Annual Review 2005, Regulations 2005
July 2006

Chapter 2 - Significant Issues

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In 2005, the Subcommittee held 8 meetings. During those meetings it considered 121 statutory rules made during 2005. Of those rules 26 were accompanied by Regulatory Impact Statements. Of the total 178 regulations made, 57 were actually considered by the Subcommittee in early 2006.

The new Premier’s Guidelines[26] (the Premier’s Guidelines) were tabled on 9 December 2004 in the Legislative Assembly and the Legislative Council. The Premier’s Guidelines superseded the edition[27] published in 1997. This statutory series was subject to the Premier’s Guidelines. The Subcommittee has monitored the impact of the Premier’s Guidelines during the course of this year in respect of the scrutiny of Regulations. It has commented in this Report and written to Ministers when appropriate.

The Subcommittee did not make any reports to Parliament during 2005. However of the statutory rules examined during 2005, the Subcommittee had concerns with twelve. In each instance it wrote to the responsible Ministers seeking clarification. Generally, the Subcommittee received satisfactory responses to the issues raised. The Subcommittee thanks the Ministers for their responses.

The Subcommittee’s experience this year was that any problems it encountered in respect of the review of the regulations tended to fall within a discrete number of areas. For ease of understanding, the Subcommittee has classified the issues into particular categories. The categories however remain fluid and of course may change from year to year. The categories are as follows:–

(a) The statutory rule has been prepared in contravention of any of the provisions of the Act or of the guidelines with respect to the statutory rule and the contravention is of a substantial or material nature

(b) Consultation

(c) Consideration of Submissions - General expectation - Response required

(d) Technical matters - Incomplete certificates - Dates of publication in the Government Gazette and newspaper - Premier's Certificate - Special circumstances

(e) Setting a package of fees - 'The basket approach' - The Premier's Guidelines

(f) Sighting of material incorporated by reference

(g) Section 9(1)(a) - Section 21(1)(I) - requires explanation as to its form or intention

(h) Other Matters - General clarification - Delay in making regulations - The 'Balanced scorecard approach' - What is it?

(i) National Competition Policy - The impact of the Premier's Guidelines

(j) Section 9(1)(a) - Is there any appreciable economic or social burden on any sector of the public?

(k) Commendations

(a) The statutory rule has been prepared in contravention of any of the provisions of the Act or of the guidelines with respect to the statutory rule and the contravention is of a substantial or material nature

Under section 21(1)(j) of the Act the Subcommittee examines regulations to ensure that they have been properly prepared. It examines them to see whether they have been prepared in contravention of any of the provisions of the Act or of the guidelines with respect to the statutory rule. It examines the regulations to see whether the contravention is of a substantial or material nature.

This year no statutory rules came within this category.

(b) Consultation

Section 6 of the Act sets out the requirements for consultation. These requirements apply to regulations made with or without RIS’s. Responsible Ministers must ensure that there is consultation “where the guidelines require consultation”[28] with “any sector of the public on which an appreciable economic or social burden may be imposed.”[29]

The Premier’s Guidelines[30] provide as follows:–

5.19 If the proposed statutory rule is likely to impose any appreciable burden, cost or disadvantage on any sector of the public, consultation must take place with that sector, eg business groups, community groups, special interest groups. That consultation should include discussion of the need for and method of the proposed regulation.

The Premier’s Guidelines indicate that the “nature and degree of consultation that is appropriate for any particular rule will vary with the nature of that rule”.[31] This places the final responsibility on Ministers to ensure that appropriate consultation takes place and includes all those affected by a proposed regulation.

While the Premier’s Guidelines provide assistance with the consultation process, the Subcommittee acknowledges that some sections are unclear and ambiguous. This makes it difficult for department and agency officers to determine in what circumstances consultation should take place. There is, for example, an inconsistency between the Act and the Premier’s Guidelines as to whether consultation must or should occur in accordance with the Premier’s Guidelines. It is the strong preference of the Subcommittee that consultation take place with all those affected by a particular regulation and that the current ambiguities be resolved.

The Subcommittee considers it is important for all consultation certificates to provide details of all those consulted.

(c) Consideration of Submissions - General expectation - Response required

Section 11(3) of the Act imposes a duty on Ministers “to consider all submissions and comments received on a draft statutory rule where a RIS has been prepared”.[32] The Premier’s Guidelines also emphasise the need for proper consultation[33] before a regulation is made.

The Subcommittee considers that appropriate consultation is essential for the effectiveness of the regulatory system. The Subcommittee expects that submissions will be appropriately considered. To that end, a considered response from the Department to an individual submission is tangible evidence that matters have been considered. The Subcommittee’s firm view is that responses ought to be sent to those who have taken the time and effort to send in a submission.

The Subcommittee understands that occasionally there may be a large number of submissions in respect of a particular regulation. However, the Subcommittee’s view is that the number of submissions does not alter the expectation that an appropriate response should be sent. It simply means that there are a large number of people who have issues with the proposed regulation. Whilst this may mean an increased workload occasionally, the Subcommittee’s strong view is that this is simply a part of the democratic regulatory process. Appropriate weight and consideration ought to be given to the submissions sent in. Transparency is a critical part of the process. The Minister is required to perform his or her duty in accordance with section 11(3) of the Act. The Subcommittee’s firm view is that publication of a response to issues on a website is a quite inadequate response.

This year the Subcommittee has noticed a considerable improvement in the quality of responses prepared by the Departments in respect of submissions. Generally, Departments prepare a table summary of the issues raised in the submissions. This is the case particularly where there are a large number of submissions. The Subcommittee finds this to be extremely helpful. This year, in many regulations where there were a large number of submissions, Departments sent a general letter covering the various themes to those who made submissions. In other instances where there were a few submissions, Departments wrote individual letters to those who made submissions. The letters discussed the matters raised in detail. Frequently, the Subcommittee has written commending a particular Department on its outstanding work.

The Department’s response in respect of SR No. 98 – Local Government (Electoral) Regulations 2005 was outstanding. The Subcommittee was provided with an extremely thorough analysis of the eighty six submissions. In addition, a detailed letter was sent to each organisation or individual responding to the issues raised. Below is the Subcommittee’s letter to the Minister.

Example 1:
SR No. 98 – Local Government (Electoral) Regulations 2005

Subcommittee’s Letter[34]

The Regulation Review Subcommittee considered and approved the above Regulations at a meeting on 26 September 2005.

Eighty six submissions were received during the regulatory impact statement process. The Subcommittee was provided with an extremely thorough analysis of the submissions. The comprehensive manner in which the Department summarised the issues facilitated the Subcommittee’s work. In addition, the Department wrote a detailed letter to each organisation or individual responding to the issues raised.

