Key aspects of Australia's Regulatory Policy

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Department of the Prime Minister and Cabinet
KEY ASPECTS OF AUSTRALIA’S REGULATORY
POLICY AND GOVERNANCE ARRANGEMENTS
16 June, 2016
OECD Conference on Measuring Regulatory Performance
Sydney, Australia
Regulatory Reform Division
Australia
www.dpmc.gov.au/regulation

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Today’s session
Part 1 (15 min)
• Overview of Australia’s regulatory policy and governance arrangements
Part 2 (30 min)
• Building the capability of regulators through the Australian Government Regulator
Performance Framework
Part 3 (45 min)
• Practical approaches to embedding what works in best practice regulatory impact
analysis, including institutional structures and consultation processes
21/06/2016

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How did we get here?
1985: Business
Regulation Review Unit
(BRRU) est. in Dept. of
Industry Science and
Technology
1986: Introduced
Regulatory Impact
Statement (RIS)
requirements
1996: Industry
Commission renamed
Productivity
Commission
1997: ‘More time
for business’
reforms
1985 1990 1995 2000 2005 2010 2015
1989: BRRU
renamed Office of
Regulation Reform
(ORR) and moved to
Industry Commission
1995: National Competition Policy
introduced (both for Australian
Government and COAG)
2005: Business
Cost Calculator
introduced
2006: ORR
renamed Office of
Best Practice
Regulation (OBPR)
2008: Est. of
Deregulation Group
in Dept. of Finance
and Deregulation
and OBPR moved in
2007: First Cabinet
Minister with
dedicated
deregulation
responsibility
2012:
Borthwick
and Milliner
independent
RIA review
2013:
‘Cutting the
Red Tape’
reforms
2013:
Deregulation
moved to PM&C

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Key changes in 2013
Measuring
achievements
A net $1 billion annual red tape reduction target
Two Repeal Days annually
A stocktake of the regulatory burden imposed by the
Commonwealth
Cultural change
RISs compulsory for all Cabinet Submissions
Introduction of the Regulator Performance Framework
Focus on regulatory costs by requiring a regulatory burden
change estimate for all new regulatory proposals

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Four capabilities underpinned the reform framework
Education
• Resources
- Website, guides (eg
Australian
Government Guide
to Regulation)
• Regulatory Burden
Measurement
• RIS questions
Networks
• Regulatory Reform
Units (RRUs)
• SES reference groups
• Community of Practice
Regulators
Transparency
• Portfolio and
government reporting
• Government targets
• Public release of RISs
• Regulator Performance
Framework
- Self-assessments
that are publicly
available
Awareness
• RRUs championing
regulatory reform in
each portfolio
• Whole of government
targets (publicly
known)
• Ministerial
responsibility

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Achievements
Measuring
achievements
$4.8 billion in red tape savings since September 2013
Four successful Repeal Days
Stocktake of Commonwealth regulation – over $65 billion of
regulatory burden imposed annually
Cultural change
Cabinet Submissions accompanied by a RIS, with only one
exemption granted
Regulator Performance Framework established
Annual reports published in 2014 and 2015

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Future challenges and opportunities
• We can’t cut $1bn per annum in red tape forever – where do we go
from here?
• The Government’s focus is productivity and growth – minimising
regulatory burden is only part of the reform equation:
“What the Panel believes is needed is better regulation, and regulation
that does not impede competition, rather than deregulation for its own
sake”
Final Report of the Competition Policy (Harper) Review, March 2015
• Many reform opportunities are the jurisdiction of Australia’s eight
states and territories – how to pursue cohesive action on regulatory
reform?
21/06/2016

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A broadened focus for regulatory reform
21/06/2016
Regulatory changes that target productivity
and growth
Review regulatory frameworks
Continue to address regulatory
compliance costs
Regulatory
Reform

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Part 2:
The Australian Government
Regulator Performance Framework
Key aspects of Australia’s regulatory policy and governance arrangements
16 June, 2016 Sydney, Australia
Australia

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The importance of good regulator performance
• Regulatory costs do not just
come from the design of
regulations.
• Poorly administered regulation
can also impose unnecessary
costs that reduce productivity.
• Efficiently administered
regulatory frameworks can
improve the operation of
businesses, markets and the
economy.
21/06/2016
• Released in 2014, the Regulator
Performance Framework was developed
to improve how regulators manage risk.
• Its objectives are to:
o Improve regulator performance and
engagement with regulated entities
o Reduce compliance costs
o Allow improved flexibility for
regulators to implement risk-based
approaches
• The RPF complements and works with
Statements of Expectation

