Best Practice regulation HandBook users guide by theelixer

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									users
 guide to the




                Best Practice
                 regulation
                   HandBook
                        August 2007
2 USERS GUIDE



   What are the Government’s requirements?1

   What is regulation and why is it important                                             What proposals are covered by
   to assess its impact?                                                                  the requirements?
   t Regulation refers to any ‘rule’ endorsed by                                          t Proposals with regulatory or quasi-regulatory
         government where there is an expectation of                                           obligations being brought to Cabinet by ministers;
         compliance. It includes primary and subordinate
                                                                                          t Letters with regulatory or quasi-regulatory
         legislation (legislative or non-legislative instruments)
                                                                                               obligations being referred to the Prime Minister
         and quasi-regulation.
                                                                                               by ministers for approval;
   t Regulation is an essential part of running a well-
                                                                                          t Proposals with regulatory or quasi-regulatory
         functioning economy and society, but must be
                                                                                               obligations of ministers, boards, statutory
         carefully designed so as not to have unintended or
                                                                                               authorities and regulators; and
         distortionary effects, such as restricting competition,
         or imposing unnecessarily onerous costs on those                                 t Treaties.
         affected by the regulations. Assessing the impact
         of regulation, including analysing the costs and                                 Do the requirements apply to my
         benefits, is therefore important to ensure that it
                                                                                          department or agency?
         delivers the intended objective without unduly
         causing adverse effects.                                                         t The requirements apply to all government
                                                                                               ministers, departments, agencies, boards and
                                                                                               statutory authorities and regulators.
   To improve the quality of regulation,
   the Government has decided that:
                                                                                          What is the purpose of this Users Guide?
   t     All regulatory proposals are required to undergo a
         preliminary assessment to establish whether they are                             t This Users Guide provides an overview of the
         likely to involve an impact on business and individuals                               initial steps you should follow to comply with
         or the economy.                                                                       the requirements.

   t If there are likely to be medium business compliance
         costs, a quantitative assessment of the compliance                               What is the purpose of the Best Practice
         costs should be prepared using the Business Cost                                 Regulation Handbook?
         Calculator (BCC) or an approved equivalent.
                                                                                          t The Handbook details the Government’s best
   t If the proposal is likely to have a significant impact                                    practice regulation requirements and contains
         on business and individuals or the economy,                                           advice on how to comply with them.
         more detailed analysis should be undertaken and
         documented in a Regulation Impact Statement
         (RIS). If the impacts include medium or significant
         compliance costs, quantification of compliance costs
         forms part of the RIS.




   1
       Note: These guidelines apply to the development of regulatory proposals of the Australian Government. Proposals of ministerial councils, their committees and
       national standard-setting bodies are subject to the Council of Australian Governments (COAG) Principles and Guidelines for National Standard Setting and Regulatory
       Action by Ministerial Councils and Standard-Setting Bodies, which is available at www.obpr.gov.au.
                                                                                                                                      USERS GUIDE 3



Getting started 1




 1. These procedures and processes are mandatory and apply to all government entities that review or make regulations that have an impact
    on business and individuals or the economy.
 2. A preliminary assessment form is available from the OBPR website.
 3. Record the reasons why you decided there are likely to be no/low impacts and report these to your Best Practice Regulation Coordinator.
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   What are the key steps to follow?

   Step 1 Analyse the problem                                  Other impacts on business and individuals
   Once you have examined the problem and established
                                                               or the economy
   a case for government action, you should consider           You should also identify any other impacts (costs and
   all feasible options (non-regulatory and regulatory)        benefits) on business and individuals or the economy.
   to achieve the Government’s objectives (see section 6.3     These impacts may be positive or negative, financial or
   of the Handbook).                                           non-financial, direct or indirect, or market or non-market.
   t If only non-regulatory options are considered,            Impacts should be viewed from a community-wide
      no further regulatory analysis is required.              perspective, taking into consideration their scope
   t If a regulatory option is considered, go to step 2.       (number of businesses and individuals affected) and
                                                               scale (size of the costs and/or benefits to a business
   Step 2 Undertake a preliminary                              or individual).
          assessment                                           You should be particularly aware of the competition
                                                               impacts of your proposal, as a RIS may be required for
   Having considered a regulatory option, you should
                                                               any proposal that promotes or restricts competition.
   undertake a preliminary assessment of the likely
                                                               Such impacts may include promoting or restricting
   business compliance costs and other impacts on
                                                               market entry or changes to price, output or
   business and individuals or the economy. For more
                                                               production methods.
   information about the preliminary assessment
   requirements, see section 3.1 of the Handbook.              The checklist in box 2 of this Users Guide (also in the
   A preliminary assessment form is available from             preliminary assessment form) will help in identifying
   the OBPR website (www.obpr.gov.au) to assist in             these types of impacts on business and individuals or
   completing this assessment.                                 the economy.
                                                               You should contact the OBPR if impacts on business
   Compliance costs                                            and individuals or the economy are more than low,
   You are required to identify whether your proposal will     or if you are unsure (see step 3).
   impose compliance costs on business. The checklist
   in box 1 of this Users Guide (also in the preliminary       Self-assessment
   assessment form) will assist with this. If your proposal    Where you have determined that your proposal will
   will impose no compliance costs on business, you            have no/low business compliance costs and no/low
   should proceed to a consideration of other impacts           other impacts on business and individuals or the
   (see below).                                                economy, you may self-assess that no further analysis
   If your proposal will impose any compliance costs,          is required.
   you need to consider whether these are low. In              When self-assessing, you should provide a copy of the
   general, compliance costs will be low where only a few      preliminary assessment to your Best Practice Regulation
   businesses are affected and the costs are negligible or     Coordinator, and include a brief description of the
   trivial. Stakeholders should be consulted at this early     proposal and your reasons for believing that there will
   stage. If the compliance costs associated with your         be no/low compliance costs and no/low other impacts.
   proposal are low, you should proceed to a consideration
   of other impacts (see below). If the compliance costs       If a proposal is self-assessed as having no/low impacts
   are not low, or if you are unsure, you should contact the   when in fact the impacts will be more significant,
   OBPR (see step 3).                                          the department or agency will be assessed as being
                                                               non-compliant with the Government’s best practice
                                                               requirements. For these reasons, you should contact
                                                               the OBPR if you are unsure about the potential impact
                                                               of a proposal.
                                                                                                         USERS GUIDE 5