The Subcommittee wishes to acknowledge the outstanding manner with which the Department dealt with the submissions. The Subcommittee commends those involved and requests that you forward its comments to the relevant officers.

In respect of SR No. 103 – Fisheries (Recreational Abalone) Regulations 2005, the Subcommittee was again provided with a thorough summary of the issues raised. The Subcommittee’s view is that transparency is an important part of the regulatory impact statement process. To that end, the Subcommittee’s view is that an appropriate response ought to be communicated to those members of the public involved in the process. The fruit of the considerable labour already undertaken needs to be shared to add a further degree of transparency. The Subcommittee wrote in those terms to the Minister.

Example 2:
SR No. 103 – Fisheries (Recreational Abalone) Regulations 2005

Subcommittee’s Letter[35]

The Regulation Review Subcommittee considered and approved the above Regulations at a meeting on 9 November 2005.

One hundred and fifty seven submissions were received during the regulatory impact statement process. A summary of the issues raised was sent to the Subcommittee. This greatly facilitated the work of the Subcommittee. From the material provided to the Subcommittee it appears that a number of changes were made as a result of the consideration of the submissions.

While the Subcommittee acknowledges the considerable work already undertaken, its general expectation is that a written acknowledgement responding to the issues raised or a general letter covering the various themes should be sent to those who made submissions. In this instance recommendations were made as a result of the consideration of the submissions. Transparency is an important part of the regulatory impact statement process. To that end, the Subcommittee’s view is that an appropriate response ought to be communicated to those members of the public involved in the process. Or to put it another way, the fruit of the considerable labour already undertaken needs to be shared to add a further degree of transparency.

The Subcommittee thanks those officers involved in the preparation of the summary. The Subcommittee would appreciate it if you could also advise the relevant officers of the foregoing.

Minister’s Response[36]

I refer to your letter of 10 November 2005 about the Fisheries (Recreational Abalone) Regulations 2005.

The Department of Primary Industries (DPI) implemented an extensive communication strategy to inform relevant stakeholders of the new regulations, both before and after their introduction on 1 September 2005. The communication strategy involved a variety of tools and mediums to communicate the outcomes from the Regulatory Impact Statement (RIS) process.

Initiatives included a comprehensive media announcement before 1 September 2005 advising of the new regulations, in addition to newspaper, diving magazine and DPI website advertisements. Letters were provided to peak bodies, dive clubs, dive shops and other relevant fisher associations. Pocket sized cards containing advice on the new regulations were distributed in Chinese, Maori, Cambodian and Chilean. The Victorian Recreational Fishing Guide 2005 was also updated to reflect the new amendments, and maps were produced showing bag limits, size limits and open season information.

I have noted your suggestion to write to each person who made individual submissions to the RIS, advising them of the outcome of the RIS. Whilst this is usually done, it was considered to be unnecessary in this instance, given the extensive communication strategy implemented by DPI. I have asked that in future, the Department provide direct responses to these members of the public involved in the submission process.

Late submission to the Subcommittee

The Subcommittee received a late submission in respect of SR No. 103 Fisheries (Recreational Abalone) Regulations 2005. At the date of receipt, the Subcommittee had already approved the Regulations. However, the Subcommittee considered it carefully and sent it to the Minister for his comments. The Subcommittee sent the following letter to the Minister:–

Subcommittee’s Letter[37]

The Regulation Review Subcommittee (the Subcommittee) considered and approved the above Regulations at a meeting on 9 November 2005. The Subcommittee also notes that a number of changes were made to the regulations as a result of consideration of the submissions. The changes included an increased daily catch limit and additional recreational fishing days.

The Subcommittee received a late fourteen page submission (the submission) from the Scuba Divers Federation of Victoria on 22 December 2005. The Regulation finally expires in the Legislative Assembly on 8 February 2006. I enclose a copy of the submission for your perusal.

The submission raises various matters. In particular: -

1. It challenges the basis of scientific data used or unused in the regulatory impact statement.

2. It asserts there is no proper quantification of the scale of the theft of the abalone.

3. It asserts that the closure dates in relation to the submissions were confusing.

The Subcommittee would be grateful for your comments in respect of the above matters as soon as possible.

Please do not hesitate to contact me should you wish to discuss any aspect of the above.

Minister’s Response[38]

Thank you for your letter of 24 January 2006 regarding the Fisheries (Recreational Abalone) Regulations 2005 and requesting comments on various matters raised by the SCUBA Divers Federation of Victoria (SDFV) in their submission to the Regulation Review Subcommittee.

The scientific information used in determining the need for the regulations was highlighted in a Primary Industries Research Victoria report titled “Assessment of abalone population on inshore reefs accessible to recreational divers alone the central Victorian coast”. The report noted that abalone populations on the inshore reefs were in lower abundance than the main commercially fished populations found in deeper less accessible reefs. In addition to this, it was noted that central Victorian inshore reefs are likely to have a lower capacity to sustain such fishing pressure compared to main commercially fished reefs. For that reason, the report supported the need for measures aimed at increasing protection to inshore populations of abalone.

It is not possible to definitively quantify the scale of illegal abalone taken however, due to the regular frequency of this activity along the coast, it was estimated the cumulative impact is likely to be relatively high. As such, a regulatory response by the Government was warranted.

Advertising the release of the Regulatory Impact Statement (RIS) and the public consultation period was part of the Department’s extensive communication strategy. The RIS was publicly advertised in a daily newspaper, ‘Fish-e-fax’, as well as the Department of Primary Industries’ external website. Furthermore, an advertisement was placed in the Government Gazette on 8 November 2004, extending the consultation period to 7 December 2004, providing more than three months for public comment.

The recreational fishing peak body, VRFish was informed of this extension by the Department.

The tighter controls on recreational abalone fishing have now been in place for a period of six months and the majority of the 60 open days for the year commencing 1 September 2005, have now passed. Advice from Senior Fisheries Officers and commercial abalone divers located in central Victorian waters is that the new management regime is having a positive impact of the resource by significantly reducing fishing pressure previously occurring due to this form of activity.

The Department has endeavoured to consult the SDFV throughout the development and introduction of the new regulations. Whilst I understand that there may be some concern amongst the SDFV regarding the new regime, the issues raised in their submission were thoroughly considered during the RIS process.

The Subcommittee also reminded the Ministers of its expectations in relation to SR No. 76 – Cemeteries and Crematoria Regulations 2005 and SR No. 69 – Transport (Ticketing and Conduct) Regulations 2005.

