Regulation Review - IPART - NSW Government
Regulation Review - IPART - NSW Government
Regulation Review - IPART - NSW Government
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Independent Pricing and Regulatory Tribunal<br />
<strong>Regulation</strong> <strong>Review</strong><br />
Local government compliance and enforcement<br />
<strong>Regulation</strong> <strong>Review</strong> — Issues Paper<br />
September 2012
<strong>Regulation</strong> <strong>Review</strong><br />
Local government compliance and enforcement<br />
<strong>Regulation</strong> <strong>Review</strong> — Issues Paper<br />
September 2012
© Independent Pricing and Regulatory Tribunal of New South Wales 2012<br />
This work is copyright. The Copyright Act 1968 permits fair dealing for study,<br />
research, news reporting, criticism and review. Selected passages, tables or<br />
diagrams may be reproduced for such purposes provided acknowledgement of the<br />
source is included.<br />
ISBN 978-1-922127-26-6<br />
The Tribunal members for this review are:<br />
Dr Peter J Boxall AO, Chairman<br />
Mr James Cox PSM, Chief Executive Officer and Full Time Member<br />
Mr Simon Draper, Part Time Member<br />
Inquiries regarding this document should be directed to a staff member:<br />
Lil Cullen (02) 9290 8410<br />
Alexandra Lobb (02) 9113 7757<br />
Independent Pricing and Regulatory Tribunal of New South Wales<br />
PO Box Q290, QVB Post Office <strong>NSW</strong> 1230<br />
Level 8, 1 Market Street, Sydney <strong>NSW</strong> 2000<br />
T (02) 9290 8400 F (02) 9290 2061<br />
www.ipart.nsw.gov.au<br />
ii<br />
<strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
Invitation for submissions<br />
<strong>IPART</strong> invites written comment on this document and encourages all interested<br />
parties to provide submissions addressing the matters discussed.<br />
Submissions are due by 29 October 2012.<br />
We would prefer to receive them electronically via our online submission form<br />
<br />
You can also send comments by fax to (02) 9290 2061, or by mail to:<br />
<strong>Regulation</strong> <strong>Review</strong> – Local <strong>Government</strong> Compliance and Enforcement<br />
Independent Pricing and Regulatory Tribunal<br />
PO Box Q290<br />
QVB Post Office <strong>NSW</strong> 1230<br />
Our normal practice is to make submissions publicly available on our website<br />
. If you wish to view copies of submissions but do not<br />
have access to the website, you can make alternative arrangements by<br />
telephoning one of the staff members listed on the previous page.<br />
We may choose not to publish a submission—for example, if it contains<br />
confidential or commercially sensitive information. If your submission contains<br />
information that you do not wish to be publicly disclosed, please indicate this<br />
clearly at the time of making the submission. <strong>IPART</strong> will then make every effort to<br />
protect that information, but it could be disclosed under the <strong>Government</strong> Information<br />
(Public Access) Act 2009 (<strong>NSW</strong>) or the Independent Pricing and Regulatory Tribunal Act<br />
1992 (<strong>NSW</strong>), or where otherwise required by law.<br />
If you would like further information on making a submission, <strong>IPART</strong>’s<br />
submission policy is available on our website.<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong><br />
iii
Error! No text of specified style in<br />
document.<br />
Contents<br />
Invitation for submissions<br />
iii<br />
1 Introduction 1<br />
1.1 What has <strong>IPART</strong> been asked to do? 1<br />
1.2 How <strong>IPART</strong> will approach the task 3<br />
1.3 Other related reviews 4<br />
1.4 How and when you can provide input to this review? 7<br />
1.5 What does the rest of this paper cover? 9<br />
1.6 List of issues on which we seek comment 9<br />
2 Local government compliance and enforcement functions 13<br />
2.1 The number and diversity of councils in <strong>NSW</strong> 13<br />
2.2 What are local government compliance and enforcement functions? 14<br />
2.3 The relationship between State and local government 20<br />
2.4 The regulatory capacity and capability of local government 24<br />
2.5 The relationships between councils 27<br />
3 Identifying reform opportunities 31<br />
3.1 The impacts of local government regulatory activities 31<br />
3.2 Sources of unnecessary regulatory burden 32<br />
3.3 Best practice regulatory enforcement 34<br />
3.4 Possible reforms to regulatory practices – leading practices 35<br />
4 Estimating the impacts of recommended reforms 49<br />
4.1 Ensuring our recommendations produce net benefits to <strong>NSW</strong> 49<br />
4.2 Estimating reduced regulatory costs from our recommended reforms 50<br />
4.3 Estimating the budget implications for government 58<br />
Appendices<br />
A Terms of Reference 59<br />
v<br />
<strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
1 Introduction<br />
1 Introduction<br />
<strong>Regulation</strong> is one of the key tools government uses to achieve its economic, social<br />
and environmental objectives. However, it must be well designed, targeted and<br />
efficiently administered, so that it achieves its objectives at least cost to society. If<br />
regulation is inefficiently or ineffectively designed or administered, it imposes<br />
unnecessary costs on business and the community.<br />
In recognition of the benefits of reduced regulatory burden, the <strong>NSW</strong><br />
<strong>Government</strong> has a target of $750 million in reduced ‘red tape’ costs for business<br />
and the community by June 2015. 1<br />
To help achieve this target, the <strong>NSW</strong> <strong>Government</strong> has engaged <strong>IPART</strong> to<br />
undertake a series of red tape reviews. In undertaking these reviews, <strong>IPART</strong> is to<br />
examine key areas of regulation, or sectors subject to regulation, and make<br />
recommendations for reforms that could provide savings to business and the<br />
community.<br />
This review is focused on local government compliance and enforcement<br />
activity in <strong>NSW</strong>.<br />
1.1 What has <strong>IPART</strong> been asked to do?<br />
The full Terms of Reference (ToR) for this review is provided at Appendix A.<br />
Under this ToR, <strong>IPART</strong> is to examine local government compliance and<br />
enforcement activity (including regulatory powers conferred or delegated under<br />
<strong>NSW</strong> legislation) and provide recommendations that will reduce regulatory<br />
burdens for business and the community.<br />
We are to consider:<br />
<br />
<br />
ways to improve governance of local government compliance and<br />
enforcement activities – including local government roles relative to, and<br />
interactions or coordination with, the <strong>NSW</strong> <strong>Government</strong><br />
ways to improve the capacity and capability of local government to undertake<br />
their regulatory responsibilities<br />
1 Premier’s Memorandum, M2012-02 Red tape reduction - new requirements, February 2012.<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 1
1 Introduction<br />
<br />
<br />
<br />
<br />
<br />
<br />
ways of improving the quality of regulatory administration by local<br />
government – including consistency of approach, economies of scale and<br />
mutual recognition across local government areas<br />
the ‘culture’ of regulatory services – including the extent to which local<br />
government considers and understands best practice regulatory principles<br />
and approaches (including consideration of the economic impacts of their<br />
regulatory actions)<br />
issues relevant to priority regulatory areas such as building and construction,<br />
parking and road transport, public health and safety, environmental<br />
regulation, planning and companion animal management<br />
best practice approaches to local government compliance and enforcement<br />
activity in <strong>NSW</strong> and other jurisdictions<br />
the merits of <strong>NSW</strong> adopting leading practices identified by the Productivity<br />
Commission (the PC) in its 2012 report Performance Benchmarking of Australian<br />
Business <strong>Regulation</strong>: The Role of Local <strong>Government</strong> as Regulator<br />
ways to ensure regular assessment of regulatory performance<br />
changes to local government regulatory services to maximise the<br />
opportunities arising from the current review of the <strong>NSW</strong> planning system.<br />
We are also required to:<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
identify the nature and extent of key regulatory functions undertaken by local<br />
government<br />
identify differences in approach across local government areas<br />
identify areas of local government compliance and enforcement with the<br />
greatest regulatory impact on business and the community<br />
ensure that our work complements the review of the Local <strong>Government</strong> Act<br />
1993<br />
provide recommendations that would produce net benefits for <strong>NSW</strong><br />
provide estimates of the reduction in regulatory burden for <strong>NSW</strong> business<br />
(especially small business) and the community from our recommended<br />
reforms<br />
provide estimates of the budget implications for the <strong>NSW</strong> <strong>Government</strong> from<br />
our recommended reforms.<br />
2 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
1 Introduction<br />
1.2 How <strong>IPART</strong> will approach the task<br />
<strong>Regulation</strong> can impose unnecessary costs on business, the community and/or<br />
regulators if it is not efficiently implemented and enforced. In <strong>NSW</strong>, a significant<br />
amount of regulation is implemented and enforced by councils. Therefore, there<br />
is merit in finding ways to reduce unnecessary costs on business and the<br />
community that arise from how councils go about this task.<br />
The focus of this review is on how local government in <strong>NSW</strong> implements and<br />
enforces regulations. We will, however, consider the design or provisions of<br />
regulations to the extent that they impede efficient and effective implementation<br />
and enforcement practices.<br />
In undertaking this review, we will seek to:<br />
<br />
<br />
identify those local government compliance and enforcement practices that<br />
are imposing unnecessary regulatory burdens on business and the<br />
community, and make recommendations to improve these practices to reduce<br />
or eliminate burdens<br />
identify best practice principles and practices in relation to implementation<br />
and enforcement of regulation, and make recommendations to enable local<br />
councils to apply these principles and practices<br />
identify impediments to efficient and effective local government<br />
implementation and enforcement of regulation, and make recommendations<br />
to remove these impediments.<br />
We will also consider:<br />
<br />
<br />
<br />
<br />
<br />
<br />
the role of local government relative to the State <strong>Government</strong> in implementing<br />
and enforcing key areas of regulation – including the extent to which there is<br />
effective coordination, cooperation and clear lines of accountability between<br />
both levels of government<br />
the extent to which councils have discretion in implementing and enforcing<br />
State <strong>Government</strong> regulation<br />
differences in implementation and enforcement practices between councils in<br />
<strong>NSW</strong> (ie, different approaches, discretionary requirements, cultures) and the<br />
extent to which these differences impose unnecessary costs or are justified<br />
the extent of cooperation and coordination between councils, and whether this<br />
lessens or removes unnecessary costs of regulation for councils, business and<br />
the community<br />
how the regulatory performance of councils and the achievement of<br />
regulatory outcomes is currently assessed and how this can be improved<br />
the impacts on business, the community, councils and State <strong>Government</strong> of<br />
potential reform options and, most importantly, the overall benefits and costs<br />
to the community as a whole of potential reform options.<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 3
1 Introduction<br />
In undertaking the review, we will be seeking to find specific, practical solutions<br />
to address identified problems. In doing so, we will be heavily reliant on input<br />
from individuals, businesses, councils and the community in general.<br />
1.3 Other related reviews<br />
There are a number of other related reviews currently taking place or expected to<br />
commence in the near future. These include reviews of:<br />
<br />
<br />
<br />
<br />
<br />
<br />
the Independent Local <strong>Government</strong> <strong>Review</strong> Panel<br />
the Local <strong>Government</strong> Acts Taskforce<br />
the <strong>NSW</strong> Planning System <strong>Review</strong><br />
infrastructure contributions<br />
building regulation<br />
the Companion Animals Taskforce.<br />
These reviews are briefly discussed below. The focus of our review is on how<br />
local government in <strong>NSW</strong> administers and enforces regulations, rather than on<br />
the regulations themselves (ie, the policy rationale for the regulation). In general,<br />
this is a key point of distinction between our review and the legislative based<br />
reviews of the planning system and Local <strong>Government</strong> Acts. We also highlight<br />
other points of difference below.<br />
We will conduct our review in close consultation with these other reviews to<br />
ensure our efforts are coordinated and not duplicative.<br />
The Independent Local <strong>Government</strong> <strong>Review</strong> Panel<br />
The Independent Local <strong>Government</strong> <strong>Review</strong> Panel (the Panel) has been<br />
appointed to drive a number of key strategic directions identified in the<br />
Destination 2036 – Action Plan. 2 Destination 2036 is a joint initiative of <strong>NSW</strong><br />
<strong>Government</strong> and councils to develop a blueprint for changes that need to occur<br />
in local government to deliver better outcomes for communities.<br />
2 Destination 2036 – Action Plan, June 2012 – available from<br />
http://www.dlg.nsw.gov.au/dlg/dlghome/documents/information/Destination%202036%20<br />
-%20Action%20Plan.pdf.<br />
4 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
1 Introduction<br />
The Panel will investigate and identify options for governance models, structural<br />
arrangements and boundary changes for local government in <strong>NSW</strong>. 3 It is due to<br />
report in July 2013. As part of its review, the Panel will examine best practice in<br />
local government in <strong>NSW</strong> and other jurisdictions, and other aspects that intersect<br />
with this review. The recommendations of the Panel may also address some of<br />
the current capacity and capability issues identified as part of this review in<br />
relation to how local government undertakes its regulatory responsibilities.<br />
The Local <strong>Government</strong> Acts Taskforce<br />
The Local <strong>Government</strong> Act 1993 (the LG Act) and the City of Sydney Act 1988<br />
establish the statutory basis for local government in <strong>NSW</strong>, including how it is<br />
constituted, administered, financially managed, financed, operated and made<br />
accountable. These Acts also set out core local government service and<br />
regulatory functions, and general enforcement powers. However, these Acts do<br />
not capture the full scope of regulatory functions and enforcement powers<br />
conferred or delegated on local government, as these are conferred or delegated<br />
under numerous other pieces of State legislation (as discussed in section 2.2 of<br />
this paper).<br />
The <strong>NSW</strong> <strong>Government</strong> has recently announced a review of the provisions of the<br />
LG Act and the City of Sydney Act and their practical operation. This review<br />
will be conducted by the Local <strong>Government</strong> Acts Taskforce. The Taskforce will:<br />
<br />
<br />
adopt the decisions of the <strong>Government</strong> in relation to the recommendations of<br />
the Independent Local <strong>Government</strong> <strong>Review</strong> Panel, and<br />
make recommendations for legislative changes necessary for a new LG Act.<br />
It is due to report by September 2013. 4<br />
Our review is distinct from the reviews of the Independent Local <strong>Government</strong><br />
<strong>Review</strong> Panel and Local <strong>Government</strong> Acts Taskforce because our focus is on the<br />
compliance and enforcement functions of local government.<br />
3 The Terms of Reference for the Panel’s review can be found at<br />
http://www.localgovernmentreview.nsw.gov.au/<br />
4 The Terms of Reference for the Taskforce’s review can be found at<br />
http://www.dlg.nsw.gov.au/dlg/dlghome/documents/Circulars/12-32.pdf<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 5
1 Introduction<br />
<strong>NSW</strong> Planning System <strong>Review</strong><br />
The <strong>NSW</strong> planning system review is a comprehensive review of the State’s<br />
planning system, with the aim of creating a new planning system to meet today’s<br />
needs and priorities. The <strong>NSW</strong> <strong>Government</strong> has recently released a Green Paper<br />
for comment, outlining its proposed reforms in this area. 5 This paper followed a<br />
review of the Environmental Planning and Assessment Act 1979 by Tim Moore and<br />
Ron Dyer. 6 A White Paper or draft legislation will be released later this year.<br />
The Green Paper contains many proposed reforms that would alter the role of<br />
local government in the planning system in relation to:<br />
<br />
<br />
<br />
how it interacts with State <strong>Government</strong>, participates in plan making and<br />
undertakes planning decisions<br />
what developments it is the consent authority for<br />
how it undertakes regulatory functions, such as imposing development<br />
consent conditions.<br />
As directed by our ToR, our recommended reforms will seek to enable local<br />
