On 31 March 1999 the Chairman of the Productivity Commission, Mr Gary
Banks; the head of the Office of Regulation Review (ORR), Dr Robyn Sheen;
and Ms Sue Holmes, an official of the ORR, met with the Committee
to discuss matters of mutual interest. The meeting followed the tabling
on 10 December 1998 of the Productivity Commission’s report Regulation
and its Review 1997-98.
The report was the first comprehensive statement on compliance with
regulation review requirements, implementing the Productivity Commissioner’s
obligation to report annually on the Commonwealth’s new, best practice
procedures for making regulations. A core element of these requirements
is the preparation of Regulation Impact Statements (RIS), which
are intended to ensure that regulatory action is well informed and meets
intended goals, while minimising any adverse effects on business and
the community. The RIS requirements apply not only to regulations, but
also to Bills, treaties and quasi-legislation.
The ORR, located within the Productivity Commission, has a central
role in achieving the implementation of these initiatives. The two most
important priorities of the ORR are to advise Commonwealth agencies
on quality control mechanisms for regulatory proposals and for the review
of existing regulations; and to examine all RIS prepared by agencies
and advise on whether they provide an adequate level of analysis and
meet the new requirements.
The establishment of RIS requirements has been one of the most significant
recent developments in quality control of legislative instruments. At
the State and Territory level this has generally been imposed by Act,
whereas at the Commonwealth level it has been implemented by administrative
direction, although the various editions of the Legislative Instruments
Bill have included provisions for RIS. The elements of a RIS may vary
between jurisdictions but typically they include:
The Commonwealth RIS requirements were consolidated
in A Guide to Regulation, published by the ORR, which was endorsed
by the Government in September 1997. Since then the Committee has scrutinised
the RIS, which are tabled, in addition to the Explanatory Statement,
with all legislative instruments affecting business or competition.
The Committee has found the RIS to be of considerable
assistance in its scrutiny of legislative instruments, despite the Committee
having different priorities to the ORR. The Committee scrutinises delegated
legislation to ensure compliance with high standards of personal rights
and parliamentary propriety, whereas the ORR responsibilities are for
the most effective and efficient regulations from an economy-wide perspective.
These different objectives are by no means the same, but they are complementary
and RIS have enhanced the ability of the Committee to carry out its
functions.
The Committee has found RIS to be particularly useful
because they are more detailed and thorough than Explanatory Statements
in their background information. Also, RIS are structured in such a
way that may reveal areas of especial concern to the Committee. For
instance, every RIS must identify a problem which needs to be addressed
and these problems are often set out with admirable frankness not usually
seen in Explanatory Statements. These problems have included deficiencies
in personal rights which have not been remedied for inappropriate lengths
of time, or questions about validity which similarly have been left
to continue for lengthy periods. The other parts of the RIS may similarly
disclose difficulties about which the Committee will require further
information from the Minister. This is not to say that RIS should displace
Explanatory Statements, because the two emphasise different matters.
Explanatory Statements are weighted towards the legal authority for
the instrument and the provisions of individual clauses. The RIS, on
the other hand, are weighted towards the goals of the instrument in
the context of the competitiveness of business and the productivity
of the economy.
The Committee closely scrutinises Explanatory Statements
for deficiencies either in quality or quantity, taking the position
that any such defects are breaches of parliamentary propriety. This
view is emphasised by the fact that Ministers usually sign or initial
tabled Explanatory Statements for regulations. Every year the Committee
writes to Ministers about problems with Explanatory Statements. Sometimes
these defects, although significant, are straightforward, with the Explanatory
Statement simply not explaining or stating anything of value. Sometimes,
however, the question is more serious. For instance, the Explanatory
Statement for one set of regulations did not advise whether a statutory
requirement to consult the Privacy Commissioner had been followed and,
if so, what was the result of that consultation. Following inquiries
by the Committee it was revealed that the Privacy Commissioner had indeed
been consulted, but that his advice was overruled. The Committee then
took action to have the Federal Executive Council Handbook amended to
provide that such matters must be included, see the Committee’s
Annual Report 1996-97 p.73 and 81. The Committee also presented
a paper to an Administrative Law and Ethics conference suggesting that
there were questions about the ethical standards of the officers of
the Department who had carriage of this matter, see the Committee’s
Annual Report 1997-98, p.99.