Example 3:
SR No. 76 – Cemeteries and Crematoria Regulations 2005

Subcommittee’s Letter[39]

The Regulation Review Subcommittee considered and approved the above Regulations at a meeting on 29 August 2005.

The Subcommittee made enquiries of the Department and was advised that a bulletin provided stakeholders with information about the number of submissions received and the key issues that were identified. The Subcommittee understands that training sessions were conducted after the close of submissions in April and May 2005. The Subcommittee considered the bulletin with which it was provided. Whilst the bulletin identifies briefly some issues raised in the written submissions, the Subcommittee is of the view that many more issues were raised by the fifty seven submissions. Some of those fifty seven submissions were lengthy.

Whilst the Subcommittee acknowledges the work already undertaken, its general expectation is that a written response is an appropriate manner in which to deal with the many issues raised by the submissions. The Subcommittee understands that occasionally there may be a large number of submissions in respect of a particular regulation. However, this does not alter its view that an appropriate written response should be sent. It simply means that there a large number of people who have issues with the proposed regulation. Whilst this may mean an increased workload, this is simply part of the democratic process.

The Subcommittee would appreciate it if you could advise the relevant officers of the foregoing.

Minister’s Response[40]

Thank you for your letter of 6 September 2005 on behalf of the Regulation Review Subcommittee of the Scrutiny of Acts and regulations Committee, concerning the Cemeteries and Crematoria Regulations 2005.

I have made the department aware of the Subcommittee’s comments, in particular the need to provide an appropriate written response to submissions made in response to the Regulatory Impact Statement.

The department has advised me that in this particular case a written response was not provided because the department considered it had satisfied this requirement through other communication means. In particular the ten full-day training sessions conducted throughout Victoria for cemetery trusts and funeral directors, which amongst other things, facilitated direct feedback on the discussion of the issues identified through the RIS process.

The Subcommittee’s advice has been duly noted by the department and will be incorporated into future processes for the development of legislation.

Thank you for bringing this to my attention.

Example 4:
SR No. 69 – Transport (Ticketing and Conduct) Regulations 2005

Subcommittee’s Letter[41]

The Regulation Review Subcommittee considered and approved the above Regulation at a meeting on 29 August 2005.

The Subcommittee notes that twenty eight submissions were received. Generally, those submissions were short. However, there was one submission from the Homeless Persons’ Legal Clinic which was some twenty five pages in length. It raises such matters as alternatives to fixed monetary penalties such as unpaid community work and an education program. There was also a submission from Youthlaw which was nine pages in length. Some emails were sent from the Department to individuals clarifying the operation of the Regulations. However, it seems no response or acknowledgment was given to all those who made submissions.

The majority of the issues were considered in the summary of submissions provided to the Subcommittee. Whilst the Subcommittee acknowledges the work already undertaken, its general expectation is that a written acknowledgement of the submissions or a general letter covering the various themes should be sent to those who made submissions. The Subcommittee understands that occasionally there may be a large number of submissions in respect of a particular regulation. However, this does not alter its view that an appropriate written response should be sent. It simply means that there are a large number of people who have issues with the proposed Regulation. Whilst this may mean an increased workload, this is simply part of the democratic process.

The Subcommittee would appreciate it if you could advise the relevant officers of the foregoing.

Minister’s Response[42]

Thank you for your letter of 6 September 2005 on behalf of the Scrutiny of Acts and Regulations Committee regarding the Transport (Ticketing and Conduct) Regulations 2005.

I am pleased to advise you that responses or acknowledgements were sent to all individuals or groups who made submissions, with the sole exception of the Victoria Legal Aid (VLA). The VLA submission comprised an unsigned letter which was received by the Department of Infrastructure (DOI) late, and by email. It was understood that a signed hard copy would be received from the VLA in due course, but this did not eventuate. However, verbal acknowledgement of the receipt of its submission was provided by the DOI to the relevant officer from VLA.

The responses that were provided to the Committee were those that were thought to be of interests. The others were not provided because it was considered both that the Committee would not wish to read through similar acknowledgements, and that the Minister’s certificate under section 10 of the Subordinate Legislation act 1994 would be sufficient. I regret that this was not made clear in the letter accompanying the documents.

Copes of the acknowledgements not previously provided are now attached. The relevant officers in the DOI have been made aware that the Committee wishes to see all responses and acknowledgements.

Thank you for bringing this matter to my attention. If you require further information, please contact Alana Chinn of the DOI on telephone (03) 9655 2064.

(d) Technical matters - Incomplete certificates - Dates of publication in the Government Gazette and newspaper - Premier's Certificate - Details of 'Special Circumstances'

The Subcommittee is concerned to ensure technical compliance with the Act. Pursuant to section 11(a) and (b) of the Act, the RIS must be published in the Government Gazette and a daily newspaper circulating generally throughout Victoria. All relevant certificates should accompany the regulations and be signed and dated. Failure to do so will ensure a letter from the Subcommittee requesting rectification of these matters.

Example 1:
SR No. 161 – Land Tax (Indexation Factors) Regulations 2004

Subcommittee’s Letter[43]

The Regulation Review Subcommittee considered and approved the above Regulations at a meeting on 16 March 2005.

The Subcommittee notes that the section 8 exception certificate is undated. The Subcommittee requests rectification of the same.

Please do not hesitate to contact me should you wish to discuss the matter.

Minister’s Response[44]

Thank you for your letter dated 24 November 2005 in relation to the Land Tax (Amendment) Regulations 2004 and the Land Tax (Indexation Factors) Regulations 2004.

With respect to the matter of undated certificates I wish to confirm that I signed the certificates on 24 and 29 November 2004 respectively in my capacity as Acting Treasurer. I attach a copy of the briefs on which approved the making of the Regulations. This shows evidence of the date of the approval and therefore the date of signing. I have also attached a statement to the original certificates confirming the date on which they were signed.

I trust the above is satisfactory to the Committee.

Attachment

I, John Lenders, Minister for Finance, confirm that the certificates associated with the as Land Tax (Amendment) Regulations 2004 and the Land Tax (Indexation Factors) Regulations 2004, listed below and attached, were signed by me on 24 and 29 November 2004 respectively in my then capacity as Acting Treasurer –

• Certificate of Exception under Section 9 of the Land Tax (Amendment) Regulations 2004

• Certificate of Exception under Section 8 of the Land Tax (Indexation Factors) Regulations 2004

Example 2:
SR No. 65 – Audit (Public Bodies) Regulations 2005

Subcommittee’s Letter[45]

The Regulation Review Subcommittee considered and approved the above Regulation at a meeting on 29 August 2005.

