addition to GST.

And when a Perth surgeon wanted to start an intimate, high-end wine bar on William Street, he was forced to spend upwards of $12,000 on communicating with police about his liquor license.

This kind of onerous and petty red tape is simply unaffordable in the post-COVID-19 economy.

Mr McGowan must set an example for his Eastern States peers.  By slashing red tape, the Government will allow West Australians to create a bonanza state once again.

Economic Zone Can Be Boost For North

Making Northern Australia a special economic zone with low taxes and less red tape, and devolving governance away from Canberra to regional hubs such the Kimberly, will deliver an economic boom and make Australia safer.

According to a report earlier this month, the Government is planning to strengthen Australia's engagement with India and Southeast Asia, in part to reduce Australia's economic dependence on China.  The rise of China over the past two decades has generated many benefits for the Australian economy, particularly in the resources sector.  Increased demand for commodity exports from Australia has driven investment, job creation, and supported the growth of regional communities.

However, this has come at the cost of a growing dependence on the Communist dictatorship which, if not managed, will erode Australia's economic and political sovereignty.

The federal government's planned return to a Budget surplus this financial year would not be possible without the revenue generated from commodity exports to China.  This has created a vulnerability for Australia and provided China with leverage.

In December the Chinese Ambassador to Australia, Cheng Jingye, hinted at this when he said China's purchases of Australian exports "... is largely responsible for the federal budget returning to surplus ahead of schedule".

Northern Australia Minister Matt Canavan, for one, appears alive to the issue, stating "we [Australia] shouldn't hitch our star to one country because that elevates risk, not just from a political perspective but from an economic one, too."

The task is to pivot Northern Australia, which is the area above the Tropic of Capricorn and all of the Northern Territory, away from its heavy reliance on China.

There are already some good initiatives underway.  During the recent US-China trade war, concerns were raised that a large amount of the rare earth minerals used for US military equipment and industry came from China, creating a national security vulnerability.

This led to renewed interest in Australia culminating in an agreement last year for the US to expand its use of Australia's rare earth minerals including antimony, manganese, and rutile.  Australia is the second largest producer of rare earths, accounting for 13 per cent of global production.  This initiative sits alongside the Northern Australian Infrastructure Facility, which provides finance to projects in the region, and an expansion of defense capabilities in areas such as Darwin.

Now is the right time to build on this good start by turning Northern Australia into a Special Economic Zone.

SEZs are designated areas where tax and regulation are significantly relaxed or reduced.  The focus of such a zone in Northern Australia would be to promote investment, create employment opportunities, and transform depressed and under-developed regions into areas of considerable economic activity and opportunity.

Reducing regulation and red tape will enable the development of more infrastructure, such as dams, which is crucial to the development of the region.  The North of Australia receives approximately 60 per cent of Australia's rainfall but currently only about two per cent is captured.

Crucially, a special economic zone will enable the North to access more diverse sources of capital and investment.  The two major impediments to business investment in Australia are the corporate tax rate and red tape.  Australia's corporate tax rate of 30 per cent is well above the OECD average of 25 per cent, while red tape reduces the size of the Australian economy by $176 billion each year which is the equivalent to 10 per cent of GDP.

As a consequence, new private sector business investment in Australia is just 10.9 per cent of GDP which is lower than the rate in the economically depressed Whitlam-era.

A lower regulatory and tax impost will help the north access more capital from the US, South-East Asia, and India.

Economic liberalisation is not only necessary for economic prosperity.  It is now a national security imperative.

Time To Break The Shackles

Western Australia has always been a fast-moving, entrepreneurial, and successful state.  Blessed with an abundance of natural resources, a thriving agricultural sector, and people with go-ahead attitude, WA has much to celebrate as the 2010s draw to a close.

More people than ever before are in full-time work, exports are booming, and West Australians possess a lifestyle that is the envy of the Eastern States.

Now is the time to take stock and consider the challenges and opportunities that WA has as we prepare to enter the first year of a new decade.

CHALLENGES

Red Tape

The first challenge for the West Australian economy is to cut red tape.

My recent research found WA regulations placed nearly 108,000 restrictions on businesses, organisations, and individuals.  The restriction count is comparable to the Eastern States, even though they have far bigger populations than WA.  There is significant work to do be done to cut the red tape burden that is weighing the economy down.

The Government has taken positive steps to cut red tape.  Its willingness to work with the Federal Coalition has delivered positive results.  Establishing a "one-stop shop" for environmental approvals will fast track investment in the resources sector by removing the onerous process of dealing separately with both State and Federal regulators.

Its Streamline WA project has also raised the profile of red tape reduction.  The challenge now is for the government to deliver reductions that unleash the WA economy.

Green Activism

The second major challenge is to fend off the continual attempts by the green movement to undermine WA's resources and energy sectors.

The mining industry alone accounts for 40 per cent of the WA economy.  Attempts by activists to shut down new mining projects through lawfare and boycotts must be resisted.  The Environmental Protection Authority's plans from earlier this year to introduce a backdoor carbon tax through industry "contributions" to a carbon abatement fund has fortunately been quashed.

The Government needs to ensure that environmental policy does not take the state down an economically harmful route.

The WA Government should form sensible policy to allow the resources sector to flourish.

The move to allow fracking last year was a step in the right direction.  However, the ban is still in place for 98 per cent of the state.

New gas projects will help drive down the cost of energy that is currently crippling the Australian economy.

Fair Share of GST

Thirdly, despite recent positive changes to the State distribution of GST, WA is still not receiving its share of revenue.  Even with improvements, WA continues to subsidise economically underperforming states like South Australia.

West Australians should reap the full benefits of their strong economic performance and the WA Government should argue for States to retain 100 per cent of the share of the GST that they raise.

OPPORTUNITIES

Small Businesses

With red tape reduction on the cards, and the phasing in of small business tax cuts by the Federal Government, small business in WA is in a strong position to thrive.  Small businesses account for 97 per cent of all businesses in WA and contribute over $48 billion to the State's economy.  Small business growth promotes competition and creates employment opportunities.  Favourable conditions for small business will allow WA to take full advantage of a strong culture of ingenuity and entrepreneurship.

Resources Sector

Next year will be another big year for the WA resources sector.  The deal struck between Australia and the United States on mining rare earth materials will be a boon for the State's mining sector.

The ability to form new supply chains with the US offers Australia's mining industry a significant opportunity.  WA has the resources to take full advantage of the new partnership.  WA is already home to the largest rare earths producer outside of China, Lynas, which mines and processes rare earth oxides at Mt Weld, south of Laverton.

High iron ore prices have boosted Australia's mining exports and strong demand from Asia for Australian resources is likely to continue to grow in the new year.

The strong prices have resulted in higher-than-forecast Government surpluses, which have given the Government the opportunity to tackle the State's growing debt.  While prices are expected to ease, the recent pickup in investment combined with moves to cut red tape in the resources sector will put the WA economy in a good position moving into the 2020s.

Sporting Capital of Australia

And finally, WA has the opportunity to turn Perth into Australia's new sporting capital in the new decade.

New and improved facilities will attract more sporting events.  With the redevelopment of the WACA, the iconic wicket can play a greater part in world cricket.  Optus Stadium has packed more Fremantle and West Coast fans in to create an even more hostile environment for the eastern clubs.

This should go a long way to boosting the odds of bringing a flag home to Perth in the 2020s.

Cutting Red Tape Will Drive Growth

Momentum is building for bi-partisan reform between the Western Australia state Labor government and the federal coalition government to cut red tape and boost economic growth.

As reported in these pages on 27 November, the McGowen government has reached out to the federal government to establish a "one-stop shop" for environment approvals.  This means that WA would be able to conduct the environmental assessment on major projects in the state, such as gas, gold, and iron ore developments, removing the need for assessment at the federal level as well.