The position is, however, different in relation to RIS.
While the Committee carefully reads all RIS and, as noted previously,
finds many instances of possible breaches of its principles, it does
not scrutinise the actual processes in the making of a RIS or the adequacy
of the RIS in complying with the administrative guidelines. The reason
for this is that the development of a RIS is essentially a policy development
process and the Committee always stays clear of policy matters. The
success of the Committee in its core function of scrutiny of legislative
instruments is due to the fact that Ministers know that it operates
in a non-partisan fashion and does not question policy. The Committee
finds RIS to be a valuable source of information, but it is not appropriate
for it to become involved in policy development. The ORR is a specialist
agency with the mandate to oversee the entire RIS process and liaison
with the ORR along the lines of our recent meeting with the Chairman
of the Productivity Commission and the head of the ORR will enable the
Committee to be aware of any relevant developments. Also, the Senate
legislation committees would scrutinise RIS in the course of their work.
For these reasons, the Committee would be reluctant to become involved
in arguments about the adequacy of RIS or other merits based issues.
There are several other areas where RIS are of particular
value to the Committee. For instance, the scrutiny of national uniform
legislative schemes presents special challenges for legislation scrutiny
committees, see Annual Reports 1995-96, p.56 and 1997-98,
p.83. It is therefore encouraging that the Council of Australian
Governments now has a mandatory requirement that new or amending regulations
which are made by Ministerial Councils or national standard setting
bodies are to have a RIS and comply with the Competition Principles
Agreement. These requirements parallel these at the purely Commonwealth
level and are supervised by the Committee on Regulatory Reform. As discussed
in the special statements made to the Senate, the scrutiny of national
schemes is difficult because of the tendency for Commonwealth, State
and Territory Ministers to reply to concerns of scrutiny committees
by saying that the schemes are the result of agreements between governments
which cannot be changed. This has not affected unduly the operation
of the Committee, which has accepted significant undertakings from Ministers
to amend national scheme regulations and not to implement these provisions
unless the changes were agreed to by the other Ministers. Nevertheless
it is a concern.
The introduction of RIS for national uniform regulations
is beneficial for the same reasons as for Commonwealth regulations.
The RIS enable the Committee to have a much broader perspective on the
background of uniform regulations, which will often be more complex
than for legislation solely at the Commonwealth level. This may lead
the Committee to issues relating to parliamentary propriety or personal
rights which it may have missed if it had to rely solely on the Explanatory
Statement. As with other RIS, the RIS here are usually quite candid
in their comments on the development of regulations and these can be
a useful source of inquiry.
Another function of the ORR is to supervise the national
Legislative Review Program, which, like the RIS requirements, was established
by administrative rather than legislative means. Along with the RIS,
review and staged repeal is an important element in improving the standard
of delegated legislation. Legislative requirements for this usually
include the exotically named backcapturing and sunset provisions. The
quantitative control of legislative instruments is important as well
as the qualitative and this is another aspect of interest to the Committee.
Finally, the requirements for RIS, Explanatory Statements
and staged repeal may change if the Legislative Instruments Bill is
reintroduced and is enacted. Different versions of the Bill, first introduced
almost five years ago, included provisions on these matters, but these
should not change the functions of the ORR. Instead, they may emphasise
its importance. The Committee will consider its options in the light
of the actual provisions of any Bill.
The Committee discussed all these matters with Mr Banks,
Dr Sheen and Ms Holmes and it is most grateful for the opportunity to
explain its operations and to be briefed by an agency whose operations
complement its own. Usually when officials of this seniority meet the
Committee it is to explain some problem in a legislative instrument,
but this was a more positive and welcome occasion.
Bill O’Chee
Chairman