The political economy of Australian regulatory reform

Abstract

The problem of regulatory accumulation has increasingly been recognised as a policy problem in its own right. Governments have then devised and implemented regulatory reform policies that directly seek to ameliorate the burdens of regulatory accumulation (e.g. red tape reduction targets). In this paper we examine regulatory reform approaches in Australia through the lens of policy innovation. Our contributions are twofold. We first examine the evolutionary discovery process of regulatory reform policies in Australia (at the federal, intergovernmental, and state levels). This demonstrates a process of policy innovation in regulatory mechanisms and measurements. We then analyse a new measurement of regulatory burden based on text analytics, RegData: Australia. RegData: Australia uses textual analysis to count ‘restrictiveness clauses' in regulation – such as ‘must’, ‘cannot’ and ‘shall’ – thereby developing a new database (RDAU1.0). We place this ‘restrictiveness clauses’ measurement within the context of regulatory policy innovation, and examine the potential for further innovation in regulatory reform mechanisms.

The ‘forever war’ on red tape and the struggle to improve regulation

“…Other major economic players in the broader regulation/regulatory burden debates include the Australian Productivity Commission (and its state counterparts in Queensland, New South Wales and Victoria), the New South Wales Independent Pricing and Regulatory Tribunal and the Economic Regulation Authority of Western Australia, as well as the Business Council of Australia, the Australian Chamber of Commerce and Industry and the Council of Small Business Organisations Australia (Allen et al., 2021; Australian Chamber of Commerce & Industry, 2005; Business Council of Australia, 2005; Carroll, 2008b; Regulation Task Force Australia, 2006). Additional advocacy for economic deregulation and reducing the regulatory burden comes from influential business lobbies and the not‐for‐profit sector (Australian Council of Social Service, 2012; Ryan et al., 2008).…”

“…Over the years, several proxy measures of regulatory burdens have been developed. These include the number of Acts and regulations passed in any 1 year, the number of pages or words, the number in force in any year, the number of regulatory agencies and their staff or budgets and, more recently, the number of regulatory restrictions (Allen et al., 2021).…”

“…A more recent attempt to measure regulatory burdens is to measure ‘regulatory restrictions’, a methodology developed by the conservative Mercatus Center at the George Mason University in the United States through a computer‐based tool entitled RegData. The approach has been adopted and promoted in Australia by academics and others associated with the IPA (Al‐Ubaydli & McLaughlin, 2017; Allen et al., 2021). Rather than measuring pages or words in legislation, it measures words associated with restriction, such as ‘shall’, ‘must’, ‘may not’, ‘prohibited’ and ‘required’.…”

“…Indeed, reviews of RISs, in Australia and elsewhere, consistently conclude that the process is not achieving its stated objectives, due to insufficient coverage, lack of resources, low levels of compliance and a reluctance by departments to prepare RISs (Carroll, 2008a). For example, the New South Wales Auditor‐General stated that the ‘[RIS] processes were ineffective, the claimed financial benefits were inaccurate and hard to quantify, and, despite some early achievements, the measures taken had failed to spark sustained regulatory reform over the medium term’ (cited in Allen et al., 2021, p. 120). Likewise, the Greiner report observed that in New South Wales their quality was inconsistent, the assessments were ‘far from the reality’ and the process was little more than a tick the box exercise, if they were prepared at all; also, that RISs were used to justify rather than inform and overall the impression was that they were ‘little more than a perfunctory exercise and an administrative burden on those undertaking them’ (Greiner et al., 2017, p. 42).…”

“…While appealing because of its ‘apparent attractions of simplicity and rigour’ (Productivity Commission, 2011, p. xvii), O1XO, like RISs, comes with challenges and drawbacks. For example, New South Wales introduced a ‘one in, two out’ policy in 2012 (Allen et al., 2021). Yet in 2016, the NSW Auditor‐General reported that over the life of the policy the number of pages of legislation increased by an average of 1.4% per year, whereas in the 10 years preceding the policy, the number of pages decreased by 1.1% per year (Audit Office of New South Wales, 2016, p. 3).…”