better business regulation 2008 - consumer affairs …...the better business regulation framework....

Better businessregulation

Research Paper No. 14 May 2008

Disclaimer

Because this publication avoids the use of legal language, information about thelaw may have been summarised or expressed in general statements. Thisinformation should not be relied upon as a substitute for professional legaladvice or reference to the actual legislation.

© Copyright State of Victoria 2008

This publication is copyright. No part may be reproduced by any processexcept in accordance with the provisions of the Copyright Act 1968. For adviceon how to reproduce any material from this publication contact ConsumerAffairs Victoria.

Published by Consumer Affairs Victoria121 Exhibition Street Melbourne Victoria 3000.

Preface > i

Preface

Consumer Affairs Victoria (CAV) is a significant marketplace regulator. It administers both economy-wide andindustry-specific legislation covering thousands ofproviders of goods and services. The agency combinesboth policy and regulation making functions withregulation implementation functions. CAV has beencommitted to achieving best practice in performingits regulatory roles.

There has been much discussion of the need toimprove the processes of making regulation in recentyears, but much less focus on improving the practicesof regulators in implementing regulation. Experiencesuggests to me that often the more significant gainscan be achieved by improving what regulators dorather than tinkering with what is on the statutebooks.

This view prompted CAV to initiate a Better BusinessRegulation project, the simple aim of which was toimprove CAV’s regulatory practices. Subsequently, theVictorian Government established a RegulationBurden Reduction initiative, which further emphasisedthe need to improve regulatory quality. CAV is aportfolio unit of the Department of Justice in Victoriaand the Department embraced both the BetterBusiness Regulation and Regulation Burden Reductioninitiatives as key priorities in 2006-2008.

This paper describes the Better Business Regulationframework developed by CAV and the Department ofJustice. It is hoped that other regulators will be able tobenefit from the work we have done by applying theframework to their own circumstances and ultimatelyeffecting improvements to their regulation.

I would like to acknowledge the work done by RodOverall (Overall Consulting) and the Allen ConsultingGroup who have greatly assisted CAV in developingthe Better Business Regulation framework. Thecombination of experience of the consultants and staffinvolved in the project has, I believe, produced apractical and innovative approach to assist in thepromotion of regulatory reform.

Consumer Affairs Victoria would welcome anycomments on the Better Business Regulationframework. These may be directed to:

Frank RossiProject ManagerBetter Business RegulationTel: 61 3 8684 6453Email: [email protected]

Dr David CousinsDirectorConsumer Affairs VictoriaExecutive Director Consumer Affairs,Department of Justice

Preface i

Introduction 01

Better business regulation 03Context 03Project approach 04

The BBR framework 05The regulatory cycle 05

Practices, processes and performance 09Good practices 10Process maturity 17Performance measurement 18

Making it work 19

Consumer Affairs Victoria research anddiscussion papers 21

Contents

The objective of the Better Business Regulation (BBR)project is to improve the way regulators operate bydeveloping a tool (the BBR Framework) that assists inevaluating performance, identifying opportunities forimprovement and developing measures to monitorperformance over time.

BBR originated in a search by Consumer AffairsVictoria (CAV) to identify ‘good practice’ in itsregulatory activities. An extensive literature searchrevealed that although there are widely acceptedprinciples of ‘good regulation’, they concentratedon the application of these principles in makingregulation (primary and subordinate legislation).There was little information on what constitutedgood regulatory practice.

The project was initiated by CAV in 2005 andextended across the whole of the Department ofJustice (DoJ) to develop and test a conceptualframework to provide guidance on good practice forregulators. Underlying this was a premise that theactivities regulators undertake are essentially similar,regardless of the particular object of the regulation, sothat it should be possible to formulate standards(termed ‘good practices’) against which regulators’ canassess current practices and identify opportunities forimprovement.

A conceptual framework was developed from theaccepted principles and the literature, particularly fromUnited Kingdom governmental sources. On the basisof that framework, an Evaluation Guide was developedand piloted for its workability in two regulatoryschemes operated by Consumer Affairs Victoria.Modifications were made following a review of thepilot’s outcomes. From mid 2008 and over an18 month period, the framework will be rolled outacross all regulators within the Justice portfolio.

This paper explains the BBR Framework and the broadprocesses for its application. Readers interested in moredetail are referred to the departmental contact noted inthe Preface.

Introduction

Introduction > 01

Better business regulation > 03

This project is being undertaken in the context of theVictorian government’s commitment to improvingregulation.

The BBR project was initiated by Consumer AffairsVictoria as a way of improving the quality of itsregulatory practice. It now also forms part of theDepartment of Justice’s effort to delivering reductionsin regulatory burden and improving the effectivenessof regulation. It has been a DoJ Strategic Priority forthe last three years.

DoJ is focusing on regulatory improvement whichincludes the Government’s broader commitment toReducing the Regulatory Burden, awhole–of–government approach to reducing theadministrative burdens of regulation.

