office of best practice regulation coag regulatory best practice and regulation impact statements
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Office of Best Practice Regulation
COAG Regulatory Best Practice and
Regulation Impact Statements
Office of Best Practice RegulationObjectives
To improve your understanding of: the rationale underlying regulatory impact
analysis (RIA) COAG’s RIA requirements and OBPR’s role
Office of Best Practice RegulationOutline
10 am Part 1 – Regulatory best practice/ COAG requirements
11-11:15am – morning tea 11:15am Part 2 – RIS 12pm – Questions /Finish
Office of Best Practice Regulation
Rationale underlying regulatory impact analysis
Office of Best Practice RegulationCulture of risk avoidance
Over-reaction to perceived risks Lack of appreciation of costs imposed Lack of balance between risks and costs
… has resulted in …
Office of Best Practice RegulationIncreasing regulatory burden
Unnecessarily complex regulations Excessive costs of compliance Adverse and unintended effects Use of substantial taxpayer resources
Office of Best Practice RegulationProductivity agenda
Best practice regulation process helps protect and implement the micro-economic reform process This link is sometimes lost with an officer
focusing on ‘requirements’ rather than on what the process is delivering
The RIA process is a means to an important end rather than a road block
Office of Best Practice Regulation
The need for best practice regulation
Regulation is an essential part of running a well functioning economy, but it must be carefully designed to avoid: unintended and/or distortionary effects overlap and inconsistency excessive compliance costs
A question of balance (costs & risks)
.
Office of Best Practice Regulation
Changing regulatory environment
COAG Australian Government States and Territories International – Netherlands, UK, Europe
Office of Best Practice Regulation
COAG initiatives on regulatory reform
Principles and guidelines for national standard setting and regulatory actions by MCs & NSSBs (1995)
COAG communiqués (2006 and 2007) PM wrote to State Premiers in August 2006 New COAG Best Practice Regulation Guide released
(October 2007)
–
Office of Best Practice Regulation
COAG RIA Requirements
Office of Best Practice RegulationEnhanced RIA requirements
Increase in the quality of RIA Cost Benefit Analysis where appropriate Compliance costs –encourage use of Business Cost Calculator
Increase scope – cumulative burdens
Gatekeeping mechanisms
Transparency
Office of Best Practice Regulation
Principles of best practice regulation
1. Establish a case for action
2. Examine alternatives to regulation
3. Adopt the option with the greatest net benefits
4. Not restrict competition, unless…
5. Provide effective guidance to regulators
6. Review regulation regularly
7. Consult effectively with stakeholders
8. Effective action proportionate to the issue
Office of Best Practice RegulationDefinition of regulation
Broad range of legally enforceable instruments which impose mandatory requirements upon businesses or individuals
Government voluntary codes and advisory instruments for which there is a reasonable expectation of compliance
Office of Best Practice RegulationCOAG RIA requirements apply to
The decisions of COAG, MCs and inter-governmental standard setting bodies, however they are constituted.
INCLUDES bodies established statutorily or administratively by government to deal with national regulatory problems.
Office of Best Practice RegulationMulti-staged decision making
Multi-staged decision making points RIS required at point at which a regulatory decision is made even
though regulatory model is still to be determined One or several RISs may be required
Multiple decision makers RIS should be provided for each body that makes a decision When COAG is the decision maker, the responsibility of preparing
the RIS sits with the Ministerial Council.
Office of Best Practice RegulationCOAG RIA framework
Regulatory proposals:
Minor / Machinery
Emergency exception
Not included: government purchasing policy or industry assistance schemes
Office of Best Practice RegulationRegulation Impact Statements
Are a key element of best-practice RIA Structured cost-benefit approach to policy
development Assist transparency Both a process and a document
Office of Best Practice Regulation
COAG RISs are prepared at two stages
consultation decision-making The OBPR must assess the adequacy of the RIS at each of
these stages.
Office of Best Practice Regulation
Consultation RISs – requirements
Expected to have strong problem, objective and options section, but Impact analysis may not be as robust as the
final RIS – as evidence is still being collected Assessed by OBPR before public release NZ-RIAU should be consulted if relevant
Office of Best Practice Regulation
COAG Consultation requirements
What is adequate consultation? Who needs to be consulted? OBPR unable to post-assess consultation
processes.
Office of Best Practice RegulationDecision RIS
Final RIS has higher ‘bar’ Assessed by OBPR prior to decision being made Assessment focuses on whether:
RIS Guidelines have been followed Type and level of analysis commensurate with impacts RIS demonstrates preferred option results in a clear net
benefit to the community
Office of Best Practice RegulationGuidelines on length of RISs
Quality versus quantity Commensurate with impacts Simple proposal – around 10-20 pages Complex proposal – 20-30 pages
Office of Best Practice RegulationCompliance reporting
Report annually in the Best Practice Regulation Report Send out compliance request letters 6 monthly Send out assessment letters advising of
compliance by MC/NSSBs
Office of Best Practice Regulation
Summary of steps in undertaking RIA
1. Consult early with the OBPR2. Prepare a consultation RIS 3. OBPR assesses consultation RIS 4. Once adequate, publish the consultation RIS – consult effectively5. Develop the RIS in light of information obtained6. Submit the decision RIS to OBPR who will assess it against the COAG
requirements7. RIS provided to the decision maker8. Proceed with regulatory action consistent with the RIS9. Publish the final RIS10. OBPR reports on compliance
Office of Best Practice RegulationRole of the OBPR
“One-stop shop” for regulators, providinginformation, advice and training on:
Need for RISs Formulation & adequacy of RISs Compliance with the RIA requirements
…..Consult the OBPR early in the policy development process.