government to maximise the opportunities from the planning system review.<br />
The Green Paper also indicated that further work was being undertaken in<br />
2 related areas. These are discussed further below.<br />
<strong>Review</strong> of development contributions<br />
As part of the planning review, the <strong>NSW</strong> <strong>Government</strong> is considering a number of<br />
options for reform to make development contributions fairer, simpler, more<br />
transparent and more efficient. This is to address current problems with the<br />
development contributions framework, which are impacting housing supply and<br />
affordability. 7<br />
The <strong>NSW</strong> <strong>Government</strong> is also proposing to establish a taskforce with local<br />
government to review the administration of development contributions. 8 The<br />
White paper will detail the <strong>Government</strong>’s proposed reforms in this area. As a<br />
result of the work in this area, our review will not consider current local<br />
government capacity issues related to the cap on section 94 contributions.<br />
5 <strong>NSW</strong> <strong>Government</strong>, A New Planning System for <strong>NSW</strong> - Green Paper, July 2012, available from<br />
www.planningreview.nsw.gov.au<br />
6 <strong>NSW</strong> <strong>Government</strong>, The Way Ahead for Planning in <strong>NSW</strong> – Recommendations of the <strong>NSW</strong> Planning<br />
System <strong>Review</strong>, Vol 1 & 2, May 2012, available from www.planningreview.nsw.gov.au<br />
7 Ibid, pp 74-77.<br />
8 Ibid, p 78.<br />
6 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
1 Introduction<br />
<strong>Review</strong> of building regulation<br />
<strong>NSW</strong> stakeholders identified a number of issues in the building industry in their<br />
submissions to the planning system review, including:<br />
<br />
<br />
<br />
accountability of builders and other building practitioners<br />
quality of building outcomes<br />
cost and effectiveness of consumer protection measures<br />
consistency of regulation. 9<br />
The <strong>NSW</strong> <strong>Government</strong> announced its intention to undertake a review to identify<br />
improvements to building regulation, policy, systems and responsibilities in<br />
response to these stakeholder concerns. This review is to be independently<br />
overseen, with the Building Professionals Board providing input. 10<br />
Our focus in this area will be on local government compliance and enforcement<br />
of building and construction regulation.<br />
The Companion Animals Taskforce<br />
A Companion Animals Taskforce has been established to provide advice on key<br />
companion animal issues and, in particular, strategies to reduce the current rate<br />
of companion animal euthanasia. The Taskforce is also proposing measures to<br />
refine the current regulatory framework around the breeding, sale and<br />
management of cats and dogs to improve welfare outcomes. The Taskforce is<br />
due to report later this year. 11 Our focus in this area will be on reducing<br />
unnecessary regulatory burdens on business or the community in relation to<br />
local government compliance and enforcement functions.<br />
1.4 How and when you can provide input to this review?<br />
We are heavily reliant on the input of stakeholders to this review. We therefore<br />
invite all interested parties, including businesses, business groups, community<br />
groups, individuals, councils and <strong>NSW</strong> <strong>Government</strong> departments or agencies to<br />
make written submissions in response to this issues paper by 29 October, 2012.<br />
9 Ibid, p 64.<br />
10 Ibid.<br />
11 Information on the Taskforce can be found at<br />
http://www.dlg.nsw.gov.au/dlg/dlghome/dlg_generalindex.asp?sectionid=1&areaindex=CA<br />
TASK&documenttype=8&mi=9&ml=10<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 7
1 Introduction<br />
In general terms, we seek information on:<br />
<br />
<br />
<br />
the specific local government compliance and enforcement activities that are<br />
imposing unnecessary costs on business and the community<br />
any impediments to local government applying efficient and effective<br />
compliance and enforcement practices<br />
ideas for reforms to reduce unnecessary costs on business and the community<br />
from local government compliance and enforcement activity.<br />
Specific questions on which we seek responses are listed at the end of this<br />
chapter, and repeated at relevant sections throughout this paper. Submissions<br />
may also comment on any other issues stakeholders consider relevant to the<br />
review. Information on how to make a submission can be found on page iii, at<br />
the front of this paper.<br />
In addition to submissions to this paper, we will meet and consult with key<br />
stakeholders. We will also hold a public roundtable discussion later this year, to<br />
provide a further opportunity for stakeholders to present their views.<br />
After we have considered all the information and views expressed in<br />
submissions and at the roundtable, we will release a draft report. Then we will<br />
invite stakeholders to make further submissions on that report. After we have<br />
considered those submissions, we will submit our final report to the <strong>NSW</strong><br />
<strong>Government</strong>.<br />
As part of our review, we are developing a comprehensive register of local<br />
government regulatory functions to help inform our work. Subject to further<br />
consideration and an assessment of its costs and benefits, this register could also<br />
be used as an ongoing resource for State and local government. The register is<br />
discussed further in Chapter 2. It is expected to be available on our website by<br />
early October.<br />
Table 1.1 sets out our indicative timetable for this review.<br />
Table 1.1<br />
Indicative review timetable<br />
Task<br />
Timeframe<br />
Release Issues Paper 17 September 2012<br />
Release register of local government regulatory functions Early October 2012<br />
Stakeholder submissions due 29 October 2012<br />
Hold public roundtable discussion 4 December 2012<br />
Release Draft Report Late March 2013<br />
Receive submissions in response to Draft Report Mid May 2013<br />
Deliver Final Report to <strong>Government</strong> Late June 2013<br />
Note: These dates are indicative and may be subject to change.<br />
8 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
1 Introduction<br />
1.5 What does the rest of this paper cover?<br />
The rest of this paper provides some context and background for the review to<br />
help you address the questions we are asking. The paper is structured as follows:<br />
<br />
<br />
<br />
Chapter 2 discusses local government compliance and enforcement functions,<br />
as well as the number and diversity of councils in <strong>NSW</strong>, the relationship<br />
between State and local government in relation to the administration of<br />
regulation, the compliance and enforcement capacity and capability of local<br />
government and relationships between councils.<br />
Chapter 3 considers sources of unnecessary regulatory burden, best practice<br />
regulatory administration and enforcement principles and potential reforms to<br />
reduce red tape for business and the community.<br />
Chapter 4 explains how we intend to estimate the impact of our recommended<br />
reforms, including impacts on business, the community and government.<br />
1.6 List of issues on which we seek comment<br />
To assist us in identifying and understanding the key issues for this review, this<br />
paper seeks comment on a wide range of issues. In providing responses, please<br />
provide specific examples, case studies or other supporting information, where<br />
available. We provide background to these questions in relevant sections of this<br />
paper (on the page numbers listed below):<br />
Exemptions provided by local government<br />
1 Local Approvals Policies (LAPs) can be used to provide exemptions from<br />
requiring approvals under the Local <strong>Government</strong> Act 1993. Should LAPs be<br />
used to provide more exemptions to reduce red tape? 20<br />
Register of local government regulatory functions<br />
2 We are developing a register of local government regulatory functions<br />
(available from <strong>IPART</strong>’s website by early October). How useful is this<br />
register? Would there be any benefit in maintaining the register as an<br />
ongoing resource? 20<br />
Local government and State <strong>Government</strong> interactions<br />
3 Are there areas where compliance or enforcement roles of local government<br />
and State <strong>Government</strong> agencies overlap or are unclear? What are the<br />
impacts of this on business, the community, councils or the State<br />
<strong>Government</strong>? 24<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 9
1 Introduction<br />
4 Can you provide examples of poor consultation or coordination between local<br />
government and State <strong>Government</strong> agencies in relation to compliance and<br />
enforcement activities? What impact does this have on business, the<br />
community, councils or the State <strong>Government</strong>? 24<br />
5 Can you provide examples of good consultation or coordination between local<br />
government and State <strong>Government</strong> agencies in relation to compliance and<br />
enforcement activities? 24<br />
6 Can you suggest ways that local government and State <strong>Government</strong><br />
agencies can work together to reduce red tape? 24<br />
7 Does the Division of Local <strong>Government</strong>’s ‘Promoting Better Practice Program’<br />
assist local government in undertaking its regulatory activities more<br />
efficiently? 24<br />
8 Are there other ways to enhance assistance to councils? 24<br />
Local government capacity and capability<br />
9 Do councils have the resources and skills to undertake regulatory activities<br />
effectively? 27<br />
10 Can you provide examples of how a lack of council resources or skills<br />
impacts on business or the community? 27<br />
11 How can councils improve their resources and skills? 27<br />
12 If you are operating a business across more than 1 council area, how do<br />
differences in council approaches impact on your business? 30<br />
13 How, and in what areas, could coordination between councils be improved to<br />
reduce unnecessary regulatory burdens on business and the community? 30<br />
14 In what areas could mutual recognition (eg, recognition of registration in<br />
multiple local government areas) be used to reduce regulatory burdens on<br />
business or the community? 30<br />
15 What other approaches could be used to improve the way councils apply<br />
regulations? 30<br />
Identifying unnecessary regulatory costs or burdens<br />
16 What specific local government compliance or enforcement activities are<br />
imposing unnecessary costs on business or the community? 33<br />
10 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
1 Introduction<br />
17 What are these costs (eg, form filling, reporting, compliance, delay, fees and<br />
charges)? 33<br />
Best practice regulatory enforcement<br />
18 Are the principles of best practice regulatory enforcement (as set out in this<br />
paper) a sound basis for assessing good compliance and enforcement<br />
practices and testing reform options? 35<br />
19 How do State <strong>Government</strong> and councils review or assess councils’ regulatory<br />
performance? How could this be improved? 35<br />
20 To what extent do councils follow best practice enforcement principles? 35<br />
21 What are examples of best practice enforcement approaches being used by<br />
<strong>NSW</strong> councils? Could these be applied more widely? 48<br />
22 What compliance and enforcement approaches used in other jurisdictions<br />
should be applied in <strong>NSW</strong>? 48<br />
Identifying reform opportunities<br />
23 Should any of the leading practices identified by the Productivity Commission<br />
in its 2012 Performance Benchmarking of Australian Business <strong>Regulation</strong>:<br />
The Role of Local <strong>Government</strong> as Regulator be implemented in <strong>NSW</strong>? 48<br />
24 What specific reforms to local government compliance and enforcement<br />
activities would reduce unnecessary regulatory burdens to business and the<br />
community? 48<br />
25 What impediments prevent councils from undertaking their compliance and<br />
enforcement activities more efficiently? How can these impediments be<br />
removed? 48<br />
Estimating impacts of recommended reforms<br />
26 Do you have information that will assist us in estimating costs of specific<br />
regulatory burdens arising from local government compliance and<br />
enforcement activities? 58<br />
27 Do you have information that will assist us in estimating cost savings from<br />
potential reforms to local government compliance and enforcement activities? 58<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 11
1 Introduction<br />
Other issues<br />
28 Do you wish to comment on any other issues relevant to this review? 58<br />
12 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
2 Local government compliance and enforcement<br />
functions<br />
2 Local government compliance and enforcement<br />
functions<br />
To review local government compliance and enforcement activity, we need to<br />
understand what this comprises. Consequently, this chapter discusses the<br />
compliance and enforcement functions of local government. It also considers:<br />
<br />
<br />
<br />
<br />
the number and diversity of councils in <strong>NSW</strong><br />
the relationship between State and local government in relation to the<br />
administration of regulation<br />
the compliance and enforcement capacity and capability of local government<br />
relationships between councils, including the extent of coordination,<br />
cooperation and consistency in relation to regulatory activities and<br />
requirements.<br />
These factors can impact on local governments’ performance as a regulator, and<br />
the regulatory burden faced by business and the community.<br />
2.1 The number and diversity of councils in <strong>NSW</strong><br />
There are currently 152 general purpose and 14 special purpose councils in <strong>NSW</strong>.<br />
A challenge for our review is that these councils differ significantly in the size<br />
and characteristics of the area they serve. As discussed later in this chapter, this<br />
can have implications for councils’ capacity to undertake their regulatory<br />
responsibilities. It can also impact on the nature and extent of their regulatory<br />
activities.<br />
Councils like Blacktown, Parramatta or Newcastle serve areas that are considered<br />
to be major cities in their own right. In contrast, some rural councils, like<br />
Balranald or Bourke Shire, serve areas that are largely agricultural. The socioeconomics<br />
of councils in <strong>NSW</strong> also varies greatly. Mosman has the highest<br />
median income ($106,000) and Guyra the lowest ($31,000). 12 Blacktown has<br />
nearly 300,000 residents, whereas Urana has just under 1,300 residents. Hunters<br />
Hill occupies the smallest area at 5.7km 2 , compared with the Central Darling<br />
12 The PC reports this to be the largest range in Australia. (Productivity Commission, Performance<br />
Benchmarking of Australian Business <strong>Regulation</strong>: The Role of Local <strong>Government</strong> as Regulator, July<br />
2012, Vol 2, p 536.)<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 13
2 Local government compliance and enforcement<br />
functions<br />
which occupies over 50,000km 2 . 13 Population density also varies greatly, with<br />
the Central Darling having just 0.04 people per km 2 and Waverley having nearly<br />
7,500 people per km 2 . 14<br />
Table 2.1 indicates the extent to which councils vary in relation to population,<br />
land area, population density and average income of residents.<br />
Table 2.1 Demographics across <strong>NSW</strong> councils (2010/11)<br />
Population<br />
(‘000)<br />
Land area<br />
(km 2 )<br />
Population<br />
density<br />
(no/km 2 )<br />
Average income<br />
of residents<br />
($’000)<br />
Lowest 1,269 5.7 0.04 30.91<br />
Highest 299,797 53,508.6 7,425.65 105.95<br />
Source: <strong>NSW</strong> Division of Local <strong>Government</strong>, Department of Premier and Cabinet, Snapshot of <strong>NSW</strong> Local<br />
<strong>Government</strong> – Comparative Information on <strong>NSW</strong> Local <strong>Government</strong> Councils 2009/10, September 2011, Table<br />
A2, pp 14-16.<br />
2.2 What are local government compliance and enforcement<br />
functions?<br />
Local government has a wide range of responsibilities and functions. These<br />
include non-regulatory roles such as delivering services (eg, waste services,<br />
childcare facilities), providing infrastructure (eg, roads, parks, sporting facilities,<br />
libraries), undertaking procurement (eg, of services and infrastructure) and<br />
engaging in advocacy (eg, promoting proposals of local interest). Local<br />
government also administers and enforces a wide range of regulatory<br />
requirements, which affect business and the community. These compliance and<br />
enforcement functions, or ‘regulatory functions’, are the focus of our review.<br />
13 <strong>NSW</strong> Division of Local <strong>Government</strong>, Department of Premier and Cabinet, Snapshot of <strong>NSW</strong> Local<br />
<strong>Government</strong> – Comparative Information on <strong>NSW</strong> Local <strong>Government</strong> Councils 2009/10, September<br />
2011, Table A2, pp 14-16.<br />
14 Ibid.<br />
14 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
2 Local government compliance and enforcement<br />
functions<br />
We consider a local government regulatory function to be any function under an<br />
Act, regulation or other statutory instrument which empowers local government<br />
to create, impose, enforce or administer rules that control the actions of others. 15<br />
Local government regulatory functions include:<br />
<br />
<br />
<br />
<br />
<br />
<br />
rule-making functions – making regulatory instruments, such as plans or<br />