The BBR project will encourage better regulatorypractice and ultimately lead to better regulatoryoutcomes. In this regard, the BBR project will supportthe Reducing the Regulatory Burden initiative andimprove the way regulators operate by highlightingareas for regulatory improvement.

Better businessregulation

Context

The Victorian Government announced the Reducingthe Regulatory Burden initiative in 2006, designed toreduce the administrative burdens of Stateregulation. The Department of Treasury and Finance(DTF) has estimated that the administrative burdenimposed by State regulation is $1.03 billion perannum.

The Victorian Government’s approach is centredon three elements:

1. reducing the existing administrative burden ofregulation by 15 per cent ($154 million) by July2009 and 25 per cent ($256 million) by July2011

2. offsetting the administrative burden of any newregulation by making simplifications in thesame or related area, and

3. undertaking reviews to identify actions toreduce compliance burdens, supported byincentive payments.

Source: The Victorian Government 2006, Reducing theRegulatory Burden — The Victorian Government’s Plan to ReduceRed Tape, http://www.dtf.vic.gov.au, accessed 11 December2006.

Reducing theregulatory burden

• Targets forachievement

• Financial supportfor projects

• Measurement ofoutcomes

Better BusinessRegulation

Good regulatory practice• What does good practice

look like?

Processes• How can it be improved?

Action Plans

• Implementing improvementopportunities.

Regulatory outcomes

• More effectiveregulation

• More efficientregulation

BBR and reducing the regulatory burden

Principles of good regulationAny exercise in evaluating regulatory practice andprocesses requires consideration of the principles ofgood regulation. These include:

• accountability

• transparency

• effectiveness

• efficiency

• proportionality

• flexibility, and

• consistency1.

For Victorian regulators the Department of Treasuryand Finance Victorian Guide to Regulation providesa useful introduction to these principles. Many of theprinciples in the Victorian Guide to Regulation arealso relevant for the day–to–day business of regulatorswhen operating regulation. However, developingspecific good practices, particularly those related tooperating regulation are not explicitly stated and needto be derived or inferred from the relevant literature.The interpretation of ‘core’ principles can then be usedto test the appropriateness of the standards.

The BBR project has been undertaken in five stageswith Stage 1 designed to answer two key questions:

1. is it possible to develop a common frameworkfor assessing regulatory performance across thediverse business regulators in DoJ, and if so

2. what would a set of workable indicators of goodpractice look like?

Stage 1 of the project focused on:

• consideration of approaches to benchmarkingregulatory functions in Australia and overseaswith a view to drawing upon existingperformance indicators and the experience ofother regulators, and

• developing a framework for benchmarkingregulators and a recommended set ofobservable/measurable indicators of regulatoryperformance that:

• is readily applicable to all business–relatedregulatory functions undertaken within DoJ

• assists the subsequent task of identifyingareas for improvement in DoJ regulators

• provides guidance on the application of theframework and indicators, and

• facilitates a pilot of the methodology intwo regulatory schemes.

Stage 1, which was completed in early 2007, resultedin the development of a preliminary BBR framework.The framework focused on the similar regulatoryactivities performed by the diverse schemes within theJustice Portfolio rather than on the very differentregulatory outcomes being pursued by the variousregulators.

The framework established in Stage 1 was subsequentlytrialled and modified during Stage 2, the purpose ofwhich was to:

• assess the BBR evaluation framework as adiagnostic tool to assess regulatory performance

• assess the associated approaches and processesinvolved in applying the BBR evaluationframework, and

• identify areas that need to be taken into accountfor wider application of the BBR evaluationframework across CAV and other DoJ regulators.

Stage 2 concluded that it was possible to apply acommon framework for evaluation and assessmentacross the diverse regulators in DoJ. Importantly, thisconceptual framework was translated into acomprehensive set of good practices allowingregulators to self-evaluate their regulatory processes.

Stage 3 utilised the findings of the Stage 2 pilots andtranslated these into strategic action plans articulatingthe regulators response to the findings of the pilots.These action plans clearly outlined specificimprovement opportunities, assigned responsibilitiesand specified timeframes for implementation. Finally,a regular reporting mechanism was established toreview progress towards regulatory processimprovements.

04 > Better business regulation

1 This list includes those principles most applicable to all stages of the regulatory cycle. Efficiency has been included as it isimportant for the operate stage, perhaps less so for the make and review stages, even though it does not form part of theVictorian Guide to Regulation. Flexibility refers to a regulator being adaptive (eg enforcement strategies, promoting compliance,risk assessments) to changing circumstances. Cooperation has not been included as this is an over-arching activity in theregulatory cycle and covered elsewhere.

Project approach

The BBR framework > 05

The BBR framework

The following sections provide an overview of thisframework starting with a discussion, at a conceptuallevel, of the regulatory cycle.

The framework maps generic regulatory activitiesacross the life cycle of a regulatory scheme. It is brokeninto three stages—make, operate and review—andshows the activities that are required at each of thesestages. Although not represented in the diagram, eachof the 10 activities around the three stages is furtherbroken down into specific tasks with good practicesthat should ideally be in place for each of the tasks.

