The Australian Labor Party’s expanded climate reporting requirements, particularly those related to Scope 3 emissions, are drawing criticism from opposition figures who argue the regulations place undue burdens on small businesses. Senator Jane Hume, deputy leader of the opposition and shadow minister for productivity and deregulation, contends that these measures create excessive red tape, limiting productivity and economic growth.

Scope 3 emissions reporting mandates businesses to disclose indirect greenhouse gas emissions occurring across their supply chains, including those from suppliers, transportation, and product use. Unlike direct emissions from a company’s own operations, these are often outside the reporting entity’s immediate control. According to a Treasury regulatory impact analysis, implementing Scope 3 emissions reporting could cost businesses approximately AUD 245,000 in the first year and around AUD 161,700 annually thereafter.

Hume emphasized that these financial and administrative obligations are particularly onerous for small businesses, such as family-owned manufacturers, transport operators, and agricultural suppliers. From July 2027, thousands of smaller enterprises will be subject to this reporting regime, raising concerns that the compliance costs could divert resources away from employment, investment, and productivity enhancements. The Australian Chamber of Commerce and Industry has described the reporting requirements as a "regulatory nightmare" for smaller firms.

Opposition calls for change also reference international comparisons. The United States has reportedly abandoned national Scope 3 reporting, and the United Kingdom does not mandate such disclosures, suggesting Australia’s approach could place its businesses at a competitive disadvantage in the global market.

Senator Hume stated that a future Liberal government led by Angus Taylor would prioritize repealing mandatory Scope 3 emissions reporting. Additionally, the opposition aims to remove Group 3 entities—organisations currently within the mandatory emissions reporting framework—from these obligations. The Australian Institute of Company Directors (AICD) estimates that such deregulation could benefit approximately 3,000 businesses and save around AUD 2 billion over four years.

The opposition maintains that businesses would remain free to measure and voluntarily disclose emissions data, preserving transparency for investors while eliminating costly compliance requirements that produce uncertain estimates. The government’s position, according to Hume, should balance environmental responsibility with practicality and economic growth, ensuring regulation does not stifle innovation or burden enterprises unnecessarily.

This stance reflects a broader call from the opposition to reduce business regulations nationwide, citing research that estimates Commonwealth regulatory compliance costs reached AUD 160 billion in 2024 — equivalent to nearly 6 per cent of GDP. Advocates for reform argue that reducing red tape will free businesses to expand, invest, and create jobs, which they believe is vital for Australia’s economic future.

Senator Hume framed the proposed changes as part of a larger commitment by the Liberal-National coalition to streamline regulation and enhance productivity, arguing that prosperity stems from producing goods and services rather than generating compliance reports.