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Government’s approach to policy development criticised in formal review

On 11 October 2012, the Government released the Independent Review of the Australian Government’s Regulatory Impact Analysis Process and its preliminary response. The Review provides a broad overview of the Government’s current policy development processes.

The Review was conducted by Mr David Borthwick AO PSM and Mr Robert Milliner, and took aim at many facets of the Government’s policy development processes, including the public service, ministers, and adherence to Cabinet processes. It made 14 recommendations.

The regulation impact analysis process mostly takes the form of the preparation of Regulatory Impact Statements (RISs) for inclusion with Cabinet Submissions in order to inform Cabinet decisions, and is intended to promote quality government policy development and decision making. A RIS must be assessed as adequate by the Office of Best Practice Regulation (OBPR) prior to a Submission being presented to Cabinet. 

The Review found that there was ‘considerable dissatisfaction and frustration with the RIS process by all parties: business and the not-for-profit sector, agencies and ministers and/or their offices.’ 

Some of the specific criticisms were as follows:
  • The Review noted that many policy proposals did not adhere to established governmental and policy processes, including the allocation of portfolio responsibilities between ministers. It observed that:
…agencies are required to deal with the consequences of a minister’s or another decision maker’s executive decision in advance of the RIS being prepared. In some instances, an announcement by a Minister outside of their portfolio has resulted in an agency being found non-compliant with the RIA Process by the OBPR. That such occurrences happen at all reflects two things:
      • at a micro level, it shows that ministers and decision makers lack an awareness of the RIA Process and the potential a timely and comprehensive RIS has for informing them and providing both a solid evidence base for policy decisions and of mitigating the risks of the consequences of ill informed or inappropriate regulation; and
      • at the broader level it is symptomatic of a drift away from rigorous regulatory policy process by successive governments over time. The move away from due process at the ministerial level flows down into the departments which serve them and has a deleterious effect on the culture for policy making across the entire public service.
  • There have been 31 Prime Minister’s exemptions from the RIS process under the Rudd/Gillard Governments. This has meant that many major policy decisions—such as the introduction of the Fair Work Act, the establishment of the National Broadband Network and the recent banning of the ‘super trawler’ from Australian waters— have not been subject to scrutiny. On Prime Minister’s exemptions, the Review said:
The Review has not been in a position to examine the reasons why particular Prime Ministerial exemptions have been sought or granted (as it has not been privy to the correspondence). … The reason appears to have more to do with it being expedient to decisions that the Government wanted to make. 
Going forward, the Review ‘strongly recommend[ed] that the reasons for granting an exemption be published.’ 
  • The capacity of the public service to effectively develop and implement policy was also questioned. The reviewers observed:
…that too many agencies claim that they lack the skills and resources to undertake analysis required by a RIS. If so, this seems to the Review extraordinary. ...a RIS should hardly be onerous to an agency which should know its business.… 
To make up for such perceived shortcomings in capacity and capability, all too often agencies have resorted to employing consultants. … 
Of course, consultants have their place, but agencies should have the expertise themselves – or be able to access it with proper planning – to define the problem and analyse the options. Admissions to the contrary – if they have any validity – do not reflect well on the state of regulatory policy capability of agencies.
  • On the OBPR, the Review concluded that:
For OBPR there is too much of a temptation to try and step in and, in effect, ‘rescue’ what they see as poor quality RISs. The Review considers that OBPR takes that role at times too far. They certainly should not effectively be making policy or regulatory judgements in areas beyond their knowledge and expertise. OBPR should exercise its oversight role as a ‘watch-dog’ asking questions and providing comment; the Review has reservations about them being a ‘gatekeeper’, especially when that seems to stop matters proceeding to Cabinet on a timely basis.
It remains to be seen whether or not the Government’s ultimate response will address these apparent shortcomings.