Redefining regulators: cutting red tape and risk management


Red-tape

Cutting red tape is a top priority for the Abbott government. But the new risk-based approach that comes with it has some public servants wondering what the Coalition really wants.

Amid the federal government’s efforts to make obeying regulations easier on businesses, the role of the regulators is being redefined through the shift to a risk-based approach and a performance framework that demands a progressively lighter touch.

In the new framework, which takes effect at the start of next financial year following a six-month transition process, strictly maintaining compliance comes second to keeping costs to business at a minimum. It makes cutting red tape an ongoing task for regulators, which must keep looking for new ways to lighten the load, particularly based on feedback received through “co-operative and collaborative relationships” with the businesses they oversee.

The government wants more industry self-regulation, and efforts to monitor and ensure compliance — like inspections and information requests — are to be minimised. At the same time, regulators must be more transparent about how they work. The framework notes concerns that being more open could make it easier to game the system, but states resolutely that in the new light-touch approach “risk-based frameworks are made public unless it can be clearly demonstrated this would lead to a failure of the regulatory system”.

But decisions inevitably need to be made “on a case-by-case basis”, as Tony Abbott’s red-tape lieutenant Josh Frydenberg repeatedly told a group of public servants who got the chance to question him at a recent public sector forum on better regulation. As always, “it’s about getting the balance right”.

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  • David Briggs

    I agree with Chloe Munro and Kareena Arthy. It’s no trivial matter to establish Governments risk appetite, and consequently operationalising a ‘risk based’ approach is not easy. Rather than trying to complicate regulation with a new and ambiguous metric, why not simply adopt a disciplined and forensic approach to establishing the likely costs and benefits of regulation that takes into account all the complexities of risk/probability weightings of possible outcomes, behavioural problems that beset regulation, and a careful appraisal of the alleged market failure. As we have seen recently with innovations like Uber, market failure in the firm of information asymmetry can be largely overcome via information sharing.

    It’s certainly true that regulation tends to become entrenched and enlarges with time, so a push for deregulation is desirable, but don’t try to sex the task up…. Application of some good public policy principle is what is necessary, not trying to unravel the entrails of Tony Abbotts brain to understand his risk appetite