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• Since 1 July 2015, over 80 Australian Government regulators
are reporting on outcomes of their efforts to administer
regulation fairly, effectively and efficiently under the RPF.
• Measuring and publicly reporting performance will
demonstrate how regulators effectively and flexibly manage
risk.
• Regulator ‘community of practice’:
• We have also initiated meetings twice every year of senior regulators, to
build a shared understanding of these issues.
• The Australian Public Service Commission is developing a training suite to
build and support regulatory policy capability for public officials that
administer, monitor or enforce regulation.
The Australian Government Regulator Performance Framework was
released in 2014

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Why have a Regulator Performance Framework?
• Additional transparency, accountability and
efficiency in administering regulation.
• The opportunity to examine our regulations and
how regulators operate.
• A push for cultural change within regulators.
• Allow improved flexibility for regulators to
implement risk-based approaches.
• Opportunities for potential reform may be identified.

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How was the Regulator Performance Framework developed?
Election
Commitment
b
Productivity
Commission
Report Stakeholder
consultation
Guidance &
Information
sessions
September
2013 March
2014
Draft
Framework
developed
Framework
released
Stakeholder
consultationApril
2014 May -
August
2014 September
2014
October
2014
January -
February
2015

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Key Performance Indicators (KPIs)
KPI1 – Regulators do not unnecessarily impede the efficient operation of regulated entities.
KPI2 – Communication with regulated entities is clear, targeted and effective.
KPI3 – Actions undertaken by regulators are proportionate to the regulatory risk being
managed.
KPI4 – Compliance and monitoring approaches are streamlined and coordinated.
KPI5 – Regulators are open and transparent in their dealings with regulated entities.
KPI6 – Regulators actively contribute to the continuous improvement of regulatory
frameworks.

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Who is subject to the Framework?
Bodies and activities subject to the Framework are involved in:
• Licensing and approvals.
• Monitoring, compliance and enforcement.
• Providing guidance.
The Framework does not apply to:
• Bodies jointly owned with other governments.
• Bodies that only set regulatory policy or standards.
• Burden created through procurement, grants and the administration of benefits and
entitlements.
• Regulation impacting only the government.
• Law enforcement, courts and tribunals.

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What regulators are required to do
Develop
performance metrics
Consult stakeholders
and agree metrics
with Minister
Collect data and
evidence against
metrics
Conduct annual
self-assessment of
performance
Stakeholder external
validation of
self-assessment
Accountable
authority certifies
self-assessment
Report provided to
Minister and made
publicly available
Evaluate findings and
act to improve where
needed
If required

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• The Framework provides an opportunity for
stakeholders to have a say in the way regulators
assess how they administer regulation.
• The development of performance metrics presents
an opportunity for stakeholders to shape the way
regulators intend to measure their performance.
• Some stakeholders will be approached by
regulators to participate in their review process by
providing external validation of the regulator’s self-
assessment results – or on a review panel for an
external review.
Regulators are required to involve stakeholders in
assessments of their performance
Regulators develop metrics to assess
performance against the framework
Consult relevant department, Advisory
Councils or other stakeholder mechanisms
on proposed metrics
Agree metrics with Minister and publish
Collect data and evidence to support
assessment against the Framework

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The importance of giving stakeholders a voice
• Regulator self-assessment alone is insufficient.
• External validation was a key design feature of the Framework.
– To balance the desire for independent views of regulator performance with the
burden this places on regulators
• External validation by stakeholders provides surety to government that self-assessments
reflect stakeholder experiences.
– Without adding substantive burden to the process for
regulators that can flow from external reviews and audits
• Increased stakeholder engagement in the assessment
process helps us to develop insights which guide future
strategy.

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Transparency and Accountability of Performance
• Self-assessment reports are externally validated by stakeholders and
required to be made publicly available.
• A small number of regulators will be subject to external review, nominated
by the Minister and agreed by the Prime Minister.
• Government can commission an annual external review of a regulator if
required.
• Regulators are required to publish a report on the outcomes of each
annual self-assessment and any external reviews.
• How reports are published is at the discretion
of individual Ministries, provided they are widely
available to interested stakeholders.

