Better regulation via CBA: setting the scene

1
Better regulation via CBA setting the scene

• Gary Banks
• Chairman, Productivity Commission

Presentation to OBPR Conference, 21 November 2007
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Common regulatory problems

• Unclear or questionable objectives
• Failure to target the regulation at the problem
• Undue prescription and complexity
• Overlap, duplication and inconsistency
• Excessive reporting and paperwork
• Unwarranted differentiation from international
  standards.

3
RedTape burdens loom large
GDP Gains from NRA Reforms
bn
13
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Competition Stream
RedTape
Health Service Productivity
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Taskforces systemic solutions

• Entrench good processes for making regulation
• Improve incentives to administer regulation well
• Strengthen mechanisms for consistency across
  jurisdictions
• Introduce fail-safe systems to ensure regulation
  remains fit for purpose

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Entrenching good processes for making regulation

• Tougher analytical requirements
• cost-benefit framework where significant costs
• measure compliance costs
• whole-of-government consultation policy
• Stricter sanctions on non-compliance
• Greater support for departments/agencies
• new Office of Best Practice Regulation

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Australian Governments new regulatory assessment
process key steps
Analyse the problem and alternative solutions
(including non-regulatory)
If regulation is being considered, do a
preliminary impact assessment (using checklists)

• If regulatory options have non-trivial impacts on
  business/competition
• Calculate compliance costs (using the BCC) and/or
  
• Prepare a RIS, including CBA

Failure to comply disqualifies a regulatory
proposal
If granted exceptional circumstances a
post-implementation review is obligatory
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Role of CBA

• A tool to assist informed decision-making
• but not pre-empt it
• Requires quantification where possible
• across economy/community
• Promotes transparency and accountability

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Using CBA

• Integrate it into decision-making processes
  (early)
• Not an add on
• Not confined to what is measureable
• Qualitative analysis can be decisive
• External experts can help
• But they should provide inputs, not output

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Moving forward

• The biggest challenges are not technical (how),
  but cultural (why?)!
• Political leadership and institutions will remain
  pivotal.

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Better regulation via CBA setting the scene

• Gary Banks
• Chairman, Productivity Commission

Presentation to OBPR Conference, 21 November 2007