                                                            Frequently asked questions

Step 3 Consult with the OBPR to                             Do I need to undertake a preliminary
       determine appropriate level                          assessment?
       of analysis                                          If regulation is being considered as an option to address
                                                            a perceived policy problem, you must assess whether
You should contact the OBPR when the potential
                                                            a regulatory proposal will have a potential impact
impacts of your regulatory proposal will be more than
                                                            on business and individuals or the economy, and
low, or where you are uncertain.
                                                            whether further analysis may be required. The OBPR
The OBPR will work with you to gain an understanding        has developed a preliminary assessment form to guide
of the proposal. The OBPR will then advise that:            you through the compliance cost impacts and other
t the proposal is likely to have no/low impacts and         impacts of your proposal.
   no further analysis is required;
t the proposal is likely to have medium compliance          My proposal has compliance costs, but
   costs and a quantitative assessment of                   how do I know if they are low?
   compliance costs should be prepared using the            In general, compliance costs are low when only a few
   BCC or an approved equivalent; or
                                                            businesses are affected and the costs are negligible or
t the proposal is likely to have significant impacts        trivial. For example:
   and a Regulation Impact Statement should be
   prepared, which may be required to include               - changes to regulation that are machinery in nature,
   a quantitative assessment of business                      involving technical changes that will not have an
   compliance costs.                                          appreciable impact on business and are consistent
                                                              with existing policy (such as indexation); or
                                                            - there would be a very small initial one-off cost to
                                                              business and no ongoing costs.




Who can help?
   The Office of Best Practice Regulation (OBPR) provides advice, training and assistance on
   regulatory impact analysis (including using the BCC and preparing RISs) to help policy officers
   meet the Government’s requirements.
   Office of Best Practice Regulation
   15 Moore Street                 Phone: +61 2 6240 3290
   GPO Box 1428                    Fax: +61 2 6240 3355
   Canberra City ACT 2601          Email: helpdesk@obpr.gov.au
                                   Website: www.obpr.gov.au
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  Frequently asked questions…cont’d

   What is meant by ‘other impacts                               Who signs off on the preliminary
   on business and individuals or the                            assessment?
   economy’?                                                     The preliminary assessment form should be signed by
   ‘Other impacts’ capture the range of impacts a                the officer who has responsibility for signing off on the
   regulatory proposal may have on business and                  proposal on behalf of the department or agency.
   individuals or the economy that may not be classified as
   ‘compliance costs on business’. These impacts may be          Do I need to quantify compliance
   positive or negative, financial or non-financial, direct or   costs?
   indirect, or market or non-market impacts.
                                                                 If there are likely to be medium business compliance
                                                                 costs, you are required to prepare a full compliance
   What should I do if the impacts of my                         cost assessment using the BCC or an approved
   proposal are no/low?                                          equivalent. The OBPR will advise you if this is the
   Policy officers should provide a description of the           case (when you contact them after completing the
   proposal and record their reasons for considering that        preliminary assessment). Where there are likely to be
   there will be no/low compliance costs on business and         significant compliance costs, the quantification of
   no/low other impacts on business and individuals or the       these costs will form part of the RIS.
   economy. A copy of this document should be provided
   to the department or agency’s Best Practice Regulation        Do I need to prepare a Regulation
   Coordinator. The preliminary assessment form (available       Impact Statement?
   from www.obpr.gov.au) may assist with this process.
                                                                 If there are likely to be significant impacts on
                                                                 business and individuals or the economy, you will
   If I assess a proposal as having                              be required to prepare a RIS. Where a RIS is required,
   no/low impact (and do not perform                             the quantification of compliance costs forms part of
   any further analysis) what are the                            the RIS requirements. The OBPR will advise you if this
   consequences if the OBPR disagrees                            is the case (when you contact them after you have
   with my assessment?                                           completed the preliminary assessment).