policies that guide regulatory decision-making<br />
approval functions – issuing of permits, approvals or registrations to enable<br />
an activity to lawfully take place, often subject to conditions<br />
notification functions – receiving notification of activities<br />
compliance functions – undertaking inspections, searches or investigations,<br />
requiring monitoring or reporting<br />
enforcement functions – comprising:<br />
– issuing of orders, directions or notices to control activities<br />
– impounding, seizures or evictions<br />
– penalty notices and other enforcement action for breaches (eg, court<br />
proceedings,)<br />
referral functions – providing recommendations or advice to State agencies for<br />
regulatory action.<br />
Table 2.2 below lists examples of each of these functions by ‘priority’ regulatory<br />
area.<br />
Our review will consider local government regulatory functions – ie, local<br />
government as a regulator. It will not consider regulatory requirements imposed<br />
on local government (eg, a requirement for local government to be audited by a<br />
State <strong>Government</strong> agency or comply with a particular standard).<br />
2.2.1 The range of local government regulatory functions<br />
Local government undertakes a wide range of regulatory activities that affect<br />
business and the community. This includes activities in relation to regulatory<br />
functions established under the Local <strong>Government</strong> Act 1993 (the LG Act), other<br />
State legislation and even quasi-regulations, such as policies and guidelines.<br />
15 The Better <strong>Regulation</strong> Office (BRO) defines regulation as “any compulsion, obligation, demand<br />
or prohibition placed on a business (including sole traders), not for profit organisation or<br />
individual, or their activities, by an Act, <strong>Regulation</strong> or other statutory rule. This includes<br />
ministerial orders, guidelines and planning instruments” (Better <strong>Regulation</strong> Office, Guidelines<br />
for estimating savings under the red tape reduction target, February 2012, p 4). The Productivity<br />
Commission defines a regulatory role as “creating, imposing, enforcing or administering rules<br />
that prescribe the actions of others” (Productivity Commission, Performance Benchmarking of<br />
Australian Business <strong>Regulation</strong>: The Role of Local <strong>Government</strong> as Regulator, July 2012, Vol 1, p 80).<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 15
2 Local government compliance and enforcement<br />
functions<br />
Regulatory functions under the Local <strong>Government</strong> Act 1993<br />
The LG Act establishes councils, provides their governance framework and sets<br />
out their core service, regulatory and other functions.<br />
There are 2 main kinds of local government regulatory functions exercised by<br />
councils within their area under the LG Act:<br />
1. Various activities can only be carried out if the council gives its approval – eg,<br />
the operation of a caravan park or a public car park; use of community land<br />
for business or entertainment; management of waste; water supply, sewerage<br />
and stormwater drainage work. 16 Some of these approvals may also be<br />
granted as part of the development consent process under planning<br />
legislation.<br />
2. A council can order a person to do, or to stop doing, something – eg, order a<br />
person to keep fewer animals on their premises; or orders in relation to<br />
standards for hairdressers, beauty salons and mortuaries. Failure to obtain or<br />
to comply with an approval and failure to comply with an order are offences<br />
under the LG Act. 17<br />
Regulatory functions under other State legislation<br />
In addition to the LG Act, numerous other regulatory functions are conferred on<br />
local government under other State legislation and associated regulations.<br />
The Productivity Commission (the PC) identified approximately 50 laws in <strong>NSW</strong><br />
which impose a regulatory responsibility on local government. 18 Our<br />
preliminary investigations, however, indicate this number may be greater.<br />
Key areas where the State government has delegated regulatory roles and<br />
responsibilities to local government are in the priority regulatory areas for this<br />
review:<br />
<br />
<br />
<br />
Planning – eg, development controls, development consents, certification of<br />
complying developments, and change of use approvals.<br />
Building and construction – eg, certification and compliance with building<br />
standards, and fire safety requirements.<br />
Environmental protection – eg, native vegetation, noxious weeds, waste<br />
management, noise control, coastal protection, underground petroleum<br />
storage systems, stormwater drainage, sewage and grey water systems,<br />
contaminated land, and solid fuel heaters.<br />
16 Local <strong>Government</strong> Act 1993, section 68.<br />
17 Local <strong>Government</strong> Act 1993, Chapter 7 Introduction, sections 124 and 626-628.<br />
18 Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012, Vol 2, Table F.1, p 573.<br />
16 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
2 Local government compliance and enforcement<br />
functions<br />
<br />
<br />
<br />
Public health and safety – eg, food safety, mobile food vendors, skin<br />
penetration businesses, cooling towers, warm water systems, and swimming<br />
pools.<br />
Parking and transport – eg, road openings and closures, structures in or over<br />
roadways or footways, traffic management plans and controls, public car<br />
parks, and road rules.<br />
Companion animal management – eg, registration of dogs and cats,<br />
dangerous dogs, and surrendered animals.<br />
Examples of regulatory functions in these areas are detailed in Table 2.2 below.<br />
Other areas in which local government has a regulatory role or responsibilities<br />
include:<br />
<br />
<br />
<br />
Liquor & restaurants – eg, controls on licensed premises, and restaurants on<br />
footpaths.<br />
Public areas & issues – eg, graffiti, hoardings, signs, waste bins, protection of<br />
public places, busking, street theatre, parks and playgrounds, public events,<br />
trees, and filming.<br />
Other activities – eg, hairdressers, beauty salons, mortuaries, backpacker<br />
accommodation, camping grounds, and caravan parks.<br />
Table 2.2<br />
Function<br />
Rule-making<br />
Approval<br />
Examples of local government regulatory functions<br />
Councils’ functions in priority regulatory areas<br />
Planning – prepare development control plans (DCPs) and local<br />
environmental plans (LEPs)<br />
Environment – make decisions on regulating the use of reserves and<br />
crown land<br />
Health & safety - may change the priority classification of an individual<br />
food business if the classification is inappropriate for any reason, including<br />
as a result of changes made to the conduct of the food business<br />
Parking - powers to build and install traffic control devices (eg, signs) and<br />
set parking fees<br />
Companion animals - can set rules on number and type of pets residents<br />
can keep as domestic animals, to encourage socially responsible pet<br />
ownership<br />
Planning – provide consent to development applications; impose consent<br />
conditions, including on licensed premises; approve changes of use<br />
Building – issue compliance, construction, occupation or subdivision<br />
certificates in relation to approved developments<br />
Environment – can issue approvals to install a solid fuel heater; approve<br />
wastewater systems<br />
Health & safety – require registration of retail food businesses and skin<br />
penetration premises<br />
Parking – issue parking permits or grant approval for use of footpaths by<br />
businesses (eg, restaurants or storage of items for sale)<br />
Companion animals - compulsory microchipping and registration of cats<br />
and dogs<br />
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2 Local government compliance and enforcement<br />
functions<br />
Notification<br />
Compliance<br />
Enforcement<br />
Referral<br />
Planning – receive notification from exempt developments (eg, notification<br />
of date of erection of temporary builders’ sheds, portaloos, marquees, etc)a<br />
Environment – receive notifications of emergency coastal protection works<br />
from land owners; receive notification of contaminated land<br />
Health & safety – receive notification where cooling towers or warm water<br />
systems are installed on premises<br />
Planning – inspection and investigation powers to enforce compliance with<br />
development consent conditions<br />
Building – enforce technical standards in buildings through mandatory local<br />
council certifiers. Such certifiers are enabled to inspect properties<br />
throughout the building process, to ensure the development is consistent<br />
with its approval conditions<br />
Environment – investigate activities relating to illegal waste dumping and<br />
noise complaints; regulation of underground petroleum storage systems<br />
Health & safety – powers of entry and inspection of public swimming<br />
pools, residential swimming pool fencing, skin penetration premises and<br />
food businesses<br />
Parking - undertake road safety activities<br />
Companion animals - investigate and enforce noise/nuisance issues or<br />
dangerous dogs and dog attacks; impound or seize animals<br />
Planning - order to demolish or repair a building, remove advertising<br />
structures, comply with development consent conditions, ensure fire safety<br />
Building – use inspection and certification processes to ensure the<br />
technical engineering standards of the Building Code of Australia are met<br />
(which sets parameters on sustainability, safety, health and amenity)<br />
Environment – may issue noise abatement directions and penalty notices<br />
for noise pollution, waste dumping and other environmental breaches<br />
Health & safety – may issue improvement notices to premises, equipment<br />
or a food transport vehicle to be put into a clean and sanitary condition<br />
Parking – powers to issue penalty notices or parking fines<br />
Companion animals - notify owners who fail to mandatorily register or<br />
microchip their cats and dogs; power to issue penalty notices<br />
Building - prepare fire safety inspection reports of third party premises, to<br />
provide to the Commissioner of <strong>NSW</strong> Fire and Rescue.<br />
a Ashfield Local Environmental Plan 1985.<br />
Local regulatory instruments<br />
Unlike other jurisdictions in Australia, councils in <strong>NSW</strong> cannot make their own<br />
laws (ie, by-laws or ordinances). However, they are empowered to issue consent<br />
instruments attaching conditions of approval and make statutory instruments<br />
under various legislation with legal effect, such as:<br />
<br />
<br />
local approvals policies and local orders policies under the LG Act<br />
development control plans and local environmental plans under planning<br />
legislation.<br />
18 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
2 Local government compliance and enforcement<br />
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While the content of these instruments is limited to what is set out in the primary<br />
legislation, they can impose regulatory requirements or burdens on businesses<br />
and the community. Indeed, these burdens are potentially significant as these<br />
instruments can prescribe actions to a greater level of detail than the primary<br />
legislation.<br />
Local orders policies (LOPs) and local approvals policies (LAPs) are peculiar to<br />
<strong>NSW</strong> and worth further examination. 19 LOPs set out criteria for assessing<br />
whether a council will issue orders to individuals or businesses that are creating<br />
hazards, pollution or failing to comply with standards under the LG Act. Our<br />
preliminary research indicates that not many councils appear to utilise these<br />
policies.<br />
LAPs provide exemptions from the need for approval normally required under<br />
section 68 of the LG Act and outline criteria for those activities where approval is<br />
required. 20 These exemptions can relate to activities such as caravan use, erecting<br />
awnings, bin use, public footpath use, busking, street theatre, loudspeaker use,<br />
transportable food vans and community organising days. Notably, this<br />
potentially provides a means of reducing regulatory burdens on small business<br />
and the community by providing such exemptions. LAPs appear to<br />
automatically lapse 12 months after the poll for a general election is declared,<br />
unless adopted by the newly elected council. 21 Our preliminary research also<br />
indicates there are few LAPs currently in operation and that LAPs are not being<br />
used extensively to provide exemptions.<br />
Quasi-regulation<br />
Local government can also develop guidelines, policies or codes that are not<br />
generally legally binding. Usually these instruments are developed to assist<br />
councils to implement, and the community to understand, requirements under<br />
law (eg, guidelines for applying for a particular permit). Depending on how it is<br />
designed, this ‘quasi-regulation’ can potentially reduce or increase the regulatory<br />
burden faced by business and the community.<br />
A register of local government regulatory functions<br />
In recognition of the significant role that local government plays as a regulator,<br />
the PC has identified as a leading practice the establishment of a comprehensive<br />
list of local government regulatory functions. 22<br />
19 Local <strong>Government</strong> Act 1993, sections 158 & 159.<br />
20 Activities such as use of community land, managing waste, water supply works, sewerage or<br />
stormwater drainage works, public car parks, caravan parks, manufactured home estates, solid<br />
fuel heaters, etc.<br />
21 Local <strong>Government</strong> Act 1993, section 165(4).<br />
22 Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012, Vol 1, p 82.<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 19
2 Local government compliance and enforcement<br />
functions<br />
According to the PC, a complete, current and accessible list of local government<br />
regulatory functions would enhance understanding of local government<br />
regulatory responsibilities and compliance burdens placed on the community.<br />
This would assist state and local government in setting priorities and allocating<br />
resources. 23<br />
As part of our review, we have engaged consultants Stenning & Associates to<br />
prepare a comprehensive register of <strong>NSW</strong> local government regulatory functions.<br />
This register is expected to be available on <strong>IPART</strong>’s website by early October.<br />
We encourage stakeholders to consult this register when preparing their<br />
submissions to this paper.<br />
<strong>IPART</strong> seeks comment<br />
1 Local Approvals Policies (LAPs) can be used to provide exemptions from<br />
requiring approvals under the Local <strong>Government</strong> Act 1993. Should LAPs be<br />
used to provide more exemptions to reduce red tape?<br />
2 We are developing a register of local government regulatory functions (available<br />
from <strong>IPART</strong>’s website by early October). How useful is this register? Would<br />
there be any benefit in maintaining the register as an ongoing resource?<br />
2.3 The relationship between State and local government<br />
In <strong>NSW</strong>, the majority of local government’s regulatory functions are conferred<br />
under State <strong>Government</strong> legislation. Furthermore, there are numerous<br />
coordinating State agencies that local government has to deal with (see Box 2.1).<br />
Many of these agencies now fall within several super departments, but it appears<br />
they have their own status for regulatory purposes. Therefore, coordination<br />
between the 2 levels of government is important. This is recognised in the ToR<br />
for this review, which requires us to consider:<br />
…ways to improve governance of local government compliance and enforcement,<br />
including:<br />
• roles and responsibilities relative to <strong>NSW</strong> <strong>Government</strong><br />
• interaction, consultation, and co-ordination with <strong>NSW</strong> <strong>Government</strong>.<br />
The sections below consider ways in which coordination and interaction between<br />
State and local governments can be enhanced. This includes ensuring there is a<br />
clear understanding of regulatory responsibilities, and the provision of assistance<br />
from State <strong>Government</strong>, where possible.<br />
23 Ibid, pp 81-82.<br />
20 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
2 Local government compliance and enforcement<br />
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Box 2.1<br />
<strong>NSW</strong> <strong>Government</strong> coordinating agenciesa<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
Department of Planning and Infrastructure<br />
<strong>NSW</strong> Ministry of Health<br />
Roads and Maritime Services<br />
Division of Local <strong>Government</strong>, Department of Premier and Cabinet<br />
Department of Primary Industries<br />
<strong>NSW</strong> Food Authority<br />
Sydney Catchment Authority<br />
Forests <strong>NSW</strong><br />
Office of Liquor, Gaming and Racing<br />
Division of Resources and Energy<br />
Biosecurity <strong>NSW</strong><br />
Screen <strong>NSW</strong><br />
<strong>NSW</strong> Fair Trading<br />
Office of Environment & Heritage<br />
Environment Protection Authority<br />
Land and Property Information<br />
Department of Attorney General and Justice<br />
a This list is preliminary and based on the 50 laws that the PC identified as being related to local government.<br />
It is likely that more agencies (or different agencies) will be identified in the register (due early October) that we<br />
are commissioning as part of this review.<br />
Source: Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012, Volume 2, Appendix F as updated by <strong>IPART</strong>.<br />
2.3.1 Clear definition of regulatory responsibilities and priorities<br />