This is a very important development which could reduce the approval time of major projects by up to six months.  The fast-tracking would not alter environmental standards because it is the duplication between state and federal regulations that is to be removed, rather than reducing underlying regulatory obligations.

In announcing the initiative Premier McGowen said "industry has been crying out for bilateral approvals and we are responding to these calls.  This plan ensures we maintain the highest environmental standards, but don't get bogged down in bureaucracy."

This is an example of Team WA working across party lines to achieve sensible economic reform.  At the federal level red tape reduction is being led by the highly capable Ben Morton, who is the Assistant Minister to the Prime Minister and the Federal Liberal Member for Tangney in the city's south.

The bi-partisan initiative comes at an important time.

Across the nation business investment is just 10.9 per cent of GDP, which is lower than it was during the Whitlam years and is slightly above the recessionary lows of the early 1990s.

New private sector business investment in Western Australia is 54 per cent below the 2013 peak which is holding back productivity, employment, and wages growth.

While there are non-policy reasons for this decline, it is red tape which has caused the decline to business investment to be deeper, wider, and more protracted than it otherwise would be.

My recent research estimated there are 107,817 regulatory restrictions contained in Western Australian legislation alone.  To put this in context, New South Wales has a population around three times that of WA, yet has slightly fewer regulatory restrictions on the books.

Regulatory restrictions refer to instances in legislation which restrict or compel behavior, including words such as "should", "must", and "shall not".

Importantly, my research found that the Department of Mines, Industry Regulation and Safety was responsible for imposing the most regulation on the Western Australian economy with 17,097.  This was followed by the Department of Jobs, Tourism, Science and Innovation with 16,272 regulatory restrictions, and the Department of Justice with 15,226 restrictions.

It is a big problem that the two departments who have primary oversight of the WA resources sector and job creation, respectively, are also responsible for imposing the most regulation.

This will undermine the ability of the McGowen government to achieve its ambitious objective of overseeing the creation of 150,000 new jobs in WA over the next five years, which includes some 30,000 new regional jobs.

To understand the problem of red tape in the resource sector, consider the Roy Hill iron ore project located in the Pilbara region.

The Roy Hill project required some 4,967 licenses, permits, and approvals for the pre-construction phase alone, approximately 79 per cent of which were imposed by the state government.

And while Roy Hill has been able to successfully navigate the reams of red tape, many other projects, particular those being undertaken by smaller businesses, cannot.

To further build on the encouraging bi-partisan effort to cut red tape, the WA and federal governments should also introduce a one-in-two-out approach where two regulations must be repealed for every new one introduced.  This will place a binding constraint on bureaucracy to ensure there is a steady decline in regulation.

Red Tape Reduction A Way To Prosperity

Australia is starting to see bi-partisan economic leadership, with both the federal Coalition government and the WA state Labor government cutting red tape and taxes to unleash prosperity, as President Trump has done in the United States.

One week ago, Prime Minister Scott Morrison announced at an event with the WA Chamber of Commerce and Industry in Perth that the Coalition government would cut red tape, lower taxes, and reform industrial relations as a part of his government's ambitious economic reform agenda.  The red tape reduction effort will be led by the highly capable Ben Morton, the Assistant Minister to the Prime Minister and federal Member for Tangney.

At the state level, the McGowan government announced the Streamline WA web portal on 25 June, which will allow Western Australians to "share ideas on how the government can improve and simplify the regulatory process".  This is an exciting development.

The bi-partisan embrace of cutting red tape is sensible.  Cutting red tape does not mean eliminating all regulation.  It means eliminating regulation which is unnecessary and goes beyond what would minimally be required to achieve a public policy goal, such safer workplaces.  Governments should aim to achieve regulation which is "minimally effective":  the fewest rules needed to achieved a given objective.  But the current regulatory regime is far from minimally effective.

My research estimated that red tape costs Australian businesses, workers, and families $176 billion each year, which is the equivalent to 10 per cent of Gross Domestic Product.  This cost represents all of the businesses never started, the jobs never created, and the dreams and aspirations which go unfulfilled due to bureaucratic interference.

State government policy is a key driver of this red tape burden.  My preliminary research found 79 per cent of the total number of regulations required to gain government approval of a resources project in WA are imposed by the state government.  And approximately 40 per cent of all regulatory obligations arise form reporting duties alone.

The Roy Hill iron ore mine demonstrates the point.  It required some 4,967 licenses, permits, and approvals for the pre-construction phase alone.  More were required for the operational and export phases.

On top of the red tape burden are state taxes, foremost amongst them is the payroll tax which is a tax on jobs and wages.  When a business's total wage bill increases as a result of recruiting more staff or paying higher wages, so too does their payroll tax bill.

In WA, businesses must pay the payroll tax when their total annual taxable wages exceed $850,000.  However, the threshold in other states ranges from $1 million in NSW (from 2021), to $1.5 million in South Australia.  Victoria, hardly a state with a burgeoning resources sector, is the only state with a lower threshold at $650,000.

The cumulative impact of red tape and high taxes is weighing on the WA economy, where new private business investment has declined by over 50 per cent in the past five years, and is at its lowest level in over a decade.  At the national level, new private sector business investment is now lower as a percentage of GDP that it was during the Whitlam era.

To avert this decline, the McGowan government should:  reform the environmental approvals process to reduce duplication with the federal government, reduce the number of permits businesses require as a part of the planning approvals process, and introduce a one-in-two-out approach as in the United States where two regulations are repealed for each new one introduced.

On payroll taxes, at a minimum the tax-free threshold should be lifted.  But a more ambitious agenda would see it scrapped altogether and replaced with the less distortionary broad-based land tax, coupled with reductions to government spending.

Western Australia has always been an entrepreneurial, go-ahead state.  It has led the nation for years with a thriving resources sector and can once again be a leader through an ambitious agenda to cut red tape and taxes.

Criminal Justice Reform Does Not Start In Jails

The new WA Government has said that it cannot afford to build a new $600 million prison planned by the previous government.

But this cost cannot be avoided simply by letting people out of prison.  Criminal justice reform must always be about maximising community safety.

The Government is right to look for inefficiencies in the criminal justice system.  WA has the country's fastest growing prison population, increasing 14 per cent over 2015-16.  The State has one of the highest incarceration rates in the country at 314 per 100,000, a 30 per cent increase over the past 10 years.  This figure rises to 3997 per 100,000 for indigenous Western Australians.

The annual per prisoner cost of incarceration in the State is $130,000.

WA is not the first jurisdiction to face rising incarceration costs.  Over the past 10 years, more than 20 American states have implemented reforms to lower the cost of incarceration while reducing crime and re-offending.  The American experience yields some useful lessons for WA.

The first lesson is to implement punishment reform for non-violent offenders.  In the words of former Texas politician Jerry Madden, we need to make a distinction between those offenders we are "afraid of" and those we are merely "mad at".  For the latter group, Texas expanded community-based punishments and treatment programs.

In practice, punishment reform means a significant portion of the money saved by not building new prisons still needs to be committed to the criminal justice system, to pay for case officers, halfway houses, and monitoring.  Research also shows that police spending is effective for reducing crime.  And in WA, the high level of indigenous incarceration may require special attention.

The real savings come from a longer-term reduction in crime and recidivism.  Texas has avoided more than $3.9 billion in prison costs.

Serious property, violent, and sex crimes fell 12.8 per cent between 2003 and 2010.

WA Corrective Services Minister Fran Logan said he would like to focus on the remand population, which makes up 30 per cent of WA's 6600-strong prisoner population.  But the most serious offence of 46 per cent of WA prisoners was a non-violent offence, showing the potential for wider reforms.  The second lesson is to reduce re-offending through skills training and employment.

About 60 per cent of WA prisoners have been imprisoned before.  Research in Australia and the US has shown a strong correlation between unemployment and re-offending.  While the Government will likely face some pressure to address crime through the welfare system, no excuses should be made for criminals.  The Government should set high expectations for released offenders.  This means insisting people become productive members of society and targeting assistance to that goal.

