News Article

April 24 2013

Red tape

‘Reducing red tape’ has been a hot topic between not-for-profits and government agencies over the last couple of years. The Western Australian Government has been driving a ‘free market‘ approach to encourage NFPs to be more entrepreneurial and innovative in the way they deliver value to the communities they serve.

Similarly, the Commonwealth Government has recently created the Australian Charities and Not-for-profits Commission (ACNC) with the promise of – among other things – standardised reporting for NFPs across the country and reducing red tape.

Professor David Gilchrist, a respected supporter of NFPs from Curtin Business School recently took the brave step of questioning the rhetoric in the ‘red tape’ debate, on LinkedIn.  David argued administrative process is a necessary and important part of any business and offered a definition of ‘red tape’ as being processes “that are:

  • valid but the results of which are not used by an organisation – perhaps there is a lack of capacity (knowledge and resources) in terms of applying the results; 
  • valid but inefficient – that is, an administrative process should be undertaken but new technology or better processes might reduce its cost; 
  • the cost of which outweighs the value it produces – for instance, a stock take where the value and quantum of stock is miniscule; or 
  • that is invalid (that is, it might be an anachronism, it may be that it is redundant or simply that it is not required or the results of it cannot be utilised by the organisation or its managers). 

In other words, Red Tape reduction is entirely appropriate where the cost of administrative process outweighs the benefit to an organisation.”

David makes a good point. There’s a risk we throw the ‘red tape’ label around too easily and it’s a convenient way to attack any administrative processes or policies we don’t like.

In 2010 the working groups tasked with converting recommendations of the Economic Audit Committee into policy discussed this issue of ‘reducing red tape’ at length and we came up with lots of examples of all four types of red tape you’ve listed above.

  • Requiring a hard copy of your NFP’s annual report every time you apply for a grant – even though you may have made many applications that year and the grant organisation already has multiple copies on file.
  • Collecting pages of detailed data from an NFP when there is no evidence of that data ever being used in any way.
  • Badly written documents asking for the same information to be provided three of four different ways.
  • Etc… I’m sure readers working in NFPs and government agencies can cite more examples.

So, while it’s true, we should guard against lazy misapplication of the ‘red tape’ label,  continue to collect data to inform policy, and we will always need good governance, at this stage in the conversation we still have so many efficiencies to gain by reducing red tape, it will be a fair while before we need to worry about overdoing it.

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