The Victorian Competition and Efficiency Commission (VCEC) and the PC have<br />
both recognised the importance of clear articulation and guidance by state<br />
governments of regulatory priorities and responsibilities. This can help ensure<br />
that local government devotes sufficient resources to regulatory areas. It can also<br />
help ensure that regulatory activities are sufficiently coordinated and consistent<br />
between state and local governments and across councils. 24<br />
24 Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012, Vol 1, p 74. Victorian Competition & Efficiency<br />
Commission, Local <strong>Government</strong> for a Better Victoria: An Inquiry into Streamlining Local <strong>Government</strong><br />
<strong>Regulation</strong> – Summary Report, August 2010, pp 32-34.<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 21
2 Local government compliance and enforcement<br />
functions<br />
Conversely, there is potential for unnecessary regulatory burden if the role of<br />
each level of government in a regulatory area is uncertain or unclear to regulators<br />
and/or business and the community. For example, this could lead to:<br />
<br />
<br />
<br />
less than optimal regulatory resourcing: where one or both levels of<br />
government are not optimally allocating resources to key regulatory areas –<br />
which could add to business cost if there are delays in receiving responses or<br />
approvals to regulatory applications<br />
duplication: where both levels of government are undertaking the same, or<br />
similar, regulatory activities – which could add to business cost if, for instance,<br />
business is required to provide similar information to 2 levels of government<br />
for the same regulatory area or issue<br />
uncertainty: where there is uncertainty as to which level of government is the<br />
responsible regulator – which could add to regulatory costs if regulated<br />
businesses or individuals have to spend time trying to locate assistance or<br />
information on regulatory requirements and how to comply.<br />
2.3.2 Other forms of assistance from State <strong>Government</strong><br />
As well as providing clear guidance on regulatory roles, State <strong>Government</strong> can<br />
play a role in enhancing the regulatory capacity and capability of local<br />
government through providing training, resources and other forms of assistance<br />
to local government.<br />
In particular, adequate resourcing is vital for ensuring local government is<br />
capable of fulfilling its regulatory role efficiently and effectively. Allocating or<br />
hypothecating revenue, allowing councils to cost recover through fees and<br />
charges and other measures can help to ensure adequate funding to achieve<br />
regulatory outcomes.<br />
The PC identified as a leading practice that State governments consider the<br />
resource implications for local government when developing and/or reviewing<br />
regulation. It noted that State governments can reduce the potential for<br />
regulations to be administered inefficiently or inconsistently by ensuring councils<br />
have adequate finances, skills and guidance to undertake new regulatory roles.<br />
It stated this could be achieved by including an assessment of local government<br />
capacities as part of the regulatory impact analysis for any regulation that<br />
envisages a role for local government. 25 It also identified the importance of<br />
adequate training and accreditation of local government officers to assist in<br />
delivering good regulatory outcomes. 26<br />
25 Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012, Vol 1, p 135.<br />
26 Ibid, pp 172 & 174.<br />
22 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
2 Local government compliance and enforcement<br />
functions<br />
The <strong>NSW</strong> <strong>Government</strong> provides assistance and guidance to local government<br />
through the Division of Local <strong>Government</strong> (DLG), part of the Department of<br />
Premier and Cabinet (DPC). For example, DLG reviews individual councils<br />
under its ‘Promoting Better Practice <strong>Review</strong>’ program, in order to identify better<br />
practice and improvements in a range of council functions, including regulatory<br />
practices. Completed reviews are publically available after the relevant council is<br />
given an opportunity to comment. 27 The PC has identified this program as a<br />
leading practice, as it:<br />
<br />
<br />
<br />
<br />
can identify areas of deficiency and ways these can be addressed<br />
may encourage collaboration between state and local government to the<br />
benefit of both<br />
may identify leading practices in one council that can be transferred to other<br />
councils<br />
indicates whether councils are complying with state requirements<br />
provides a ‘health check’ of a council’s overall viability. 28<br />
As at the end of August 2012, 111 councils had undergone a Promoting Better<br />
Practice review, and it is anticipated that all councils will be reviewed by 30 June,<br />
2015. 29<br />
The Local <strong>Government</strong> and Shires Associations of <strong>NSW</strong> (LGSA) also plays a role<br />
in enhancing interaction and coordination between State <strong>Government</strong> and local<br />
government. The LGSA represents all 152 general purpose councils and<br />
14 special purpose councils. Since October 2010, there has been an<br />
Intergovernmental Agreement between the <strong>NSW</strong> <strong>Government</strong> and the LGSA,<br />
which aims to enhance communication and consultation and the existing<br />
collaborative working relationships between State and Local <strong>Government</strong>. 30<br />
The capacity of local government to effectively undertake compliance and<br />
enforcement activities is considered further below.<br />
27 See for more details:<br />
http://www.dlg.nsw.gov.au/dlg/dlghome/dlg_generalindex.asp?mi=6&ml=4&areaindex=LG<br />
RPBP, accessed 10 August 2012.<br />
28 Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012, Vol 1, p 179.<br />
29 Division of Local <strong>Government</strong>, pers comm, 6 September 2012.<br />
30 An Intergovernmental Agreement between The <strong>NSW</strong> State <strong>Government</strong> and the Local <strong>Government</strong> and<br />
Shires Association of <strong>NSW</strong> on behalf of <strong>NSW</strong> Councils, October 2010, available at:<br />
http://www.dlg.nsw.gov.au/dlg/dlghome/documents/information/Intergovernmental%20A<br />
greement%20between%20the%20<strong>NSW</strong>%20<strong>Government</strong>%20and%20the%20Local%20Governme<br />
nt%20and%20Shires%20Associations%20of%20<strong>NSW</strong>.pdf, accessed on 10 August 2012, p 2.<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 23
2 Local government compliance and enforcement<br />
functions<br />
<strong>IPART</strong> seeks comment.<br />
3 Are there areas where compliance or enforcement roles of local government and<br />
State <strong>Government</strong> agencies overlap or are unclear? What are the impacts of<br />
this on business, the community, councils or the State <strong>Government</strong>?<br />
4 Can you provide examples of poor consultation or coordination between local<br />
government and State <strong>Government</strong> agencies in relation to compliance and<br />
enforcement activities? What impact does this have on business, the<br />
community, councils or the State <strong>Government</strong>?<br />
5 Can you provide examples of good consultation or coordination between local<br />
government and State <strong>Government</strong> agencies in relation to compliance and<br />
enforcement activities?<br />
6 Can you suggest ways that local government and State <strong>Government</strong> agencies<br />
can work together to reduce red tape?<br />
7 Does the Division of Local <strong>Government</strong>’s ‘Promoting Better Practice Program’<br />
assist local government in undertaking its regulatory activities more efficiently?<br />
8 Are there other ways to enhance assistance to councils?<br />
2.4 The regulatory capacity and capability of local government<br />
The ToR for this review require us to consider, amongst other factors, the current<br />
capacity and capability (ie, resources and skills) of local government to undertake<br />
their regulatory responsibilities, including whether and how these can be<br />
improved.<br />
As discussed at the beginning of this chapter, councils vary significantly in terms<br />
of their areas and socio-economic characteristics. As outlined below, they can<br />
also vary in relation to their fiscal capacity and regulatory expenditure and<br />
capability.<br />
These factors can impact on the regulatory burden faced by business and the<br />
community. For example, a remote area council with a small population may<br />
have difficulty attracting skilled planners. As a result, businesses may<br />
experience greater delays in obtaining planning consents or have to comply with<br />
sub-optimal consent conditions. These factors can also affect the viability of<br />
potential reform options. For instance, reforms to instigate more risk-based<br />
enforcement activities are unlikely to be implemented if a council is lacking<br />
relevant expertise in its workforce.<br />
24 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
2 Local government compliance and enforcement<br />
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2.4.1 Fiscal capacity<br />
Fiscal capacity of councils relates to their ability to raise revenue to pay for public<br />
services, which include regulatory functions. In 2008, the PC assessed local<br />
government revenue raising capacity and concluded that:<br />
<br />
<br />
<br />
capital city councils had the highest fiscal capacity, principally attributed to<br />
high business incomes and comparatively small resident populations<br />
while some remote councils also had high levels of fiscal capacity due to<br />
substantial business income from mining and petroleum activity in their area,<br />
there were others which had particularly low fiscal capacity, including some<br />
Indigenous councils<br />
on average, urban councils had intermediate levels of fiscal capacity, with<br />
urban fringe councils having the lowest levels. 31<br />
Local government receives revenue from a variety of sources, as seen in<br />
Figure 2.1. In 2010/11, <strong>NSW</strong> local government’s revenue was around $10 billion<br />
dollars. 32<br />
Figure 2.1<br />
<strong>NSW</strong> Local <strong>Government</strong> Revenue Sources<br />
Taxation revenue (33%)<br />
Sales of goods and<br />
services (32%)<br />
Current grants and<br />
subsidies (11%)<br />
Interest income (4%)<br />
Other (20%)<br />
Data source: ABS, <strong>Government</strong> Finance Statistics, Australia, 2010-11, cat. 5512.0, Table 331, Table 1.<br />
31 Productivity Commission, Assessing Local <strong>Government</strong> Revenue Raising Capacity, April 2008,<br />
p XXV.<br />
32 ABS, <strong>Government</strong> Finance Statistics, Australia, 2010-11, cat. 5512.0.<br />
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2 Local government compliance and enforcement<br />
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Fiscal capacity affects a council’s ability to resource its regulatory activities. A<br />
council with high levels of fiscal capacity is better placed to purchase expertise, if<br />
lacking, or attract skilled staff. It is also better placed to implement inspections,<br />
audits or other costly enforcement activities. Lack of fiscal capacity may<br />
adversely affect businesses and the community if the result is ill-targeted<br />
enforcement activity undertaken by ill-equipped staff, or delays in responses to<br />
regulatory applications or queries from businesses and the community. Delay<br />
costs are discussed in Chapters 3 and 4.<br />
2.4.2 Regulatory expenditure and capability<br />
The diversity of councils in <strong>NSW</strong> means there is a wide range of staff numbers<br />
per council, as well as a range of different skills and skill shortages across the<br />
State. 33 Specifically, there is also a wide range of expenditure on regulatory<br />
functions and regulatory capability.<br />
According to the PC, in <strong>NSW</strong> the median expenditure dedicated by local<br />
government to undertaking regulatory functions relating to business is around<br />
3%. 34 However, for one council in <strong>NSW</strong>, expenditure on their regulatory<br />
activities was reported to be as high as 50% of their total expenditure. 35<br />
Regulatory activities take approximately 11% of total local government staff<br />
time. 36 The range of time spent on regulatory activities varies markedly between<br />
individual councils. In <strong>NSW</strong>, local government respondents indicated as little as<br />
1% and as much as 80% of their time was spent on undertaking their regulatory<br />
roles. 37 The regulatory workforce is largest in metropolitan areas where there is a<br />
higher concentration of businesses to people.<br />
This wide variation in regulatory activity may have implications for regulatory<br />
burden on businesses and the community if, for example, low activity means<br />
regulatory objectives are not being achieved or very high activity represents<br />
over-zealous or inefficient enforcement. The variation in regulatory activity<br />
across <strong>NSW</strong> may suggest a higher likelihood of inconsistent regulatory<br />
approaches applied across different local government areas. This may also<br />
translate to higher regulatory burden, especially for businesses operating across<br />
local government boundaries.<br />
33 The PC reports vacancy rates in councils to be as high as 15% generally, and much higher for<br />
specific skills, eg, 21% of councils in <strong>NSW</strong> have at least 1 vacancy for Environmental Health<br />
Officers. Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>:<br />
The Role of Local <strong>Government</strong> as Regulator, July 2012, Vol 1, Table 4.8, p 149 and Table 4.14, p 161.<br />
34 Ibid, p 142 and Appendix M.<br />
35 Ibid, Table 4.5, p 142.<br />
36 Ibid, p 150.<br />
37 Ibid.<br />
26 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
2 Local government compliance and enforcement<br />
functions<br />
<strong>IPART</strong> seeks comment<br />
9 Do councils have the resources and skills to undertake regulatory activities<br />
effectively?<br />
10 Can you provide examples of how a lack of council resources or skills impacts<br />
on business or the community?<br />
11 How can councils improve their resources and skills?<br />
2.5 The relationships between councils<br />
The ToR for this review require us to consider ways of improving the quality of<br />
regulatory administration by local government, including consistency of<br />
approach, economies of scale and recognition of registration in multiple local<br />
government areas. In other words, we are to consider ways to improve<br />
regulatory administration through enhanced coordination and cooperation<br />
between local councils.<br />
2.5.1 The benefits of coordination and cooperation between councils<br />
There are distinct benefits that can be achieved from effective coordination and<br />
cooperation between councils, such as:<br />
economies of scope and scale through sharing resources and knowledge –<br />
which can achieve better regulatory outcomes at lower cost (eg, shared<br />
rangers, joint building inspections)<br />
<br />
<br />
consistency in approach across local government areas – which can provide<br />
greater certainty and lower compliance costs for businesses operating across<br />
these areas<br />
mutual recognition - where compliance by a business or individual with the<br />
requirements of one council is deemed to satisfy the regulatory requirements<br />
of another council (eg, currently there is no mutual recognition of mobile food<br />
vendors in <strong>NSW</strong>, which are required to be registered in every local<br />
government area, but there is in Victoria, South Australia and Queensland). 38<br />
Conversely, a lack of coordination or cooperation between councils can impose<br />
regulatory burdens on business and the community by leading to an inconsistent<br />
application of rules (eg, building code) or a less strategic approach to<br />
enforcement, particularly of cross-boundary issues (eg, waste dumping).<br />
38 Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012, Vol 1 & 2, pp 333 & 646.<br />
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2 Local government compliance and enforcement<br />
functions<br />
2.5.2 Types of coordination and cooperation between councils<br />
There are over 600 collaborative arrangements between councils in <strong>NSW</strong>, across a<br />
variety of areas. 39 These include:<br />
<br />
<br />
<br />
County Councils – there are 14 County Councils formally established under<br />
the Local <strong>Government</strong> Act to provide joint services for member councils (7 for<br />
water supply, 6 for weeds eradication, and 1 for floodplain management) .40<br />
Regional Organisations of Councils (ROCs) – most councils in <strong>NSW</strong> are<br />
members of one or more of the 18 ROCs that cover most of the state. 41 ROCs<br />
can be forums for regional advocacy, research, planning, and sharing<br />
resources and knowledge between constituent councils.<br />
Other collaborative arrangements aimed at sharing information, expertise and<br />
resources and/or achieving a common goal – such as:<br />
– Sister City agreements – eg, the Liverpool Plains Shire Council/Blacktown<br />
City Council Sister City Agreement involves staff exchanges covering areas<br />
such as noxious weed control, planning and ranger services. 42<br />
– Advisory committees, alliances and regional schemes – eg, the Illawarra<br />
Urban Development Committee, the Mid Lachlan Alliance of Councils, the<br />
South Western Regional Waste Management Group.<br />
– ROC-based collaborations – eg, Riverina Eastern ROC’s initiative ‘Start<br />
your Business here’. This is an on-line, self-guided computer program. It<br />
allows start-up businesses to determine what regulations and planning<br />