Texas and other American jurisdictions have tackled re-offending by expanding skills education, reducing barriers to employment and offering tax incentives to businesses that hire former prisoners.  In Australia, the high minimum wage is a particular barrier for higher risk potential employees.

The Commonwealth should consider an exemption for ex-prisoners.

Whatever programs are put in place to reduce offending, they must be tracked and evaluated.  This means that administrators and researchers must have reliable data.  In the US, criminal justice reform typically begins with a top-to-bottom independent review of the system's operation and oversight mechanisms.

The State Ombudsman has experience in conducting reviews of government administration and would likely be able to perform this function.

Finally, the Government should take note of the politics of criminal justice reform.  In the US, reform has been led by conservatives, with an emphasis on community safety and fiscal responsibility.  Even more importantly, reformers have been able to bring the public with them by pursuing reforms consistent with traditional moral principles like personal responsibility and just punishment.

The public, rightly, will not support any reforms that undermine their sense of right and wrong.

Criminal justice reform is therefore not simply about reducing incarceration.  It is about reducing crime through cost-effective, data-driven punishment reform, thereby lowering costs while making the community safer.

Red tape hampers resources recovery for miners

The future prosperity of resource-rich states such as Western Australia is threatened by unnecessary regulatory roadblocks.

Capitalising on a possible market recovery, and unleashing the potential benefits of a second mining boom, can only begin by cutting the layers of red tape sitting between miners and the resources they seek to extract.

Australia's has a red tape problem.  My recent research, based on the World Bank's "regulatory quality index" and a methodology developed in the US, found that red tape costs $176 billion in foregone economic output every single year.  That's the equivalent of 11 per cent of GDP.

That new estimate is more than double the Abbott government's 2014 estimate of $65 billion for two reasons.  First, my methodology takes into account not just commonwealth law, but the body of state and local government law too.

And second, rather than asking government departments to estimate the burden of the red tape they impose, my top-down approach incorporates some of the unseen burdens of red tape:  fewer jobs, fewer new businesses, and lower productivity.

It is this second point that is most poignant for the resource industry, and therefore for states such as WA.

The cost of red tape isn't just the inconvenience of government approval and filling out additional forms.  The real cost of overbearing government regulation is how it fundamentally changes the structure of our economy — distorting decisions and resources away from their most productive uses.

The resources industry in particular is subject to a byzantine array of by licenses, permits and approvals, that slow or prevent major projects, cost jobs and ultimately undermine Australia's prosperity.

Earlier this year, for instance, recall that plans for Yeelirrie, one of Australia's largest uranium mines in Western Australia, were halted by the Environmental Protection Authority because of a threat to 11 species of tiny "stygofauna", or "desert prawns".

According to the Productivity Commission, the costs of delaying an average sized project by just one year is in the order of $26 million to $59 million.

The Roy Hill project in the Pilbara required over 4,000 permits, licenses and approvals, including 1,057 environmental regulatory approvals, in the pre-construction phase alone.

With this unsustainable level of regulatory resistance it's no wonder money funnelled into exploration is in precipitous decline.

Over the past four years, according to the Australian Bureau of Statistics, the money spent on minerals exploration in WA (excluding petroleum) has plummeted from $574 million to $220 million.

The trend for petroleum looks even worse:  dropping from $955.4 million in December 2012 to $223.6 million in June this year.  That's a fall of over 70 per cent.

Exploration is critical to the long-term future of Australia.

It is of course the case that some of this trend can be attributed to cyclical economic forces outside our control, from commodity prices and changing global currents.

But it is equally clear that the government has a role in encouraging investment, and in particular competing for investment.

To reinvigorate our resources industry, and thereby the West Australian economy more broadly, governments at all levels must begin to wind back roadblocks on business.

Only by doing this can we propel economic growth, get more people into jobs, and pull ourselves back up the international competitiveness rankings.

We should be optimistic about the future of the mining in this country.  A Newport Consulting report in June showed that 43 per cent of miners surveyed were optimistic about the year ahead.  But 24 per cent of miners in that survey also said red tape was an issue, especially for project approvals.

To be sure, the West Australian government last year reinvigorated efforts to streamline project approvals.  But more needs to be done.  If Western Australia is serious about a second leg of the mining boom then the role of the government is to create a regulatory environment conducive to exploration and investment.

Cutting red tape is a real economic plan with tangible economic dividends — and ones that the public can understand.  Cutting red tape promises to help unleash a second wave of prosperity from the West.

Red tape the big hurdle for the mining industry

This week the Mining Business Outlook 2016 by Newport Consulting outlined the challenges and opportunities facing 50 of Australia's most prominent mining leaders.

The report demonstrated beyond a doubt that cutting unnecessary red tape on mining is essential if governments are concerned about the future growth and prosperity of Western Australia.

A quarter of respondents to Newport Consulting cited red tape as a critical area for government to act.

This comes after Gina Rinehart's comments last week that Australian politicians don't have the guts to cut red tape.

The scope of Australia's red tape problem is difficult to grasp because it stems from many different regulators and is made up of thousands of different pages of legislation.

However, my research has found that red tape costs the Australian economy as a whole at least $176 billion dollars every year in foregone economic output.

That means if red tape were an industry, it would comprise a larger portion of our economy — 11 per cent of GDP — than any other industry.

One of the most telling impacts of our red tape problem is how it impacts new mining projects.  Those mining companies prospecting, investing and seeking new opportunities spend a remarkable amount of time and money dealing with government.

One prominent example is the Roy Hill Iron Ore project by Hancock Prospecting, which had to work through over 4,000 government licenses, approvals and permits before production even began.  Many of these obligations are duplicated across jurisdictions, especially between state and federal governments.

According to the government's registry, Australian businesses and individuals are now burdened by over 30,000 licenses, permits and approvals.  Small and big businesses spend more and more of their time complying with red tape, taking their attention off serving their communities.

This red tape burden leads to serious delays in getting projects up and running.  In 2012, research for the Minerals Council of Australia by Port Jackson Partners found that Australian thermal coal projects experienced 1.3 years' additional delay relative to the rest of the world.

Every minute our mining companies spend pandering to government is a minute they don't spend hiring an additional employee, or discovering new innovative and efficient processes.

The costs of compliance activities only seem to be getting worse.  A Deloitte Australia report estimated that in 2006 the mining workforce spent 7.6 per cent of its time undertaking compliance activities.  By 2011 that number had increased to 8.9 per cent.

It's no wonder Australia is in the bottom half of the world in terms of the burden of government regulation in the World Economic Forum's Global Competitiveness Report.  We now sit behind many of our major competitors including the United States, Singapore and China.

Australia cannot afford an international reputation of regulatory complexity and onerous government control.  Australian governments should be facilitating our miners to compete in global markets and export our high quality resources.

To be clear, unleashing Australia's miners into a new era of prospecting, investment and innovation doesn't mean removing all licenses and permits.  It means cutting out the wasted time and money spent on compliance benefitting no one but bureaucrats.

Indeed, as the Productivity Commission noted in 2013, many environmental processes could be "greatly reduced without lowering the quality of environmental outcomes".

If it is successful, the Western Australian government's new red tape reduction plan — the #ShredTheRed campaign — will drive growth.  The plan includes a dedicated parliamentary repeal week, where for one week parliament is restricted to cutting red tape, rather than passing new rules and regulations.

But there is a risk with these sorts of plans.  The WA government will have to work hard to maintain its momentum.  It needs to continue to lift unnecessary red tape burdens on business long after those weeks are over.

A real economic growth plan — a plan that enables WA to continue its enormous contribution to our economy — should focus on shorter approval processes, removing regulatory duplication, and dramatically reducing the complexity of rules.

Governments need to free the resources industry to employ, grow and compete.  Cutting mining red tape will not only lead to higher investment, encourage innovation, and stimulate employment.  It will unleash Australian prosperity for years to come.

