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 Fragmentation Tax
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.
23 Feb, 2026
Reforming Victoria's Windfall Gains Tax
Victoria's Windfall Gains Tax (WGT), introduced in July 2023, has compounded a decade of new and increased property taxes that have made Melbourne the most costly major city in Australia for development. Commissioned by the Property Council Victoria, this Mandala report finds that developer taxes and charges now account for 18% of total costs on Melbourne developments - double the rate of Sydney - and that the average WGT liability pushes project returns below the viability threshold. The analysis estimates that removing the WGT could unlock $1.4 billion in additional annual investment, support 2,700 jobs and deliver the equivalent of 3,100 new homes per year by 2030. The report also presents a suite of targeted reforms across financial relief, predictability, and policy alignment that would restore investor confidence while balancing the government's revenue objectives.
23 Feb, 2026
Restoring affordable access to specialist care in Australia
In this report, Mandala and Private Healthcare Australia (PHA) studied the affordability of specialist care in Australia. We find that specialist fees are rising, exacerbating cost-of-living pressures on consumers and worsening the affordability of healthcare. We propose a targeted package of measures to improve consumers' ability to access high-quality care, of their choosing, at fair and transparent costs.
3 Feb, 2026
Critical Minerals Strategic Reserve Design
Mandala's latest report for the Association of Mining and Exploration Companies (AMEC) sets out an industry-informed approach to implementing Australia’s Critical Minerals Strategic Reserve, with a focus on rare earths critical to national security and the energy transition. Bringing together 10 Australian rare earth developers, and drawing on international precedents and economic analysis, the report recommends a commercially viable and fiscally sustainable model to support new investment in Australia’s rare earths sector while managing risk to taxpayers.
12 Jan, 2026