In 2014, the New South Wales Government (Government) launched the Quality Regulatory Services Initiative (QRSI), which aims to implement an outcomes and risk-based regulatory framework across Government agencies and Government-led industry initiatives.
The QRSI implementation period started in July 2014 and has a scheduled review date in July 2019 with regular review checkpoints throughout. This article examines a practical example of how one Government department – the NSW Department of Industry – is implementing the QRSI.
Key features of the QRSI
While regulation can be an important tool to, among other things, create competitive and productive markets, it can also impose a heavy burden on regulated entities. The QRSI is an instrument aimed at reducing regulatory burden and is part of a broader regulatory agenda in New South Wales to reduce red tape.
The QRSI incorporates five key reforms which are intended to make interactions with NSW regulators ‘easier and less burdensome for business[es] and the community’, namely:
- enable electronic transactions
- provide clarity in processing timeframes
- provide transparent appeal mechanisms
- promote a risk-based approach to compliance and enforcement
- require a greater focus on regulatory outcomes.
The first three reforms are relatively clear and straightforward.
In terms of the fourth reform – promotion of a risk-based approach to compliance and enforcement – the OECD defines risk-based regulation as a:
…systematised decision-making framework and procedures that prioritise regulatory activities and deploy supervisory resources, in particular those of inspection and enforcement, based on an assessment of the risks that activities pose to a regulator’s objectives.
In terms of the fifth reform – require a greater focus on regulatory outcomes – such an approach has been defined as a clearly defined and achievable approach that targets the efficiency and effectiveness of regulatory actions and outcomes which requires regulators to reflect on:
- legislative mandate
- core purpose to regulate entities, regulation beneficiaries, and the broader strategic context
Indicators of effective implementation of the QRSI
According to guidance published by the NSW Government to facilitate implementation of the QRSI, there are four key indicators of effective implementation of the QRSI:
- Developing and publishing a compliance and enforcement policy
- Driving employee internal and external business context and objective awareness including key strategies and milestones to achieve these objectives and the role they play
- Implementing effective internal procedures to ensure a structured approach to planning and gathering information, and measuring process
- Maximising technological resource application over short and long term time frames to improve areas within the control of regulators and identifying capability gaps and addressing them with innovative solutions.
In order to help regulators maximise the effectiveness of their QRSI implementation, the Government has generated a diagnostic tool. The diagnostic tool assists regulatory bodies in aligning their existing regulatory regimes with the QRSI by facilitating an identification of regulatory areas which require further development or areas which may already satisfy the objectives of the QRSI.
The NSW Department of Industry (Department) provides a practical example of how the QRSI has been implemented. The Department’s Regulatory Policy explains that it seeks to achieve an outcomes-focused and risk-based regulatory framework that each of the Department’s regulators follow, which addresses the requirements of the QRSI. In its Regulatory Policy, the Department has provided its regulators with step-by-step guidance as to how this can be achieved.
|1||Define the regulator’s core purpose|
|2||Classify regulated entities and activities into segments according to risk|
|3||Define and document intended outcomes|
|4||Define and document operational plans to achieve the outcomes|
|5||Carry out regulatory operations – implement the operational plans|
|6||Establish measures and report on achievement of outcomes|
|7||Strategic risk review and review of the outcomes, achievements and measures|
The Department’s Game Licensing Unit (GLU) Regulatory Policy illustrates how the high-level guidance provided by the Department has been can be translated into a pragmatic and strategic instruction for the regulator’s staff.
GLU’s Regulatory Policy demonstrates its ‘modern regulatory approach’ by driving behavioural change in its regulated class, game hunters. Under its legislating framework, the Game and Feral Animal Control Act 2002 and Game and Feral Animal Control Regulation 2012 and the outcomes and risk-based focus directed by the QRSI, the principle focus of GLU is to increase voluntary compliance by hunters rather than use resources to mitigate against non-compliance. Given the potentially lethal consequences of game and feral animal control, the above diagram demonstrates GLU is aware of and reacting to the risks involved in its activities and is seeking to implement a QRSI and Department level compliant response.
The QRSI is a mechanism for the Government to improve the State’s regulatory environment and, as a corollary, maintain and improve its dynamic economic growth. This article has shown that a shift to an outcomes and risk-based approach to regulations is already percolating through Departments in the Government into practical steps and strategic documents for regulators to follow.