Federal agencies smash red tape reduction targets by $1b in one year

By Stephen Easton

Thursday May 5, 2016

Federal agencies smashed the government’s targets to reduce the costs of regulatory red tape and delays to individuals, businesses and community organisations by $1 billion per year over 2014 and 2015, according to their own estimates.

But the Australian National Audit Office says the results of portfolio-level surveys reported to the Department of the Prime Minister and Cabinet “are not a substitute for the structured third-party assessment of impact agreed by Ministers at the commencement of the program”.

In the only recommendation from its recent audit of the red tape reduction drive, ANAO reminds PM&C that the three-year deadline for this more comprehensive whole-of-government assessment by the Productivity Commission or a similar body is coming up soon, and the central agency confirms:

“Implementation of this decision is currently being discussed with the Government.”

According to the recent audit report, internal red tape reduction targets were set for each portfolio in late 2013, shortly after the Coalition came to power, which actually added up to slightly more than the publicly announced target of $1 billion per year.

The internal targets added up to a combined total of $2.65 billion in savings for the community over the two-year period, but agencies estimate they have gone above and beyond this as well:

“Portfolio reporting to PM&C advised that some $3.97 billion in net savings had been implemented in 2014 and 2015 — exceeding the internal target of $2.65 billion by $1.32 billion.”

This adds up to 82.7% of the $4.8 billion that was expected to be saved in the community as a result of all deregulation measures announced by the end of 2015. The remainder is likely to flow through this year, based on what the public servants told the auditors:

“The ANAO was advised that substantial time-lags between receiving agreement to measures and their implementation may occur where legislative changes or complex stakeholder negotiations are required to give effect to a measure.”

PM&C head Martin Parkinson told the auditor-general why the internal targets were set higher than the “at least $1 billion a year” target that was publicly announced and suggested that the audit report could be misleading:

“As presented, this information does not fully reflect the role these targets played in supporting the Government’s achievement of its red tape reduction initiative.”

The department’s full response explains the public servants were hedging their bets:

“Internal portfolio targets were used to minimise implementation risk. In setting the sum of these targets to be substantially more than the Government’s $1 billion annual commitment, the Government took into account the risks associated with the limited provision allowed for the likelihood that some portfolio targets would be difficult to achieve and assisted in achieving the overall objective of at least $1 billion per year across all portfolios, consistent with the Government public announcements on the agenda.

“In addition to managing implementation risk, internal targets played an important role in encouraging effort and supporting cultural change across all portfolios.”

Parkinson also “cautions against” comparing figures for decisions “to be taken” with what is actually implemented because some measures can be changed or rejected by Parliament.

The audit found PM&C moved quickly after establishing a new deregulation office to set up an overarching governance framework and monitor each portfolio’s progress towards its target, providing support via portfolio liaison officers, information sharing events and chairing a reference group for senior executives.

In a sample of three departments — Communications and the Arts, Health, and Industry, Innovation and Science — set up their reregulation units with “clearly articulated roles, responsibilities and consultative mechanisms” and got senior leaders involved “to provide impetus” to the project. The audit reports things when smoothly, more or less:

“PM&C provided portfolios with a suitable range of guidance material and tools, adopting a staged approach to their preparation and dissemination. The three departments selected for this audit advised the ANAO that there were some operational challenges during the initial implementation of the Deregulation Agenda, but ‘work-arounds’ were developed as necessary and lines of communication remained open.”

The total cost of red tape to the nation was estimated to be $65.39 billion using the Regulatory Burden Measurement framework, which is based on a methodology used by the Victorian government. The bulk of the total relates to taxation, placing 71.9% of the burden within Treasury’s domain.

The “work-arounds” included the use of Excel spreadsheets to make the RBM calculations following concerns that an “RBM Cost Calculator tool” was not fit for purpose because:

  • it lacked the capacity to deal with complexities;
  • it was difficult to use and not intuitive, especially for officers who were not in Deregulation Units; and
  • files created using the tool corrupted at times

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