The Subcommittee notes that the section 9 certificate is undated. The Subcommittee requests rectification of the matter.

Minister’s Response[46]

I refer to your letter dated 6 September 2005 relating to the above Regulation in which you note that the section 9 certificate forwarded to the Regulation Review Subcommittee was undated. This was an administrative oversight which has now been rectified. Please find enclosed a copy of the dated section 9 certificate for you records.

Should you have any queries in respect to these Regulations please contact me on 9651 5310.

(e) Setting a package of fees - 'The basket approach' - The Premier's Guidelines

The Premier’s Guidelines[47] provide as follows:–

5.25 It is acceptable to make a statutory rule setting a package of fees. This is known as the ‘basket approach’. However, the exception available in section 8(1)(a) does not apply if any individual fee component in the package exceeds the Treasurer’s annual rate. It does not matter if the average fee increase across the package is less than the annual rate. If any individual fee is increased above the annual rate, a RIS process needs to be undertaken as the fee increase may have a significant and adverse impact on the community and business.

In SR No. 57 – Plumbing (Fees Amendment) Regulations 2005 increased a number of fees. This was done using the ‘basket approach’. In this instance, four of the seventeen fee increases exceeded the Treasurer’s approved rate of 2.25% although the actual monetary increases were extremely small. In addition, the package as a whole fell within the Treasurer’s approved rate. The increases were 0.03% above the approved rate. The table set out below illustrates the dollar value of the four fee increases which were marginally above the approved rate. In real terms, the largest monetary amount above an increase of 2.5% was eight cents. The smallest monetary amount above an increase of 2.5% was three cents.

The Subcommittee is bound by the Premier’s Guidelines. A strict interpretation of the Premier’s Guidelines leads to the view that as a matter of principle individual fees in a ‘basket’ package should not exceed the Treasurer’s annual rate. However, the Subcommittee is of the view that fee increases and the Premier’s Guidelines need to be read in a commonsense manner. Clearly, it is often sensible to introduce a ‘basket’ package of fees. It is a more efficient and streamlined manner of introducing a large number of routine fee increases. In this instance monetary increases were extremely small.

The Subcommittee will examine each regulation carefully. The Subcommittee is conscious of its statutory obligations. The Subcommittee’s view is that it is a matter of balance. The ‘basket’ of fees in its entirety must not exceed the Treasurer’s approved annual rate. However if, in a package of a number of fees, three or four slightly exceed the Treasurer’s annual rate then that may not necessarily be an immediate cause for concern. Rather, the Subcommittee will examine each fee increase, the monetary amount and what the fee is for. Each Regulation will be examined on its merits and in context.

During the year, there have been informal discussions with officers from the various Departments and the Legal Adviser. The discussions suggest that a strict interpretation of the Premier’s Guidelines may make it difficult for Departments in practical terms in setting a package of routine fee increases. Ultimately, Regulations are the practical arm of the legislation. They need to function and be made in a commonsense and practical manner where possible. The Subcommittee will continue to monitor the impact of the Premier’s Guidelines. If and when appropriate it will recommend changes to the wording of the Premier’s Guidelines. At this stage, the Premier’s Guidelines have only been in operation for over a year. The Subcommittee’s will carefully scrutinise the Regulations and the Premier’s Guidelines during the coming year. The Subcommittee welcomes input from Departments.

Example 1:
SR No. 57 – Plumbing (Fees Amendment) Regulations 2005

Subcommittee’s Letter[48]

The Regulation Review Subcommittee considered and approved the above Regulations at a meeting on 29 August 2005.

The new Premier’s Guidelines which were tabled on 9 December 2004 provide as follows: –

5.25 It is acceptable to make a statutory rule setting a package of fees. This is known as the ‘basket approach’. However, the exception available in section 8(1)(a) does not apply if any individual fee component in the package exceeds the Treasurer’s annual rate. It does not matter if the average fee increase across the package is less than the annual rate. If any individual fee is increased above the annual rate, a RIS process needs to be undertaken as the fee increase may have a significant and adverse impact on the community and business

The Subcommittee notes that four of the seventeen fee increases exceed the Treasurer’s approved rate of 2.25%. To that extent, the Regulations do not conform with the Premier’s Guidelines. In this instance, the Subcommittee notes that the actual increases in monetary terms are small. The increases are 0.03% above the approved rate. As a matter of principle the Subcommittee wishes to reinforce its view that individual fees in a ‘basket’ package should not exceed the Treasurer’s annual rate. However the Subcommittee is of the view that fee increases and the Premier’s Guidelines need to be read in a commonsense manner. The Subcommittee will continue to monitor such ‘basket’ packages closely in the future. The Subcommittee would appreciate it if you could advise the relevant policy officers of the foregoing.

Minister’s Response[49]

Thank you for the Committee’s comments regarding four fee increases in the above regulations which exceeded the Treasurer’s rate by 0.03%.

I am advised that the four fees were rounded to the nearest whole dollar in accordance with section 8(2) of the Subordinate Legislation Act 1994 (SL Act).

I note the Committee’s advice that the Premier’s Guidelines made under section 26 of the SL Act do not refer to rounding in accordance with section 8(2).

Relevant officers have been advised of the Subcommittee’s view that individual fees in a package of fees must not exceed the Treasurer’s rate.

(f) Sighting of material incorporated by reference

Regulations often include a table of applied, adopted or incorporated matter in accordance with the requirements of regulation 6 of the Subordinate Legislation Regulations 1994. Such a table lists all the material applied, adopted or incorporated by reference in the regulations. Occasionally, the Subcommittee is placed in the position where it has to consider and or approve regulations without sighting the material which is incorporated into them. Where the Subcommittee does not sight the material it cannot form a view as to whether it conforms with the requirements of the Act.

The Premier’s Guidelines provide some assistance.[50]

7.03 Section 32 of the Interpretation of Legislation Act 1984 prescribes the procedural requirements which must be fulfilled whenever a statutory rule applies, adopts or incorporates material by reference. Section 32(5) of the Interpretation of Legislation Act 1984 provides that a failure to comply with the tabling requirements does not affect the validity, operation or effect of a statutory rule but agencies should nevertheless ensure compliance with the requirements of section 32 as amended by the Subordinate Legislation Act 1994.

7.04 When considering whether to incorporate a particular document in a statutory rule it should be remembered:

• that the provisions of the rule will only refer to the incorporated material and members of the public affected by the rule must see the incorporated document before they can understand the contents and effect of the rule:

• that the incorporated material may not be readily available at a reasonable cost:

• that the procedures set out in section 32 are designed to facilitate Parliamentary oversight of incorporation of material and to ensure that such material is publicly available so that members of the public affected by the rule can have access to the rules with which they must comply.