With many activities in the cycle performed bydifferent branches or agencies, coordination ofresponsibilities becomes a large component throughoutthe regulatory cycle. Accordingly, it is represented inthe diagram as a continuum around the cycle.

While in concept the regulatory cycle is not new, thegood practices developed for each of the activitieswithin the regulatory cycle have not been broughttogether in this way in the extensive literaturereviewed. By drawing on the Victorian Guide toRegulation, other principles of good regulation, andexperience from other jurisdictions, the BBR projectderived or inferred the practices to which regulatorsshould adhere. In all, the BBR framework proposes74 good practices for the 10 regulatory activitiesaround the make, operate and review stages and thecoordination responsiblities.

To assist with the identification of those ‘similar’regulatory activities, the concept of a regulatory cyclewas developed as set out below.

The regulatory cycle

PRINCIPLES

GOOD PRACTICE

COORDINATE RESPONSIBILITIES

REV

IE

WMAKE

OPERATE

Review

objectives

of the

government

intervention

Assessperformanceof the

governmentintervention

Iden

tity

prob

lem

s’to

bead

dres

sed

bygo

vern

men

tin

terv

entio

n

Design

gove

rnmen

t

interv

entio

n

Plan

implementation

of government

intervention

Monitor and

enforce

compliance of

regulated

entities

Man

age

ongo

ing

regist

ration

/lic

ensin

gpr

oces

s

Educatestakeholdersaboutgovernment

interventionsReceive and

respondto

enquiries and

complaints

Registerandlicense

entities

Life cycle of a regulatory scheme

06 > The BBR framework

2 The discussion in this report is designed to be inclusive and therefore the term ‘regulation’ should be interpreted in its widersense to include all government regulatory instruments including primary legislation and sub–ordinate legislation (called‘Regulation’) rather than sub–ordinate legislation only.3 Regulation Task Force 2006, Rethinking Regulation: Report of the Task Force on Reducing Regulatory Burdens on Business, Report tothe Prime Minister and the Treasurer, Canberra, January, p. 145.4 Department of Treasury and Finance 2005, The Victorian Guide to Regulation,http://www.vcec.vic.gov.au/CA256EAF001C7B21/WebObj/VictorianGuidetoRegulation/$File/Victorian%20Guide%20to%20Regulation.pdf, accessed 6 December 2006, pp. 3–1.5 It should be noted that the above summary is by no means a substitute for the Victorian Guide to Regulation—in fact, theGuide is the endorsed Government policy on developing regulation—nor is the summary intended to provide greater emphasisrelative to those requirements not stated. Rather, the above summary ensures that concepts used in the benchmarkingframework are kept as simple as possible. Also, while not an explicit intention, simplifying the activities involved in ‘making’regulation allows for greater attention to be devoted to those activities involved in ‘operating’ regulation, which is the focus ofmost DoJ regulators.

How governments go about their core business ofmaking and administering regulation2 is the keydeterminant of regulatory outcomes.3 While regulatorsmay differ in role, structure and objectives, theregulatory cycle is common to all.

At its most simplified, the regulatory process typicallyinvolves:

• making or passage of government regulation(make regulation), followed by

• interpreting, administrating and enforcing thatregulation (operate regulation), and usuallysometime later

• reviewing how well that regulation is working,with the potential for refining, amending, orrepealing the regulation (review regulation).

For each of these core elements of the regulatory cycle,there is a range of activities that regulators orgovernment must undertake.

However, in many cases an individual regulator willnot undertake all three stages or activities of the cycle.For example, legislation may be recommended anddrafted (make regulation) by the Departmentresponsible for policy advice in the relevant area, astatutory authority may administer (operateregulation) the regulatory scheme established by thelegislation and the same Department may evaluate theeffectiveness of the scheme after several years ofoperation (review regulation).

Make regulationThe Victorian Guide to Regulation sets out the requiredprocess for making regulation and states thatgovernments should assume that regulation isunnecessary, unless it is clear that:

• a problem exists

• government action is justified, and

• regulation is the best alternative open to thegovernment.4

In answering these questions, the Victorian Guide toRegulation provides detailed guidance on the activitiesthat regulators must undertake when making orremaking regulations. Summarising the key elementsof the Guide, the process to make regulation comprisesthe following:

• identify objectives—identifying the purposes ofregulatory intervention and establishing the casefor government action

• consider alternatives—framing options for meetingthe identified objectives

• assess impacts—estimating the impacts of eachalternative scenario, and

• consult stakeholders—engaging with interested andaffected stakeholders to fully understand theregulatory environment.5

These form the basis for the three activities that arerequired in the make stage.