Office of Best Practice Regulation
Any questions on Part 1- COAG RIA?
Office of Best Practice Regulation
Regulation Impact Statements (RIS)
Office of Best Practice RegulationObjectives of preparing a RIS
Consultation RIS – canvas regulatory options and their costs and benefits
Decision RIS – provide information to the decision maker
Also, provide evidence of the steps taken in good policy development
Office of Best Practice RegulationKey elements of a RIS
1. Problem2. Objective(s)3. Options4. Impact analysis5. Consultation6. Conclusion and recommended option7. Implementation and review
You need to adequately address each element to draft an adequate RIS
Office of Best Practice Regulation
Element 1. Identifying the Problem
What is the problem? Why should Government intervene?
to deal with market failure to correct a regulatory failure to address an unacceptable risk
Is there existing regulation? If there is, why is further action needed?
Office of Best Practice Regulation
Element 2: Objectives of govt action
Be specific, link it to the problem But not be too specific, so as to preclude
options Do not confuse ‘ends’ with ‘means’ when
setting an objective
Office of Best Practice Regulation
Element 3: Consider a broad range of options
Include non-regulatory and regulatory options
Distinguish feasible options from infeasible options Explain why some options are not feasible Do not confuse infeasible with not preferred Describe feasible options (but don’t analyse them
here)
Office of Best Practice Regulation
Element 3 cont’d: Examples of options
Status Quo or do nothing Non-regulatory options Self regulation Quasi-regulation Explicit government regulation Note there may be sub options within each
category
Office of Best Practice Regulation
Element 4: Impact Analysis
For each option Identify who is affected? How are they affected? To what extent are they affected (costs and benefits)? Quantify where possible
level of analysis must be commensurate with level of impacts
restrictions on competition require a higher level of analysis
Office of Best Practice Regulation
Element 4 cont’d: Impact Analysis
Examples of costs and benefits
Consumers prices, variety, availability, quality, convenience, safety and risk, access to
information Business
compliance costs, uncertainty, complexity, market access, input prices, process modification, restrictions on competition
Government administration and enforcement costs
Community public health and safety, environmental quality/ESD, economic growth,
innovation, employment
Office of Best Practice Regulation
Estimating compliance costs
Use of BCC to estimate compliance costs is encouraged (but not mandatory) IT tool available from the OBPR website Checklist: notification, education, permission,
purchase cost, record keeping, enforcement, publication/documentation, procedural and other
Include compliance costs in RIS
Office of Best Practice Regulation
Element 4 cont’d: Restrictions on competition
Some examples include: governing the entry or exit of businesses into markets controlling input or output prices restricting the quality, quantity or location of goods and services restricting advertising and promotional activities
For such proposals the RIS must demonstrate that restricting competition will: result in a net benefit for the community; and the objective of the intervention can not be achieved in any other
way
Office of Best Practice Regulation
Element 5: Consultation
Who has been consulted? How was consultation conducted? What are stakeholders views (highlight dissenting
views)? How did these views affect the outcome? If stakeholder views were not addressed, explain
why.
Office of Best Practice Regulation
Element 6: Conclusion / recommended option
Provides a summary of the options and their impacts.
Identifies which option is preferred and why others options are not preferred.
Reiterates why the benefits of the preferred option outweigh the costs.
Office of Best Practice Regulation
Element 7: Implementation and review
How will the preferred option be implemented? Transitional arrangements? Who will administer the regulation? How will it be enforced? How will compliance costs be
minimised?) Will it be subject to sunset provisions? Will it be reviewed? (if so, by whom and according
to what criteria?)
Office of Best Practice RegulationAnalysis is the key
“ … the goal of evidence-based policy-making is unquestionably important, and it is encouraging that it has received vocal support at the highest political levels. However, measured against the various ingredients for an effective approach, it seems clear that current practice continues to fall short. Addressing this is now largely up to the public service. Not only is there a need to improve the capacity of the public service to deliver evidence-based policy advice, there is a need for it to improve political understanding of what that entails.”
Gary Banks - Evidence-based policy-making: What is it? How do we get it?4 February 2009
Office of Best Practice RegulationLike to know more?
Visit our website - www.obpr.gov.au Consult the
COAG guide Australian Government Best Practice Regulation
Handbook Contact the OBPR
helpdesk@obpr.gov.au or 6215 1955
Office of Best Practice RegulationRIA or RISs
QUESTIONS?
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