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The Framework in the International Context
• Recommendation of the Council on Regulatory Policy and Governance.
• The Framework is consistent with Recommendation 6 – to regularly
publish reports on the performance of regulatory
policy and reform programmes and the public authorities.
• OECD report on Regulatory Enforcement and Inspections
• Risk-based and proportionate enforcement activity.
• Coordination and consolidation of enforcement activity.
• The Framework’s KPIs closely align with the
OECD Best Practice Principles for Regulatory Policy:
the Governance of Regulators.

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Comparison to some other economies
United Kingdom Regulators’ Code
• Provides a principles-based framework, spelling out how regulators should
engage with those they regulate.
• Principles of the Code focus on transparent, accountable,
proportionate and consistent regulatory activity.
Canadian Guide on Improving Service Performance for Regulatory
Authorizations
• Outlines requirements Ministries must meet in complying with the Cabinet
Directive on Regulatory Management.
• Predominantly focused on the establishment of timeliness service
standards for regulatory authorizations.

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Lessons Learned
• Initial resistance from regulators.
• Stakeholder buy-in facilitated by effective communication throughout the
development of the framework.
• Managing expectations of Government and regulators.
• Principles rather than prescriptive approach.
• How the reporting framework affects other reporting requirements.
• Value of the Framework.

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Where to next?
• Looking ahead to how we can make the aims of the Framework
“business as usual.”
• Further build regulator capability more broadly.
• Better alignment with other frameworks and reporting requirements.
• We are watching developments in other countries:
• UK growth duty
• Legislative vs policy approach
• As well as watching what Australian sub-national governments are
doing in this space
e.g. New South Wales Quality Regulatory Services Initiative

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Questions? or Observations?

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Part 3:
Practical approaches to embedding what works
in best practice regulatory impact analysis
16 June, 2016 Sydney, Australia
Australia

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BACKGROUND
Australia’s regulatory impact analysis system
16 June, Sydney, Australia
Australia

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Australia’s regulatory context
Federal system of government:
• Westminster-like parliamentary system
with Prime Minister
• Common Law legal system
• Law-making powers shared between the
Commonwealth and the
States/Territories
• Local government authorities (e.g.
town/city/regional level) are established
under the laws of each State/Territory
jurisdiction
Source image: http://www.aph.gov.au/About_Parliament/Work_of_the_Parliament/Forming_and_Governing_a_Nation/parl

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Federal level: Executive Government
http://www.aph.gov.au/About_Parliament/House_of_Representatives/Powers_practice_and_procedure/00_-_Infosheets/Infosheet_20_-
_The_Australian_system_of_government
Prime Minister
Head of the Government; elected leader of the party in government (in the case of a
coalition government, the major party).
Cabinet
Federal Government’s pre-eminent policy-making body. It decides major policy and legislative
proposals and is presided over by the Prime Minister. Consisting of about 19 or so senior
Ministers, members are selected by the Prime Minister.
Ministers: Up to 30 Ministers are selected by the Prime Minister. They are responsible for particular areas
of administration within a major department, or may be in charge of a small department. Ministers are
appointed from both Houses of Parliament, although most are Members of the House of Representatives.
Parliamentary Secretaries/Assistant Ministers: Up to 12 Members and Senators are appointed by the
Prime Minister as Parliamentary Secretaries to assist or represent Ministers in their administrative
responsibilities.

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http://www.pc.gov.au/inquiries/completed/regulatory-impact-analysis-benchmarking
There was widespread
acceptance that deliberate
effort is required by
governments to ensure
regulatory frameworks
deliver high quality
outcomes.
In 2012, the Australian Productivity Commission found that RIA
requirements in all Australian jurisdictions consistent with OECD
and COAG guiding principles

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Australia’s Productivity Commission plays an important role in enhancing
regulatory policy coherence within Australia.
Available from www.pc.gov.au
Some examples of relevant work:
2011 Identifying and Evaluating Regulation Reforms Research
report
2012 Impacts of COAG Reforms: Business Regulation and VET
Commissioned study
2012 Regulatory Impact Analysis: Benchmarking Commissioned
study (COAG)
2015 Business Set-up, Transfer and Closure
Public inquiry
2016 Disruptive Technologies: What do governments need to
do? Commission research project (due June 2016).
Core functions
• Public inquiries and research
studies requested by government
• Self-initiated research and annual
reporting on productivity, industry
assistance and regulation
• Performance monitoring and
benchmarking and other services
to government bodies
• Reviewing competitive neutrality
of government businesses

