Benchmarking regulatory burdens Roundtable 11-12 December 2006.
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Transcript of Benchmarking regulatory burdens Roundtable 11-12 December 2006.
Benchmarking regulatory burdens
Roundtable
11-12 December 2006
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Session 1
Background to benchmarking regulatory burdens
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Background:What were we asked to do?
Conduct a feasibility study (Stage 1) to develop feasible performance indicators and options for
benchmarking regulatory burdens on business Subject to COAG consideration, proceed to an
implementation study (Stage 2)
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Background:Why benchmark regulatory burdens?
Benchmarking to improve regulatory regimes understanding nature and size of burdens leading to:
yardstick competition greater accountability and transparency continual improvement
Reducing unnecessary burdens could improve economic performance
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Background:What could be benchmarked?
Benchmark regulatory burdens associated with: becoming and being a business (licensing and reporting) doing business (obtaining approvals) doing business interstate
Benchmark regulatory environment changes to stock of regulation over time quality of design, administration and enforcement benchmark against policy targets and monitor reform
progress
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Background:What cannot be done?
Construct a ‘meta’ indicator of overall performance too complex and subjective
Estimate aggregate compliance costs for a regulation or industry indicators of direct incremental cost unavailable incidence of regulation not always known
Benchmark economic costs of regulation counter-factual usually unknown
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Background:What do the studies tell us?
Few examples of regulation benchmarking not directly applicable to Commission study, but do
provide some insights Key insights
benchmarking regulatory burdens is feasible importance of making assumptions and caveats explicit basis for inter-jurisdictional comparison required
(‘reference business’) subjecting information and data to robustness tests
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Background:What are administrative compliance costs?
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Background:How might the data be collected?
Different approaches to suit the circumstances surveys, case studies, use of existing records
Reference business approach will be prominent businesses with standardised characteristics (size,
industry) cost-effective, focussed, and comparable
Not a statistically representative sample non-probability, judgemental sampling of a limited
number of businesses
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Session 2
Benchmarking regulatory compliance costs
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Becoming and being a business:Which regulations?
Regulations that require licences, permits and registrations
State taxes Commonwealth taxes over time
OHS covering safety plans and incident reporting distinction between prescriptive and performance-based
compliance
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Becoming and being a business:What are the objectives?
Reveal existence and source of any unnecessary burdens for regulation with common objectives after adjusting for any activities justified by a specific
regulatory objective and benefit Monitor changes over time
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Becoming and being a business:Which burdens?
Administrative compliance activities required by regulation involving one-off, recurring and ongoing costs
Includes certain non-paperwork costs
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Becoming and being a business:Which indicators?
Administrative compliance costs price x time x quantity + other non-paperwork costs indirect measures businesses assumed to be ‘normally efficient’ and fully
complying Compliance complexity
proxies for cost
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Becoming and being a business:How would indicators be measured?
Face-to-face interviews SCM and BCC used
Reference businesses range of reference business sizes to account for any
differences in activity costs
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Doing business:Which regulations?
Regulations requiring approvals and setting out approval processes
State and local government
Australian Government
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Doing business:What are the objectives?
Reveal existence and source of any unnecessary burdens for approval processes with common objectives and similar complexity
Identify opportunities to improve processes
Monitor changes over time
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Doing business:Which burdens?
Delays and uncertainty which can result in capital holding costs
Administrative compliance activities associated with the approval process
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Doing business:Which indicators?
Measures of timeliness and certainty
Contextual information which could also be used as indicators
Administrative compliance cost indicators
Choice of indicators to depend on the regulation
Indicators should not be interpreted in isolation of the other indicators
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Doing business:How would indicators be measured?
Use existing government data collections as far as possible to minimise burden on government
Information collected for reference activities
Provide criteria for indicators involving subjective assessment by experts
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Doing business interstate:Which regulations?
Areas of regulation where governments have agreed a national approach would reduce regulatory burden, for example: occupational health and safety (OHS) personal property securities consumer product safety
Other areas of regulation could be benchmarked for similar reasons
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Doing business interstate:What are the objectives?
Reveal existence and source of any unnecessary burdens for interstate business or trade
Identify opportunities for greater harmonisation
Monitor changes over time
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Doing business interstate:Which burdens?
Administrative compliance activities that arise because of regulatory duplication and inconsistency across jurisdictions
Other economic costs would be excluded from the benchmarking such costs might be considered in choosing area to
benchmark
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Doing business interstate:Which indicators?
Number of duplicate or inconsistent requirements, depending on area of regulation
‘Notional’ business as the basis of comparison
Proportions out of total compliance requirements compliance ‘inflator’ from operating or trading
interstate
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Doing business interstate:How would indicators be measured?
Detailed analysis of regulation in each jurisdiction by industry experts methodology agreed among interested parties
appropriate to area of regulation agree the ‘notional’ business(es) or business activities
Existing work by Ministerial Councils or other groups charged with harmonisation
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Session 3
Benchmarking the regulatory environment:(quantity and quality)
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The quantity of regulation:Which regulations?
All regulations applying to business by the form
primary legislation subordinate legislation quasi-regulation
Regulations applying to a particular business type number of regulations and regulatory requirements
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The quantity of regulation: What are the objectives?
Reveal potential unnecessary burdens resulting from the growing amount, complexity and reach of regulation
Provide contextual information for interpretation of results generally
Monitor over time
Track reform progress against baseline measure against targets set by governments
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The quantity of regulation:Which indicators?
Primarily count indicators for the total stock for a particular business type
Primarily contextual information rather than indirect indicators of unnecessary burden
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The quantity of regulation: How would indicators be measured?
Most indicators would be measured through an assessment of the relevant regulation criteria might be required to ensure consistency
Government agencies could be used to attain further information
Reference businesses and business activities used for a particular business type
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The quality of regulation:Which regulations?
All regulations applying to business specifically, how they are designed, administered and
enforced Do not need to have the same objectives to be
comparable
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The quality of regulation: What are the objectives?
Reveal the potential for unnecessary regulatory burdens due to departures from accepted best practice
Identify systemic problems in regulatory processes
Monitor over time
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The quality of regulation:Which indicators?
Characteristics of regulation design administration enforcement
Mainly qualitative indicators
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The quality of regulation: How would indicators be measured?
Many indicators would require expert assessment which could be subjective criteria required to guide assessments
Government agencies would have to be involved
Legal experts could be consulted
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Session 4
The way forward
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The way forward:Which regulations?
Prioritisation is essential COAG’s ‘hot spots’ first areas of greatest concern to business capacity for benchmarking to identify unnecessary
burdens possible inclusion of New Zealand
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The way forward:Program scheduling
Periodic, rolling program more cost effective than annual reporting
Periodically to allow changes in performance to occur and reforms to be introduced
More complex areas could be scheduled after year 1
Focus could change reflecting changing priorities
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The way forward:Benefits and costs
Likely costs and benefits costs would be significant, although difficult to estimate in
advance even greater uncertainty over benefits, but the benefits
could be substantial and orders of magnitude greater than the costs
cost effectiveness cannot be determined until experience gained
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The way forward:Key program elements
Key elements of the suggested program: modest coverage initially (but all types of burdens) focus on ‘hot spots’ early on periodic, rolling program
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The way forward:Implementation issues
Consult and involve business and government
Decide how many and which indicators to report
Develop data collection methods and standards including the selection of reference businesses
Identify appropriate caveats
Develop templates
Ensure momentum and commitment
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The way forward:Discussion points
Is benchmarking likely to offer net benefits?
What are the highest priority regulatory areas to benchmark?
How should any program be scheduled?
What are the key implementation issues, concerns and possible pitfalls?