controls they must comply with in each of the Local <strong>Government</strong> Areas<br />
that comprise the Riverina Eastern ROC region. 43<br />
– Creation of joint entities of councils dedicated to providing functions on<br />
behalf of the councils – eg, Hunter Councils Inc, which represents<br />
12 councils in the Hunter Valley and is a shared services and regional<br />
procurement entity. It has a dedicated local government training institute,<br />
a regional data centre, an environmental division, and legal services. 44<br />
– Agreements for sharing specific resources, services or approaches – eg,<br />
Coffs-Bellingen Trade Waste Inspection Services, Griffith Region Food<br />
Safety Inspection Agreement.<br />
– Agreements relating to specific projects and other collaborations – eg,<br />
Waverley, Woollahra and Randwick Councils’ Ecological Footprint<br />
Project. 45<br />
39 <strong>NSW</strong> Independent Local <strong>Government</strong> <strong>Review</strong> Panel, Strengthening your Community –<br />
Consultation Paper, July 2012, p 11.<br />
40 Ibid.<br />
41 Ibid.<br />
42 <strong>NSW</strong> Department of Local <strong>Government</strong>, Collaborative Arrangements between Councils – Survey<br />
Report, June 2011, p 41.<br />
43 See: http://startyourbusinesshere.com.au/, accessed 11 September 2012.<br />
44 See: http://www.huntercouncils.com.au/, accessed 17 August 2012.<br />
45 <strong>NSW</strong> Department of Local <strong>Government</strong>, Collaborative Arrangements between Councils – Survey<br />
Report, June 2011, pp 75-214.<br />
28 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
2 Local government compliance and enforcement<br />
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Table 2.3 below provides examples of collaborative arrangements between<br />
councils, by operational or regulatory area.<br />
Table 2.3<br />
Examples of collaborative arrangements between councils, by<br />
area<br />
Area<br />
Regional planning<br />
Waste management<br />
Environmental health<br />
Water and sewerage<br />
Example<br />
Regional General Managers groups/meetings<br />
Shared facilities, approaches to illegal<br />
dumping, recycling projects<br />
Shared lab services, pest control<br />
Regional water schemes, floodplain<br />
management<br />
Development assessment and town planning Shared staff, joint building inspections,<br />
development control<br />
Roads and engineering<br />
Joint employment of road safety officers,<br />
shared maintenance<br />
Weed management<br />
Noxious weeds groups and shared noxious<br />
weeds officers<br />
Companion animal management<br />
Shared ranger and impounding services<br />
Training<br />
Shared training services<br />
Note: This is not a complete list and we have focused on areas that fall within the priority regulatory areas.<br />
Source: Department of Local <strong>Government</strong>, Collaborative Arrangements between Councils – Survey Report,<br />
June 2011, pp 215-222.<br />
Related to cooperation and coordination, is the issue of consolidation of local<br />
government. This is not within the scope of our review.<br />
2.5.3 Leading practice in local government coordination and cooperation<br />
In its recent review of local governments as regulators, the PC recognised the<br />
value of cooperation and coordination between councils to achieve economies of<br />
scope and scale in resources and skills. 46<br />
It identified the following examples:<br />
<br />
<br />
<br />
In Victoria, there is a Rural Planning Flying Squad, which sends out planning<br />
experts to councils that are experiencing shortages in planning resources and<br />
skills 47<br />
In <strong>NSW</strong>, Conargo, Deniliquin and Murray have agreed to have common<br />
development applications forms and procedures<br />
In Western Australia, several councils in the South West have agreed to<br />
develop online building and health permits using the same software. 48<br />
46 Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012, Vol 1, pp 181-182.<br />
47 Ibid, pp 175-176.<br />
48 Ibid, p 198.<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 29
2 Local government compliance and enforcement<br />
functions<br />
<strong>IPART</strong> seeks comment<br />
12 If you are operating a business across more than 1 council area, how do<br />
differences in council approaches impact on your business?<br />
13 How, and in what areas, could coordination between councils be improved to<br />
reduce unnecessary regulatory burdens on business and the community?<br />
14 In what areas could mutual recognition (eg, recognition of registration in multiple<br />
local government areas) be used to reduce regulatory burdens on business or<br />
the community?<br />
15 What other approaches could be used to improve the way councils apply<br />
regulations?<br />
30 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
3 Identifying reform opportunities<br />
3 Identifying reform opportunities<br />
More efficient regulation can boost productivity and promote economic growth<br />
in many ways. For example, it minimises the time businesses spend complying<br />
with regulatory requirements, which can increase their ability to innovate, be<br />
entrepreneurial and respond creatively and quickly to market opportunities or<br />
threats. 49 For regulation to be efficient, it must be efficient in both design and<br />
implementation.<br />
This chapter discusses the impacts that local government compliance and<br />
enforcement activities can have on business and the community, and identifies<br />
some potential sources of unnecessary regulatory burdens – which can relate to<br />
both the design and implementation of regulation. It then seeks to articulate<br />
some best practice regulatory enforcement principles to guide this review.<br />
Lastly, we consider some of the leading practices highlighted by the PC’s review<br />
of local government as a regulator, 50 as a possible source of reform opportunities<br />
for <strong>NSW</strong>.<br />
3.1 The impacts of local government regulatory activities<br />
<strong>Regulation</strong> requires businesses and individuals to undertake certain tasks to<br />
comply with the rules. These may include, for example, form filling, making a<br />
property available for inspection or purchasing equipment to ensure standards<br />
are meet. Complying with regulatory requirements is likely to incur some costs.<br />
Some of these costs may be small, but some may have a significant impact on the<br />
business, individual or the community.<br />
The Better <strong>Regulation</strong> Office (BRO) outlines 4 cost categories that we will assess<br />
under the red tape reduction target. These include:<br />
<br />
Administrative costs – which are often incurred in demonstrating compliance<br />
with a regulation through information-related activities such as completing<br />
and lodging forms and applications (eg, form filling to obtain an approval,<br />
inspections, certification, audits and reporting).<br />
49 Better <strong>Regulation</strong> Office, Guide to Better <strong>Regulation</strong>, November 2009, p 7.<br />
50 Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012.<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 31
3 Identifying reform opportunities<br />
<br />
<br />
<br />
Substantive compliance costs – which largely relate to capital and production<br />
costs that are required to comply with regulation (eg, equipment, training and<br />
waste management).<br />
Fees and charges – which must be paid directly to local government (eg,<br />
licence and permit fees, fines and levies, but not rates).<br />
Delay costs – which are costs incurred due to a delay in an approval process<br />
or other regulatory transaction with local government (eg, capital holding<br />
costs incurred by a developer due to delays in obtaining a development<br />
approval). 51 Our preliminary consultation indicates that delay costs can be of<br />
significant concern to business and the community. 52<br />
<strong>Regulation</strong>s can have varying impacts depending on the size of a business. For<br />
example, small businesses’ administrative and compliance costs as a proportion<br />
of their business turnover will generally be much higher than for larger<br />
businesses. However, larger businesses are more likely to be affected by a<br />
greater range of regulatory requirements.<br />
3.2 Sources of unnecessary regulatory burden<br />
<strong>Regulation</strong> necessarily involves some costs or burdens on businesses, individuals<br />
or the community in order to achieve its objectives. As long as there are net<br />
benefits to a particular regulation, these costs are considered justified.<br />
However, when regulation is poorly designed or implemented, for example by<br />
imposing duplicative reporting requirements or being inconsistently applied, it<br />
may impose unnecessary costs or burdens. These are costs or burdens greater<br />
than are necessary to achieve the regulatory objectives.<br />
Box 3.1 below identifies some possible sources of unnecessary regulatory<br />
burdens that can arise in the implementation or enforcement of regulations.<br />
Some of these may also arise as a result of the underlying regulatory design – eg,<br />
unclear or complex regulatory requirements, unclear delineation between State<br />
and local government responsibilities, or duplicative/overlapping requirements.<br />
51 These costs are quite narrow and do not include indirect costs which are excluded from the<br />
calculation of savings towards the red tape reduction target. BRO, Guidelines for estimating<br />
savings under the red tape reduction target, February 2012, p 6-7.<br />
52 Victorian Competition and Efficiency Commission, pers comm, 17 August 2012.<br />
32 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
3 Identifying reform opportunities<br />
Box 3.1<br />
Examples of possible sources of unnecessary regulatory burdens<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
delays in obtaining approvals from councils<br />
excessive requirements imposed by councils through approvals, permits or other<br />
regulatory instruments<br />
inconsistent interpretation or application of regulations by councils<br />
multiple registration requirements on businesses operating in different local<br />
government areas (ie, required to be registered for same activity by different councils)<br />
duplicative or overlapping state and local government regulatory requirements (eg,<br />
requirements to report to both state and local government on the same regulatory<br />
issue)<br />
unclear or complex requirements hindering council’s enforcement undertakings and<br />
business/community compliance<br />
a lack of timeliness in regulatory decisions of councils<br />
unwieldy licence application and approval processes<br />
variations in, or lack of, enforcement of regulatory requirements<br />
confusion or lack of clarity as to council’s and State agencies’ regulatory role in a<br />
particular regulatory area<br />
invasive regulatory behaviour, such as overly frequent audits or inspections<br />
lack of, or poor quality, advice or guidance provided by councils in relation to obtaining<br />
approvals or other regulatory compliance matters<br />
excessive information requests<br />
excessive fines, fees or charges<br />
Source: Some examples taken from Productivity Commission, Performance Benchmarking of Australian<br />
Business <strong>Regulation</strong>: The Role of Local <strong>Government</strong> as Regulator, July 2012, Vol 1, Box 6.1, p 214 and Table<br />
6.9, p 242.<br />
Some sources of unnecessary regulatory burdens may be more or less pertinent<br />
depending on the size of a business. For example, larger firms operating across<br />
local government areas may have concerns with councils inconsistently applying<br />
regulations, which small businesses operating in only one council area don’t<br />
share.<br />
<strong>IPART</strong> seeks comment<br />
16 What specific local government compliance or enforcement activities are<br />
imposing unnecessary costs on business or the community?<br />
17 What are these costs (eg, form filling, reporting, compliance, delay, fees and<br />
charges)?<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 33
3 Identifying reform opportunities<br />
3.3 Best practice regulatory enforcement<br />
The principles of best practice regulation are now enshrined in <strong>NSW</strong><br />
<strong>Government</strong> regulation making processes through BRO’s 2009 Guide to Better<br />
<strong>Regulation</strong>. However, the principles of best practice regulatory enforcement have<br />
not been explored to the same extent in <strong>NSW</strong>.<br />
In considering whether unnecessary burdens are being imposed through existing<br />
regulatory enforcement practices and identifying possible reform options, it is<br />
useful to consider what best practice regulatory enforcement would look like.<br />
International jurisdictions such as the UK, and international bodies such as the<br />
OECD, have done considerable work in this area. In <strong>NSW</strong>, the BRO is also<br />
undertaking work in this area. The following OECD principles capture the key<br />
elements of best practice regulatory enforcement:<br />
<br />
<br />
<br />
<br />
<br />
Proportionate: regulators should only intervene when necessary. Remedies<br />
should be appropriate to the risk posed, and costs identified and minimised<br />
Accountable: regulators must be able to justify decisions, and be subject to<br />
public scrutiny<br />
Consistent: government rules and standards must be seamless and<br />
implemented fairly<br />
Transparent: regulators should be open, and keep regulations simple and user<br />
friendly<br />
Targeted: regulators should be focused on the problem, and minimise the side<br />
effects. 53<br />
As an example, the UK’s Hampton <strong>Review</strong> set out a number of principles for<br />
good regulatory enforcement. 54 These are outlined in Box 3.2 below.<br />
53 OECD, Guiding Principles for Regulatory Quality and Performance, Paris, 2005.<br />
54 Philip Hampton, Reducing Administrative Burden: Effective Inspection and Enforcement, March<br />
2005.<br />
34 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
3 Identifying reform opportunities<br />
Box 3.2<br />
Principles of good inspection and enforcement<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
Regulators, and the regulatory system as a whole, should use comprehensive risk<br />
assessment to concentrate resources on the areas that need them most.<br />
Regulators should be accountable for the efficiency and effectiveness of their<br />
activities, while remaining independent in the decisions they take.<br />
All regulations should be written so that they are easily understood, easily<br />
implemented, and easily enforced, and all interested parties should be consulted when<br />
they are being drafted.<br />
No inspection should take place without a reason.<br />
Businesses should not have to give unnecessary information, nor give the same piece<br />
of information twice.<br />
The few businesses that persistently break regulations should be identified quickly,<br />
and face proportionate and meaningful sanctions.<br />
Regulators should provide authoritative, accessible advice easily and cheaply.<br />
When new policies are being developed, explicit consideration should be given to how<br />
they can be enforced using existing systems and data to minimise the administrative<br />
burden imposed.<br />
Regulators should be of the right size and scope, and no new regulator should be<br />
created where an existing one can do the work.<br />
Regulators should recognise that a key element of their activity will be to allow, or<br />
even encourage, economic progress and only to intervene when there is a clear case<br />
for protection.<br />
Source: Philip Hampton, Reducing Administrative Burden: Effective Inspection and Enforcement, March 2005,<br />
p 7.<br />
<strong>IPART</strong> seeks comment<br />
18 Are the principles of best practice regulatory enforcement (as set out in this<br />
paper) a sound basis for assessing good compliance and enforcement practices<br />
and testing reform options?<br />
19 How do State <strong>Government</strong> and councils review or assess councils’ regulatory<br />
performance? How could this be improved?<br />
20 To what extent do councils follow best practice enforcement principles?<br />
3.4 Possible reforms to regulatory practices – leading practices<br />
The ToR for this review requires us to consider the appropriateness and<br />
feasibility of <strong>NSW</strong> adopting the leading practices identified in the PC’s report<br />
Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of Local<br />
<strong>Government</strong> as Regulator.<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 35
3 Identifying reform opportunities<br />
In reviewing the role of local government as regulator across Australia, the PC<br />
identified a number of leading practices. Some of these relate generally to how<br />
local government undertakes its enforcement functions, and others to specific<br />
areas of regulation. These areas include most of the priority regulatory areas we<br />
have been asked to consider – ie, planning, building and construction, parking<br />
and road transport, public health and safety and environmental regulation.<br />
These general and specific leading practices are discussed in the sections below.<br />
3.4.1 General leading practices<br />
There are a number of general leading practices from the UK that the PC<br />
recommends be considered by state and local governments. These include the<br />
establishment of a Local Better <strong>Regulation</strong> Office (LBRO), a statutory compliance<br />
code for regulators, and a Primary Authority Scheme (PAS). These are discussed<br />
briefly below.<br />
A Local Better <strong>Regulation</strong> Office (LBRO)<br />
An agency such as the UK’s Local Better <strong>Regulation</strong> Office (LBRO) would focus<br />
on the regulatory activities of local government and have responsibilities and<br />
powers to implement, monitor, coordinate and prioritise regulatory activities<br />
between and within levels of government. We note there could be various<br />
