What is your assessment on the legal, fiscal, and regulatory environment in the country?

Are these likely

to change in near future?

Legal Environment in Australia

The law regulates all business conduct. Every transaction and relationship is governed by an increasingly
complex mix of statutory and judge-made regulations. The ability to identify and manage legal risks, and
knowledge of compliance and dispute resolution strategies, are essential business management skills.
This unit examines the legal framework and regulatory regime within which all businesses operate in
Australia and a global economy. It introduces students to the legal implications of commercial conduct.
It provides an overview of the Australian legal system and threshold legal concepts of agreement,
ownership, and civil and criminal liability. Key areas of substantive business law are examined, including
contracts, torts, property and securities, and crime. The unit also provides students with an overview of
areas of legal regulation with an increasingly significant impact on business operations, including
privacy, intellectual property rights, competition law, consumer law (in particular advertising regulation,
product liability, and unfair contracts), misleading conduct and unconscionable conduct.

While Australia does not have human rights enshrined in our constitution and only limited reflection
through other federal laws, various states have introduced legislation to recognize and protect human
rights. The right to a healthy environment has been integrated into over 150 legal frameworks
worldwide; Australia remains one of only 15 countries without the right to a healthy environment
enshrined in our federal laws or constitution.

Australian environmental law is evolving, and as more information and data concerning the
environment becomes available, the environmental legal sphere is subject to proposals for change.

Importantly, there is currently no national climate change legislation that sets statutory targets relating
to greenhouse gas emissions or any mandatory carbon trading scheme. However, there is a national
framework for measuring and reporting on greenhouse gas emissions and a range of voluntary offsetting
mechanisms.

Underlying the Commonwealth framework are extensive environmental legislative mechanisms for each
state and territory administered by their respective regulatory authorities covering matters such as
pollution, biodiversity, water trading, and use, contamination, hazardous substances, resource recovery,
waste, and heritage.

Fiscal Environment in Australia

The data indicate that the counter-cyclical stance of Australian fiscal policy has been conducive to
achieving two key objectives: promoting long-term growth and stabilizing the economy. While it might
be challenging to establish the exact contribution of fiscal policy to long-term growth, the link between
fiscal policy and cyclical stability is much more direct. Suppose Australian people have benefited from a
relatively stable economy in the past 25 years. In that case, it is because fiscal policy has been run
counter-cyclically, at least under the Labor governments.
The benefits of cyclical stabilization should not be underestimated. A more stable economy encourages
investments, which strengthens the long-term growth potential of a country. Stability also allows for
consumption smoothing, which raises an individual’s welfare. Moreover, with a counter-cyclical fiscal
policy, the government makes lower-income groups less vulnerable to the adverse consequences of
recessions.

In light of all this, I think that Labor governments should be praised for their approach to fiscal policy-
making in these last two decades. In particular, the increase in debt under the first Rudd government is a
sign of competent policy-making: fiscal policy became strongly expansionary when a strong negative
shock hit the economy, and the country was at high risk of recession. Any different course of action
would have been a mistake.

It is also important to stress that the increase in debt did not make the debt to GDP ratio unsustainable.
Australia is today one of the countries with the lowest debt-to-GDP ratio.

In conclusion, I am not worried about increasing debt in a recession. I would be worried if the
government did not do that. In the same way, I am worried if a government plans its budgetary policy
ten or so years ahead without any reference to or consideration for the cyclical fluctuations of the
economy. It’s just not good fiscal policy-making.

Regulatory Environment in Australia

Environmental regulations raise production costs at regulated firms, though the costs are only a small
fraction of a firm’s total costs in most cases. Productivity tends to fall, and firms may shift new
investment and production to locations with less stringent regulation. However, environmental
regulations have had enormous benefits in terms of lives saved and illnesses averted, especially through
reductions in airborne particulates. The potential health gains may be even greater in developing
countries, where pollution levels are high. Hence, the benefits to society from environmental regulation
appear to be much larger than the costs of compliance.

There is a general absence of professional or legislative rules within Australia requiring companies to
provide information relating to their environmental performance or any environmental initiatives
undertaken. Previous research studies have shown that many firms present environmental information
but only tend to present favorable information to their corporate image. Investigates the environmental
reporting practices of a sample of 20 Australian companies which were subject to successful prosecution
by the New South Wales and Victorian Environmental Protection Authorities during the period 1990‐
1993. Indicates a significant increase in the reporting of favorable environmental information
surrounding environmental prosecution. Further, the amount of positive environmental information
significantly outweighed the negative environmental information presented, which was interesting. It is
clear that the firms studied did have bad news to report. Only two of the companies within the sample
reported a proven environmental offense. Raises issues as to whether information about a proven
environmental offense is “material” to account users and, if so, whether financial statements could be
construed as being misleading in the absence of such information.
The Grose River is contained almost entirely within a World Heritage Area. While sewage pollution in the
area has been addressed, pollution at damaging levels continues from a disused coal mine, closed in
1997. Despite some surface rehabilitation, no action has occurred to remediate zinc polluted waters
emanating from the mine. We examine the historical regulation and management of the Australian
Commonwealth and New South Wales governments and highlight gaps in both regulatory systems. We
conclude that there is an urgent need to improve water pollution regulation, mining, and environmental
management in highly valued world heritage areas.

This briefing addresses a number of current practices in environmental reporting in Australia. It is

limited to consideration of mandatory and voluntary initiatives at the national level (rather than state or
territory levels). Three initiatives are explored. Two of these are mandatory requirements—section 299
corporate disclosures required under the 2001 Corporations Act and section 516 disclosures by
Commonwealth government organizations under the Environmental Protection and Biodiversity
Conservation Act 1999. One other initiative is voluntary—Public Environmental Reporting—aimed at all
organizations. Links with the Global Reporting Initiative are considered, followed by a brief comment on
incentives and users of environmental reports. The briefing concludes by raising three issues that need
to be addressed in the future—sustainable development, education, training and communication, and
environmental accounting.

Key findings:

• Laws and regulations are essential instruments, together with taxes and spending, in attaining policy
objectives such as economic growth, social welfare, and environmental protection. At the highest
political level, OECD countries have generally committed to an explicit whole-of-government policy for
regulatory quality and have established a standing body charged with regulatory oversight.

• Implementation of regulatory policy varies greatly in scope and form across countries. While RIA has
been widely adopted, few countries systematically assess whether their laws and regulations achieve
their objectives. Stakeholder engagement on rulemaking is widespread in OECD countries, mainly in the
final phase of developing regulation.

• The national executive government has made important progress over the last decade to improve the
quality of regulations. Parliaments, regulatory agencies, and sub-national and international levels of
government need to be more engaged to ensure that there are evidence-based and efficient laws and
regulations for stimulating economic activity and promoting well-being.

• The impact of regulatory policy could be further improved by addressing shortcomings in the
implementation and enforcement of regulations and by considering new approaches to regulatory
design and delivery, such as those based on behavioral economics.