7.05 It needs to be remembered that the incorporated material may not be a single document. The problem is exacerbated by the drafting style adopted by the Standards Association of Australia as these standards are frequently not self contained but adopt the provisions of other standards. This can create a chain of material incorporated by reference leading to the possibility that the need to table a particular document will be overlooked.

7.06 Consideration should also be given in drafting statutory rules as to whether the reference to an Australian Standard should be to a specific standard (eg AS 1234) or to a specific version of a standard by reference to its date (eg AS 1234, 1997). The latter approach means that if a later amended version of a standard is to be adopted it will require the amendment of the statutory rule and the undertaking of the RIS process. The former approach may result in significant changes to the effect of the statutory rule with no automatic mechanism to review the changes to the costs and benefits of the statutory rule.

7.07 The aim of the procedures set out in section 32 of the Interpretation of Legislation Act 1984 is to guarantee the availability of any material which is incorporated into a statutory rule by reference, to ensure that citizens may have access to the laws with which they must comply.

7.08 In deciding whether to incorporate material by reference, agencies need to take care to balance the drafting convenience with ease of access to the incorporated material and understanding of it by those affected by it or required to comply with it. Agencies should reserve the use of incorporated detailed and extensive technical material to regulations concerning industries familiar with and using the material. The use of the material then has the benefit of removing duplication. In such cases agencies should also consider whether performance standards are the more appropriate means of regulations.

The Subcommittee’s preference is that all material is provided to it simultaneously so that it can all be considered in the context of the regulation.

This year the Subcommittee has again noticed that generally material incorporated by reference has been provided to it with the original material in respect of the regulation. This certainly makes the Subcommittee’s task easier. The Subcommittee wishes to acknowledge and thank those Departments who make the effort to forward to it additional material.

(g) Section 9(1)(a) - Section 21(1)(I) - requires explanation as to its form or intention

There were not any regulations this year in respect of which this head of power was raised.

(h) Other Matters - General clarification - Delay in making regulations - The 'Balanced scorecard approach' - What is it?

Often the Subcommittee considers the overall operation of a regulation. It may consider just how a regulation works in practice. The Subcommittee sometimes writes to a Minister seeking general clarification of various matters.

Delay in making Regulations

One matter which concerned the Subcommittee this year was the delay between the advertisement of the regulatory impact statement and the making of the regulations. In SR No. 18 – Heritage (General) Regulations 2005 the delay was actually three years. These Regulations prescribed forms, fees and specified the circumstances under which the Heritage Council can waive fees. The Subcommittee made considerable enquiries about the process from the Department. It was advised that additional consultation in the form of letters to stakeholders took place during that time. In this instance, nearly all the stakeholders approved the making of the regulations. Nevertheless, the Subcommittee wrote to the Minister expressing its view that it is not preferred practice to have such a long delay between the advertisement of the regulatory impact statement and the making of the regulations.

Example 1:
SR No. 18 – Heritage (General) Regulations 2005

Subcommittee’s Letter[51]

The Regulation Review Subcommittee considered and approved the above Regulations at a meeting on 4 July 2005.

The Subcommittee notes that the regulatory impact statement was first advertised for public comment in February 2002. The Regulations finally commenced operation on 15 April 2005. The Subcommittee notes that during the three year period the regulatory impact statement was not re-advertised. The Subcommittee also notes that some consultation in the form of letters to stakeholders took place during that time. The Subcommittee also notes that nearly all the stakeholders approved the making of the Regulations.

However, the Subcommittee wishes to express its view that it is not preferred practice to have such a long delay between the advertisement of the regulatory impact statement and the making of the regulations.

The ‘Balanced Scorecard Approach’ – What is it?

Another matter which concerned the Subcommittee was the use of the ‘Balanced Scorecard Approach’ in a RIS. The Subcommittee seems to encounter the use of the ‘Balanced Scorecard Approach’ in RISs with increasing frequency. In SR No. 136 – Transport (Tow Truck) Regulations 2005, the RIS which accompanied the Regulations included a summary of alternatives. The summary of alternatives included a Table. The Table contained a subjective assessment of the proposed regulations and the alternatives compared to the ‘Base Case’ using the ‘Balanced Scorecard Approach”. It is fair to say that the Subcommittee does not find that the use of such a Table provides great illumination in the context of an assessment of alternatives. On one view, the inclusion of such a Table to the average reader of the RIS adds little in terms of understanding and clarity. If such a Table is to be used, then there ought to be appropriate commentary which explains it. The Subcommittee wrote to the Minister in the following terms.

Example 1:
SR No. 136 – Transport (Tow Truck) Regulations 2005

Subcommittee’s Letter[52]

The Regulation Review Subcommittee (the Subcommittee) considered and approved the above Regulations at a meeting on 8 March 2006.

The Regulatory Impact Statement (RIS) which accompanied the Regulations included a summary of alternatives at page v. The summary of alternatives included a Table. The Table contained a subjective assessment of the proposed Regulations and the alternatives compared to the ‘Base Case’ using the ‘Balanced Scorecard Approach’.

The Subcommittee made enquiries and understands that the inclusion of the table and the ‘Balanced Scorecard Approach’ comes from the new Victorian Guide to Regulation published in February 2005 at pages 5-12 and 5-13. It seems to the Subcommittee that the inclusion of the Table to the average reader, adds little in terms of understanding and clarity. What are ‘weighted scores’ and ‘scores’? How are the scores given? On one view, any numbers can be chosen to ensure that ‘weightings’ come out in favour of the proposed Regulations. The description of the Table in the RIS uses the words ‘subjective assessment’. How does this ‘subjective assessment’ or indeed the Table assist the average reader of a RIS in terms of understanding?

Whilst there is some explanation (one paragraph at page 5-13), in the Victorian Guide to Regulation of the ‘Balanced Scorecard Approach’, the average reader would not generally use such a document. The Victorian Guide, so the Subcommittee understands, was prepared principally for those involved with the preparation of RISs and business impact statements.

The Subcommittee is in the process of finalising the Annual Report for publication. These matters will form part of the Annual Report.

The Subcommittee would appreciate your explanation and comments as soon as possible.

Minister’s Response[53]

Thank you for your letter of 14 March 2006 regarding the use of the Balanced Scorecard Approach in the Regulatory Impact Statement (RIS) for the above Regulations.