options for hosting these responsibilities in <strong>NSW</strong>. These may include an existing<br />
state agency such as the Division of Local <strong>Government</strong> or under contract to the<br />
LGSA. 55<br />
A statutory compliance code for regulators<br />
A statutory compliance code for regulators, based on the UK’s Hampton<br />
principles, would be aimed at improving the quality and consistency of local<br />
government regulatory enforcement and inspection activities to minimise the<br />
burden of these activities on businesses (see Box 3.3 below). 56<br />
55 Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012, Vol 1, p 72. At the end of 2011 the functions of the<br />
LBRO were incorporated into a dedicated unit called the Better <strong>Regulation</strong> Delivery Office in<br />
the Department for Business, Innovation and Skills. See:<br />
http://www.legislation.gov.uk/ukdsi/2012/9780111517772/pdfs/ukdsi_9780111517772_en.pd<br />
f.<br />
56 Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012, Vol 1, p 13.<br />
36 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
3 Identifying reform opportunities<br />
Box 3.3<br />
UK Regulators’ Compliance Code - obligations of the Code:<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
Economic progress – Regulators should consider the impacts of their regulatory<br />
interventions on economic progress, including considering the costs, effectiveness<br />
and perceptions of fairness of regulation. In particular, regulators should try to ensure<br />
the burdens of their interventions fall fairly and proportionately on small businesses,<br />
given the size and nature of their activities.<br />
Risk assessment – Risk assessment should proceed all regulatory activities,<br />
including data collection, information requirements, inspection programs,<br />
advice/support programs and enforcement/sanctions. Risk assessment involves the<br />
identification and measurement of capacity of harm and an evaluation of the likelihood<br />
of the occurrence of harm. By basing regulatory work on an assessment of the risks<br />
to regulatory outcomes, regulators are able to target resources where they will be<br />
most effective and risk is highest.<br />
Advice and guidance – Regulators should provide general information, advice and<br />
guidance to make it easier to understand and comply with regulation. Advice should<br />
be clear, concise and accessible.<br />
Inspections – Regulators should focus their greatest inspection effort where risk<br />
assessment shows a breach would pose a serious risk to a regulatory outcome and<br />
there is a high likelihood of non-compliance. Burdens of inspections from the same or<br />
different regulators should be minimised through joint or coordinated inspections.<br />
Information requirements – Regulators should undertake an analysis of costs and<br />
benefits of data requests when determining what data they require, and should<br />
consider varying data requests according to risk, reducing frequency of data<br />
collection, obtaining data from other sources and allowing electronic submission.<br />
Duplication of data collection by regulators should be avoided by sharing data.<br />
Compliance and enforcement actions – Regulators should publish an enforcement<br />
policy. In accordance with the Macrory <strong>Review</strong>, regulators should also:<br />
– measure outcomes not just outputs<br />
– justify their choice of enforcement actions year on year to interested parties<br />
– follow-up enforcement actions where appropriate<br />
– enforce in a transparent manner<br />
– be transparent in the way in which they apply and determine penalties<br />
– avoid perverse incentives that might influence the choice of sanctioning response.<br />
Accountability – Regulators should increase transparency by reporting on outcomes,<br />
costs and perceptions of their enforcement approach.<br />
Sources: Department for Business Enterprise & Regulatory Reform, Regulators’ Compliance Code: Statutory<br />
Code of Practice for Regulators, 17 December 2007; and Macrory, R, Regulatory Justice: Making Sanctions<br />
Effective, November 2006, p 10.<br />
The BRO has also developed draft elements of good regulatory practice, based on<br />
these principles. These could also be considered as a basis for a compliance code<br />
for <strong>NSW</strong> regulators (see Box 3.4 below).<br />
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3 Identifying reform opportunities<br />
Box 3.4<br />
<strong>NSW</strong> Better <strong>Regulation</strong> Office – draft elements of good regulatory<br />
practice:<br />
<br />
<br />
<br />
<br />
Risk based regulation<br />
– risk assessments inform all regulatory activities<br />
– a range of interventions including regulatory and non-regulatory options<br />
– concentrate resources in areas that threaten the achievement of outcomes<br />
– intelligence-led operational risk targeting and inspections<br />
– proportionate and meaningful sanctions promote behaviour change.<br />
Accountability<br />
– common standards and expectations about the way the regulator works<br />
– clear governance of outsourced regulatory functions<br />
– monitor performance and the extent to which the regulator meets its objectives.<br />
Service efficiency<br />
– cost efficient delivery of regulation that is business-friendly and achieves outcomes<br />
– streamline transactions with business and community and improve e-capability;<br />
require information to be provided to government only once<br />
– implement appropriate planning and resource management practices.<br />
Outcomes focus<br />
– clearly defined and published regulatory outcomes to enhance transparency<br />
– compliance action that is directed towards the achievement of results, rather than<br />
imposing enforcement outputs.<br />
<br />
<br />
<br />
Improvement framework<br />
– experiment with what works, evaluate closely<br />
– adapt interventions to their effectiveness in achieving intended outcomes<br />
– benchmark regulator performance and identify good practice<br />
– collaborate with other regulators.<br />
Understand business and community<br />
– building and monitoring effective stakeholder relationships<br />
– understanding the reasons and context for non-compliance<br />
– engage stakeholders in identifying risk, risk analysis and evaluation of regulator<br />
performance<br />
– provide authoritative and accessible advice and information.<br />
Culture<br />
– support economic progress by being less bureaucratic and less administratively<br />
burdensome for business<br />
– a program of continuous training and capacity building within regulatory agencies.<br />
Source: Better <strong>Regulation</strong> Office, unpublished, August 2012.<br />
38 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
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A Primary Authority Scheme (PAS)<br />
A Primary Authority Scheme (PAS), based on the UK’s PAS, would be aimed at<br />
providing more regulatory consistency and certainty for businesses that operate<br />
across a number of local government areas. Under this scheme, the business can<br />
form a partnership with a single council who becomes the primary authority<br />
with which other councils must defer to in relation to regulatory compliance<br />
issues (see Box 3.5 below). 57<br />
The VCEC, as part of its Inquiry on Streamlining Local <strong>Government</strong> <strong>Regulation</strong>, has<br />
examined the advantages and disadvantages of the PAS. On balance, the VCEC<br />
concluded:<br />
The primary authority scheme is a promising innovation, which could reduce<br />
inconsistencies that impose significant costs on businesses … However … more<br />
information is needed before the proposal is considered in Victoria. 58<br />
We note that the benefits of PAS would depend on the extent to which<br />
differences or inconsistencies in regulatory approaches across councils impose<br />
unnecessary regulatory burdens on businesses and the community. These<br />
benefits would then have to be weighed against the costs of establishing and<br />
running the PAS.<br />
57 Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012, Vol 1, p 75.<br />
58 Victorian Competition and Efficiency Commission, Local <strong>Government</strong> for a Better Victoria: An<br />
Inquiry into Streamlining Local <strong>Government</strong> <strong>Regulation</strong> – Final Report, August 2010, p 311.<br />
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Box 3.5<br />
The UK’s Primary Authority Scheme<br />
Key features of the PAS are:<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
Any company operating across council boundaries can form a partnership with a<br />
single council in relation to regulatory compliance. These agreements can cover all<br />
environmental health legislation, or a specific function such as food safety.<br />
A central register of the partnerships, held on a secure database, provides an<br />
authoritative reference source for businesses and councils.<br />
If a company cannot find an appropriate partner, it can ask the Local Better <strong>Regulation</strong><br />
Office to find a suitable local authority for it to work with.<br />
A primary authority provides robust and reliable advice on compliance that other<br />
councils must take into account, and may produce a national (or state-wide) inspection<br />
plan at the request of the business, to coordinate activity.<br />
Before other councils impose sanctions on a company, including formal notices and<br />
prosecutions, they must contact the primary authority to see whether the actions are<br />
contrary to appropriate advice it has previously issued. (This requirement to consult is<br />
waived if consumers or workers are at immediate risk.) If the proposed action is<br />
inconsistent with advice previously issued by the primary authority, it can prevent that<br />
action being taken.<br />
Where the authorities cannot agree, the issue can be referred to the Local Better<br />
<strong>Regulation</strong> Office for a ruling, which is made within 28 days.<br />
The question of resourcing the partnership is up to the councils and businesses<br />
concerned. Where necessary, a primary authority can recover its costs.<br />
Source: Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012, Vol 1, p 75.<br />
3.4.2 Specific leading practices – priority regulatory areas<br />
The sections below outline leading regulatory practices of councils within<br />
Australia, as identified by the PC, in the areas of planning, building and<br />
construction, environment, public health and safety, and parking and road<br />
transport.<br />
Planning<br />
The PC suggests there is a range of leading practices being used across councils<br />
in relation to planning and development assessment that could reduce delays<br />
and inconsistencies, streamline administrative processes and assist local<br />
government to resolve land use and coordination issues. These are outlined in<br />
Box 3.6.<br />
40 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
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Box 3.6<br />
Leading practices used across Australian councils in relation to<br />
planning and development assessment<br />
The PC identified the following lead practices:<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
pre-lodgement meetings with advice provided in writing, clear and accessible planning<br />
scheme information and application guidelines<br />
the use of a standard approval format and implementing standardised definitions and<br />
processes to drive consistency in planning processes between councils<br />
timely assessment of applications and completion of referrals<br />
facilities that enable electronic submission of applications and making information on<br />
planning decisions publicly available to increase transparency and public confidence<br />
the wider adoption of track-based assessment (ie, development applications streamed<br />
into appropriate assessment ‘tracks’ that correspond with the level of risk and impact<br />
and therefore the level of assessment attention required to make an appropriate<br />
decision)<br />
developing strategic plans and eliminating as many uncertainties as possible at this<br />
stage, and making consistent decisions about transport, other infrastructure and land<br />
use<br />
ensuring local planning schemes are regularly updated or amended to improve<br />
consistency with state and regional planning schemes and strategies<br />
adopting broad land-use zones to provide potential for increased competition<br />
increasing transparency and community consultation when undertaking ‘spot<br />
rezonings’<br />
providing state support to councils who require assistance with strategic planning or<br />
aligning local plans with regional or state plans<br />
wider adoption of code-based assessments, where appropriate, to make decisionmaking<br />
processes more objective, less discretionary and cheaper for businesses.a<br />
a Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of Local<br />
<strong>Government</strong> as Regulator, July 2012, Vol 1, pp 35-36. Note these recommendations are consistent with the<br />
findings in the Productivity Commission’s earlier report, Performance Benchmarking of Australian Business<br />
<strong>Regulation</strong>: Planning, Zoning and Development Assessments, May 2011.<br />
Source: Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012, Vol 1, pp 35-36, 425 and 433.<br />
The <strong>NSW</strong> planning system review Green Paper indicates that a number of these<br />
leading practices will be part of the reform package being proposed for adoption<br />
in <strong>NSW</strong>. In particular, <strong>NSW</strong> is considering:<br />
<br />
<br />
<br />
adopting track-based assessment<br />
elevating the importance of strategic planning and coordination with<br />
transport and infrastructure decisions (ie, Regional Growth Plans)<br />
adopting broader land-use zoning (ie, new Enterprise Zones) that are more<br />
flexible, with fewer development controls<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 41
3 Identifying reform opportunities<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
introducing ‘strategic compatibility certificates’ to enable developments<br />
consistent with regional strategies to proceed even if the local land use plan<br />
has not yet been amended to catch up with the regional strategy<br />
greater use of code-based assessments (complying development)<br />
reducing the number of planning instruments (ie, State Environmental<br />
Planning Policies, Regional Environmental Plans, Local Environmental Plans<br />
and Development Control Plans) to remove complexity and confusion in the<br />
planning system<br />
reducing referrals and concurrence requirements, and consolidating <strong>NSW</strong><br />
<strong>Government</strong> agencies’ requirements for developments<br />
establishing clear principles in relation to the types of development consent<br />
conditions that are appropriate (ie, clear, reasonable, cost effective and<br />
proportionate), removing duplication with other regulatory requirements and<br />
standardising these conditions to improve consistency across councils<br />
requiring mandatory monitoring of State and local government performance<br />
against clear indicators (measurable planning goals), with regular public<br />
reporting and review<br />
adopting an ‘amber light approach’ – formally requiring consent authorities to<br />
provide advice to an applicant of amendments that would make an otherwise<br />
unacceptable proposed development acceptable, if adopted, and allow the<br />
proposal to be so modified<br />
introducing a cultural change program, to be led by the Department of<br />
Planning & Infrastructure in partnership with the Planning Institute of<br />
Australia, local government and stakeholder representatives, to change the<br />
current culture of the planning profession – which has been described as being<br />
overly controlling, highly risk-adverse, unhelpful, bureaucratic and focused<br />
on how to stop outcomes – to a culture of facilitating good outcomes. 59<br />
As discussed in Chapter 1 of this paper, the ToR directs us to ensure any<br />
recommended reforms from our review will enable councils to maximise the<br />
opportunities from the planning system review.<br />
59 <strong>NSW</strong> <strong>Government</strong>, A New Planning System for <strong>NSW</strong>: Green Paper, July 2012.<br />
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3 Identifying reform opportunities<br />
Building and construction<br />
In <strong>NSW</strong>, the PC reports that local government regulation of building sites occurs<br />
on a case by case basis, typically through conditions imposed at the planning<br />
approval stage and the compliance process during the construction phase. It<br />
notes that this allows for greater flexibility in tailoring regulation to specific<br />
circumstances. However, it also reports that this provides for more discretion by<br />
local government officers and hence greater regulatory variability and possibly<br />
less transparency. 60<br />
The PC’s analysis also suggests that councils in <strong>NSW</strong> impose standards (eg,<br />
sustainable building design) above and beyond the Building Code of Australia<br />
(BCA), which are often considered by businesses to be unnecessary. 61 In 2008, the<br />
Australian Building Codes Board (ABCB) reviewed local government<br />
interventions above requirements specified in the BCA and reported that there<br />
are a minimum of 8 in <strong>NSW</strong>. It subjected these to cost benefit analysis and found<br />
they increase business compliance costs by between 2% and 14%. It also reported<br />
that these interventions impact on housing affordability, and suggested that<br />
many of the issues regulated would be best left to market mechanisms. 62<br />
Across Australia, the PC highlighted a number of leading practices in the area of<br />
building and construction.<br />
Gateway approach<br />
A gateway approach is used by Queensland and Victoria to monitor and assess<br />
all building standards that are higher than those set out in the BCA. Assessments<br />
