Ai Group chief executive Heather Ridout.

The growing burden of business regulation is becoming a barrier to innovation and growth, according to the latest report from the Australian Industry Group/Deloitte CEO survey released this week.

The survey of 322 CEOs from the manufacturing, services and construction sectors found the average business spends almost 4% of its annual costs on complying with regulations.

Other key findings include:
*Business regulations are hampering the ability of CEOs to improve their businesses by engaging in trade, introducing new products and services and changing work practices.
*Around one-third of CEO respondents indicate regulations are a substantial barrier to employing more staff, which is critical for business growth.
*Some 70% of respondents have experienced a rise in compliance costs over the past three years.
*Over 75% of CEOs report that they expect a rise in compliance costs in the next three years.
*Around 37% of respondents anticipate that carbon pricing-related regulations will be the major driver of increased compliance costs in the next three years.

Ai Group chief executive Heather Ridout says despite all the talk of aspiring to be a seamless national economy, Australia's red tape burden is rising, not falling.

She says government needs to be proactive to address the regulatory burden and actions should include: accelerating the implementation of the recent COAG reform initiatives; reviewing the effectiveness of state government initiatives to reduce the regulatory burden; making regulatory impact statements more consistent and transparent; and improving regulatory agency interaction with the business community.