How friendly are regulatory authorities toward small business?
The Productivity Commission will investigate how federal and state regulators impact small business costs.
Its report, due to be completed by September 2013, will examine how friendly regulatory authorities are towards small business.
Assistant Treasurer David Bradbury said recently the way federal and state regulators went about their operations could have a big impact on the time and costs for small businesses.
A new regulatory and competition reform agenda was agreed at the last Council of Australian Governments (COAG) meeting in April following the inaugural COAG business advisory forum.
The second forum, to be chaired by Prime Minister Julia Gillard in Canberra, has been briefed on the new Productivity Commission inquiry.
The commission's work will also complement that of the Small Business Commissioner, Mark Brennan, who starts work in January.
During the inquiry, small business operators will be able to raise concerns about their interactions with regulators, Small Business Minister Brendan O'Connor said.
Small business groups argue regulators take different approaches to their roles, with some being heavy-handed on enforcement while others work in more consultative and educational ways.
They also say many regulators don't take into account the size and nature of businesses and the cost burden of compliance.
One of the outcomes of the Productivity Commission's work is likely to be a new standard definition of a small business.
The Tax Institute welcomed the review, saying it had been calling on the government to closely consider the merits of establishing both a universal definition of small business and a separate small business entity.
"For too long small businesses have been hamstrung by a multitude of thresholds and definitions that has hampered growth due to excessive regulation and red tape," the institute's senior tax counsel Robert Jeremenko said in a statement.
"Many of the compliance issues being faced by small business are caused by different policy priorities within both federal and state governments."