REV

IE

WMAKE

OPERATE

The regulatory cycle

The BBR framework > 07

Operate regulationEven the best regulation will result in inefficienciesand poor outcomes if it is not appropriatelyadministered and enforced.6

For most regulators, the majority of their time andresources is dedicated to the operation of regulation.Indeed, for many their role almost exclusively relatesto this. While again somewhat simplified forcategorisation purposes, the core elements of‘operating regulation’ can be distilled into five distinctactivities:

• process development—devising systems andprocesses to manage the tasks involved inadministering regulation

• register and license—receiving, assessing, processing,issuing and maintaining registrations and licences

• educate and promote—informing regulated parties,other stakeholders and the general public aboutrelevant issues

• monitor compliance—monitoring the complianceof regulated parties, and

• enforce compliance—enforcing the compliance ofregulated parties with relevant regulations.

These are the basis for the five activities that arerequired in the operate stage.

Note that not all regulators operate registration orlicensing as a function in their regulatory schemes.However, it has been added given that it is a verycommon regulatory tool.

Review regulationThe Victorian Guide to Regulation states that regulationshould be evaluated on a regular basis to ensure that itcontinues to meet its specified objectives. If theobjectives are not being met, then considerationshould be given to changing the regulation, or relyingon alternative measures to achieve the desiredoutcomes.

Whilst not providing guidance on the detail of such areview, it can be surmised that the review of regulationshould:

• assess performance—are the regulations achievingtheir objectives

• review objectives—are the objectives for which theregulations were implemented still valid, and

• consider modifications—how the regulations couldbe improved.

As with the make and operate stages, these points arethe basis for the two key activities required in thereview stage.

Coordinate responsibilitiesRegulatory functions for a specific scheme may be splitamong different branches or agencies. For example,such splits commonly occur between the make andoperate stages and between the operate and reviewstages. Sometimes within the operate stageenforcement may be carried out by a body separatefrom the body carrying out the licensing orregistration function. Separating responsibilities withinthe regulatory cycle may be based on a number offactors, such as legislative or regulatory requirements,operational agreements, probity or historical factors.Each branch or agency involved undertakes to ensuredelivery of the regulatory processes in a manner thatis, to the greatest extent possible, consistent andseamless. The framework captures these intersectingresponsibilities and depicts it in the life cycle of aregulatory scheme diagram as an over-arching activitythroughout the cycle. As such, capturing the realitythat branches or agencies regulators are involved indelivering different activities associated with aregulatory scheme is critical to ensuring the frameworkis robust. For this reason, the concept of coordinateresponsibilities is incorporated. The coordination iscritical so as to:

• clearly delineate lines of responsibility forregulatory activities, and

• ensure that regulatory activities are performedefficiently and effectively.

These points are the basis for the two activitiesrequired in coordinate responsibilities. Although notrepresented in the regulatory cycle diagram, these areincluded in the good practices tables commencing onpage 11.

From a holistic perspective, the BBR framework focuseson regulatory schemes rather than single regulators.This enables identification of who carries responsibilityfor the various activities, duplication of activities andwhere any responsibility gaps may occur.

6 Independent Pricing and Regulatory Tribunal 2006, Investigation into the Burden of Regulation and Improving RegulatoryEfficiency, www.ipart.nsw.gov.au, p. 39.

Practices, processes and performance > 09

Practices, processesand performance

While the activities described above connect the roleof regulators with the principles of good regulation,they only provide general guidance on the manner inwhich regulators should undertake their duties. Theydo not specify practices and processes that regulatorsshould comply with and they do not specify standardsby which performance can be gauged.

By focusing on areas of commonality across theregulators and the regulatory schemes and in particularthe regulatory functions, the framework allows for theevaluation of:

• good practice—the quality aspects of regulatoryactivities

• process maturity—the degree of development ofregulatory activities, and

• performance—the translation of inputs to outputsto outcomes of regulatory activities.

Therefore, the framework links the practices to theconceptual model and also allows process quality,efficiency and effectiveness performancemeasurements to be linked back to regulatory activitiesand acknowledges the specific roles of individualbusiness units within a regulatory scheme.

PRINCIPLES

GOOD PRACTICE


REV

IE

WMAKE

OPERATE

Review

objectives

of the

government

intervention

Assessperformanceof the

governmentintervention

Iden

tity

prob

lem

s’to

bead

dres

sed

bygo

vern

men

tin

terv

entio

n

Design

gove

rnmen

t

interv

entio

n

Plan

implementation

of government

intervention

Monitor and

enforce

compliance of

regulated

entities

Man

age

ongo

ing

regist

ration

/lic

ensin

gpr

oces

s

Educatestakeholdersaboutgovernment

interventionsReceive and

respondto

enquiries and

complaints

Registerandlicense

entities

Activity Evaluation

Performance(inputs, outputs, outcomes)

Process maturity(degree of development)

Good practice(indicators of quality)

Receive andrespond toenquiries andcomplaints

Tasks

Levels of evaluation in BBR

10 > Practices, processes and performance

7 Centre for European Studies 2004, Project on Indicators of Regulatory Quality: Final Report, Bradford University/Commission forEuropean Communities, http://www.bradford.ac.uk.irq, accessed 23 November 2006, p. 4.8 Ibid, p. 4.