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Democracy ill-served by compulsory voting

That nearly 1000 West Australians have been convicted for the crime of not voting in last year's Senate election is more proof that it's time to make voting voluntary.

The special election — essentially an election repeat — came about because electoral commission staff lost 1375 ballot papers that may have determined the election outcome.  Now, 964 people have been convicted for failing to vote in what was the third election in 13 months for West Australians.  Worse still is the amount of informal votes.  Senate voting is relatively uncomplicated, as you only need to tick one box "above the line".

That almost 33,000 voted informally is more likely a sign that though people were compelled to turn up, they didn't much care what became of their ballot paper.  It is a sign, too, that coercing voters into turning up to booths is not the best way to run a democracy.

In simple terms, democracy does mean the majority rules.  But Australia is a liberal democracy, and the right to vote is not a duty to vote.  Indeed, the right to vote is the liberty to vote — or not, if one so chooses.  So obvious is this around the world that Australia is one of the few countries to enforce compulsory voting.  One need only look at our closest cousins in the Commonwealth — New Zealand, Canada and Britain — to see voluntary voting is possible, and works in a Westminster parliamentary system.

The question put is:  which system best encourages civic engagement?  The traditional argument is that by compelling people to turn up to the voting booth, then people will be compelled to consider their choice before casting a vote.  There is little evidence to support this point of view.  If there was, we would not see so many informal votes in elections.

Perhaps the better question is:  what is civic engagement?  Turning up and lodging a vote on election day is only the final step a person takes when taking part in the political world.  On the first level, you have political discussion and debates held publicly and privately.  After that, you might volunteer your time to a political cause you believe in.  Or volunteer your time in election campaigns and make donations to candidates.

Considering all this, which system works best for enabling civic engagement?  One unavoidable consequence of compulsory voting is that major parties devote their efforts in chasing the vote of the undecided and the less engaged.  This means presenting a "least worst" option, and offloading core beliefs.  Except core beliefs are the reason many would join a political party in the first place.

Inevitably, when neither political options are offering what supporters want, the supporters fall away.  This is reflected in long-term data that shows membership of political parties has plummeted and continues to fall away.

At the same time, as people have become disaffected from those political parties, we see political parties effectively compensated by the public purse.  The perverse incentive for the parties is to rely more and more on government largesse and less and less on party faithful.  Correspondingly, government grows ever larger and spending ever higher.  This all paints a picture of overall civic engagement suffering.  And yet, compulsory voting is meant to "encourage" civic engagement?  It just doesn't add up.  What does add up is that with compulsory voting, you see more informal voting.

The informal vote is a legitimate political expression and a measure of how people view the political system.  In the 2013 Federal election, more than 400,000 Senate votes, and 800,000 House of Representatives votes were informal.  Such a significant informal vote suggests dissatisfaction goes beyond just the major parties — even the mainstream protest parties are being avoided.

Compulsory voting certainly isn't fixing this, but it does needlessly add to the workload of electoral commission staff.  That we see lost ballots is perhaps not so surprising.  If voting was voluntary, the parties would need to balance the interests of their own supporters, along with the swing voters.  MPs in ultra-safe seats would no longer be able to rely on the automatic support that compulsory voting turns out.  This would make politicians more representative and politics more democratic.

There are plenty of reasons to support the introduction of voluntary voting.  And who knows — maybe under voluntary voting, the Australian Electoral Commission won't be inundated with ballots from people who didn't want to vote in the first place and voters won't need to be sent back to the polls for a mistake they didn't make.

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Public taken for a ride by government crackdown on Uber

Nothing shows the mismatch between public sentiment and government action more clearly than Uber.  Regulators seem determined to destroy an industry with almost unanimous public support.

The latest weapon of choice by WA regulators against Uber is private investigators.  Last week, the Department of Transport released a tender calling for contractors to "undertake covert investigative operations".  Regulators are getting desperate and scrambling to clasp on to the "sharing economy", in whatever way they can.

These investigators are worrying — both in practice and in precedent.  We now have a situation where taxpayer funds are being used to restrict voluntary and mutually beneficial trade.  West Australians should be deeply concerned by this government encroachment on their right to exchange.

It is baffling why Uber users are not up in arms.  It is a telling sign of unrepresentative regulators that citizens must lobby for their right to free trade.  Government treatment of the sharing economy makes this blindingly clear.  While the sharing economy remains uncertain and unlawful it is conservatively estimated in the tens of billions of dollars.

We must ask:  who is representative?  Is it the regulators and the Taxi Services Commission, or the millions of satisfied Uber users?  Governments have clearly forgotten that their most fundamental role is to represent the Australian people.

These investigators also set a dangerous precedent for the entire suite of current and future "sharing economy" platforms.  Uber is not the first or nor the last.  We're already seeing the success of Airbnb, Kickstarter and Airtasker.  While we don't know what the next "sharing" business will be, we certainly want them to be Australian.

Australian governments should be welcoming to innovators and entrepreneurs.  We must provide political certainty by displaying our flexibility and willingness to adapt.  This is not achieved by shutting down new industries, squeezing companies into outdated and ill-fitted rules, or spending taxpayer dollars on unattainable enforcement.

Aside from the benefits of innovation, Australians should be appalled at this latest government intrusion on exchange.  Acceptance of an Uber ride is a voluntary exchange.  As with any other free market transaction, both parties understand the risks and agree to the conditions.  To require permission to willingly trade private property flies in the face of a free society.

Sharing economy platforms tend to be cheaper, faster and of higher quality than their government controlled rivals.  They stimulate economic growth, generate flexible employment opportunities, and help with growing congestion and sustainability concerns in the process.

The problem is that incumbent industries are threatened by the loss of their artificially high profits.  For years, taxis have enjoyed government-granted barriers to entry.  And now we have tech entrepreneurs competing for the same customers but with a radically different and decentralised business model.

In the case of Uber, the root of the problem is that the entire structure of the taxi industry is based on government determined rules:  what does a taxicab look like, how many there are, who can drive them, and so forth.  Specific rules suppress competition because innovation occurs at the boundaries of industries.  This brings higher prices for consumers, higher profits for licence owners, and a lower quality service.  Any taxi ride in the previous few decades would make this obvious.

Unfortunately the transition from old rules to new rules will not be a frictionless.  Traditional industries will continue to put up a fight.  We are seeing this in real time with the Taxi Services Commission.  And while these industries — which will be inevitably be destroyed — have every incentive to pay to protect their artificially high prices this does not make good policy.

Some deregulation is now inevitable.  But the question is whether new legislation will be placed around Uber.  Australians should be just as cautious of this.

There will undoubtedly be more disruption in the transport industry.  Regulating ride sharing in the same way we regulated the taxis will only generate future problems similar to the ones we're having now.  We would only be creating barriers for the next Uber.

As consumers rush towards this revolutionary mode of economic organisation, the Government needs to ensure that regulators are working for consumers, not for incumbent industries.

If a consumer and a producer wish to exchange on a free market without interfering with third parties, then they should be emphatically free to do so.

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Big implications in council vote

The Federal Government is pitching its case for local government recognition in the Australian Constitution as ''small'' and ''modest'' change.

The reality is that the effect of this proposal, to be put to the public in a referendum at the September election, would be large and immodest, most notably because it will exacerbate centralising tendencies in our Federal system.

The proposal is that local government bodies be added to Section 96 of the Constitution, which presently enables Federal Parliament to grant financial assistance to the States on terms and conditions it thinks fit.

To appreciate why this proposal is dangerous to the integrity of Australian Federalism, one only need recognise that the best predictor for future political behaviour is past political behaviour.

Since the early 1920s, successive Commonwealth governments have used Section 96 to intrude into the affairs of WA and other States, by imposing increasingly prescriptive conditions on State governments as a condition of funding.