include independent cost benefit analysis of proposed standards. In this way,<br />
state governments effectively act as gatekeepers in relation to additional building<br />
standards. 63<br />
Regimes for application fees<br />
According to the PC, there is significant inconsistency across <strong>NSW</strong> councils in<br />
relation to building and construction application fees – with fees varying by over<br />
$2,000, based on a 200m 2 residential dwelling. There is a larger variation across<br />
councils for commercial applications. There are also questions about the costreflectiveness<br />
of some fees. 64<br />
60 Productivity Commission, Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of<br />
Local <strong>Government</strong> as Regulator, July 2012, p 274.<br />
61 Ibid, p 281.<br />
62 Ibid, p 266 – 268.<br />
63 Ibid, p 270.<br />
64 Ibid, pp 262 and 264-265.<br />
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3 Identifying reform opportunities<br />
The PC recommended that local government charging regimes for assessing<br />
building applications be based on the recovery of efficient administrative costs.<br />
It states that this would avoid potentially inefficient cross-subsidies between<br />
different types of building applications and between building and non-building<br />
revenue sources. It also notes that it would enable local government to devote<br />
greater resources to assessing building applications and should reduce<br />
processing times and the associated delay costs faced by builders. 65<br />
Cost effective risk-based inspection regimes<br />
According to the PC, <strong>NSW</strong> has more construction inspections than any other<br />
state or territory. Furthermore, it notes that there is no indication that there is<br />
more defective or lower quality building in states that have a more moderate,<br />
risk-based approach to inspections. It consequently advocates a move towards a<br />
risk-based approach for building and plumbing inspections, as a means of<br />
reducing regulatory costs without compromising the integrity of the building<br />
process. 66<br />
The PC stated:<br />
As a general rule, businesses, LG’s and consumers would benefit from having<br />
regulators focus on areas which pose the greatest risk to public health and safety,<br />
and/or would be the most costly to rectify and/or have the highest likelihood of<br />
compliance breaches occurring (including the compliance history of the builder).<br />
Inspection frequency (and duration) should be tailored to meet that underlying<br />
principle. 67<br />
Environmental regulation<br />
According to the PC, leading practices in relation to local government<br />
administration and enforcement of environmental regulation include:<br />
<br />
<br />
<br />
clarity on cost recovery associated with implementing environmental<br />
regulations<br />
clear delineation of responsibilities between local government and state<br />
agencies with environmental responsibilities (as there is some evidence of<br />
duplication in information requirements placed on business – eg, in relation to<br />
land clearing applications)<br />
sharing skilled staff and resources across councils to undertake environmental<br />
regulation, provide training and mentoring – which could assist in reducing<br />
delays in businesses receiving environmental approvals<br />
65 Ibid, p 265.<br />
66 Ibid, pp 281-285.<br />
67 Ibid, p 283.<br />
44 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
3 Identifying reform opportunities<br />
<br />
clear links between state government requirements for local government<br />
environmental administration and related funding and efficient cost recovery<br />
by local government. 68<br />
In <strong>NSW</strong>, the PC identified some apparent overlap in the regulation of land<br />
clearing. Clearing of vegetation is regulated under the Native Vegetation Act 2003<br />
(NV Act) and the Native Vegetation <strong>Regulation</strong> 2005. To clear land, a landholder<br />
may either apply to council for development consent or submit a draft property<br />
vegetation plan (PVP) to the catchment management authority for approval. 69<br />
According to the PC, the NV Act does not override or replace any requirement to<br />
obtain consent from a council where a Local Environmental Plan requires<br />
approval for the clearing of native vegetation. Similarly, a development<br />
approved by council may still require approval under the NV Act. 70<br />
Public health and safety<br />
In identifying leading practices in local government enforcement of public health<br />
and safety regulation, the PC reviewed a number of specific areas. These are<br />
outlined below.<br />
Public pools<br />
According to the PC, the regulatory burden of businesses subject to public<br />
swimming pool regulation would be reduced if local government based the<br />
frequency of swimming pool inspections on both the identified risk<br />
categorisation and prior compliance history of the business/pool. 71<br />
Skin penetration activities<br />
The PC notes that some councils use a risk-based approach to determine the<br />
frequency of inspections of skin penetration premises, taking into account the<br />
inherent risks of activities undertaken and the prior compliance history of the<br />
business. It believes there are merits in adopting such a system, if it was based<br />
on state or nationwide data and supported by a rigorous testing regime to ensure<br />
the robustness of the approach. 72<br />
Liquor Licensing<br />
Two levels of government are involved in regulating licensed premises in <strong>NSW</strong>.<br />
The <strong>NSW</strong> Office of Liquor, Gaming & Racing issues liquor licences, while local<br />
councils consider development applications for proposed licensed premises.<br />
68 Ibid, p 385.<br />
69 A PVP identifies areas which may be cleared, which vegetation must be kept as an offset and<br />
what the cleared land may be used for.<br />
70 Ibid, Box 11.7, p 410.<br />
71 Ibid, pp 370-371.<br />
72 Ibid, pp 380-381.<br />
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3 Identifying reform opportunities<br />
The PC reports that businesses are better able to determine the viability of<br />
proposed licensed premises if they have clear information about likely<br />
operational requirements at the project inception stage. It consequently notes<br />
that some councils (eg, Byron Shire Council) have a clear and publicly available<br />
policy indicating the development conditions they will place on approvals for<br />
licensed premises and the criteria they have for supporting a liquor licence<br />
application to the relevant state regulator.<br />
The PC also states that prospective liquor licence applicants would benefit from<br />
state licensing regulators providing explicit advice to them on the approvals that<br />
they need to get from local government. 73<br />
Liquor licensing can also be a contentious area of regulation for the community.<br />
This is currently evident in relation to licensed premises in Kings Cross, Sydney.<br />
Food Safety<br />
<strong>Government</strong>s at all levels have invested significant resources in improving food<br />
safety regulation throughout Australia. While the divergent approaches<br />
implemented in different states or by individual councils impacts on the goal of<br />
nationally consistent food safety regulation, the variation provides a wealth of<br />
opportunities for identifying leading practices. The range of approaches include:<br />
<br />
<br />
<br />
<br />
<br />
Excluding businesses selling only negligible risk food from food safety<br />
regulation and enforcement (Victoria, Tasmania and Western Australia).<br />
Using risk and compliance history information to improve regulation of food<br />
businesses (used by a number of local governments in Australia).<br />
Using standardised forms (<strong>NSW</strong> Food Authority).<br />
Enhancing public transparency, through:<br />
– easily accessible information explaining the basis for policies and especially<br />
the reasons for differential treatment (<strong>NSW</strong> Food Authority)<br />
– publishing information on regulatory activities (fees and charges,<br />
frequency of inspections, etc) and the results of compliance activities (New<br />
South Wales, South Australia, Queensland and Western Australia report on<br />
some items, while some local governments provide all such information).<br />
Precluding the need for multiple registrations – Victoria, Queensland and<br />
Western Australia enable mobile food vendors who operate in multiple local<br />
government areas to be registered once. There is concern that some councils<br />
across Australia can require a single food business such as a supermarket,<br />
which has multiple departments (eg, bakery, deli, butcher and seafood<br />
departments), to register individual departments as separate food businesses.<br />
An approach similar to that used for mobile food vendors could be warranted<br />
to clarify what should be considered a single food business and what should<br />
be considered separate.<br />
73 Ibid, p 383.<br />
46 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
3 Identifying reform opportunities<br />
<br />
Food safety program templates and tools to automatically generate programs<br />
(Victoria) – ideally, this could be combined with ‘deemed to comply’<br />
provisions (as recommended by South Australia) if the food business adhered<br />
to the procedures outlined in those templates. 74<br />
Parking and road transport<br />
The PC notes that, despite the introduction of national standards for parking and<br />
heavy vehicle road access, there is significant variation in their application by<br />
councils. It considers this can be a source of unnecessary regulatory burden for<br />
businesses operating across council jurisdictions.<br />
Parking<br />
According to the PC, an example of leading practice in parking regulation<br />
(exhibited by some councils in Tasmania, Queensland and the Northern<br />
Territory) is clear and accessible guidelines to allow prospective developers to<br />
evaluate their options with respect to the provision of parking, cash-in-lieu<br />
contributions (as substitutes for parking) and other offsets. 75 It notes more<br />
certainty would be provided to business if such guidelines clearly outlined:<br />
<br />
<br />
the circumstances in which cash-in-lieu contributions will be considered<br />
how contributions will be calculated<br />
how the money collected will be applied. 76<br />
Road transport<br />
Some councils restrict heavy vehicle access in a large proportion of their local<br />
roads, whereas others have little or no restrictions. According to the PC, these<br />
variations can impose significant costs on businesses operating across multiple<br />
jurisdictions. It consequently recommends that the National Heavy Vehicle<br />
Regulator seek to actively engage councils in the development of national heavy<br />
vehicle standards to moderate the inconsistent application of PBS-compliant 77<br />
vehicle access across local roads in different local government areas. 78<br />
74 Ibid, pp 330-338 and 348.<br />
75 Ibid, p 303-305.<br />
76 Ibid, p 305.<br />
77 The PBS (Performance Based Standards) is a nationally accepted classification system, which<br />
forms the basis for regulation of road access by heavy vehicles. There are 4 levels of<br />
classification, from single articulated vehicles to road trains. (Productivity Commission,<br />
Performance Benchmarking of Australian Business <strong>Regulation</strong>: The Role of Local <strong>Government</strong> as<br />
Regulator, July 2012, Vol 1, p 306).<br />
78 Ibid, pp 317-321.<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 47
3 Identifying reform opportunities<br />
The PC also reports that there is a lack of local road mapping in some areas<br />
because council road managers have not identified and published PBS-compliant<br />
routes. This means that heavy vehicle operators may have to apply individually<br />
to councils for permission to use the road network, rather than being able to<br />
access the network through compliance with gazettal notices. 79 It therefore<br />
recommends that state governments or the National Heavy Vehicle Regulator<br />
consider providing support, including technical and financial resources, to<br />
councils to identify and gazette suitable roads according to the PBS classification.<br />
This would enable heavy vehicle operators to avoid having to apply for several<br />
permits to access local roads on specific routes.<br />
<strong>IPART</strong> seeks comment<br />
21 What are examples of best practice enforcement approaches being used by<br />
<strong>NSW</strong> councils? Could these be applied more widely?<br />
22 What compliance and enforcement approaches used in other jurisdictions should<br />
be applied in <strong>NSW</strong>?<br />
23 Should any of the leading practices identified by the Productivity Commission in<br />
its 2012 Performance Benchmarking of Australian Business <strong>Regulation</strong>: The<br />
Role of Local <strong>Government</strong> as Regulator be implemented in <strong>NSW</strong>?<br />
24 What specific reforms to local government compliance and enforcement<br />
activities would reduce unnecessary regulatory burdens to business and the<br />
community?<br />
25 What impediments prevent councils from undertaking their compliance and<br />
enforcement activities more efficiently? How can these impediments be<br />
removed?<br />
79 Ibid, p 318.<br />
48 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
4 Estimating the impacts of recommended reforms<br />
4 Estimating the impacts of recommended reforms<br />
The ToR for this review require us to consider and estimate the impacts of our<br />
recommended reforms on business (especially small business), government and<br />
the broader community. This chapter explains how we propose to do this. It<br />
discusses how we will ensure our recommendations produce net benefits to<br />
<strong>NSW</strong>. It also outlines how we plan to estimate the reduction in regulatory<br />
burden to business and the community and the impact of our recommended<br />
reforms on government.<br />
In line with best practice regulatory principles, our analysis of potential impacts<br />
will be proportionate to the expected impacts of reform and informed by<br />
stakeholder consultation. 80<br />
4.1 Ensuring our recommendations produce net benefits to <strong>NSW</strong><br />
The ToR for this review requires us to provide recommendations that produce<br />
net benefits to <strong>NSW</strong>. This means that we will have to ensure that the value of<br />
regulatory reductions as a result of our recommendations are greater than any<br />
costs they impose on society. A reform that would merely shift costs from one<br />
group within the community to another (eg, from business to government)<br />
would not produce a net benefit to <strong>NSW</strong>. Similarly, a reform that would reduce<br />
costs to business, but impose costs on the community that are larger than these<br />
reduced business costs (eg, through adverse impacts on the environment,<br />
amenity, public health and safety, etc) would not produce a net benefit to <strong>NSW</strong>.<br />
In developing our recommendations, we will therefore consider all potential<br />
costs and benefits, not just reduced regulatory costs to regulated businesses or<br />
individuals.<br />
We are also unlikely to examine or critique the underling policy objectives of<br />
existing regulations. We will generally take these objectives as given. Rather, the<br />
aim is to determine ways in which the objectives of regulation can be achieved at<br />
least cost to society.<br />
80 <strong>IPART</strong>, Investigation into the burden of regulation in <strong>NSW</strong> and improving regulatory efficiency,<br />
October 2006, p 58; and <strong>NSW</strong> Better <strong>Regulation</strong> Office (BRO), Guidelines for estimating savings<br />
under the red tape reduction target, February 2012, p 10.<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 49
4 Estimating the impacts of recommended reforms<br />
4.2 Estimating reduced regulatory costs from our recommended<br />
reforms<br />
Regulatory reform can reduce or eliminate direct regulatory costs to the<br />
regulated group of businesses and/or individuals. Depending on the scope of<br />
the reform, it can also have indirect impacts – eg, flow-on impacts on other<br />
parties of sectors of the economy. Furthermore, reform can re-distribute<br />
resources and/or costs (eg, from one business group or industry to another, or<br />
from business to government, or from one level of government to another, or<br />
from one group within the community to another).<br />
For this review, we will:<br />
<br />
estimate the direct cost savings as a result of our recommended reforms<br />
consider and, where possible, evaluate indirect impacts of our<br />
recommendations<br />
<br />
consider the distributional impacts of our recommended reforms.<br />
4.2.1 Estimating direct cost savings from regulatory reform<br />
The purpose of our review is to make recommendations that improve the<br />
efficiency of local government compliance and enforcement activities. These<br />
recommendations will be aimed at reducing unnecessary regulatory (or ‘red<br />
tape’) costs to businesses and individuals. As outlined in Chapter 3, these costs<br />
include:<br />
<br />
<br />
<br />
<br />
administrative costs<br />
substantive compliance costs<br />
fees and charges<br />
delay costs.<br />
The sections below discuss, in general terms, how we propose to estimate the<br />
reductions in these costs as a result of our recommended reforms. This is based<br />
on methodologies outlined in BRO’s 2012 Guidelines for estimating savings under<br />
the red tape reduction target.<br />
Although, the methodologies for estimating cost savings are relatively simple,<br />
the challenge is obtaining the necessary data. For this will be largely reliant on<br />
the input of stakeholders, including businesses, local councils, <strong>NSW</strong> <strong>Government</strong><br />
agencies and the community. We hope to receive this via submissions to this<br />
