There is no quick fix for stilted business growth as the Productivity Commission says it's high time the regulatory "thicket" is trimmed back under control.
Treasurer Jim Chalmers requested an inquiry by the commission into how businesses start, expand and close down in May as a part of the federal budget's productivity measures.
So-called "business dynamism", the economy's capacity to renew itself through the entry, growth, restructuring and exit of businesses, is a key driver of productivity growth.
An interim report published on Friday laid out the key barriers stifling this allocating of resources across the economy.
It acknowledged the intention of regulation but warned the scale, complexity and cost of regulation in Australia has 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.
The Australian Chamber of Commerce and Industry slammed the report for snubbing key issues plaguing business, namely taxes and workers rights, at the request of the treasurer.
"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," the chamber's chief executive Andrew McKellar said.
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.
Full recommendations and economic modelling will be published in the final report due in May 2027.
With six more months until the reporting deadline, the commission is still considering a number of issues including which sectors need a regulatory review and what role artificial intelligence should play in easing administrative burdens.