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Broadening the Australian
Government’s regulatory
reform priorities in 2016
November 2015 announcement:
• Increased focus on productivity
and growth while maintaining
efforts to minimise unnecessary
regulatory burden
February 2016, announcement:
• Annual reports that assess
regulatory performance to date
and set a course of reform over the
year ahead will replace days
dedicated to repealing legislation
in Parliament
Some Australian Government reforms to drive economic
growth, productivity and innovation include:
• Committed $5.6 million over the next three years for
Treasury-led work to ensure Commonwealth regulations
remain fit-for-purpose
• Introducing a regulatory sandbox# exemption to
facilitate the testing of new financial technology
products and services
• Australia’s trade deals to reduce costs and red tape and
other trade barriers as well as improve the trade and
investment environment and facilitate participation in
regional supply chains
• The Government’s Increasing Choice in Home Care
initiative is scheduled to deregulate supply of home
care places in early 2017 and simplify the way services
are delivered in mid-2018
# a ‘safe space’ in which businesses can test innovative products, services, business models and delivery mechanisms without incurring
normal regulatory consequences.

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Australia’s regulatory impact analysis system and the role of the
Office of Best Practice Regulation– a quick overview
The 2014 Australian Government Guide to Regulation:
• Sets out 10 principles for policymakers that highlight expectations about
regulatory quality, stakeholder consultation and transparency.
• Provides guidance to policymakers on how to develop a Regulation Impact
Statement and Post-Implementation reviews
• PIRs must also be prepared when regulation has been introduced, removed, or
significantly changed without an adequate regulation impact statement (RIS).
• Based on the information submitted in a preliminary RIS assessment form,
OBPR can provide advice on whether a RIS is required for a policy proposal
• OBPR helps to:
• progress the proposal through decision making forums, such as Cabinet, in a timely
manner
• ensure full compliance with the Government’s requirements.
21/06/2016

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RIA: Principles for
Australian Government policy makers
1. Regulation should not be the default option for
policy makers: the policy option offering the
greatest net benefit should always be the
recommended option.
2. Regulation should be imposed only when it can be
shown to offer an overall net benefit.
3. The cost burden of new regulation must be fully
offset by reductions in existing regulatory burden.
4. Every substantive regulatory policy change must be
the subject of a Regulation Impact Statement.
5. Policy makers should consult in a genuine and
timely way with affected businesses, community
organisations and individuals.
6. Policy makers must consult with each other to
avoid creating cumulative or overlapping
regulatory burdens.
7. The information upon which policy makers base
their decisions must be published at the earliest
opportunity.
8. Regulators must implement regulation with
common sense, empathy and respect.
9. All regulation must be periodically reviewed to test
its continuing relevance.
10. Portfolio Policy makers must work closely with
their regulatory policy areas throughout the policy
making process.

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Regulation Impact Statement Assessment
Developing a Regulation Impact Statement (RIS)
What policymakers should consider when developing a RIS:
What is the problem you are trying to solve?
Why is government action needed?
What policy options are you considering?
What is the likely net benefit of each option?
Who will you consult about these options and how will you consult them?
What is the best option from those you have considered?
How will you implement and evaluate your chosen option?
Two pass
assessment
process
OBPR
formal
assessment
Preliminary form –
do you need a RIS?
Developing
a RIS
RIS
publication
on website
Office of Best Practice Regulation (OBPR)
• Assesses RISs and Post-Implementation
Reviews
• Provides advice and guidance to assist
agencies to prepare RISs
• Publishes RISs and regular reports on
compliance with the Australian
Government RIA requirements
(http://ris.dpmc.gov.au/)
• Conducts training on Australia’s RIS
process

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21/06/2016

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Massive Open Online Course on Regulatory Impact Analysis
riamooc.com

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Regulatory training from the Australian Public Service
Commission (APSC)
The APSC has two learning and development programmes specifically relating to
regulation:
• Introduction to Better Practice Regulation
– targeted at staff who are new to regulatory implementation or policy roles.
– aims to develop regulatory skills on how to implement regulation with common
sense, empathy and respect.
– uses a combination of e-learning, a two day face-to-face workshop and on-the-job
training.
• Regulation for Regulators
– will focus on regulatory practitioner skills and is currently being developed by subject matter experts in
consultation with relevant government agencies.
– The programme is expected to be available from late 2016.
21/06/2016