As noted above, the good practices operationalise theprinciples of good regulation and provide a set ofstandards against which current activities can beassessed (gap analysis) and opportunities forimprovements identified.

Regulatory performance—or as some call it ‘regulatoryquality’—is a complex notion. It links the effects of aregulatory process with the principles of goodregulation. As a result it comprises notions ofefficiency, effectiveness and good governance.In this way, as Jacobs notes:

[…] principles of better regulation provide a focus onquality that goes beyond efficiency. In fact, theexperience of governments and internationalorganizations indicates that quality is anchored to thenotion of good governance. As such, regulatory qualityhas a normative dimension, sets goals in terms ofgovernance, and is neutral to the scope and size ofpublic intervention. Quality is intimately different fromquantity. High quality regulation does not mean ‘lowlevels of regulation’, but regulation that is proportionate,targeted, efficient, accessible and transparent.7

Where the conditions of good regulatory quality aremet—namely, those articulated in the Victorian Guideto Regulation—regulation will become embedded inpolicy decision–making by regulators, ministers andstakeholders. Good quality regulation, then, can‘change the way organised interests, firms and citizensengage in the policy–making process, understand andaccept the regulatory framework’ and promoteregulatory legitimacy.8

Due to the normative dimension of the principlesespoused in the Victorian Guide to Regulation andsimilar documents, it is difficult to measure theextent to which a regulatory regime conforms to theprinciples. In addition, the practices against whichquality and performance are measured might beemphasised or de–emphasised according to the lensthrough which they are viewed.

The approach to develop the good practices was todraw on the literature relating to principles of goodregulation, best practice governance, and best practiceadministration to derive or infer good practices forregulatory activity.

The good practices provide the bridge between theprinciples of good regulation – accountability,transparency, effectiveness, efficiency, proportionality,flexibility and consistency – and regulatory activities.They describe how regulators should perform the tasksthey have been allocated.

While essentially qualitative in nature, they are able tobe supported by evidence of conformance to orapplication of good practice, and thereby enableregulatory schemes to identify over time levels ofperformance improvement.

Consideration of good practices also forms animportant point for more detailed assessment ofregulatory scheme performance, and ultimatelyprovide guidance as to how schemes should beimproving regulatory tasks and activities. Wheregood practices are not in place, regulators can improveperformance by embedding the good practices intotheir operations. Together with the maturity andquantitative performance of regulatory activities asdescribed below, the BBR framework will enableregulatory schemes to identify those good practicesthat have the most crucial or significant impact onscheme performance.

The following table sets out the good practicesdeveloped for each of the activities and tasks withinthe regulatory cycle.

Good practices


Identify 'problems' to be addressedby Government intervention

MAKE REGULATION

Ascertain policypriorities

Policy staff receive regular updates on policyobjectives/priorities

Conduct marketscanning

Select issue to beaddressed

Policy staff receive regular updates ondevelopments at COAG, in other Australian andoverseas jurisdictions

Activity Task Good practice that relates to the task

External scanning activities are conducted toidentify emerging issues

Consider consolidated data from educationactivities/enquiries/complaints/audit outcomes/enforcement and cross-scheme analyses

Clearly articulate the issue/problem and the needfor government intervention

Assess whether government intervention is justifiedusing the framework set out in the Victorian Guideto Regulation

Clearly state objectives for government interventionprior to options being determined

Design government intervention Develop alternatives Consider all reasonable regulatory and non-regulatory options (as per the Victorian Guide toRegulation)

Encourage stakeholders to contribute their viewsduring development of alternatives

Consult with government agencies that have a rolein administering/operating the proposedgovernment intervention regarding the alternatives

Demonstrate that stakeholder views have beenconsidered when recommending a preferredalternative

Quantify the impact of the alternatives (incl. cost-benefit analysis)

Assess the alternatives in terms of their consistencywith government policy and their effects across thecommunity

Assess the alternatives from a cost recoveryperspective

Evaluate alternatives

Assess risks to regulatory outcomes for eachalternative and analyse the targeting of resourceneeds accordingly

Recommend preferredalternative

Adopt (or recommend the adoption of) thealternative that was estimated to generate thehighest net benefit

Plan the implementation ofgovernment intervention

Communicate objectivesof intervention torelevant agencies

Inform all relevant government agencies andstakeholders of the objectives of the intervention

Develop an education campaign aimed atinforming regulated entities implementing theintervention of the desired compliance outcomes

MAKE REGULATION

Developadministrativeprocesses to enableimplementation

Develop or amend administrative processes toenable practical implementation of interventionincluding:

a) enquiries process

b) complaint handling process

c) dispute resolution process

d) licensing process

e) compliance and enforcement process


Consider agency resources/capabilities in designof administrative processes

Consider probity and governance requirementswhen allocating responsibility for regulatoryactivities to agencies

Ensure that the processes developed are consistentwith the government’s commitment to reducingregulatory burden



