On The Good Builder Podcast, Xero economist Louise Southall defined red tape as internal friction rather than external regulation. It is a smaller idea than the policy debate, and a considerably more usable one.

Ask almost anyone in Australian construction what red tape means and the answer points outward. Planning approvals. Licensing. Compliance paperwork. Duplication between agencies.

The industry has spent years making that case, and it has made it well. Housing groups have put the cost of regulation across residential construction at tens of billions a year, and successive governments have responded with reform packages aimed squarely at it.

None of that is wrong. It is just incomplete.

Louise Southall is an economist at Xero, working across the Xero Small Business Insights program, which measures sales, jobs and wages across more than half a million Australian small businesses. Asked on The Good Builder Podcast what has genuinely been cut and what is still sitting there, she started by declining the premise.

“Red tape means different things to different people,” Southall said. “I’m sure if you had a town planner on, they would have a very different perspective to me about what red tape is. So my perspective is really around the running of the business.”

The Version That Does Not Require Anyone Else to Move

The distinction Southall draws is between regulation imposed on a business and process accumulated inside one. The second category is larger than most operators assume, and it does not require legislation to change.

“Some of those things are within the control of the business owner. So it is thinking about, okay, where are the friction bits in my business that I could remove? I don’t have to wait for government to remove these bits of red tape. There are things that actually business owners have themselves.”
LOUISE SOUTHALL, ECONOMIST, XERO

This is a meaningfully different proposition to the policy conversation. Planning reform runs on parliamentary timetables and consultation periods. Internal process runs on a decision made on a Tuesday.

Southall was also clear about which of the two a building business actually has leverage over.

“Construction businesses do have a lot more control perhaps over that than maybe they do other sorts of red tape, like big policies and big planning laws,” she said. “You can’t really control that. But there’s plenty of red tape within every business that a business owner can look at.”

Three Friction Points, in Order

Southall breaks a building business into a sequence, and locates the friction at the joins rather than in the work itself.

“For somewhere like construction, a friction point is you do the quote, then you do the work, but then you’ve got to get the invoice out, then you’ve got to get the payment in,” she said. “They’re kind of like three friction points that I would think for this particular industry.”

Quote to work. Work to invoice. Invoice to payment.

Each of those transitions is a place where a job can sit still while nothing about the building work is holding it up. A quote waiting on a second signature. An invoice that goes out at the end of the month rather than the end of the stage. A payment that arrives when someone finally follows it up.

None of those are regulatory problems. All of them cost money.

They are also the points at which delay compounds fastest, because a slow invoice does not simply arrive late. It moves the whole payment cycle back with it.

The Test Is Whether Anyone Can Explain Why

The most useful part of Southall’s framing is the question she attaches to it, which is not about efficiency in the abstract but about origin.

“When I think about reviewing processes, it might even be that there’s something that you’ve done in your business for a long time because that’s just how it’s always been done,” she said. “You don’t actually need to do that anymore. So that’s the perfect red tape reduction program, isn’t it, within a business, to actually stop doing something that you don’t need to be doing anymore.”

Processes in a building business tend to accumulate for reasons that made sense once. A checking step added after a job went wrong. An approval layer introduced when a new estimator started. A form that exists because a client asked for it in 2019.

Very few of them are ever removed, because removal requires someone to notice, and nobody is assigned to noticing.

What It Looks Like in Practice

Az described the version of this that ran inside a building business he was a partner in, where quotes moved through several people before they reached a client.

“It would be like, well, why didn’t we get that quote out two weeks ago? And by that time, that two weeks has gone, we’d go back to the customer and they’re gone. We’re already talking to someone else. They’ve got a price.”
AZ, THE GOOD BUILDER

The quoting process was internal. The consequence was commercial.

What he described noticing only in hindsight was where the attention had been going in the meantime. The business was watching interest rates, competitor pricing and market conditions, none of which it could influence, while a fixable two week delay sat inside its own approval chain losing work.

That pattern is common, and it is not a competence problem. External conditions in construction are genuinely volatile and genuinely consequential, so they hold attention easily. Internal process is quiet by comparison. It does not announce itself, and it rarely appears on a profit and loss statement as its own line.

Technology Comes Second

The obvious response to friction is software, and Southall was careful about the order of operations there.

“Often technology is a solution, but it’s understanding what the problem is in the first place,” she said. “So when you’re reviewing your business you see, okay, the quotes I’m doing okay on, but where I’m struggling is my payments aren’t coming in quick enough. Then that’s having a look at what technology tools can you use in your business to get payments coming through the door quicker.”

Her example was deliberately small. A pay now button on an invoice, so a client can settle it the moment it arrives rather than at the point they get around to it.

That sequence matters because the reverse order is how businesses end up with subscriptions they do not use. A platform bought to fix an unspecified problem tends to sit alongside the existing process rather than replacing it, which adds a step instead of removing one.

Why the Time Is Worth More Than It Looks

The argument for clearing internal friction is usually made in terms of hours saved, which understates it. Southall put the value in what those hours get spent on instead.

“If you’re spending less time chasing payments, finding out who’s paid, who hasn’t, understanding what’s happening with cash flow, if you’re spending less time doing those things, you’ve got more time to take on more customers and focus on actually the things people love doing,” she said. “No one starts a small business to do the books.”

In a building business, the hours recovered from administration are the same hours that go into site supervision, trade relationships, quoting accuracy and client communication. Those are the activities that determine whether jobs run to program and whether clients refer.

So the return on removing an unnecessary approval step is not the twenty minutes. It is what the twenty minutes was displacing.

The Scale of the Change Is Smaller Than Expected

Southall raised one more thing worth holding onto, which is that this work does not look like a transformation project.

“There’s a bit of a misconception about productivity, that in order to boost it you have to do a really big thing in your business,” she said. “But the thing about productivity is it’s actually about moving and changing things at the margin.”

That reframing lowers the barrier considerably. Removing a redundant sign off, moving a progress claim from monthly to stage based, or putting a payment link on an invoice are not initiatives. They are adjustments.

They are also the kind of change that survives, because they do not depend on anyone sustaining enthusiasm for a new system across a busy quarter.

Southall’s starting point was that the business owner already holds the necessary information.

“The business owner, you are the person who understands your business the best,” she said. “As the business owner, you can really understand the systems that you have, and that’s really the starting point.”

Two Conversations, Not One

The external red tape debate should continue. Approval timeframes, duplicated compliance and inconsistent state requirements impose real costs on builders, and smaller operators absorb them least comfortably because they have the thinnest capacity to carry delay.

But that conversation has a structural weakness, which is that its outcome sits with somebody else. A builder can contribute to it, advocate within it and wait on it. They cannot decide it.

The version Southall describes has no such dependency. It is smaller, less satisfying to argue about, and entirely resolvable inside the fence line.

Both conversations are about the same thing in the end, which is time lost to process that produces nothing. Only one of them is waiting on a parliament.

The full conversation with Louise Southall is available on The Good Builder Podcast.

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Author: TGB Editorial