   If you assess that a proposal has no/low impacts on
   business and individuals or the economy and the               When do I need to consult with
   impacts are in fact more significant, your department         stakeholders?
   or agency may be found to be non-compliant with the           Effective consultation should occur at all stages of
   Government’s regulatory impact analysis requirements.         the regulatory cycle.
   In such cases, the proposal should not proceed to the
                                                                 Consultation early in the regulatory process will
   decision maker unless exceptional circumstances have
                                                                 assist in identifying the nature and extent of the
   been granted by the Prime Minister. If you are unsure
                                                                 problem, the range of possible options for addressing
   as to whether there are no/low impacts, or whether
                                                                 it, and potential costs to consider.
   any further analysis is required, you should consult
   the OBPR.                                                     The whole-of-government policy on consultation
                                                                 establishes the principles for best practice consultation
                                                                 with stakeholders as part of good regulatory process.
                                                                                                                  USERS GUIDE 7



Box 1 Business Compliance Cost Checklist
As part of a regulatory impact analysis, a practical approach for considering the impacts on business compliance costs
potentially flowing from regulatory proposals is through a set of threshold questions (a compliance cost checklist).
Would the regulatory proposal involve one of the following compliance tasks?

Notification
Will businesses incur costs when they are required to report certain events?
- For example, businesses may be required to notify a public authority before they are permitted to sell food.

Education
Will costs be incurred by business in keeping abreast of regulatory requirements?
- For example, businesses may be required to obtain the details of new legislation and communicate the new requirements
  to staff.

Permission
Are costs incurred in seeking permission to conduct an activity?
- For example, businesses may be required to conduct a police check before legally being able to employ staff.

Purchase cost
Are businesses required to purchase materials or equipment?
- For example, businesses may be required to have a fire extinguisher on-site.

Record keeping
Are businesses required to keep records up to date?
- For example, businesses may be required to keep records of accidents that occur at the workplace.

Enforcement
Will businesses incur costs when cooperating with audits or inspections?
- For example, businesses may have to bear the costs of supervising government inspectors on-site during checks of
  compliance with non-smoking laws.

Publication and documentation
Will businesses incur costs when producing documents for third parties?
- For example, businesses may be required to display warning signs around dangerous equipment, or to display a sign at the
  entrance to home-based business premises.

Procedural
Will businesses incur non-administrative costs?
- For example, businesses may be required to conduct a fire safety drill several times a year.

Other
Are there any other business compliance costs (including indirect costs or impacts on intermediaries such as accountants,
lawyers, banks or financial advisers) associated with the regulatory proposal?
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      Box 2 ‘Other impacts’ Checklist
      The following checklist will help you to assess whether a proposal has a potential impact on business and individuals
      or the economy.
      Will the proposal:
      Potentially affect the number and range of businesses in an industry?
      For example:
      - change the ability of businesses to provide a good or service;
      - change the requirements for a licence, permit or authorisation process as a condition of operation;
      - affect the ability of some types of firms to participate in public procurement;
      - significantly alter costs of entry to or exit from an industry; or
      - change geographic barriers for businesses.
      Potentially change the ability of businesses to compete?
      For example:
      - control or substantially influence the price at which a good or service is sold;
      - alter the ability of businesses to advertise or market their products;
      - ban certain types of products or business practices;
      - set significantly different standards for product/service quality; or
      - significantly alter the competitiveness of some industry sectors.
      Potentially alter the incentives for business to compete?
      For example:
      - create a self-regulatory or co-regulatory regime;
      - impact on the mobility of customers between businesses;
      - require/encourage the publishing of data on company outputs/price, sales/cost; or
      - exempt an activity from general competition law.
      Potentially impact on consumers?
      For example:
      - alter the choices available to consumers;
      - affect the quality of consumer products or services;
      - create or remove restrictions on access to a product;
      - promote or restrict information dissemination to consumers; or
      - add to or reduce the complexity of consumer products or services.
      Potentially have any other impacts on business and individuals or the economy?
      For example:
      - mandate payments from one party to another (excluding taxes);
      - have environmental or social impacts (including distribution of resources);
      - create or amend government cost recovery arrangements;
      - impact on Australia’s international capital flows or trade;
      - impact on mobility of labour;
      - impact on resource allocation, saving or investment;
      - transfer risk between business, individuals and government; or
      - impose any other financial costs.

								
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