Educate stakeholders about thegovernment interventions

OPERATE REGULATION

Plan educationalinitiatives

Articulate the objectives of each education/information initiative

Deliver educationalinitiatives

Review educationinitiatives

Design education/information initiatives havingconsidered and evaluated alternatives


Deliver education/information initiative(s) to plan

Regularly review the information provided ineducation campaigns to ensure currency and assessthe impact of the education campaigns

Assess whether compliance obligations areconveyed simply/directly/repeatedly to relevantparties in a manner to ensure they understandtheir regulatory responsibilities and rights

Report trends in education data to all branches/agencies involved in the government intervention

Receive and respond to enquiriesand complaints

Register and license entities

Respond to enquiries

Resolve complaints

Review enquiries andcomplaints data

Process registration andlicensing applications

Provide the public with convenient mechanismsfor making enquiries

Provide accurate information in response toenquiries within agreed timeframes

Provide the public with convenient mechanismsfor making complaints

Resolve complaint or refer complaint to appropriateparty for resolution/escalation using establishedprotocols

Report trends in enquiries to all branches/agenciesinvolved in the government intervention

Report trends in complaints to all branches/agencies involved in the government intervention

Provide convenient mechanism(s) for licenceapplicants/licensees to contact regulator and lodgelicensing and registration applications

Capture application and payment details promptlyand accurately into relevant systems

Assess applications for registrations and licencesagainst the requirements of the scheme

Consider impact of licensing decisions on thirdparties and informed them of decision to grantlicence (where relevant)

Communicate registration/licensing decisionswithin agreed timeframes stating reasons fordecision

Provide accurate information in response tocomplaints within agreed timeframes

Explain complaints procedures to complainantincluding estimated timeframes


Manage ongoing registration/licensing process

OPERATE REGULATION

Process annual returnsand renewals

Provide convenient processes for annual reporting/licence renewals

Review registrationand licensing data

Maintain register of licences and registrations inline with government policies


Report trends in licensing/registration applicationsdata to all branches/agencies involved in thegovernment intervention

Report trends in complaints regarding registrationand licensing processes to agencies involved in thegovernment intervention

Analyse the costs and benefits of data requestsmade to regulated entities

Review compliance andenforcement data

Assess enforcement activity to test whetherenforcement effort is commensurate with thecompliance breach or potential breaches

Report trends in compliance data to all branches/agencies involved in the government intervention

Reported trends in complaints and the outcomesof monitoring activities to all branches/agenciesinvolved in the government intervention

Monitor and enforce complianceof regulated entities

Plan monitoring andenforcement activities

Implement monitoringplans

Identify monitoring and enforcement activitypriorities and objectives using risk based approach

Use complaints data to inform development ofmonitoring and enforcement plan and assignresources accordingly

Implement plans to monitor compliance ofregulated entities

Remediate compliancebreaches

Remediate non-compliant behaviour andcompliance breaches in proportionate manner(compliance effort commensurate with breach)

Sanctions and penalties are designed to achievethe regulatory outcome

Reasons are given in writing at the earliestopportunity to the regulated entity

Manage complaintsregarding registration/licensing decisions

Resolve disputes or complaints regarding thegranting, denial, or revocation of a licence andcommunicate reasons for those decisions torelevant stakeholders


Assess the performance of thegovernment intervention

Review the objectives of thegovernment intervention

REVIEW REGULATION

Assess outcomes ofthe intervention

Assess the extent to which the governmentintervention addressed the original problem andachieved the stated objectives

Assess administrativeperformanceassociated withaction undertaken


Consult stakeholders on their perceptions of theperformance of the government interventionagainst stated objectives

Consider compliance breaches when assessingeffectiveness of regulatory government intervention

Review processes and systems against the statedobjectives of the intervention

Assess administrative and other burdens borne byregulated entities in line with the government'scommitment to reducing regulatory burden

Recover cost of licensing/registration scheme fromapplicants as stated in objectives of the intervention

Recommendmodifications tointervention

Assess the ongoing appropriateness of theidentified regulatory objectives in light of actualperformance

Recommend the need for changes to policy or toregulatory intervention in light of actualperformance and identify possible improvements


Coordinate activities betweenregulatory agencies


Determine andformaliseresponsibilities andactivities of agencies

Agree respective roles and responsibilities ofregulators, agencies and departments givingconsideration to probity and governance issues

Manage ongoingrelationshipsbetween agencies


Formalise the objective, method and staff formanaging relationships with other regulators andagencies

Negotiate the budget allocation for the deliveryof tasks including the basis for any costsharing/reimbursement

Clearly articulate the issue/problem and the needfor government intervention

Agree information and data to be shared betweenagencies including mechanisms for enabling datasharing

Improve coordination of regulatory effort betweenagencies through:

a) promotion of efforts to minimise theadministrative complexity for individualsor businesses who are subject to regulation frommultiple regulators

b) inter-agency co-ordination of resourcing onindividual cases

c) sharing of resources

Engage in annual corporate planning processes tointegrate activities, priorities and resourcing ofagencies involved in regulatory cycle

