Regulating for Growth
While Australia’s relatively strong regulatory environment can be seen as an advantage for exporters, local business remains more concerned about the associated risks than their global counterparts. So how can we get the regulatory balance right?
Australia and the global perspective
In KPMG’s most recent Global CEO Outlook 2018, the majority of Australian CEOs in fact cited other factors as greater inhibitors to growth than regulatory risk – including cyber security and emerging or disruptive technology. As KPMG Partner Justin Jamieson suggests, Australia’s relatively strong regulatory environment can be seen as a competitive advantage on some levels as our exports are trusted in overseas markets. However with the KPMG study also finding local CEOs nearly 10 per cent more likely to worry about regulatory change than their global counterparts, Jamieson says regulation can’t be too onerous. This is especially true in a world where business has to be quicker to market than in the past, he says.
Getting the balance right
The 2017 KPMG study on CEO sentiment Keeping us up at night found many business leaders believe regulation is often introduced to counter media noise or political agendas. A strong theme was that government often turns to a one size fits all approach, which does not always reflect the commercial realities of individual industries and sectors.
The recent Fairfax Media and KPMG Enterprise Growth 2.0 survey confirmed that getting governance, risk and compliance practices right is a fine line and they need to be constantly reviewed. Mid-sized businesses that do get the balance right stand to benefit enormously in the future.
Finally, having the necessary risk management and controls in place ensures a company is better placed when it comes to a transition event such as a change in leadership or ownership or even a large capital raising.
It is clearly a constant for business but one that needs to be addressed internally for success.
Leadership to ensure house in order
With mid-market enterprise leaders relatively confident in their plans for growth in the current environment, they understand change needs to come from within. Our survey respondents know they need to get their internal cultures right to be able to respond quickly to regulatory changes when they need to. They also understand internal governance has to be driven by management and the importance of having the right leadership team in place to implement these changes so the business can continue successfully.
Enterprise is a specialist division of KPMG Australia, dedicated to advising the emerging, private and mid-market. We work with established entrepreneurs, family businesses, not-for-profits, and fast-growing companies to build thriving organisations.
By bringing our diverse expertise together, we give our clients the confidence to focus on the things that will truly make an impact and help them grow.
At Enterprise, we offer an extensive range of audit, tax, accounting and advisory services to help clients through every stage of their life cycle, whether starting, growing or exiting their businesses.