Address by the Hon Dr Peter Hendy MP, Assistant Minister for Productivity to the Community of Practice for Commonwealth Regulators

Type: Speech

Date: Thursday 3 December 2015

Location: Department of Prime Minister and Cabinet

It is a pleasure to be here with you today.

As the new Assistant Minister for Productivity, the regulatory reform agenda forms a key part of my overall responsibilities and I recognise the vital role that you as regulators play.

I’m not new to the issues involved.

In a previous bureaucratic career, twenty years ago, I was the senior executive in the NSW Cabinet Office who headed up the NSW Regulation Review Unit.

I was separately, heavily involved in the negotiation and implementation of the Hilmer Report’s competition policy reforms in New South Wales.

And more recently I was the Executive Director of the Bahrain Economic Development Board in the Middle East, seeking to introduce a new regulatory system for that desert kingdom – with mixed success, if I can be brutally honest.

And then, from private sector perspective, for around six years I was the chief executive of the Australian Chamber of Commerce and Industry and I took a great interest in regulatory reform from a business point of view.

While I was the chief executive I was the Australian delegate on the Business and Industry Advisory Committee to the OECD (BIAC) and participated in many relevant discussions in the OECD forums.

But to today’s agenda.

I was doing a bit of bed time reading the other day and was perusing the “OECD Regulatory Policy Outlook 2015”. 

In it is a statement that encapsulated the centrality of regulatory reform to current economic policy. 

It said:  “In the current context of slow growth, high unemployment and fiscal stringency in many countries, governments have limited scope for further spending and tax reduction.  Reforms aimed at improving the quality of laws and regulations remain a potent means of stimulating economic activity and promoting well-being.”

May I say that a lot has been achieved through the regulatory reform agenda in Australia over the last two years but there is more to do.

Given the importance of regulatory improvement to the broader economic reform agenda in the coming years, I envisage that ministers, policy advisers and regulators will all have a very busy job.

The Prime Minister has made it clear that the focus of Australian economic policy is on boosting innovation and productivity, as we seek to deal with the pressures being experienced through the downturn in the commodity cycle, and maintain the economic growth that is essential for our living standards.

This focus, within the Prime Minister’s own portfolio, is reflected in my title – as Assistant Minister for Productivity.

Last month I led the Government’s fourth Repeal Day in Parliament, which noted our success to date and flagged our intention to build on this success.

As you probably know, since coming to Government, we have made decisions that are aimed at reducing the cost of complying with Commonwealth regulation by $4.5 billion annually.

There is no doubt that our modern society and economy need regulation and that we all benefit from it.

The Government recognises and values the important work you, as regulators, do to deliver a fair and functional society, promote community safety and security and protect the environment.

But there is also no doubt that if regulation is inefficient and ineffective, or not administered in the best way, it unnecessarily takes resources away from people, drives up costs for business and drags down our economy, making it less agile and less competitive.

The way regulators operate is a critical determinant of the extent of the regulatory burden that is experienced by individuals and business.

Just as with regulation that is poorly conceived and designed, regulation that is administered inefficiently creates a significant cost for businesses and individuals – in the time it takes to get a product to market, the cost of compliance and the potential to distract businesses from other productive activities.

I would like to say something about the challenges of the future for regulators – and to recognise that your challenge is not about just trying to deliver your legislated role while imposing the least necessary burden.

I acknowledge that the challenge for you (and for the designers of regulation) is also to take into account the complexities of the emerging and future environment, including new business models and changing social, technological and economic trends.

These rapid changes in our environment not only affect business and individuals but also the way you the regulators need to operate.

We are all becoming familiar with the emerging new business models along the lines of Uber and Airbnb - governments and regulators are facing new challenges as to how to adjust regulatory settings and we are usually not given a lot of time to do it.

We have to work out the right amount of protection for consumers, for businesses and the economy, public health, safety and the environment, without stifling emerging markets and denying the community the benefits of these new models.

While the Uber and Airbnb examples predominantly present challenges for state and territory regulators, the changes are also starting to pile up in the environments where Commonwealth regulators work.