Demonstrate risk management approach to keyaspects of regulatory administration

Assess delegation of decision making to ensureconsistency with legislation and managementdirectives

Implement mechanisms to minimise risk ofcorruption, misconduct, conflict of interest,regulatory capture and abuse of power

Plan corporate processesand activities

Manage capacity,processes anddelegations

Coordinate and plan withinregulatory agencies


Good practices generally require their processes to bewell documented, measured and regularly reviewed,according to their importance in the overall functions.Thus process maturity applies across many regulatoryactivities and is presented separately in the BBRframework. Because it does not derive specifically fromthe nature of regulation, but is an accepted goodbusiness practice in general, it is not presented as oneof the good regulatory practices. Nevertheless, it is apractice directly related to implementing the principlesof accountability, consistency and transparency.

Process maturity is a way to determine thesophistication or level of development of processesacross the regulatory scheme on the basis that thequality of regulation is likely to be higher if processesa formalised, documented, adhered to in practice andmeasured.

Measurement requires a rating to establish the relativedevelopment and application consistency of each ofthe practices followed by the regulators to determinetheir ‘maturity’. It is adapted from the establishedprinciples of process maturity typically used whenevaluating organisational processes. Accordingly,process maturity is evaluated to:

• focus attention on how processes contribute toregulatory quality as, by definition, the processesbeing assessed are key to producing regulatoryoutcomes

• establish a link between conduct of theseregulatory activities and improvementopportunities, and

• structure and prioritise implementation ofimprovements.

A higher rating would be achieved the greater thedegree or extent of documentation, measurement,or promotion of continuous improvement. Theratings are:

Level 1—Informal and person dependantThis is for cases where the process being performedis not documented or formalised. In other words, it isnot recorded either in outline or in detail. The activityis person–dependent and the sequence, timing andresult may vary during repetition, or be sacrificedunder pressure. This requires significant supervisionand there is no guarantee of either achieving thedesired result or adhering to timelines. The activity isad hoc, with the effectiveness of the activity isdependent on individuals.

Level 2—Partially documented processesAt this maturity level, the processes have beenreviewed, documented and approved by the supervisoror the approving authority as the standard process. Butit may be doubtful that the activity is being performedin all instances according its documentation. This maybe because of process drift or a change since thedocument was drafted.

Level 3—Fully documented processesAt this level, there is consistency between thedocumented process and the deployed process. Theprocess documented and deployed is applied at all theintended locations, by all supervisors and staff. There isalso a seamless linkage to other processes whereverthere needs to be any interaction to ensure aconsistent level of service.

Level 4—Level 3 plus measured processesThe process has set measures and goals, such asadherence to timelines, customer satisfaction, cost,and the process is measured against these goals.Process variation is reduced through statisticalmanagement with corrective action able to be taken atthe point of reference. Outcomes can be predicted withaccuracy from organisational capability.

Level 5—Level 4 plus continuously improvementAt this level, the goals set for the process are analysedfor achievements and improved regularly. Thetimelines, cost targets, satisfaction levels are achievedregularly and the targets are stretched usingcontinuous quality improvement techniques.Improvements are evaluated and deployed usingsystematic methods.

Process maturity therefore refers to the level ofdevelopment and formalisation of the processes thatsupport the regulatory activities. It plays an importantrole in managing risk as it encourages regulators tomove away from person dependent processes, to onesthat are well documented and understood, wheredocumentation reflects practice, and wheremeasurement is routinely reported and acted on.Regulators can improve their performance byconsciously increasing the level of process maturity.

Process maturity


The BBR Framework also allows for performance ofthe regulatory scheme to be considered in terms of:

• efficiency—indicators developed by consideringthe key inputs and outputs that relate to eachregulatory activity, and

• effectiveness—indicators developed byconsidering the overall purpose and outcomesof the regulatory activity.

The project has developed a suite of potentialperformance indicators for each of the activities in theregulatory framework. These performance indicatorsare the third set of measures that complete the overallregulatory performance measurement in the BBRframework when combined with the process indicatorsof good practice and process maturity. In particularthey have been designed to link to, and hence providefurther evidence for, assessments of good practices andprocess maturity. When interpreted together, the threesets of indicators provide a broad and more completepicture of regulatory performance that includesassessments of operational activities (efficiency) and ofregulatory outcomes (effectiveness). The positioning ofthe performance indicators within the BBRmeasurement framework is illustrated below.

Development of performanceindicatorsThe development of the performance indicatorsinvolved the identification of indicator concepts foreach activity, where the indicator concept posed thequestion ‘what do we need to know?’ to gaugeperformance for each activity. One or moreperformance indicators for each activity weredeveloped from these indicator concepts. They aremost informative when viewed as a suite of indicatorsand not interpreted as isolated measures. Ifperformance against single indicators is relied uponwithout the balance that occurs when the indicatorsare viewed collectively, inaccurate interpretations maybe made leading to inappropriate decision-making.

