Regulation slashed – or just junk DNA?

Peter Costello has announced that 4,100 pages of inoperative law will be removed from the taxation legislation. This is a Good Thing I guess, but I’m not sure I’d give it a reception quite as enthusiastic as Henry Thornton.

You little ripper! Treasurer Peter Costello is going to give the chop to over 4000 pages of “inoperative” tax law and make various simplifications to the operative parts, including private rulings by the ATO.

Our DNA contains is it 90% of junk code – that is stuff that some scientists presume is no longer operative. But if that’s right it doesn’t seem to do much harm sitting there.

A lot of pages of the tax act are similar. Meanwhile although it is quite true that over-regulation (or better put bad regulation) is a serious problem for our society and economy, our understanding of the problem is crude as is our measurement of the problem. We repeatedly measure it in pages of legislation and the number of instruments passing into law. This ignores the quality of the regulation.

And the kind of reform we’ve got here is the kind of reform you’d expect when this is your measure of success. Yet even acts of deregulation spurn more legislation and more regulation – if you measure it by pages. This is the case whether it’s badly designed deregulation as most people would consider the recent IR regulation was, or well designed regulation as the implementation of the Hilmer or Wallis Reports involved.

I think we should be thinking a bit differently about regulation. I won’t cite chapter and verse here because it would be nice to get someone to pay for it. But here’s a thought. What if we thought of regulation as standard setting. That would certainly put the spotlight where I think it belongs. That is on:

  • the responsiveness of regulatory systems to the needs of their ‘users’ and
  • the quality of the standards we set
  • And we might be more relaxed about the increasing volume of regulation. After all, as societies grow their standards become larger and more complex.

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    armaniac
    15 years ago

    Best way to simplify tax- remove deductions (and compensate by lowering rates).

    Strongest lobby against this? Over tax-protected industries and tax-avoidance, sorry minimisation, advisors.

    People its best for? Everyone who works hard for a real salary or wage and can claim sweet FA of their operating costs.

    Chris Lloyd
    Chris Lloyd
    15 years ago

    Excellent post Nick – and great metaphor with the junk DNA. And you even resisted the temptation to finish the piece with a a return to the same metaphor, possibly mixed and combined with pun! You’ll never make it as a real journalist.

    The notion that the optimal tax system can be defined by some simple minded two page algorithm is”

    Sacha
    15 years ago

    I was trained as a mathematician and not a biologist, but recently I read a book on evolution that seemed to suggest that “junk DNA” may not be junk after all – it may be presumptuous to assume that it serves no purpose… although perhaps a large part of income tax laws serve no purpose whatsoever!

    Andrew Leigh
    15 years ago

    Nice post. I think we’ve always known that pages was a crude metric – the question is whether you can show it’s negatively correlated with the “right” measure.

    “I think we should be thinking a bit differently about regulation. I won’t cite chapter and verse here because it would be nice to get someone to pay for it.”
    > A subtle bid for consulting work?

    Tony Harris
    Tony Harris(@tony-harris)
    15 years ago

    Well I suppose cutting pages out will save some trees when the Act is reprinted but I suppose the point is to remove things that actually cause problems.

    Many years ago the Sydney City Council repealed some redundant rules and I wish I could remember them all but one was about washing barrels within 100 yards of a main thoroughfare. I like to think that another was about the keeping of hogs.