Federal politicians have used Section 96 grants to dictate to States the policy objectives to be pursued, specifications of service targeting and delivery standards, and even administrative structures which must be put in place.

National Partnership Payments, introduced under former prime minister Kevin Rudd, are arguably even more intrusive, since States can now only receive funds if they adhere to Federally dictated milestones or performance benchmarks.

The effects of these arrangements on the quality of our public governance have been dramatic, with voters finding it increasingly difficult to identify which level of government is responsible for failures in policy performance or service delivery.

Federal and State politicians have capitalised on this blurring of democratic accountability by fomenting blame games against each other, much to the frustration of average voters.

So far, the financial relationship between the Commonwealth and 565 councils has been on a much smaller scale.

However, the problems bedevilling Federal-State relations will become a reality for local governments should Canberra receive a constitutional green light to fund councils on any terms and conditions it thinks fit.

About 83 per cent of the $2.6 billion in Federal funding to councils is given in accordance with Section 96, with funds sent to each State on the proviso that they then pass the funds on to their local government authorities.

However, the remaining Federal funding, which flows directly to local government bypassing the States altogether, remains controversial and has come under greater scrutiny in recent years.

In 2001 the Howard government introduced the Roads to Recovery program, which is today the single largest direct funding program to local governments, costing $335 million last year.

Prior to his election as a parliamentarian in 2010, economist Andrew Leigh found evidence of pork-barrelling within this program, as the funding distribution favoured councils in coalition regional electorates.

In the Pape and Williams cases of 2009 and last year respectively, High Court judges ruled that the Commonwealth could not directly appropriate funds unless explicitly supported by powers explicitly stated in the Constitution.

The Gillard Government is now proposal asking the public to enshrine local government financial recognition in the Constitution, to allegedly allow the imperilled Roads to Recovery and other direct funding programs to continue.

However, just last year the Government passed the Financial Framework Legislation Amendment Bill (No. 3) 2012, authorising it to spend on local government, and 414 other areas of public policy, without having to ask Parliament for future authorisation.

The referendum proposal is left politically exposed for what it truly is:  a plea by Canberra's political class for an unprecedented ability to interfere in local community affairs, with a good dose of pork-barrelling for votes along the way.

It is no coincidence that referendum proponents argue the proposal would somehow reduce Australian over-government, claiming that channelling most Federal funding to local governments through the State middlemen is a needless exercise.

Such assertions do not stand up to scrutiny, in that the States are legally obligated to pass on the full amount of relevant funding to councils without undue delay.

Federal funding of councils through the States is generally agreed to be constitutionally valid, and allows State politicians to scrutinise these Federal funds flowing through to their local government administrations.

This funding methodology also pays respects to the reality that councils are administrative sub-units of State governments, and are recognised as such within State constitutions.

Indeed, there is no good argument for the Commonwealth to not direct every last cent of its funding to councils through the States, on democratic accountability and financial probity grounds.

The Australian people resoundingly rejected two similar constitutional amendment proposals in 1974 and 1988, and the argument against allowing Canberra to infiltrate every town hall remains as valid this year as it was in the past.

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Fear taxpayers to take up disability levy slack

Prime Minister Julia Gillard this week framed the fiscal scenario surrounding the Budget as one in which the growth in government revenue collections has fallen short of their previous expectations.

Stronger than expected reductions in the company and mining taxes, in particular, have meant that total Commonwealth general government revenue will increase 7 per cent this financial year, rather than the 11 per cent expected at the time of December's midyear economic and fiscal outlook statement.

With aggregate spending still at excessive levels, spilling over in the form of a persistent Budget deficit and burgeoning debts, Ms Gillard indicated that her Government needed ''to have every reasonable option on the table to meet the needs of the times, even options previously taken off the table''.

The Government wants a 0.5 per cent levy dedicated to funding the National Disability Insurance Scheme, incidentally a proposal that the Prime Minister ruled out six months ago.

Strictly dedicating a pool of funds towards specific purposes can help reveal the full costs of such initiatives to the taxpayer.

However, there are reasons for taxpayers to be concerned about the financial efficacy of an NDIS levy, if the experience of the longstanding Medicare levy is any guide.

The Medicare levy was introduced in 1984 at a rate of one per cent of personal taxable income and was described by the Labor government during the September 1983 Medicare parliamentary debates as a ''substantially self-funding'' arrangement for Medicare.

But subsequently, experience has shown that changes to the Medicare levy have acted in effect as generalised income tax increases befitting political needs to expand consolidated revenue.

In 1986 the Medicare levy was increased to 1.25 per cent and again to 1.5 per cent in 1995, with an additional Medicare levy surcharge of one per cent enacted by the Howard government to encourage higher income earners to take up private health insurance.

In addition to insufficient safeguards against levy increases, the Medicare levy has consistently been found to be seriously deficient in meeting its original ambition of financing most, or all, of the Medicare system.

According to the Australian Taxation Office, the Medicare levy raised $7.7 billion in revenue whilst the accompanying surcharge raised less than $200 million in 2009-10.

The amounts raised by the levy and the surcharge only cover about half of the estimated Medical Benefits Schedule spending during that year and would cover less than 30 per cent if Federal hospitals and Pharmaceutical Benefits Scheme expenditures were also included.

The effect of patients not fully facing the costs of their health care is that the remaining costs associated with Medicare are borne by general Commonwealth government taxpayers, which defeats the purpose of tax hypothecation for Medicare.

Some preliminary estimates suggest that the modest 0.5 per cent increase in the Medicare levy, rebadged as an NDIS levy, would raise a little over $3 billion a year.

However, the likely fiscal costs associated with the NDIS are forecast to be up to $22 billion in gross terms, or $8 billion in net terms, in its first year of operation alone.

At first glance, an NDIS levy would need to be set at a much higher rate to collect enough revenue to fully fund the disability support needed across the country, however, there is the pressing economic need to ensure that the levy does not unduly hamper economic activity through the disincentive effects of higher taxation.

Therefore, it is difficult to imagine how an NDIS levy would not replicate the largely unhappy experience of the Medicare levy, with entrenched higher tax rates unable to deliver sufficient funding for the intended purpose.

If both parties remain determined to implement the NDIS, a more effective approach would be to make sustained and permanent reductions in government expenditures elsewhere.

There are always opportunities for governments to divest themselves of responsibilities in activities which do not correspond with public goods, such as industry subsidies or arts and recreational spending.  There also seems to be a growing acceptance of the need to reduce middle-class welfare payments.

Both Labor and the coalition could also make a case for a generic reduction in funding right across the board, to fund an NDIS.

As risky as the NDIS is likely to be in terms of the effective containment of spending pressures in the longer term, funding it through spending cuts, as opposed to increasing taxes, should at least encourage politicians to become more discerning more often about their budgetary priorities.

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Big debt means staying on same path too risky

Now that the State election is out of the way, the returning Barnett Government should consider a new fiscal strategy to contain WA's runaway debt.

To understand why economists, financial commentators and credit ratings agencies have expressed growing concerns about the State debt, consider the trends since the GST reforms came into place in mid-2000.

Taking the general government sector — consisting of agencies mainly funded by taxes — as the starting point, gross debt fell from about $3 billion in financial year 2001 to about $2 billion in 2007 but has risen dramatically since, to about $10 billion last year.

The midyear financial projections released by the Government in December suggest that general government gross debt will keep increasing to about $18 billion by 2016.

Expressing these figures in terms of total output by the State economy, gross debt fell from about 4 per cent of gross State product in 2001 to about one per cent in 2007 but grew back to about 4 per cent last year.

By 2016 it is estimated that general government gross debt will absorb about 6 per cent of the State's total output.

But these figures exclude the borrowings by other government bodies, such as State-owned electricity generators, ports and water authorities.

When these entities are included the gross debt to GSP ratio jumps to about 12 per cent last year, with expectations it will increase to about 14 per cent by the end of the forward estimates.