The Scrutiny of Acts and Regulations Committee (the Committee) has commented that the weightings and scores given are subjective and add little in terms of understanding and clarity. On one view, any numbers can be chosen to ensure that “weightings” come out in favour of the proposed regulations. It further commented that while there is some explanation (one paragraph at page 5-13) in the Victorian Guide to Regulation (the Guide), the average reader would not generally use such a document and the Guide was prepared principally for those involved in the preparation of RISs and business impact assessments.

The use of the Balanced Scorecard Approach in the RIS was adopted on advice from the Victorian Competition and Efficiency Commission (VCEC). The view of the VCEC is that the Balanced Scorecard was the most appropriate decision criterion to assess various regulatory alternatives in the RIS, given that most of the benefits arising from the regulations were qualitative in nature. Further, VCEC independently certified the RIS as “adequate” under section 10(3) of the Subordinate Legislation Act 1994.

It is the understanding of the Department of Infrastructure (DOI) that the use of the Balanced Scorecard Approach is often use in RISs where there are qualitative benefits which are difficult, costly or impractical to estimate. For example, after advice from VCEC, the RISs for the Transport (Ticketing and conduct) Regulations 2005 S.R No.69/2005 and the Transport (Taxi-Cab Licences – Market and Trading) Regulations 2005 S.R No.164/2005 also adopted the Balanced Scorecard Approach.
The Guide provides two paragraphs of explanation of the Balanced Scorecard and a fully worked example (the explanation covers all but two lines of page 5-13). It should be noted that the other decision criteria (net present value and benefit-to-cost ratio) only have explanations of one and two paragraphs respectively.

While only those involved in preparing RISs would generally read the Guide, the fact that the principles and processes in the Guide must be reflected in the RIS appears to contemplate that the Balanced Scorecard Approach is thought to be within the capacity of the average reader.

While the weightings and assigned scores are the subjective views of DOI, they are published in the RIS to provide transparency. The view of the VCEC on the use of the Balanced Scorecard Approach is that the weightings and scores are subject to public scrutiny, and that readers can make submissions on what the appropriate weightings and scores should be. It should be noted that quantitative estimates in RISs can result in substantial differences, depending on the assumptions and methodology used and the reliability or accuracy of the data.

DOI is confident that the RIS provides sufficient analytical rigour, as well as transparent evidence, for the community to be satisfied that the regulations meet their objectives and do not impose an undue burden on businesses and the community.

Thank you for bringing this matter to my attention. If you have further questions in relation to the use of the Balanced Scorecard Approach, I suggest that the Committee raises any changes with VCEC as VCEC is responsible for administering the Guide and the use of the Balanced Scorecard Approach in RISs.

The Subcommittee also wrote in identical terms to the Minister in respect of SR No.132 – Metropolitan Fire Brigades (General) Regulations 2005.

Example 2:
SR No. 132 – Metropolitan Fire Brigades (General) Regulations 2005

Subcommittee’s Letter[54]

The Regulation Review Subcommittee (the Subcommittee) considered and approved the above Regulations at a meeting on 8 March 2006.

The accompanying Regulatory Impact Statement (RIS) included Table 8 at page 38. The RIS states that the criteria for choosing between alternatives that are relevant in the context of the underlying regulatory objectives are those of efficiency and equity together with a degree of administrative complexity. Table 8 is entitled “Choosing between the proposed fees regulations and identified alternatives” The Table scores the alternatives considered in terms of the three criteria using the ‘Balanced Scorecard Approach’.

The Subcommittee made enquiries and understands that the inclusion of the table and the ‘Balanced Scorecard Approach’ comes from the new Victorian Guide to Regulation published in February 2005 at pages 5-12 and 5-13. It seems to the Subcommittee that the inclusion of the Table to the average reader, adds little in terms of understanding and clarity. What are ‘weighted scores’ and ‘scores’? How are the scores given? On one view, any numbers can be chosen to ensure that ‘weightings’ come out in favour of the proposed Regulations. How does this ‘subjective assessment’ or indeed the Table assist the average reader of a RIS in terms of understanding? In the Subcommittee’s view, it does not add substantially to a better understanding of the matters discussed in the RIS.

Whilst there is some explanation (one paragraph at page 5-13), in the Victorian Guide to Regulation of the ‘Balanced Scorecard Approach”, the average reader would not generally use such a document. The Victorian Guide, so the Subcommittee understands, was prepared principally for those involved with the preparation of RISs and business impact statements.

The Subcommittee is in the process of finalising the Annual Report for publication. These matters will form part of the Annual Report.

The Subcommittee would appreciate your explanation and comments as soon as possible.

Minister’s Response[55]

Thank you for your letter of 14 March 2006 regarding the ‘Balanced Scorecard Approach’ in the Regulatory Impact Statement (RIS) for the Metropolitan Fire Brigades (General) Regulations 2005 (the Regulations).

The table using the ‘Balanced Scorecard Approach’ was included in the RIS at the request of the Victorian Competition and Efficiency Commission (VCEC). The purpose of the ‘Balanced Scorecard Approach’ is to provide a means of comparing the proposed regulatory solution to other alternatives.
The main benefit of this approach is to provide a transparent means of demonstrating the judgements made about alternative approaches to the regulations proposed. It also provides a visual aid to assist the reader. The table in the RIS aims to demonstrate how the benefits of the regulations outweigh the costs. This approach is useful where it is not possible to assign monetary values to the impacts of a proposed measure.

The ‘Balanced Score-card Approach’ is one of the decision criteria available (the others are ‘net present value’, ‘benefit-to-cost ratio’, and ‘break-even analysis’). In this instance, the other criteria were not appropriate, as monetary values could not be quantified.

The proposed regulations and alternatives are listed in the table. An assessment of the options is based on the selected criteria of equity, efficiency and administrative cost. These are qualitative criteria, rather than quantitative, and hence, the other decision criteria do not apply.

The Victorian Guide to Regulation (the Guide) notes that weightings may be applied to each criterion. This then allows an overall ‘weighted score’ to be derived, which reflects the relative significance of the criterion (i.e. by multiplying the assigned score by the weighting). All scores reflect a subjective judgement based on information about the proposal and any alternatives. By applying the same weighting to each alternative, a simple comparison can be made of each alternative.

As you should be aware, the text preceding and following table provide an explanation of why the alternatives attract particular scores. As such, I utterly reject any suggestion that values have been attributed to ensure that the scores come out in favour of the proposed Regulations.

I note and agree with your observation that the Guide is not likely to be used by the ‘average reader’. Nonetheless, it is an essential tool to assist those involved with the preparation of RIS s and business impact assessments (BIAs). I also note that the readers of RISs and BIAs are generally those who are informed in such matters and familiar with relevant requirements.

In the absence of other applicable decision criteria, I believe that the approach used in this instance was appropriate and assists in demonstrating why the Regulations are a preferable option to identified alternatives.

