Rules are costing Western Australians $37 billion every year and an average of eight hours a week complying with self-imposed red tape, a new Deloitte report has found.
Deloitte calculated the national cost of rules and regulations at $250 billion annually across the private and public sectors.
It found the matching cost of administering and complying with rules that organisations choose to impose on themselves to be at $155 billion, while the cost of administering and complying with public sector regulations was lower at $95 billion.
"Yet the dollars locked up by businesses in complying with self-imposed red tape are double those associated with government regulations."
According to a Deloitte survey, Australian business leaders revealed that, on average, Western Australians spend about 8.4 hours a week complying with rules that organisations set for themselves.
On a national scale, WA ranked second only to Queensland.
In a statement, Deloitte provided examples of 'dumb' rules it uncovered.
It found a firm which insisted employees use an expensive 'preferred' hotel, then required multiple approvals to switch to a non-preferred hotel that was more convenient and cost less than half the preferred one.
It also found mining firms where OH&S managers filled in different reports for each contractor and subcontractors, rather than preparing a common report.
Deloitte said it had also uncovered a global HQ that told a newly acquired Australian subsidiary that it couldn't put an Excel spreadsheet on its website, even though the new subsidiary's line of business was selling data in Excel format to its clients.
"Australia's compliance culture is cluttering our cost base and choking our innovation," Mr McNulty said.
"That is coming at a massive and rising cost to our nation and to our ability to innovate."
He said both public and private sectors could benefit from a new approach to rules and regulations, but the biggest opportunity lay in business slashing its own red tape.