The federal Opposition’s pledge to cut red tape by a quarter has been welcomed by a business lobby that counts the Insurance Council of Australia (ICA) among its members.
The commitment gives a political platform to an argument insurers have been making for a year: that compliance costs are feeding into premiums.
Opposition Leader Angus Taylor announced the commitment in a speech to Business Sydney on Monday. He said a Coalition government would cut federal red tape by 25% in its first term, which he estimated would save businesses $40 billion a year. Deputy Opposition Leader Jane Hume would lead a “red tape razor gang” to identify cuts.
The Alliance of Industry Associations, a group of around 30 industry bodies, said the pledge matched its own call for all governments to cut unnecessary regulatory costs by 25% by 2030. The Alliance relies on Australian Institute of Company Directors research putting the cost of federal regulatory compliance at about $160 billion a year, almost 6% of GDP. A quarter of that figure is the source of the $40 billion savings estimate.
The ICA put its own number on the problem last November. Its report The Cost of Regulatory Burden estimated that general insurers spend between $2.5 billion and $3.5 billion a year on compliance, or 4% to 6% of gross written premium. The report counted more than 30,000 obligations enforced by 25 authorities under 300 regulatory instruments.
When the Alliance first called for the 25% target in April, ICA chief executive Andrew Hall linked regulation directly to household costs.
“Reducing regulatory red tape is one of the most direct levers available to ease cost of living pressures at a time when the Middle East conflict is driving up prices across the economy,” said Hall.
He said at the time that a 25% cut to the industry’s compliance burden would bring relief to policyholders across the country.
The Alliance also acknowledged the government’s existing commitment, while saying it did not go far enough. Treasurer Jim Chalmers’ May budget included a productivity package that the government says will reduce regulatory costs by $10.2 billion a year.
The financial sector accounts for $780 million a year of that total, through 14 legislative reforms. A further $181 million a year is expected to come from cutting duplicative data requests by financial regulators. Those measures are the closest either side has come to naming specific savings for insurers.
The Coalition has not yet said which financial services obligations it would target.
Consumer advocates dispute the industry’s case. After the ICA’s report was released, the Australian Consumers Insurance Lobby argued that insurers should improve their conduct before asking for lighter oversight. Its argument is that many of the rules followed misconduct findings.
Brokers have a stake in how the debate plays out. The National Insurance Brokers Association has argued that affordability and accessibility should be treated as regulatory outcomes in their own right. Brokers place about 46% of Australia’s general insurance premium, so changes to disclosure, advice and claims-handling rules would land on intermediaries as much as on insurers.
For now, the two parties are offering different scales of ambition rather than competing lists of rules to remove. The Coalition’s figure rests on an economy-wide estimate, while the government’s rests on itemised measures. Until either side says which insurance obligations would change, the practical effect on premiums and on broker workloads is impossible to measure. The next federal election is due by 2028, so that detail is likely to be some way off.
