Australian retailers and consumers are being hammered by a growing web of Federal Labor and State government regulations that industry leaders say is costing billions and driving up prices at the checkout.

The newly formed Australian Retail Council (ARC), now collecting tens of thousands of dollars in membership fees from retailers, which gives them a fighting fund, has launched an aggressive push to rein in what it describes as a spiralling regulatory mess that is crippling productivity and inflating household costs.

In a new report titled The Fragmentation Tax, prepared with research group Mandala, the ARC claims inconsistent and overlapping regulations across federal, state and local governments are acting as a hidden tax on businesses and families — and the price is climbing fast.

According to ARC modelling, regulatory fragmentation will wipe $26 billion from Australia’s GDP over the next decade and saddle households with more than $9 billion in additional costs. The compliance burden from Commonwealth regulation alone has exploded to more than $160 billion annually, up from $65 billion just ten years ago. Once state and territory requirements are layered on top, the total bill approaches a staggering $240 billion a year.

ARC CEO Chris Rodwell says the system has become economically destructive.

“Retailers operating interstate are forced to run parallel compliance systems, fragmented logistics models and jurisdiction-specific supply chains,” Rodwell said. “Businesses are spending more time and money navigating different rules when they could be investing in jobs, innovation and growth.”

Industry leaders argue that Federal Labor regulations, coupled with inconsistent state policies, are creating chaos across the retail supply chain. The consequences range from trucks being forced to unload at state borders due to differing transport rules, to retailers sourcing different packaging — even different coffee cups — depending on which state they operate in.

ARC Chief Economist and Chief Policy Officer Glenn Fahey says the inefficiencies are absurd — and expensive.

“Right now, a truck carrying a legal load in Sydney can be forced to stop at the border and transfer that load onto a different vehicle simply to continue to Brisbane,” Fahey said. “Retailers are sourcing different packaging and coffee cups for different states. Delivery schedules are dictated by mismatched local rules and different council curfews. This friction ultimately ends up in the price on the shelf that every Australian pays.”

The impact extends beyond logistics. Appliance and television manufacturers are reportedly being forced to navigate differing environmental and energy regulations overseen by Federal Environment Minister Murray Watt and Climate Change and Energy Minister Chris Bowen, as well as varying state requirements. In some cases, manufacturers are being pushed to produce different versions of products such as washing machines and dryers to satisfy conflicting state standards — driving up production costs that are ultimately passed on to consumers.

The ARC argues that small retailers — which make up the bulk of its membership — are bearing the brunt of the compliance burden. Instead of focusing on innovation, artificial intelligence adoption, or tackling rising retail crime, businesses are diverting resources into managing red tape.

The report makes three key recommendations:

1. Allocate $260 million of the National Productivity Fund to create a dedicated retail harmonisation incentive scheme.

2. Establish a National Harmonisation Council to drive cross-jurisdiction decisions and delivery.

3. Deliver the first harmonised regulatory package within 12 months.

Mr Rodwell says the report identifies practical, achievable steps governments can take within the year to begin harmonising regulation.

“This has been done before and we can do it again. Our action plan draws directly from the National Competition Policy reforms of the 1990s. Those reforms added 2.5% to GDP and $5000 to household incomes,” he says.

“The blueprint exists. What’s required now is political commitment.”