The Fragmentation Tax
23.02.2026 - 05:11
Australian retailers operate across a patchwork of inconsistent state and territory regulations that, left unchecked, will cost the economy $26 billion and households $9.4 billion over the next decade. Commissioned by the Australian Retail Council, this Mandala report finds that regulatory fragmentation in retail - Australia's second-largest employer, generating $649 billion in economic activity annually - is compounding the country's productivity crisis at the worst possible time. The report identifies specific issues in transport and logistics, and packaging and waste as priority areas for reform, where harmonisation alone would inject up to $1.65 billion into the economy over 10 years. It recommends the Federal Government use its National Competition Policy framework to drive reform - including a $260 million increase to the National Productivity Fund, a new National Harmonisation Council, and a mandate that Regulatory Impact Statements explicitly quantify fragmentation risks.
Australians are struggling with high prices while weak productivity growth reduces their wages and living standards. Addressing regulatory inconsistencies in one of the most systemic sectors and biggest employers in the economy - the retail sector - is a unique opportunity to help address both these challenges at once.
To support retail is to support the economy. The retail sector is the second largest employer in the country. It employs over 1.5 million Australians and generates $649 billion of income for the Australian economy every year. The retail sector is highly systemic. It permeates throughout the economy and is a critical part of the supply chain for almost every business in Australia. This presents a significant opportunity: addressing problems in the retail sector is one of the biggest-bang-for-buck reforms the government can pursue.
Left unchecked, inconsistent state and territory regulations will cost the Australian economy $26 billion and cost households $9.4 billion over the next 10 years. Regulatory inconsistencies mean retailers face unnecessary costs as they contort their business operations to deal with inconsistent approaches to regulation. It means a retailer transporting goods from one state to another may have to change trucks at the border. It means fleet managers must design elaborate delivery plans when neighbouring local councils have different delivery curfew regulations. It means national retailers need to procure different types of cups in different states to meet fragmented regulatory requirements.
Areas for immediate reform are in transport and logistics, and in packaging and waste reduction regulations. Transporting goods across Australia is a regulatory challenge. Heavy vehicle standards, accreditation and permit processes, commercial vehicle standards, and fatigue management requirements are inconsistent. Harmonising these regulations alone would inject $1 to $1.3 billion into the economy over 10 years.
Packaging and waste reduction regulations are riddled with jurisdictional inconsistencies. Container deposit schemes and bans on single-use plastics vary. Cleaning up these regulatory inconsistencies alone would add $300 to $350 million to the economy over 10 years.
The Federal Government should use its National Competition Policy framework to prioritise cross-jurisdictional reforms in the retail sector. To achieve this the Commonwealth Government should:
- Increase the National Productivity Fund by $260M to support regulatory harmonisation
- Establish a National Harmonisation Council within the NCC to drive cross-jurisdiction decisions and delivery
- Deliver the first harmonised regulatory package within 12 months
- Mandate that Regulatory Impact Statements explicitly acknowledge and quantify fragmentation risks
Read the full report here.
Read our latest posts
The essential infrastructure: How Australian banks power the economy
Mandala's latest research, prepared for the Australian Banking Association, examines the often-hidden role Australian banks play in supporting households, businesses and the broader economy. The research finds that banks are deeply embedded in the financial lives of Australians - as lenders, as community investors, through the jobs they generate and increasingly as assets owned by Australians themselves through shares and superannuation. From financing homes and small businesses to supporting regional communities through hardship and disaster, the report builds a picture of a sector whose success is broadly shared across the Australian population.
17 Jun, 2026
The threat of climate change to the US insurance industry
This joint report by the Coalition for an Insurable Future and Mandala Partners examines how climate change is undermining the stability of the US home insurance market. Homeowners insurance premiums have risen 38% since 2021, outpacing both inflation and wage growth, while 1 in 7 owner-occupied homes are now uninsured. Climate risk could push national premiums 35–107% higher by 2050, leave an additional 1.5–2.5 million households without cover by 2035, and cost the broader economy $1 trillion. The aggregate cost could rise to over $3 trillion by 2050. A preliminary assessment of state-level policy responses across California, Florida, Louisiana, New York and Colorado finds that effectiveness is mixed, and that the burden of costs falls primarily on homeowners, insurers and taxpayers, rather than on the sources of the underlying climate risk.
10 Jun, 2026
Surf, Shop, Save 2.0: How online retail is helping ease cost-of-living pressures in Australia
Mandala's latest research, commissioned by Amazon, examines how online channels are easing cost-of-living pressures for Australian households. The research analysed the prices of more than 95,000 products sold through online channels, constructing an Online Channel Index (OCI) to track how online prices have moved since 2019. The OCI has deflated 6 percentage points over that period, while the comparable CPI basket has risen 8 percentage points, a reflection of the competition and efficiency effects that online channels bring to the broader retail market. These effects are expected to save the average household $1,414 in 2026, roughly six weeks of grocery spending, with total savings of $7,766 since 2019. Lower-income households gain the most as a share of income. Online sales now account for 12 per cent of Australian retail, and some of the country's largest retailers are also leading omnichannel players.
22 May, 2026
Accelerating Housing Delivery Through Risk Capital Approaches
Mandala’s latest research, prepared with CBRE, aims to understand the benefits of shifting public-sector subsidies from grant dependence to risk capital co-investment. Risk capital is the deployment of sub-market loans to housing developments and has been applied in Greater Manchester to halve the effective public cost of subsidisation. As England grapples with a viability crisis, risk capital can provide an effective policy solution. This report models the deployment of £8.5bn from the National Housing Bank as risk capital across England. The report finds that deploying this capital within existing fiscal rules could unlock 94,000–104,000 additional homes by 2031, depending on the deployment strategy. This could crowd in £22bn in private investment, generate £5.6–£5.8bn in cumulative GDP growth, and support 71,000–73,000 jobs across England while recovering public capital with interest.
20 May, 2026