Report: Isle
regulators ‘hostile’
to small business

A task force says the state
needs to change its attitude
in dealing with entrepreneurs

By Peter Wagner
Star-Bulletin

A new report issued today by the defunct Small Business Task Force on Regulatory Relief says regulators in Hawaii are hostile to small business, drowning enterprise in a sea of ill-conceived regulations.

"A major shift in attitude needs to take place," the report says. "Government should facilitate rather than hinder."

The 12-member task force, disbanded in June, was set up three years ago to advise the state government on concerns in the small business community. Today's report is the last of four submitted by the group, each critical of government attitudes toward entrepreneurs in Hawaii.

Among common complaints heard by the panel:

Unfair enforcement actions.
Lack of small business input in rule-making.
Punitive citations and fines.
Subjective and arbitrary interpretation of rules by state and county inspectors.
Unreasonable taxes.
Growing user fees.
Obstructive procedures.

"These complaints only scratch the surface of inequities caused not only by the tens of thousands of rules and regulations but mostly by the attitudes of government regulators," the report says.

What's needed, it says, is a sea-change in which new and existing businesses are nurtured, allowing them to grow larger.

Beverly Harbin, owner of Pacific Island Petroleum in Kakaako and a former task force member, said she's seen a positive response by the state administration to the tough criticism.

"I think they now realize the problem of over-regulation is a lot larger than they expected," she said.

"I truly believe there will be changes to regulations as we now see them."

Among the consequences of the tough business climate in Hawaii is a "brain drain" of talent moving to the mainland for better opportunities, the report says.

The report acknowledges efforts by Gov. Ben Cayetano to reform the civil service system, which it calls a breeding ground for unproductive workers. But other reforms are seen as lacking, among them:

Government spending should be more accountable to citizens.
"Tax and spend" should be revised to a saving or surplus mode.
Services should be privatized.
Incentives are needed to reduce the government payroll.