Retailers today urged governments across Australia to address the deepening productivity challenge following the RBA’s decision to hold the cash rate. The Australian Retailers Association (ARA) and National Retail Association (NRA) say excessive and escalating regulation is undermining economic capacity and fuelling inflationary pressures.

ARA CEO Chris Rodwell said a key focus area should be addressing regulatory fragmentation across the States.

“Australia is facing its worst productivity growth in more than 60 years,” Mr Rodwell said. “We need governments to act to reduce the regulatory burden and lift productivity. A significant aspect of this work has to be for the Federal Government to work with the States to reduce regulatory fragmentation. Without this effort, interest rates will remain higher for longer — and the entire economy will feel the strain,” said Mr Rodwell.

“Consumer and business confidence remains fragile, and the outlook on interest rates is creating great uncertainty around what next year looks like for businesses and households. After years of subdued spending, coupled with rising costs of doing business, we need to more to strengthen our $444 billion retail sector,” he said. “Retail is the largest private sector employer in the nation – contributing almost one fifth of Australia’s GDP. We need retail to thrive, which will have a flow-on effect to everyone in Australia.”

A recent report commissioned by the Australian Institute of Company Directors and prepared by Mandala highlights the scale of the challenge:

  • Australia now has the second-highest regulatory burden among G7 nations (behind Japan).
  • The number of Acts and legislative instruments has more than doubled from 3,974 in 2000 to 9,600 in 2024.
  • Total pages of laws and instruments have tripled since 2000 — from 67,000 to 193,000.

“This avalanche of regulation has created a fragmented, overlapping and confusing system that is impossible for businesses to navigate efficiently – and leaves many small to medium size businesses particularly vulnerable,” Mr Rodwell said. “The compliance load is clearly suppressing investment, productivity and innovation — all of which are essential for easing inflation and lowering interest rates.”

Recent state and federal legislative moves continue to add new layers of red tape at precisely the time Australia should be prioritising regulatory simplification.

Mr Rodwell said the Federal Government must now “crack on” with its economic reform agenda — including streamlining regulation, lifting workforce participation and capability, and supporting business investment.

“Today’s rate decision is a reminder that monetary policy can only do so much,” Mr Rodwell said. “If we want lower interest rates, stronger growth and better living standards, the productivity agenda must accelerate — starting now.”