These figures do not include the State's unfunded superannuation liabilities or council and shire debts, which, as a share of GSP, conceivably add up to another 5 per cent to the total.

The estimates presented here also exclude State Treasury's recent advice that election campaign promises may further increase debt, even setting aside Barnett Government hopes for Federal funding on transport projects.

In simple terms, public sector debt in WA has moved in one, unflattering direction:  up.

In fairness, the Barnett Government has insisted its borrowing program, fuelling the growing State debt, is financing major infrastructure in a fast-growing jurisdiction.

It also seems the Government is more eager to borrow, than would otherwise be the case, to help protect its Budget surplus.

Although most economists agree that borrowing for long-lived capital is not unreasonable, they likewise suggest that infrastructure must clearly generate economic value, ensuring a more productive State addresses its financial commitments more easily.

On this score, it was troubling that both major parties during the election campaign did not provide sufficient detail as to how their pet capital projects stacked up in cost-benefit terms.

Taxpayers should also be reminded that, though some of the projects will become a reality only in the longer term, a growing interest bill is already gnawing away at other spending priorities in the State Budget.

Concerns about growing public sector debts also centre upon capacities to bear the load of future taxes.

WA's commodities bounty provides the Government with lucrative sources of royalty revenue, although recent reductions in commodity prices have magnified concerns about the State's reliance on volatile revenue sources to repay burgeoning debts.

The States and Territories remain hampered by an upside-down Australian fiscal federalism model in which all the key revenue sources, such as income tax, are needlessly monopolised by big-spending Canberra.

The tax instruments that remain in the hands of the States tend to be inefficient taxes, which generally do not deliver spectacular revenue yields and can hamper market activities, such as jobs creation or labour mobility, that grow an economy and cultivate a more sustainable revenue base.

The State Government is walking a somewhat fine line when it comes to its overall budgetary stance, and if commodity prices soften or domestic economic activity weakens there will be a need for an explicit strategy to deal with the debt overhang.

The best strategies to reduce debt would be to privatise government assets, and direct the sale proceeds towards that and direct the sale proceeds towards that purpose, and reduce recurrent spending providing more Budget room so that a greater share of revenues can be used for debt reduction.

Another strategy for government to ease the burden of public debt is to encourage growth of the private sector, generating more revenue in the process.

To this end, a program of deregulation would be highly desirable for a State with a reputation for extensive red tape restrictions on business.

In recent years, WA has made its own eager contribution to the global public sector debt ocean of more than $50 trillion and counting.

But with the rough weather of economic uncertainty lingering, there seems no better time than the present for the Barnett Government to start swimming against the debt tide.

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Housing affordability key to northern growth

Northern Australia is suffering a housing affordability crisis.  But it doesn't need to be this way.  Recent media reports confirm this crisis.  It was reported in this newspaper that Karratha and Port Hedland had a housing shortage of 1531 and 1402 dwellings respectively.

One father of three said that rent for his three-bedroom home recently rose to $1600 a week.  ''I'm a local person, lived here all my life, the kids were born here but I can't afford to be in Port Hedland any more,'' he said.  ''There will come a time when there will be no one left.''

There are critical housing shortages in Darwin, many towns in the Pilbara, in Aboriginal communities and in many other towns and cities across northern Australia.

One local council in the Pilbara has seen rental prices balloon from $350 to $2000 a week over a three-year period.  The key driver of these price rises is an increase in demand for housing.  Most of this increase in demand comes from fly-in, fly-out workers.

In a submission to the parliamentary inquiry into FIFO workers, the Pilbara Regional Council concluded that ''the proliferation of FIFO in a community can have an extremely detrimental impact on local housing markets, particularly when resource-based, associated service businesses operate on the FIFO model''.

The underlying cause of this housing crisis is restrictive land release policies and slow planning approvals.  While governments can't end FIFO, they can increase land supply so that house prices don't drive out existing residents.

The scarcity of housing resulting from restrictive land supply, both in the owner and rental markets, is artificial.

It distorts market activity away from housing development and towards FIFO.

So ultimately the cost of this market distortion is borne in higher labour costs, fewer jobs and lower take-home pay.  This leads to a lack of economic diversity.  For instance, according to the Pilbara Regional Council, FIFO has a detrimental effect on local tourism:  ''Accommodation price pressures resulting from traditional tourist accommodation being used by FIFO workers have drastically reduced the financial viability of the tourism industry in the Pilbara.''

Solving the housing crisis does not call for special housing subsidies, price controls or public housing.

In order to reduce the cost burden of FIFO on businesses and communities, government agencies must free up more land for housing across northern Australia and let the private sector do the rest.

In this case, government agencies like WA's LandCorp should release far more land for residential development.

Another way governments might allow the private sector to rapidly increase housing supply would be the creation of special economic zones with less restrictive planning laws.  As part of the zones, governments should consider how crown land can be better used to encourage residential development.

Housing unaffordability is also partly responsible for the lack of population growth in northern Australia.  Access to affordable housing is one of the vital elements in any attempt to build a town and encourage people to put down roots in a community.

Ultimately, the vision should be of a thriving north, with regional cities across the Pilbara, Kimberley, Northern Territory and Far North Queensland to rival regional cities on the south-eastern seaboard in terms of population and economic activity.

Fixing the housing affordability crisis in mining towns is just one part of a broader set of policy challenges that need to be overcome to develop Australia's north and capitalise on its strategic advantage in the Asia-Pacific century.

But without affordable housing you will not attract human capital and without human capital the north will never realise its full potential.

Unless pioneering southern Australians turning towards the north for economic opportunities have somewhere to live, they will continue to congest our major cities and fly thousands of kilometres for work.  Encouraging permanent settlement of northern Australia is in the interests of both the south and north.

If towns and communities are to grow in northern Australia, tackling housing affordability must be given high priority.

It's time misguided land starvation was stopped

With boom times returning to WA, the housing market is once again overheating.  The median house price in Perth is now $512,000, according to the December quarter figures from Australian Property Monitors, putting it beyond the reach of any new homeowner without substantial savings or parental support.

Even in the new suburbs, prices have left all but the most affluent with no foot on the home-ownership ladder.

Typical of these is Ballajura, where the average house costs almost $400,000.  That's up 60 per cent from $260,000 five years ago.  The suburb's average house price increase has massively outpaced prices in general, which are up only 15 per cent.  And more importantly for the prospective buyer, house prices have far outpaced average earnings.

It is not difficult to pinpoint the cause of this price escalation.

During the second half of last year, new lots approved for building in Perth and Peel were running at an annual rate of under 9000.  This is extraordinarily low.  Even in the mid 2000s, when supply was being far outpaced by demand, annual new lot releases were running at more than 15,000.

Last year in my report, The Great Lock Out, I reported how, over the past two decades, Perth had been transformed from one of the most affordable housing markets in Australia to having the unenviable reputation of rivalling Sydney as the least affordable.

The reasons for this were shown to lie squarely with the Government's land-starvation policy.  The Government just won't allow enough blocks to be developed for housing, thereby preventing competition from driving down prices.

This has stemmed from unfounded fears of the high cost of providing new infrastructure, a mania for central planning and groundless opposition to urban sprawl in a State that has more natural bush and farmland than anywhere else in the world.

Government resistance to allowing land to be used for housing has also been abetted by ministerial dreams of creating a compact city with teeming inner suburbs populated by bohemian theatregoers and by downright contempt for new-homebuyers' preference for McMansions on individual lots.

With a new Government in WA we might have expected to see a reappraisal of the restrictive land release policy.  Instead, the figures show Perth going backwards in new housing development permits.  This is particularly unfortunate with population growth at 3 per cent a year and every expectation of a strong renewal of resource based development.

Rather than tightening the vice over new development approvals, now is the time for energetic action to remove restraints on land availability.  Predictably, the upshot of the intensified squeeze on land availability has been skyrocketing prices.  Land, as with any other product, will see prices rise if supply is rationed.