Thank you for raising this matter with me.

On a more general note, a RIS should be user-friendly. Whilst a RIS may deal with difficult technical matters, the author should be conscious of drafting it in a ‘common sense’ fashion. Glossaries of technical terms may be useful. Length in a RIS is not always desirable. Rather, the RIS should be precise, structured and deal with the matters required under the Act.

(i) National Competition Policy - The impact of the Premier's Guidelines

Pursuant to the Premier’s Guidelines, the Subcommittee no longer has the jurisdiction to scrutinise National Competition Policy Certificates and accompanying assessments. The Subcommittee wrote to the Premier requesting an explanation and the reasons for the changes made to its jurisdiction.

Example 1:
Premier’s Guidelines made pursuant to the Subordinate Legislation Act 1994

Subcommittee’s Letter[56]

The Subordinate Legislation Act 1994 (the Act) requires the Premier to make Guidelines in relation to the development of statutory rules. The most recent Guidelines (the new Guidelines) were tabled in the Legislative Assembly on 9 December 2004.

The Regulation Review Subcommittee (the Subcommittee) is bound by the Act and the new Guidelines. Consideration of statutory rules is undertaken in the context of the Act and the new Guidelines. When considering SR 49-2005 Meat Industry Regulations the Subcommittee noted that the new Guidelines do not include any National Competition Policy requirements. More specifically, the following materials from the previous Guidelines are not included in the new Guidelines: -

• Part 14 – Competition Policy Requirements

• Attachment B – Tests for restriction on competition and benefits and costs to the community

• Appendix 1 – Defining the market

• Attachment C – Certificate of Compliance where subordinate legislation does not restrict competition and certificate of compliance where subordinate legislation restricts competition.

The complete removal of the National Competition Policy material from the new Guidelines effectively prevents the Subcommittee from scrutinising it. Whilst the Subcommittee may have regard to the Victorian Guide to Regulation, its power to scrutinise such material derives from section 10(1)(f) of the Act which includes ‘any other matters specified by the Guidelines’

The Subcommittee requests an explanation and the reasons for the changes made to its jurisdiction.

Premier’s Response[57]

Thank you for your letter dated 6 September 2005 concerning the revised Premier’s Guidelines that were tabled in Parliament on 9 December 2004 and published in accordance with section 26 of the Act. Your letter noted that the revised Guidelines removed the National Competition Policy (‘NCP’) requirements that appeared in the previous edition and requested an explanation of this change.

As the Committee is aware, the revised Guidelines came into operation on 17 January 2005 and supersede the edition published in 1997. The Competition Policy Requirements set out at Part 14 of the 1997 edition (and the corresponding attachments) were drafted to ensure compliance with the NCP. They were also supported by the separate Guidelines for the Application of the Competition Test to New Legislative Proposals issued by the Department of Premier and Cabinet in 1995 (“the Competition Guidelines”).

When the revised Guidelines were prepared in late 2004, the Commonwealth indicated that NCP funding for State Governments would cease in 2005. This effectively brought a ten year NCP reform period to an end. As the future NCP agenda was uncertain, it was decided that the references to NCP be removed from the revised Guidelines and that other mechanisms be put in place to assess the competition implications of regulations.

On 1 July 2004, the Government established the Victorian Competition and Efficiency Commission (“VCEC”) to maintain and improve competition and efficiency in the Victorian economy. VCEC’s functions include taking over the responsibilities of the Office of Regulation Reform. A consolidated Victorian Guide to Regulation was developed in February 2005 that subsumed many existing guides including the Competition and Premier’s Guidelines. VCEC is required to assess Regulatory Impact Statements (‘RISs’) and Business Impact Assessments (‘BIAS’) prepared under these consolidated guidelines.

Despite the uncertainty surrounding the NCP’s future, the Victorian Government has shown its commitment to competition principles by establishing VCEC and strengthening the RIS and BIA processes.

I trust this addresses the queries raised in your letter.

The Subcommittee notes that VCEC’s role differs from that of the Regulation Review Subcommittee.

(j) Section 9(1)(a) - Is there any appreciable economic or social burden on any sector of the public?

Many regulations are accompanied by a section 9(1)(a) certificate of exemption which states that they do not impose an appreciable economic or social burden on any sector of the public.

Paragraph 5.33 of the Premier’s Guidelines[58] set out the particular requirements in respect of the exemption certificates.

The Minister must include in the exemption certificate detailed reasons as to why the proposed rule does not impose an appreciable economic or social burden on a sector of the public under section 9(2). It will not be sufficient to simply assert that there is no appreciable economic or social burden on a sector of the public in the exemption certificate.

The Subcommittee also takes the view that it is not sufficient to simply assert that there is no appreciable economic or social burden on a sector of the public in the exemption certificate. The Subcommittee expects that detailed reasons will be given as to why there is no appreciable economic or social burden on a sector of the public and will examine those reasons closely.

This year there have been no regulations on which the Subcommittee has commented in respect of this matter. The Subcommittee acknowledges the high standard of the exemption certificates provided to it. The quality of the work presented to the Subcommittee has made its consideration of these matters easier. The detailed nature of the exemption certificates signifies to the Subcommittee a very real attempt to grapple with whether there “is an appreciable economic or social burden” imposed or not. The Subcommittee’s is guided by the Premier’s Guidelines. It also uses a common sense approach. Each regulation will be considered in its context and on its merits.

Following are matters that the Subcommittee may consider in the context of a regulation: –

• What does this regulation do specifically?

• Who does it effect?

• How many people does it effect?

• How does it effect them?

• What is the extent of the effect?

• Is there an economic burden imposed?

• Is there a social burden imposed?

• Are these burdens “appreciable”?

Example 1:
SR No. 28 – Sale of Land Regulations 2005

The Sale of Land Regulations 2005 (“the proposed Regulations”) remake the Sale of Land Regulations 2004 to implement amendments to the Sale of Land Act 1962 (“the Act”) made by the Fair Trading (Enhanced Compliance) Act 2004 in December 2004. The amendments provide an exemption from the prohibition on vendor bids at public auctions of land for co-owners, or their representatives, who genuinely wish to bid purchase the property from their co-owner or co-owners, if the auction rules allow such bids and the auctioneer announces that such bids may be made.

The proposed Regulations set out the rules and pre-auction announcements that will allow co-owner bids. They prescribe three new sets of rules and auctioneer announcements to cover the three circumstances in which genuine co-owner bids are made and amend the information statement required to be displayed at auctions to include information on co-owner bidding. The proposed Regulations also simplify the announcements that auctioneers must make about vendor bids and prohibited conduct at auctions and clarify provisions in the existing information statement.

