By Noah Secomb and Andrew Brown in Canberra

Issues with tax and industrial relations should not be ignored as part of a review into boosting the productivity of businesses, peak bodies have urged.

An interim report published on Friday by the Productivity Commission laid out the key barriers to how businesses start and expand.

Treasurer Jim Chalmers requested the inquiry into so-called “business dynamism” – the economy’s capacity to renew itself through the entry, growth, restructuring and exit of businesses – as part of measures in the federal budget.

It acknowledged the intention of regulation but warned the scale, complexity and cost of regulation in Australia have made it unnecessarily complicated.

“In some industries, the cumulative burden of requirements can create regulatory thickets that are particularly difficult for businesses to navigate,” the commission said.

For businesses facing significant strain, the commission found leaders rarely knew where to look for government support or how to navigate the insolvency process when necessary.

Broadly, the federal government has been urged to simplify regulation and clarify policies at all stages of business from creation to insolvency.

Labor should also follow through with existing measures including a “tell-us-once” system to stop duplication of information at local and state levels.

But the Australian Chamber of Commerce and Industry warned the report did not paint the full picture of issues faced by the business sector, given taxes and workplace relations issues were not in the remit of the commission’s inquiry.

The chamber’s chief executive Andrew McKellar said the lack of focus on those issues for business had compromised the report’s findings.

“Assessing business dynamism without looking at tax and workplace relations is like a doctor being blocked from checking the heart or lungs. You can ease symptoms, but you miss what is killing the patient,” he said.

“The Productivity Commission has been stopped from undertaking a proper assessment.”

Assistant Productivity Minister Andrew Leigh said the government had already acted on tax reform and workplace changes.

“We also understand the importance of taking a holistic look on productivity, and that’s what this report and the Productivity Commission is working on all day,” he told reporters in Canberra.

“What this report is about is trying to shine a spotlight on a set of issues that have not been extensively canvassed before, issues around the insolvency processes and around management quality, around the uptake of technology.

“We need to be looking at the whole spectrum when we look at productivity.”

While the report offers some “worthy insights”, Mr McKellar has warned the government against using the findings to assess business dynamism broadly in Australia.

“After five interest rate rises this year, and with inflation still too high, we need a national turning point on productivity. All options must be on the table, and that must include tax and industrial relations,” he said.

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