Land around Perth is particularly suitable for home building.  It is flat and sandy.  On the city edge, the land is overwhelmingly used for farming and is worth at most $20,000 a hectare.  Even with allocations of the land to common space, each hectare can accommodate at least 10 decent-sized blocks.  Developing the land grading, roads, water, sewerage and so on costs at most $65,000 a block, so we should be seeing lots ready for building on at under $70,000 all around Perth.

Instead, because supply is rationed by the Government we see lot prices at $200,000.  In other words, Government policy is inflating land values by around $130,000 a lot.  That's terrific if you're a landowner who has got development approval but it is a cruel injustice on the people who don't have a house of their own.  Forcing those without a home of their own younger and less affluent people to pay an additional $130,000 means a monthly mortgage bill of more than $1000.

A liberalisation of Perth's highly restrictive planning policies would see three- bedroom, two-garage houses on an average sized block at $250,000.  And unlike most other policies, bringing about such a benefit costs the taxpayer nothing.  The excess prices are the result of Government policies giving windfall gains to landowners and developers who win the right to convert raw land into land for housing.

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Red tape excess holds back State's progress

The Western Australian economy might be reeling from the impact of the global financial crisis and retreating commodities boom, but not everything is out of the government's hands.  One sure-fire method by which the Barnett government could shore up the WA economy would be to tackle the state's massive red tape and over-regulation problem.

Every year, the Western Australian parliamentarians and bureaucrats add more and more economic, social, and environmental burdens upon businesses and individuals.

In the 1960s, the Western Australian government was passing an average 750 pages of legislation every year.  This decade, that average has increased to 2,500 pages.

This dramatic increase in legislative activity is not totally unique.  All states have passed an unprecedented volume of legislation since the turn of the century.  But Western Australia has increased the most -- state politicians are passing an average of 157 pages more per year than the year before.

That's a lot of rules.  The sheer volume of regulation WA businesses have to monitor and comply with is one of the state's largest problems.

For example, the average farm -- from small family‑owned farms to large corporate behemoths -- has to comply with at least 30 pieces of state legislation and 86 separate pieces of subordinate legislation.  And that's before we account for all the federal and local government laws.

Unfortunately, it's no surprise that the state has developed a certain reputation for regulatory excess.

In survey done of resource executives around the world, Western Australia was rated as the most risky investment destination in Australia.  Given the choice, resource firms would prefer to invest their money in other states -- hardly the sort of situation you'd want your state to be in as the economy plummets.

The Western Australian Chamber of Commerce and Industry has estimated that regulation costs the state economy the $2.1 billion a year -- the equivalent of 2 per cent of gross state product.

Over-regulation doesn't only have financial costs.  Shop trading hours restrictions don't just cost the WA economy, they reduce quality of life -- holding Perth's social and retail scene back from its otherwise abundant potential.  Red tape surrounding the 2006 reforms to liquor licensing have stifled the development of Perth's nightlife, which has only been further stifled by the restrictive taxi licensing that makes it almost impossible to catch a cab home.

So what can be done about WA's over-regulation problem?  There is a broad consensus on both sides of politics that the state needs to cut back on red tape, and the Barnett government's announcement earlier this of much needed regulatory reform is welcome.  From now on, every new regulation proposed will have to be assessed to see whether it is excessively costly or could have significant unintended consequences.

These reforms are a good start, but cutting back the dense thickets of regulation will require somewhat more.  An advantage of lagging behind much of the wave of regulatory reform over the last decade is that, by now, we have a fairly good idea at what works to reduce regulation -- and what doesn't.  WA needs an independent, dedicated agency to monitor to progress of regulatory reform, benchmark government outcomes and undertake inquiries into regulatory issues, like the Victorian Competition and Efficiency Commission, or the Dutch Advisory Board on Administrative Burdens, two models of independent agencies which Western Australia could emulate.

But the biggest change will have to be cultural.  Too many of the regulations holding back Western Australia's economy support vested interests at the expense of consumers.  The hairdresser's licencing board even states on its website that the compulsory hairdressers licence is intended to prevent "unqualified people from opening a salon next to you and practising as a hairdresser in an attempt to impact on your established clientele".  Protecting hairdressers from competitive pressure keeps prices high and availability low.

Regulations should benefit, not punish consumers.  If Western Australia is going to come out of the financial crisis stronger, the Barnett government will have to tackle the state's over-regulation problem.

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Case is overwhelming to extend shop hours

Already retail trading is troubling the new Barnett Government.  Big supermarket chains have been quick to press for reform, arguing the current restrictions mean shoppers are paying more for their groceries.

Their opponents, independent supermarkets, convenience stores and service stations like the current arrangements -- they can open while others must close and naturally this suits them.

Today, arguments for and against deregulation of shop trading hours are seen as a battle between big and small business -- the big, bad Coles and Woolies versus the small, struggling independent.  But this is not the full picture.  The data shows small business is also hurt by restrictions on shop trading hours.

It is no accident that the States with the greatest growth in small retailer numbers are those with the most liberal shop trading hours.  The chart, right, shows while Victorian small retailer numbers grew 30 per cent in the past decade, WA growth was only 2 per cent.

And this lack of new small shops is not surprising because the most successful shopping areas elsewhere are open at times consumers want to shop -- the weekend -- and combine big anchor tenants such as department stores with all the funky and individual boutiques and specialty shops that exemplify small business.

Far from the big guys swamping the small, the evidence from everywhere else is that they are complementary.  As the WA Chamber of Commerce and Industry notes, the biggest drop in small businesses as a proportion of total retailers happened in WA and South Australia, where trading-hour restrictions still exist.

Traditionally, trade unions and churches have opposed Sunday retail trade, based on the idea that nobody should be forced to work on a Sunday.  Twenty years ago, this argument had some merit because most employees were full-time workers.  These days, with many more part-time workers who fit employment around study, child care and other responsibilities, the pool of people choosing to work on Sunday is much greater.  Interestingly, both Coles and Woolworths make Sunday work voluntary while most smaller retailers have less flexibility and offer no choice over Sunday working hours.

The silent losers from all this argy-bargy between vested interests are consumers.  In every place shop trading hours have been liberalised there would be an outcry and electoral oblivion if major restrictions were reintroduced.  People get used to the freedom to shop on Sunday.

They weave it into their lives, so that Sunday trading becomes an ordinary thing, as commonplace as football on a Sunday.

Since shopping is so mundane, so much a habit, it is easy to believe that since we manage to survive now without Sunday trading we won't personally benefit from it if it were introduced.  Like most outmoded practices, once they're gone nobody misses them but until then we put up with the way it is now, pretty much without thinking about it a lot.

Freedom and flexibility are not the only benefits for consumers.  As a Choice survey proved, the supermarkets currently allowed to trade on Sundays charge significantly higher prices than Coles and Woolworths.  The fact that these otherwise uncompetitive stores do so well on Sunday, to the extent it is their biggest day of trade, tells us two things.  First, consumers want and need to shop for food on a Sunday, the demand is clearly there.  Second, consumers are losing from the trading hours restrictions -- they are forced to pay more for the "privilege" of shopping on a Sunday.

But some consumer apathy and confusion over the benefits is no excuse for Government apathy -- the broader economic effects are too important to ignore.  Places with deregulated shop trading, not just phoney tourist areas, have more shops, employ more people in retail trade and generate greater economic activity from retail.  The economy-wide benefits are significant.

And the economic benefits are not just from retail trade itself.  A growing and increasingly diversified population creates demand for greater variety, whether this is in retail, restaurants, entertainment or work.  Great cities cater to all sorts and increasingly the kinds of young, highly skilled workers WA needs are demanding more lifestyle options than the State is permitting.  The result is an outflow of young people to other States and to overseas, exactly the people WA is desperate to attract.