paper, as well as through our own research and follow-up consultation with<br />
stakeholders.<br />
50 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
4 Estimating the impacts of recommended reforms<br />
Administrative costs<br />
Administrative costs are incurred when demonstrating compliance with a<br />
regulation (eg, by providing information to a regulator) and through<br />
information-related activities (eg, completing and lodging forms and<br />
applications). 81<br />
Administrative costs often equate to the time taken to provide a regulator with<br />
necessary paperwork multiplied by the value of this time. They may also include<br />
the cost of purchasing expert advice (eg, technical or legal experts) to assist in<br />
providing necessary information to regulators.<br />
BRO notes that administrative cost savings to business and the community may<br />
be realised through reforms which:<br />
<br />
<br />
move from paper to electronic applications or information collection<br />
consolidate separate administrative tasks into a single task<br />
place the administrative burden on the regulator. 82<br />
To estimate administrative cost savings of a recommended reform, we will seek<br />
to:<br />
<br />
<br />
<br />
identify the task(s) removed if the reform were to be implemented – eg,<br />
removal of a requirement to report information to a regulator<br />
place a time and dollar value on the removed task – eg, removal of the<br />
reporting requirement may save regulated businesses, on average, 7 hours of<br />
staff time per annum 83 , and the value of this would be equal to 7 x the relevant<br />
hourly wage rate x an employee on-cost multiplier<br />
multiply the value of the removed task by the relevant population of<br />
businesses or individuals affected – eg, if removal of the reporting<br />
requirement saves regulated businesses, on average, $400 per annum and<br />
there are 100 regulated businesses, then the annual cost saving of the removed<br />
task is $40,000.<br />
BRO notes that effective consultation should assist the measurement of<br />
administrative cost savings. This is because business, not-for-profit<br />
organisations, government departments, and individuals can provide<br />
information on appropriate wage rates and the time it takes to perform the tasks<br />
necessary to comply with regulation or interact with regulators. 84<br />
81 <strong>NSW</strong> Better <strong>Regulation</strong> Office, Guidelines for estimating savings under the red tape reduction target,<br />
February 2012, p 12.<br />
82 Ibid.<br />
83 That is, 7 hours of a ‘Full-Time Equivalent’ (FTE) employee.<br />
84 Ibid.<br />
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4 Estimating the impacts of recommended reforms<br />
Substantive compliance costs<br />
Substantive compliance costs primarily relate to changes in capital and operating<br />
costs required to comply with regulation or interact with regulators. They can<br />
include, for example, costs of buying and maintaining new equipment or<br />
undertaking specific training in order to comply with regulatory requirements.<br />
According to BRO, compliance cost savings to business and the community may<br />
occur where:<br />
<br />
<br />
<br />
certain equipment is no longer required to be purchased<br />
the government provides the training required to meet new standards<br />
the government removes restrictions or requirements on particular goods sold<br />
in an industry – eg, by moving from mandatory product standards to product<br />
efficiency labelling. 85<br />
To estimate substantive compliance cost savings of a recommended reform, we<br />
will seek to:<br />
<br />
<br />
<br />
Identify the requirement(s) removed if the reform were to be implemented<br />
– eg, a regulatory reform could remove the need to use a particular piece of<br />
equipment and certain production inputs such as energy, chemicals, labour,<br />
etc.<br />
Place a quantity and dollar value on the removed requirement(s) – eg, the<br />
capital equipment may cost $100,000, while the materials (or operating cost<br />
items) may cost an average of $30,000 per annum, per regulated business. To<br />
convert the capital cost to an annual figure, BRO recommends using the<br />
straight line depreciation method. 86 That is, if the average lifespan of the<br />
equipment is 10 years, the annual depreciation cost is $10,000 (ie,<br />
$100,000/10). Costs of avoided or reduced operating cost items can be<br />
estimated by multiplying the quantity of inputs reduced by the market price<br />
of these inputs.<br />
Multiply the average cost saving per regulated entity by the relevant<br />
population of businesses or individuals affected – eg, if the average annual<br />
cost saving per business is $40,000 and there are 100 regulated businesses<br />
affected, the total annual cost saving is $4 million.<br />
BRO notes that estimates of the amount of equipment or training costs that will<br />
be saved from a regulatory reform can be obtained through a combination of<br />
consulting with business and research. 87<br />
85 Ibid, p 13.<br />
86 Ibid, p 14.<br />
87 Ibid.<br />
52 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
4 Estimating the impacts of recommended reforms<br />
Fees and charges<br />
Fees and charges include licence fees, permit fees, registration fees, and other fees<br />
relating to the administration of regulation. Ideally, regulatory administration<br />
fees and charges should be set to allow regulators to recover the efficient costs<br />
they incur in administering and enforcing regulations.<br />
To estimate fee and charge cost savings of a recommended reform, we will seek<br />
to:<br />
<br />
<br />
<br />
identify the fees or charges reduced or eliminated if the reform were to be<br />
implemented – eg, a licence fee may be reduced to reflect a more targeted and<br />
efficient enforcement regime<br />
place a dollar value on the amended fee or charge – eg, the annual licence fee<br />
may be reduced from $200 to $20, which equates to a reduction of $180 per<br />
licence<br />
multiply the value of the reduced fee or charge by the relevant population<br />
of businesses or individuals affected – eg, if 1,000 businesses are subject to<br />
the annual licence fee, the annual value of the reduction is $180,000 (1,000 x<br />
$180).<br />
According to BRO, reductions in fees and charges should be the easiest cost<br />
savings to calculate. This is because they are known to regulators, who are also<br />
likely to have access to data on the number of individuals, businesses and notfor-profit<br />
organisations that would be liable for the fee or charge. 88<br />
Delay costs<br />
Delay costs result from delays in regulatory processes – eg, delays in receiving<br />
approval to undertake a certain activity. Delay costs generally include the cost of<br />
holding assets (land, capital, labour).<br />
BRO observes that delay costs may be reduced where:<br />
<br />
<br />
<br />
regulators are required to process applications within a set period<br />
the quantity of material required for an application is reduced, allowing faster<br />
processing<br />
there is a significant change to an approval process – eg, the process for<br />
handling objections. 89<br />
88 Ibid, p 15.<br />
89 Ibid, p 16.<br />
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4 Estimating the impacts of recommended reforms<br />
To estimate delay cost savings of a recommended reform, we will seek to:<br />
<br />
<br />
<br />
Identify the delay reduced or eliminated if the reform were to be<br />
implemented – eg, a reduction in the delay in processing development<br />
approvals (DAs)<br />
Place a quantity and dollar value on the reduced delay – if the average DA<br />
processing time is reduced from 50 days to 30 days, there is a saving of<br />
20 days. If the average value of a development for which approval is sought is<br />
$1 million and the cost of capital (of interest rate) is 7%, the value of this saved<br />
20 days equates to $3,836 ((20 days/365 days) x $1 million x 7% = $3,836).<br />
Multiply the value of the reduced delay by the relevant population of<br />
businesses or individuals affected – eg, if an average of 1,000 businesses or<br />
individuals per annum benefit from the reduced delay, the total annual cost<br />
saving is $3.8 million (which equals $3,836 x 1,000).<br />
Box 4.1 below outlines the results of some recent surveys of business on their<br />
regulatory compliance costs. The surveys by the PC and VCEC related<br />
specifically to local government as a regulator.<br />
54 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
4 Estimating the impacts of recommended reforms<br />
Recent surveys of Australian business on regulation and its costs<br />
Australian Industry Group National CEO Survey: Business <strong>Regulation</strong> (2011)<br />
Around 320 CEOs were surveyed regarding their experience with business regulatory<br />
regimes across Australia. The survey found that the average business spends close to<br />
4% of total annual expenditures on complying with regulation. It also found that larger<br />
(100 employees or more) businesses spend relatively more time on compliance related<br />
activities (27.2 hours per week) compared to medium (16.8 hours) or small businesses<br />
(7.3 hours).<br />
<strong>NSW</strong> Business Chamber Red Tape Survey (2011)<br />
Most of the 581 businesses surveyed were small to medium size (less than 50<br />
employees). The survey found that around 39% of these businesses spend more than 5<br />
hours per week on compliance activities.<br />
Productivity Commission National Survey of Business Perceptions (local<br />
government) (2012)<br />
The PC engaged Sensis to conduct a survey of 1,913 small and medium sized<br />
businesses across Australia. It found that 60% of these businesses had regulatory<br />
dealings with local government over the last 3 years. 83% of businesses said they were<br />
treated fairly in their regulatory dealings with local government, but 43% claim that the<br />
time and effort required to comply with regulations is excessive. More than one-third<br />
believe there is significant duplication with state government regulation.<br />
Victorian Competition and Efficiency Commission (VCEC) Business Perception<br />
Survey about Local <strong>Government</strong> <strong>Regulation</strong> (2010)<br />
Roy Morgan Research undertook a survey of 1,917 Victorian businesses on behalf of<br />
the VCEC. Of these businesses, just one-third had regulatory dealings with the local<br />
government in the last 3 years. Most interaction was in planning and land use, and<br />
building and construction regulations. 68% of Victorian businesses felt they were<br />
treated fairly in terms of regulation, but 30% stated there was too much duplication<br />
between state and local regulation.<br />
Sources: Australian Industry Group, National CEO Survey: Business <strong>Regulation</strong>, 2011. <strong>NSW</strong> Business<br />
Chamber, Red Tape Survey, September 2011. Productivity Commission, Performance Benchmarking of<br />
Australian Business <strong>Regulation</strong>: The Role of Local <strong>Government</strong> as Regulator, July 2012, Vol 1, p 228-238.<br />
VCEC, Local government for a better Victoria: An inquiry into streamlining local government regulation, August<br />
2010, pp 40 – 46.<br />
4.2.2 Considering indirect impacts of regulatory reform<br />
The section above discussed how we would seek to estimate direct cost savings<br />
from regulatory reform – ie, those cost savings that can be counted towards the<br />
<strong>NSW</strong> <strong>Government</strong>’s red tape reduction target of $750 million by June 2015.<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 55
4 Estimating the impacts of recommended reforms<br />
It is also important, however, for us to consider potential indirect impacts of our<br />
recommendations. Indirect impacts from regulatory reform may be wideranging<br />
and will likely be considerably more difficult to measure and analyse<br />
than direct impacts. Examples of indirect impacts include:<br />
<br />
<br />
<br />
<br />
<br />
improved regulatory outcomes (eg, better environmental amenity, reduced<br />
adverse health outcomes, etc)<br />
improved incentives for investment and innovation<br />
lower prices, improved quality and wider range of goods and services<br />
higher workforce participation, employment and economic growth<br />
enhanced competition or reduced barriers to entry.<br />
Economy-wide or indirect impacts of regulatory reform can be modelled using<br />
equilibrium modelling or econometric analysis (see Box 4.2).<br />
Like all models, equilibrium modelling is data-based and assumption driven.<br />
This means if the data are not reliable or the assumptions do not adequately<br />
capture the underlying relationships, the modelling results will not reflect the<br />
real-world effects of reforms. 90 Equilibrium modelling is best suited to large<br />
scale, economy-wide reform. The PC has used general equilibrium modelling on<br />
several occasions to assess COAG reforms.<br />
Econometric analysis can model and test links between regulatory reforms and<br />
dependent variables. Results are, however, influenced by assumptions in the<br />
modelling framework. Further, econometric analysis is unable to be used to<br />
estimate dynamic and flow-on effects of reforms beyond the dependent<br />
variable. 91 There is also a need for reliable and robust time series or panel data.<br />
Given the data requirements of equilibrium modelling and econometric analysis,<br />
we are unlikely to use them for this review. We will, however, seek to identify<br />
and qualitatively assess the potential indirect impacts of our recommended<br />
reforms.<br />
90 Productivity Commission, Identifying and evaluating regulation reforms, December 2011,<br />
Appendix J, p 32.<br />
91 Ibid, pp 20-21 & p 24.<br />
56 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
4 Estimating the impacts of recommended reforms<br />
Box 4.2<br />
Methods for assessing economy-wide regulatory impacts<br />
Equilibrium modelling<br />
Partial equilibrium models typically estimate the impact of a reform on a specific industry.<br />
For example, changes to the industry’s inputs, outputs or profitability over time.<br />
General equilibrium models – which describe the main relationships between inputs and<br />
outputs in the economy – then estimate how these changes flow on to other industries<br />
and sectors of the economy.<br />
Econometric analysis<br />
Econometrics is a set of statistical tools that can be used to determine whether regulatory<br />
reforms affect variables of interest. For example, the US Small Business Administration<br />
employed a regression analysis to examine what impact reductions in the regulatory<br />
burden (or changes in the ‘Regulatory Quality Index’) would have on a country’s<br />
economic activity (as measured by GDP per capita).<br />
Sources: Productivity Commission, Identifying and evaluating regulation reforms, 2011, p xxxviii. Crain NV &<br />
Crain MW, The Impact of Regulatory Costs on Small Firms, report for the Small Business Administration Office<br />
of Advocacy, September 2010, http://archive.sba.gov/advo/research/rs371tot.pdf (accessed 11 September<br />
2012).<br />
4.2.3 Considering the distributional impacts of our recommended reforms<br />
A further consideration is that changes to regulations or regulatory practices will<br />
likely have differing impacts on different sectors of the community. For example,<br />
the burden of regulation is not always uniformly distributed among small,<br />
medium and large businesses.<br />
The Australian Chamber of Commerce and Industry (ACCI) has argued that<br />
small and medium sized enterprises can bear a disproportionate burden of the<br />
costs of meeting regulatory obligations, “primarily due to the differential impact<br />
of the costs involved with improvements and administrative requirements<br />
resulting from the fixed-cost nature of compliance”. 92 The US Small Business<br />
Administration also found that regulatory cost per employee was at least 36%<br />
higher in small businesses (
4 Estimating the impacts of recommended reforms<br />
Moreover, different size businesses may have different objectives, which<br />
influences what they want from a regulatory regime. For example, larger<br />
businesses may want outcomes based approach, with flexibility, whereas smaller<br />
businesses may just want to be told exactly what they need to do to comply.<br />
In developing our recommendations, we will consider potential impacts on<br />
different segments of the community, including business (particularly small<br />
business), local government, State <strong>Government</strong> and the broader community.<br />
4.3 Estimating the budget implications for government<br />
The ToR requires us to provide estimates of the budget implications for<br />
government from implementation of our recommended reforms.<br />
We will therefore consider the potential impact of reforms on both government<br />
costs and revenues. In doing so, we will consult directly with a selection of<br />
potentially affected councils and/or State government agencies.<br />
As discussed previously, we are required to provide recommendations that<br />
would reduce red tape to business and the community, but also produce net<br />
benefits for <strong>NSW</strong>.<br />
<strong>IPART</strong> seeks comment<br />
26 Do you have information that will assist us in estimating costs of specific<br />
regulatory burdens arising from local government compliance and enforcement<br />
activities?<br />
27 Do you have information that will assist us in estimating cost savings from<br />
potential reforms to local government compliance and enforcement activities?<br />
28 Do you wish to comment on any other issues relevant to this review?<br />
58 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
A Terms of Reference<br />
A Terms of Reference<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 59
A Terms of Reference<br />
60 <strong>IPART</strong> <strong>Regulation</strong> <strong>Review</strong>
A Terms of Reference<br />
<strong>Regulation</strong> <strong>Review</strong> <strong>IPART</strong> 61