‘Judgement calls’ on red tape savings don’t stack up: NSW auditor

By Harley Dennett

August 25, 2016

Simply removing legislative instruments hasn’t had the kind of red tape reduction effect the government had intended, says New South Wales’ auditor-general.

Margaret Crawford today tabled her report into the state’s red tape reduction initiatives, labelling them “ineffective” and the claimed $896 million in savings “inaccurate”.

In part, central coordination was missing she says, and there was little data to support assumptions made in the savings assessments.

“Estimating the benefits of red tape reduction requires a degree of judgement,” Department of Premier and Cabinet secretary Blair Comley wrote in his reply to Crawford, noting that the report agreed that the independent consultant assessments had improved the robustness of savings estimates.

“The ultimate test of that regulatory balance is how the community views regulation of its everyday activities.”

Comley stated his preference for targeted red tape reviews in future, “given the overall likely benefits,” instead of the comprehensive stocktake that Crawford proposed her in report.

Agencies were given a state-wide target for red tape savings — $750 million — and asked to make their own estimates of savings in their portfolio toward it. Any claims more than $5 million were externally verified by a consultant, and last year, based on those agency submissions, the NSW government reported it had exceed the target by $146 million.

Crawford’s examination of samples of those submissions, however, found problems:

  • key assumptions were not supported by evidence and data, nor adequately verified
  • the link between reforms and benefits was not clearly explained and quantified
  • cost transfers were sometimes claimed as savings
  • full projected savings were claimed immediately but not always realised in implementation.

“The net burden of red tape, and the overall impact of claimed savings, was not accounted for in an overall stocktake of legislative and non-legislative regulatory burden. Accordingly, the impact of the claimed $896 million savings in reducing the overall burden of red tape in New South Wales is unknown.”

Target reached, but outcome unknown

The premise of the reform was “one-on, two-off” — one new legislative instrument to replace two existing ones — encouraging minister to carefully assess the need to introduce new legislation and force reviews of existing legislation. While it more than reached the numerical target, it also increased the total legislative burden by $16.1 million over the five-year period.

The government has been upfront about that increase, which is dwarfed by the claimed savings. Crawford doesn’t believe the savings claims can be justified:

“In the absence of an accurate red tape savings figure and a stocktake of regulation, the NSW government does not have a clear view of what impact its reported red tape savings has had on the overall net burden of red tape in New South Wales.”

Crawford has recommend that DPC, or another central agency, take a lead role in building a framework for targeted reductions of unnecessary regulation, starting with a comprehensive stocktake of regulatory burden.

Commonwealth auditor-general Grant Hehir has raised similar concerns about red tape savings claims.

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