I will give just one example that some of you know is already recognised as potentially bringing profound change – it is the blockchain technology of trusted transactions that may well decentralise much of what goes on now in the clearing houses of banking and stockbroking.

As industries undergo deep transformation, so our regulation of them will also be profoundly affected.

The way ahead requires an awareness of such changes in the pipeline and in prospect, a capability to adapt quickly enough, a different understanding of acceptable risk and a better appreciation of the cumulative impact of regulation on business decision making and the community.

It requires new partnerships and different ways of understanding and problem solving. Your jobs as regulators are becoming much more multifaceted and complex, and adaptability and agility are the key.

It is vital that we and the community learn to adapt to these changes.

Then we can take advantage of the excellent opportunities for economic growth and better service for people as business and markets change and we take on new models of industry and new ways of doing business.

Regulatory reform is a part of almost every Government review and change process under way at the moment.

Rather than look in isolation at the impact of regulation in different processes, it makes sense to consider them together under a unified and refreshed regulatory reform agenda.

As I announced on Repeal Day, we are looking to strengthen the agenda over the coming months.

First, we will look to create the right environment and structures to support better regulatory outcomes.

We will be looking at changes to the costing methodology and Regulation Impact Statement processes to ensure that regulatory reform efforts are more efficient and effective.

We are also examining our internal processes and the way we communicate reforms.

Second, we want to ensure that we are focussing on the right priorities.

We need to talk to business, and listen, about which reforms are most important – the things that matter and will make a difference to business and citizens.

The Government will develop its priorities with the help of these consultations.

And we need to make sure we are working with states and territories so we are all pulling in the same direction on regulatory reform.

Individuals and businesses are relying on us to coordinate with our state and territory counterparts – to reduce duplication and remove barriers to innovation and productivity growth.

Third, we want to ensure that we have the capability to deliver the regulatory reform agenda.

This includes ensuring that we have the right staff, training and knowhow – we need to have regulatory literacy across the public sector.

Initiatives are already underway to boost the Government’s capability in this area.

I am pleased to be able to announce today that an interactive online training course in regulatory impact analysis is now available through the OBPR website – the Regulatory Impact Analysis MOOC (massive open online course).

This online course enables policymakers, regulators and others with an interest in the policy development process to learn about regulatory impact analysis and regulation impact statements in an interactive environment.

It is open to anyone in Australia or abroad to learn more about good regulatory practice.

While we continue to implement reforms, business has already been active in putting their views to me, making it clear that the administration of existing regulation remains a key issue.

This is no surprise to me, but it is a challenge.  Indeed it is a challenge to us all.

I would like to pose some questions to you, which I hope will inform your thinking and future discussions.

First, you may wish to consider: to what extent do regulators (as well as the designers of regulations) play a role in ensuring that Australia does not have unnecessary barriers, so that it can compete internationally in attracting business to, or developing business within Australia?

Second, I want to draw your attention to Government’s policy on adopting international standards and risk assessments – which I know has been discussed in detail at previous Community of Practice meetings.

In this context, you might consider the extent your organisation is doing as much as it can to ensure it adopts these international benchmarks unless there is a clear reason not to do so.

Has this been considered as part of your future agenda, and have the outcomes been published?

Finally, particularly for those of you who primarily deal with the community and citizens, rather than business, to what extent do we understand the real value of regulatory reforms in freeing up a citizen’s time, delivering better service and building better citizen and government relationships?

To what extent is your organisation putting effort into better understanding the real impact these reforms have on citizens?

The Government is very committed to regulatory reform, and is building on existing hard work and achievements.

I have outlined some of the changes we are exploring in refreshing the regulatory reform agenda.

I do thank you for your hard work and diligence in administering the regulations of the Commonwealth.

As mentioned, we all have to work together to ensure that those regulations and the manner of their operation and administration creates no more burden on business and the community than is necessary.

It is vital that regulation does not inhibit our journey down the path of innovation, productivity and growth that is essential if we are to maintain and grow living standards and provide the healthy, prosperous society that we all aspire to.

I thank you all for listening and wish you well in your discussions today.