Appendix 1: Key characteristics of good regulatory systems
Key characteristics of good regulatory systems
The Department of Treasury and Finance released the 'Victorian Guide to Regulation' in August 2011. This document provides guidelines to achieve the Government's vision of well-targeted, effective and appropriate regulation. A number of key characteristics of good regulation that were described in the guide and that would also be applicable to the development of legislation are:
- Effectiveness: Regulation, in combination with other government initiatives, must be focussed on the problem and achieve its intended policy objectives with minimal side-effects. The regulatory system should also encourage innovation and complement the efficiency of markets.
- Proportionality: Regulatory measures should be proportional to the problem that they seek to address. This principle is particularly applicable in terms of any compliance burden or penalty framework, which may apply. This characteristic also includes the effective targeting of regulation at those firms/individuals where the regulation will generate the highest net benefits.
- Flexibility: Government departments and agencies are encouraged to pursue a culture of continuous improvement, and regularly review legislative and regulatory restrictions. Where necessary, regulatory measures should be modified or eliminated to take account of changing social and business environments and technological advances. All subordinate legislation must be reviewed regularly and systematically under the SL Act The Act mandates that subordinate legislation 'sunsets' after ten years. This should be considered as the maximum time period at which the legislation is reviewed. Flexibility should also be taken into account when drafting legislation, to ensure that it does not unnecessarily constrain future government responses.
- Transparency: The development and enforcement of government regulation should be transparent to the community and the business sector. Transparency can promote learning and information-sharing within the regulatory system, and can also help to build public trust in the quality of regulation and the integrity of the process.
- Consistent and predictable: Regulation should be consistent with other policies, laws and agreements affecting regulated parties, in order to avoid confusion. It should also be predictable, in order to create a stable regulatory environment and foster business confidence. The regulatory approach should be applied consistently across regulated parties with like circumstances.
- Cooperation: When appropriate, regulation must be developed with the participation of the community and business and in coordination with other jurisdictions, both within Australia and internationally, to ensure that it reflects the interest of Victorians and takes in to account Victoria's major trading relationships. Regulators should also seek to build a cooperative compliance culture.
- Accountability: The Government must explain its decisions on regulation and be subject to public scrutiny. The same is true of its enforcement agencies. As such, the development and enforcement of regulation in Victoria should be monitored, with the results being reported to the public on a systematic basis.
- Subject to appeal: There should be transparent and robust mechanisms to appeal against decisions made by a regulatory body that may have significant impacts on individuals and/or businesses.