RIS QUESTION 3

What policy options are you considering?

In this section of the RIS, you must:

  • Identify a range of genuine and viable alternative policy options.
  • Ensure any of your live options can achieve your stated policy objectives.
  • Give the decision maker confidence you have identified all of the available options open to you.
  • Identify the context for the options considered (for example, the policy may be an election commitment).

Start with clear, well differentiated policy options

Every good RIS will canvass a range of viable options. The number of options you include in your analysis should be commensurate with the magnitude of the policy problem being considered, but three is a good minimum rule of thumb.

While every option considered should be practical and implementable, options should not be discounted just because they haven’t been considered before or there are risks associated with them.

At least one option must always be non-regulatory. Remember that a rigorous cost-benefit analysis must always pose the status quo as the benchmark policy option.

Non-viable options should only be incorporated into your RIS if they have been canvassed publicly.

Give careful thought to reassuring the decision maker that you haven’t missed a viable policy option during your analysis. A thorough and broad-based consultation process inviting affected groups to discuss the issues can often settle that question.

Above all, keep in mind, presenting one fait accomplis option is not acceptable. There must always be analysis of the no regulation or status quo option as a benchmark, unless your proposed policy approach is an election commitment. When this is the case, the Government has already committed itself to one policy approach in a public and accountable way and no alternative options need therefore be considered.

Cabinet can also determine there is no need for options in the case of a policy matter where there are special political, economic, military or other considerations.

Which is the best option?

Which option is more effective? Appropriate? Efficient? Which is the least costly? Which one has the lowest regulatory impact?

All other things being equal, the policy option offering the greatest net benefit should always be the recommended option.

Judgement is required. It’s rare for all other things to be equal. But you must be able to support your conclusions with clear thinking, logical argument and thoroughly checked facts.

Does one size fit all?

Sometimes a mix of options should be considered. Different groups—especially small businesses—experience regulation differently while others present less compliance risk. Have you considered whether a mix of policy options would be more effective and efficient? For example, small businesses are disproportionately affected by many regulatory burdens because the extra workload of new obligations tends to be spread among fewer people. If a group is less likely to present a risk or the risk is smaller, you should consider whether they should be exempt from the new regulation, or be subject to a simpler, lighter touch approach.

Have you discussed the options with your Deregulation Unit?

Your portfolio has a dedicated team who can help. Work closely with them on every RIS.

The most important policy option: the no-regulation option

When analysing the non-regulatory option, ask yourself honestly: “What would happen if we didn’t introduce any new form of regulation?”

There may be good reasons for regulating, but these must be weighed against not regulating. One benefit of not regulating is, of course, you won’t need to find regulatory offsets, but there are usually others too.

Don’t treat this option lightly or consider it a token gesture. It is mandatory to give it serious consideration as a way of challenging you to broaden your thinking on the policy options available to you.

Better enforcement of existing regulation

Sometimes better staff training, enforcement or a different management focus to address cultural, behavioural or systems issues can be an effective means of achieving your outcome. Always assess the potential for improving policy outcomes with better enforcement of the rules already in place.

Remember too, that people can have poor awareness of their obligations. Better targeted education can be a useful tool in achieving your objectives.

Light touch regulation

As a policy maker, you can choose to be less prescriptive and give discretion to regulated parties on how they can act. Principles–based regulation allows maximum flexibility among affected groups as to how they achieve compliance. For example, where a market operates inefficiently, light touch regulation might lay down rules for the participants on how to agree on prices. More heavy-handed regulation might involve government determining the price itself.

It is often possible to achieve regulatory ends by non-legislative means, such as binding or non-binding guidelines on market participants. Light touch regulation must be implemented to ensure those affected understand their legal rights and obligations otherwise the regulation may not be effective.

Self-regulation

This consists of industry-written rules and codes of conduct enforced by the industry itself. Where industry participants understand and appreciate the need for self-regulation, this can be a good option.

Any red tape resulting from self-regulation is usually minimal and often administered sympathetically by the industry. Self-regulation is a good option where the consequences of market failure are low and the market is likely to move towards an optimal outcome by itself.

Self-regulation is not a viable option if an industry has no incentive to comply with its own rules. In some cases, self-regulation may create public concern, where, for example, perceived conflicts of interest could threaten safety, such as in food-handling, healthcare or aviation. Self-regulation should be approached carefully where previous attempts to achieve compliance or penalise non-compliance have failed.

Quasi-regulation

This approach covers a wide range of rules or arrangements that are not part of explicit government regulation, but nevertheless seek to influence the behaviour of businesses, community organisations and individuals. Examples include industry codes of practice developed with government involvement, guidance notes, industry–government agreements and accreditation schemes.

Co-regulation

This describes a solution where industry develops and administers its own arrangement and government provides the underpinning legislation to enforce it. Such legislation can set out mandatory standards, but may provide for enforcement through a code overseen by the industry.

Explicit government regulation

So called black-letter law, this comprises primary and subordinate legislation and is probably the most common form of regulation. Usually used as a regulatory tool where there is high perceived risk or public interest and achieving compliance is seen as critically important.

Where you rely on this form of regulation, ensure it is drafted in plain language and applicable requirements on sunsetting are observed.

Alternative instruments

With each of these regulatory options, there may be alternative instruments available to address the problem or issue set out in a RIS. Alternative instruments can include:

  • No specific action—that is, relying on the market in conjunction with existing general liability laws (e.g. negligence or breach of contract) and insurance laws.
  • Information and education campaigns, including product labelling or media campaigns.
  • Market-based instruments including taxes, subsidies, tradeable permits, performance bonds and tradeable property rights.
  • Pre-market assessment schemes, such as listing, certification and licensing.
  • Post-market exclusions like bans, recalls, licence revocation or negative licensing.
  • Service charters.
  • Standards, which may be voluntary, compulsory or performance-based.
  • Other mechanisms like public information registers, mandatory audits and Quality Assurance schemes.

RIS requirements apply to the development of standards used for regulatory purposes, even if they have been developed by Standards Australia or other third parties.

If any of the options involve establishing or amending standards in areas where international standards already apply, you should document whether (and why) the standards being proposed differ from the international standard.

Agencies should also consider opportunities for trans-Tasman regulatory alignment as an option for lowering costs or delivering benefits to Australian and New Zealand businesses.

Further guidance material can be found at www.cuttingredtape.gov.au