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Australia’s RIA: Guidance for policymakers
available from http://www.dpmc.gov.au/regulation
• The Australian Government Guide to Regulation
• User Guide to the Australian Government Guide to
Regulation
• Is a RIS required?’ preliminary assessment form
• COAG RIS preliminary assessment form
• Regulatory Burden Measurement Framework guidance
note
• Post-implementation reviews guidance note
• Best Practice Consultation guidance note
• Short form and Interim Regulation Impact Statements
guidance note
• Regulation Impact Statement Policy Options guidance
note
• Carve-outs guidance note
• Independent Reviews, RIS-like Processes and the Regulation
Impact Statement Requirements guidance note
• Risk Analysis in Regulation Impact Statements guidance
note
• Individuals guidance note
• Community Organisations guidance note
• Commonwealth Programmes guidance note
• Small Business guidance note
• Sunsetting legislative instruments guidance note
• Cost-benefit analysis guidance note
• Competition and Regulation guidance note
• Environmental Valuation and Uncertainty guidance
• Trade Impact Assessments guidance note
21/06/2016

Practical approaches to embedding
what works in RIA: a discussion
OECD Sydney Workshop
16 June 2016
Tony Simovski, Deputy Executive Director (A/g), OBPR
Rob Reilly, Director, OBPR

• Value of RIA
• Understanding the surroundings
• How to better embed RIA in such environment
• A practical discussion on:
 Approaches to RIA gatekeeping
 Administrative burden costings
 RIA Consultation processes
 RIS transparency
 RIA training
• What are your experiences and lessons in administering RIA?
Focus of presentation and
discussion
2

• Good RIA process and analysis adds significant value:
• Defines/clarifies the problem/policy objectives
• Assesses the effectiveness of proposals in achieving policy objectives
• Reduces regulatory capture
• Promotes public consultation
• Supports better decision making
• …and we all administer RIA in slightly different ways, and in line with
OECD best practice principles.
• …but we also face (common) challenges in embedding best practice
RIA.
Value of RIA
3

RIA best
practice
Policy
influence
Policy influence and RIA
Question: How do we optimise the value and policy
influence that RIA adds to public policy? 4

Factors that influence policy
choice
Source: Haskins and Margolis, 2014, Show Me the Evidence: Obama's Fight for Rigor and Results in Social Policy
5

• …policy decisions will typically be influenced by much more
than objective evidence, or rational analysis. Values,
interests, personalities, timing, circumstance and
happenstance — in short, democracy — determine what
actually happens.
• But evidence and analysis can nevertheless play a useful,
even decisive, role in informing policy-makers’ judgements.
Importantly, they can also condition the political environment
in which those judgements need to be made.
“Understanding the
surroundings”
Source: Banks, G. 2009, Evidence-based policy making: What is it? How do we get it?, 2009, Productivity Commission 6

• Approaches to RIA gatekeeping
• Centralised independent RIA assessments/quality assurance by
oversight body
• Decentralised model, with ministries in charge
• Strong, pragmatic, flexible, facilitative or advisory
• US/UK experience
• NZ experience
• Administrative burden (compliance) costings
• Who prepares: ministry, regulatory oversight body, statistical office?
• Who is gatekeeper, when are they estimated?
• Are they evaluated? (Germany’s experience)
How to better embed RIA:
What works?
7

• RIA Consultation processes
• Compulsory or highly recommended RIS for consultation (Canada 30
day compulsory consultation)
• Australia’s experience (Federal vs “COAG” RISs)
• RIS transparency
• Compulsory or highly recommended publication of RIS for
consultation
• Final/Decision RISs publication
 Ministry and/or oversight body’s website
• RIS assessments by oversight body published?
• Preliminary Assessments (for example, Cambodia)
What works?
8

• RIA Training
• Outposting model
• In-house/ministry specific training
• Online training (RIA MOOC riamooc.com)
• Coaching (advice/expectations letters on RIA aspects)
What works?
9

• What is your experience in better embedding RIA and
identifying what works with your processes and
ministries?
• What are your lessons or suggestions about how best
to embed RIA and influence policy developers and
policy decision makers?
• What can you share today?
DISCUSSION
How to better embed RIA in a
“constraint” environment
10

• Approaches to RIA gatekeeping
• Administrative burden costings
• RIA Consultation processes
• RIS transparency
• RIA training
Discussion
11

Key aspects of Australia's Regulatory Policy

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