The performance indicators are also designed so thatdirectional changes provide clear and unambiguousinterpretations of performance. This means that goalsor targets can be assigned to each indicator oncesufficient data has been obtained to determine theappropriate level.

Where possible, the performance indicators areexpressed in generic language that is applicable acrossregulatory schemes. Not all of the indicators will applyto all schemes—for example, if a scheme does notinclude licensing provisions then the licensing relatedindicators would not apply. For some schemes it maybe helpful to tailor the language to reflect thatcustomarily used within that scheme.

Overall, the performance indicators reflect the natureof the activities within each of the make, operate andreview stages and coordinate responsibilities. It shouldalso be noted that the performance indicators, as wellas the good practices and process maturity measures,can be used for comparing regulatory performancewithin a specific scheme over a time and also acrossregulatory schemes.

However, the performance indicators even whencombined with the good practices and processmaturity measures do not provide all the managementinformation that may be required by those managingregulatory activities and tasks. There are many otherpieces of information relating to operational detail thatare important for management to access when makingdecisions. Therefore, it is intended that managers willseek more information than is represented by theperformance indicators. For example, those managinga licensing process should be aware of the number oflicence applications received. This data may wellconvey crucial information about the licensingintervention and inform decisions about the resourcesrequired to process the applications, even though thenumber of applications received does not in itselfconstitute performance data.

Performancemeasurement

Regulatoryobjective

Regulatoryperformance

Performancemeasurement

Processmaturity

Goodpractice

Performanceindicators

Processindicators

Regulatoryactivities

Standard regulatory approaches

BBR approach

Measuring regulatory performance in theBBR Framework

Making it work > 19

The BBR framework can be applied in two modes:

a) A ‘one-off’ evaluation to assess a regulator’scurrent practice against the standard of the goodpractices (gap analysis) to identify improvements.There is the option of repeating this periodicallyat medium to long term intervals, say every threeyears. Key steps in this type of application are:

• gap analysis

• interpret and understand reasons for gaps

• identify priority areas for improvement

• design and plan an improvement strategy

• implement the improvement strategy

• monitor results and review outcomes.

b) Ongoing monitoring of performance using thegeneric performance measures in terms ofefficiency and effectiveness. Key steps in thistype of application are:

• adapt BBR generic performance measuresto the specific regulator or scheme

• determine data needs and availability(eg is current data adequate for purposes?)

• collect data

• estimate measures

• interpret measures and trends

• identify particular activities for furtherassessment and improvement (eg measuresmay indicate problems areas but not thecauses, that may require much more detailedand specific analysis).

Both of these modes of application are through a self-evaluation process. Self evaluation can be a usefulvehicle for accurate identification of strengths andopportunities for improvement. It is also a learningopportunity supporting managers to better understandand assess the practices and processes within their areaof accountability and should be seen as a starting pointfor continuous improvement. The BBR framework isdesigned to be implemented using a self evaluationprocess with facilitated workshops to develop actionplans for improving regulatory performance.

The BBR framework was piloted by Consumer AffairsVictoria on two regulatory schemes using thismethodology for the purposes of:

• assessing the evaluation framework as adiagnostic tool to measure regulatoryperformance

• assessing the associated approaches and processesinvolved in its application, and

• identifying areas that need to be taken intoaccount for wider application of the BBRframework.

The pilot confirmed that the BBR framework has thecapacity to identify issues and opportunities forimprovement. The challenge will be to tailor andincorporate further improvements and examineopportunities to embed a continuous improvementculture amongst different regulators.

Making it work

CAV research and discussion papers > 21

1 Consumer Education in Schools: Background Report,November 2003

2 What do we Mean by ‘Vulnerable’ and‘Disadvantaged’ Consumers?, March 2004

3 Information Provision and Education Strategies,March 2006

4 Social Marketing and Consumer Policy, March 2006

5 Designing Quality Rating Schemes for ServiceProviders, March 2006

6 Regulating the Cost of Credit, March 2006

7 Consumer Advocacy in Victoria, March 2006

8 Choosing Between General and Industry-specificRegulation, November 2006

9 Using Licensing to Protect Consumers’ Interests,November 2006

10 Consumer Detriment in Victoria: a Survey of itsNature, Costs and Implications, October 2006

11 Stopping Rogue Traders, November 2006

12 Unfair Contract Terms in Victoria: Research intotheir Extent, Nature, Cost and Implications,October 2007

13 Institutional Arrangements for Consumer ProtectionAgencies, April 2008

14 Better Business Regulation, May 2008

Consumer Affairs Victoriaresearch and discussionpapers

May 2008C-68-01-1090

Consumer Affairs Victoria

Victorian Consumer & Business Centre113 Exhibition StreetMelbourne 3000Telephone 1300 55 81 81 (local call charge)Email [email protected] www.consumer.vic.gov.au

Regional offices are located in Ballarat,Bendigo, Geelong, Morwell, Mildura,Wangaratta and Warrnambool.

better business regulation 2008 - consumer affairs …...the better business regulation framework....

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