Eventually WA will totally deregulate shop trading hours.  Eventually somebody will be brave enough to take on the vested interests and act for the benefit of consumers and the State economy.  Once it happens the issue will go away:  nobody ever agitates for re-regulation.

Until then the pressure will keep mounting because the current situation is unsupportable, a gross distortion that benefits a tiny minority of food retailers against the interests of the whole community.  A new Liberal Government not beholden to vested interests is the obvious place to make this important change.

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We need more people to help WA prosper

What is the major factor limiting Western Australia's continued prosperity?  It's not water, global warming, Canberra or even the OBE, but people.  The State needs people, lots of people who are willing and able to work.

The State has gone beyond full employment.  The unemployment rate now stands at 2.7 per cent -- a historic low.  Youth unemployment which was above 25 per cent seven years ago now stands at 6 per cent.  At the same time the proportion of the population in the workforce has been pushed to historic levels.

The pressure on the labour force is growing.  Vacancies are at record levels with the number of registered vacancies exceeding the number of people on unemployment rolls.  While the vacancies are largest in construction and mining, all occupations, businesses and locations are facing labour shortages.

This is not a temporary phenomenon, but a pointer of things to come.  We have entered a world where the key limiting factor is people.

The population bomb was a dud.  Fertility rates have declined sharply for decades in all but the most dysfunctional countries.  All countries, including Catholic Ireland and teeming China, are preparing for the day when their populations begin to decline.  Japan's population is already in freefall and most of Europe is on the edge of doing so.

Australia, while better off than most wealthy countries thanks to its high immigration levels, is already experiencing the effects of slowing population growth.  The workforce is ageing, becoming less mobile and less willing to work full time.  At the same time the flow of new entrants into the workforce is declining.  These trends are expected to accelerate over the next 50 years, leading eventually to a declining workforce.

While WA faces a slightly less-pressing population outlook than the nation as a whole, it confronts much greater opportunities and demands for labour.

We are now in the largest boom in the State's history.  The challenge for the State is to make the most of the boom and getting more people to the State is the key to doing so.

The main task is to ensure that as many long-term resource projects get built and are operating so that when commodity prices do fall and investment slows we have a large stock of working mines and processing facilities to keep the economy growing and the Government coffers full.

We also need to use the boom to build Perth as a resource hub for the region and beyond.  This is a real opportunity and challenge which offers the potential to both diversify the State's economic base and strengthen the mining and energy sector.

However, projects are already getting delayed and cost overruns are rampant because of the lack of workers.  These cost overruns are permeating throughout the economy, pushing up costs, undermining competitiveness and causing some firms to simply shut down.

The labour shortage might ease once the boom subsides but it will not go away.

Most sectors throughout the economy, but particularly the mining sector, face a rapidly ageing and retiring workforce.

The average age of mining and construction workers is 48 years with most retiring at 55.  Moreover, our young are avoiding these occupations despite the high pay and the steady work

This along with growth in demand will cause large on-going labour shortages even when the boom subsides.

Recent research by Flinders University predicted that the State's mining sector will in just 10 years face shortages in its operating workforce in excess of 50 per cent across all occupations, with the greatest shortages among labourers (81 per cent) and tradesmen (70 per cent).

The teaching, health, government, farming, manufacturing, transport and property and finance sectors face a similar scenario.

The real challenge is getting people.  The world is short of people particularly of the types we need.  The mining and building boom is a global phenomena and its workforce is in high demand around the world.  Moreover, as people age they become less mobile.

In the past we have relied heavily on interstate migration to fill our labour shortage.  However, people are no longer coming in numbers, at least on a permanent basis.  Indeed, the available data indicate there has been no growth in interstate arrivals for over a decade.

Instead we need to look overseas for people, preferably as permanent migrants, but if not then as temporary ones.

While more people will bring challenges, such as ensuring that there is adequate land for housing, schools, hospital beds and roads, it is the key to our future prosperity.

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Labour reform vital to the boom in WA

Is it controversial to claim that WA's economic boom would not have been so huge if cutting edge labour reforms had not happened over the last twenty years?  If it is, it may be even more controversial to say that the current Federal labour reforms are essential to maintaining and even expanding the boom.

WA is doing really well but not well enough to bring the 4 per cent plus unemployment rate down to historical lows of 2 per cent seen in the 1960s.

More economic growth is needed.  Getting labour issues right is essential to this objective.  The WA mining industry shows why.  If any economy is to fire at full capacity every operational aspects of business must be in total harmony.

This was the situation in WA mining in the 1980s.  Ore bodies were secured, finance was in place, markets were expanding, mines were built but labour relations were a disaster.  Mines were underperforming because collective labour agreements stopped mines operating at full design capacity.

The big change started in the Pilbara when the Robe River mine shifted to individual agreements.  Robe management simply wanted to run the mine properly.  They said the collective agreements stopped them having good working relationships with Robe staff.  This change in management attitude was revolutionary at the time, but it resulted in massive productivity, wage and profitability increases at Robe.

The new management approach was rapidly adopted through the mining sector, particularly in WA.

Quality individual staff agreements assist labour and management to pull together with planners, engineers, financiers, marketers and others to achieve high success.  Miners say they would not have captured the full benefit of the Chinese and Indian economic explosions without this.

The outcome is that the current WA mining boom and hence the general economic boom, would not have been on the scale it is if individual labour agreements had not spread through WA in the 1990s.

Take this simple example.  Many mines now have women driving their monster ore trucks.  It turns out women have proven safer and more skillful than men.  The greater female care has resulted in less equipment damage, breakdown and wear and tear.

But women have high child care needs.  In some mines women have formed child-care groups.  They alter their work rosters and share child care amongst themselves.

This could never have occurred under the old industrial relations processes.  To change things companies had to apply to government tribunals, employ lawyers and wait months, sometimes years for a decision.  If more change was needed the process was repeated.  The old system was just to slow to meet the evolving needs of the people on the ground.

Individual agreements enable the constant and small changes needed to focus everyone on properly servicing clients.

This is why the mining industry fled to the Federal industrial relations system a few years ago when WA laws destroyed individual worker contracts.

It's why the mining industry has been a loud supporter of the Federal Work Choices legislation.  They even say it doesn't go far enough to make individual contracts easier.

It's why WA needs to recognise the risk of not pushing for constant labour reform.

The terminal collapse now occurring of the traditional east coast manufacturing sector is a lesson for WA.  Over the last decade Australian manufacturers stuck to 1950s-style collective labour agreements.  They failed to do what miners did and focus the total business, including labour, on success.  Competitive international threats are now overwhelming Australian manufactures and opportunities are going unrealised.  It is management failure on a grand scale.

The same can happen in WA.  The WA commercial construction sector is the best example.

WA construction is plagued by violence, scandalous cost and schedule overruns.  It affects every aspect of life and business in WA.

These failures are held together by the WA industrial relations system which locks up labour and stops competition.  It's holding back the additional economic potential of WA.

If not fixed, it will continue to cause the boom to be under-realised.  Further, it can lead to economic rot in some sectors and job losses down the line as is happening in east coast manufacturing.

This is the importance of the new Federal regulator, the Australian Building and Construction Commission which is charged with weeding out corruption and returning competition to the construction sector.  It's a big task with a large focus in WA.

It's all part of the Federal Governments integrated approach to creating labour reform.  Along with Work Choices and the ABCC, we will soon see new legislation to look after independent contractors rights.

Is this revolutionary?  For some people, yes!  The total reform approach challenges some entrenched ways of doing business, and organising labour.  From these groups there will continue to be a lot of huff and noise.

For others, individual contracts merely secure what is already happening.  For them it's no big deal and they'll just continue with the job.

But for WA there's a lot at stake.  The development boom has a long way to go to secure the full benefits.  Labour reform is part of the package of activities that needs to occur to lock down this historic WA economic opportunity.

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