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Regulatory Impact Statement: an important tool in forming regulation

Written by Michael Reddy

 

When a problem needs to be addressed by government, an idea for legislation must go through a process of analysis, research, and consultation to ascertain the most feasible option available. In this article we will be outlining that process, focusing on the requirements and role of the Regulatory Impact Statement (RIS).

 

 

 

What is a RIS?

 

When it comes to policy development, regulation-setting shouldn’t be the default option. The Australian Government prefers to consider the regulatory option that provides the greatest net benefit to society while meeting the needs of government.

 

A RIS is a tool to help policy makers reach the preferred regulatory option. By answering the key questions below, the RIS assists policy makers to describe the issue that requires regulation, compare various regulatory and non-regulatory options for addressing the issue, as well as conduct an impact analysis of all regulatory options.

 

A RIS is often one of the documents available for comment during public consultation. This allows for greater scope in determining which option to take or, if an option has already been chosen, to receive feedback about the chosen path and any further considerations that may need to be made.

 

 

 

 

Key RIS questions

 

  1. What is the problem you are trying to solve?
  2. Why is government action needed?
  3. What policy options are you considering?
  4. What is the likely net benefit of each option?
  5. Who did you consult and how did you incorporate feedback?
  6. What is the best option from those you have considered?
  7. How will you implement and evaluate your chosen option?

 

 

 

 

Assessing the impacts

 

The impacts considered in the RIS are:

  • direct regulatory impacts such as the burden of compliance
  • significant flow-on effects, for example:
    • the economy
    • competition
    • society
    • the environment
    • specific cohorts
    • creation of disincentives or incentives in the market.

 

The RIS is prepared by the Government area responsible for the regulatory proposal, and it is recommended to begin preparation at the start of the policy process to allow it to develop over time before a final decision is made.

 

It is also recommended that the Office of Best Practice Regulation (OBPR) be consulted at the start for advice on the depth of analysis and additional information required. The OBPR will assess the final RIS submission.

 

 

 

 

The role of the RIS in the policy process

 

The policy process contains three key stages:

  1. Preliminary Assessment
  2. Preparation of the RIS
  3. Ensuring transparency

All stages require research and stakeholder feedback to be conducted.

 

Preliminary Assessment

 

The preliminary assessment determines whether the regulatory proposal requires further analysis in the form of a RIS. The preliminary assessment requires the following be answered:

 

  • Who will be the decision maker?
  • What is the policy problem?
  • What are the objectives of government action?
  • What policy options are available?
  • What are the likely regulatory impacts of the proposal (including whether there are any market or competition impacts)?
  • What are the likely regulatory costs of the proposal, including administrative, substantiative compliance and delay costs, as per the Regulatory Burden Measurement framework?
  • What are the key dates and timelines?

 

 

 

Preparation of the RIS

 

If determined by the preliminary assessment that the regulatory proposal is significant in scope or scale, or government intervention has the potential to impose significant impacts, then a RIS needs to be prepared.

 

The depth of analysis for the RIS should be proportionate to the magnitude of the proposed changes. For every decision, the level and depth of analysis needs to reflect the significance of the proposal and the stage of the policy process.

 

Proposals assessed as minor or machinery (i.e. changes in Commonwealth management of responsibilities) will only require a RIS if the decision maker is cabinet or one of its committees.

 

Early and final assessment of the RIS

 

When assessing the RIS, the OBPR will consider a range of factors including assessment of the problem, impacts, and stage of the policy development process, among other things.

 

An early assessment can be provided once the policy maker has completed the first four RIS questions (including the regulatory burden in the impact analysis), planned their consultations, and had their RIS certified by the relevant member of the Department of Prime Minister and Cabinet.

 

The early assessment will consider:

 

  • Adequacy of the proportionality principle
  • How well the RIS questions have been answered
  • How well the Guide to Regulatory Impact Analysis requirements has been followed.

 

The final assessment considers if the complete RIS has answered the question: Does the analysis support an informed policy decision? It is assessed in a two-pass process:

 

  • The first pass: The RIS is consistent with the Government’s requirements and adequately addresses all seven RIS questions. The RIS reflects stakeholder feedback and utilises the full suite of policy options available to the policy maker’s analysis.

 

  • The second pass: The RIS must conform to all applicable processes and have all necessary inclusions, such as an appropriate consultation approach and a minimum of three policy options, one of which must be a non-regulatory option. The RIS must have an appropriate level of detail, with the depth of analysis staying proportionate to the scale of the problem and potential regulatory impact.

 

Once the final assessment is complete, this will be published with the RIS on the OBPR’s website for stakeholder feedback.

 

 

 

 

Ensuring transparency

 

Transparency is one of the main purposes of regulatory impact analysis. The publication of RISs and information about their adequacy is critical to transparency, providing stakeholders and the community access to the research and rationale behind the Bill put before Parliament.

 

In practice, OBPR will seek to publish the RIS on its website as soon as practicable after a final decision is publicly announced. If OBPR confirms that a decision on a policy proposal was made without the appropriate level of supporting analysis, it will also report that on its website. Once the RIS has been assessed by the OBPR, it will be published with the assessment on the OBPR website subject to scrutiny from the public.

 

Where a regulation is tabled in Parliament, the RIS needs to be included in full in the explanatory memorandum or statement.

 

 

 

 

Explanatory Statements

 

This Explanatory Statement must describe the nature of any consultation that has been undertaken, including:

  • Method and purpose of consultation:
    • State who and/or which bodies or groups were targeted for consultation and specify the names of each.
    • Set out the purpose and parameters of the consultation.
  • Issues raised in consultations and outcomes:
    • Identify the nature of any issues raised in consultation, as well at the outcome of the consultation process.

 

 

Access these resources with Environment Essentials

 

Relevant workplace health, safety and environmental consultations that are available for comment, including RIS, are included within the HSE Bulletin.

 

 

 

References