The proposed Regulations will come into operation on 1 July 2005 thereby providing the real estate industry with certainty about the new requirements and sufficient time to prepare for their introduction.

I, Marsha Thomson, Minister for Consumer Affairs, exempt the proposed Regulations from the requirement to prepare a regulatory impact statement under section 7 of the Subordinate Legislation Act 1994 (“the SLA”) as I have formed the opinion that they are of a fundamentally declaratory or machinery nature (section 9(1)(c) of the SLA), and would not impose an appreciable economic or social burden on a sector of the community (section 9(1)(a) of the SLA).

The reason for forming the opinion that the proposed Regulations are of a declaratory or machinery nature is that they prescribe the rules and announcements which the Act requires to be made to enable the exemption for co-owner bids.

The reason for forming the opinion that no appreciable burden will be imposed is that consultation has revealed that the proposed Regulations impose only a minor cost. The Real Estate Institute of Victoria which represents real estate auctioneers has confirmed that the cost of industry compliance will be minimal. The documentation which auctioneers are currently required to purchase and display will be replaced, in part, by the new rules and a revised information statement. The purchase of the new documents will involve only a small and infrequent cost for auctioneers as they can be readily produced as a single sided A3 or A4 pages and used on repeated occasions, as is the case with the current documents. Any additional burden imposed on an auctioneer by selecting and displaying the appropriate documentation for a particular auction will be offset by the benefits achieved through allowing co-owners, who had previously been prohibited, to bid at public auctions of land in Victoria.

Example 2:
SR No. 91 – Petroleum Products (Terminal Gate Pricing) (Amendment) Regulations 2005

I, Marsha Thomson, Minister for Consumer Affairs, and Minister responsible for administering the Petroleum Products (Terminal Gate Pricing) Act 2002 (‘the Act’), certify under section 9(1)(a) (no appreciable social or economic burden imposed by the regulations) and 9(1)(c) (regulations are of a declaratory or machinery nature) of the Subordinate Legislation Act 1994 that, the Petroleum Products (Terminal Gate Pricing)(Amendment)Regulations 2005 (‘the Regulations’), in my opinion are exempted from the requirement to prepare a Regulatory Impact Statement under section 7 of that Act.

The proposed Regulations amend the Petroleum Products (Terminal Gate Pricing) Regulations 2001 9’the existing regulations’) to implement amendments to the Act made by the Petroleum Products (Terminal Gate Pricing)(Amendment) Act 2004 (‘the Amendment Act’). The amendments to the Act provide declared suppliers with an exemption from the requirement to supply a particular class or classes of declared fuel where there is a shortfall in the availability of that fuel. Previously, declared suppliers were required to provide a notice to the Director of Consumer Affairs Victoria with details of their supply capacity and commitments before refusing to supply a customer.

The proposed Regulations specify the circumstances for the new exemption as a shortfall in the availability of fuel that would hinder a supplier’s ability to meet its commitments to its contracted customers if it were to be required to supply a new customer. They also specify the notification requirements for a declared supplier where the exemption issued as grounds for refusing to supply a customer (a distributor or retailer). These requirements include a notice from a declared suppler to their customer, either orally or in writing and within 1 business day of the refusal to supply, giving the reason for the refusal to supply and the expected duration of the shortfall. Amendments are also proposed to the current record keeping requirement to remove the requirement that declared suppliers keep a certain category of records.

The proposed Regulations will come into operation on 1 August 2005, which is the date the exemption provision in the Act is to commence.

The reason for forming the opinion that the proposed Regulations are of a declaratory or machinery nature is that they prescribe the circumstances for the exemption authorised by the amendments 6to the Act and make consequential changes to the notification requirements and remove a requirement to keep certain records that will no longer be relevant following the amendments to the Act.

The reason for forming the opinion that no appreciable burden will be imposed is that consultation has revealed that the proposed Regulations impose only a negligible, if any, cost on declared suppliers. There will be four suppliers declared for the purposes of the Act: BP Australia Pty Ltd, Caltex Australia Petroleum Pty Ltd, Mobile Oil Australia Pty Ltd and The Shell Company of Australia Limited. These are the multi-national petroleum refining companies that operate in Victoria.

While the proposed Regulations will exempt these companies from the requirement to supply fuel in certain circumstances it will impose on them an obligation to provide certain information tot heir customers. In particular, they will be obliged to give a notice to a customer at the time of refusing supply advising that the reason for the refusal is a shortfall in the availability of fuel. As it is currently common practice for a declared supplier to provide this information, no additional cost is imposed by this obligation. The proposed regulations also require that the notice include a reasonable estimate of the likely duration of the shortfall. This is information which is fundamental to the effective operation of a terminal business and would be known by the terminal manager or readily available to them. Some declared suppliers already supply this information to their customers. The notice is simple to prepare and flexible in that it allows a supplier to choose the manner of providing the information which is most effective in the circumstances, either orally or in writing, and allows a reasonable amount of time for the notice to be provided, up to 1 business day.

Furthermore, it is unlikely that declared suppliers will be required to provide many notices. Knowledge of a shortfall generally circulates rapidly through the market and means that the risk of a declared supplier being approached by a new customer during such periods is significantly reduced.

Declared suppliers have confirmed that any financial cost resulting from the notice requirements is small and does not impose on them any appreciable social or economic burden.

Non-compliance with the notice requirement provokes a fine of up to 20 penalty units. The major oil companies are significant public players with reputations to protect. They have advised that as the requirement reflects common practice, compliance is not a burden and, therefore, it is unlikely that the penalty will be imposed, except on rare occasions.

Example 3:
SR No. 96 – Dangerous Goods (HCDG) Regulations 2005

I, John Lenders, Minister for WorkCover and Minister responsible for administering the Dangerous Goods Act 1985 (DGA), certify under section 9(1)(b) of the Subordinate Legislation Act 1994 (SLA) that the proposed Dangerous Goods (HCDG) Regulations 2005, in my opinion, are exempt from the requirement to prepare a Regulatory Impact Statement (RIS) under section 7 of the SLA.

The reason for forming this opinion is that the proposed Regulations are required under a national uniform legislation scheme and an assessment of costs and benefits has been undertaken under that scheme. An RIS was prepared by the Department of Prime Minister & Cabinet in relation to the regulation and control of security-sensitive ammonium nitrate, and was released with the proposed Regulations for public comment. The Commonwealth Office of Regulation Review (ORR) has provided written advice that the RIS meets the Australian Government’s regulatory best practice requirements and contains an adequate level of analysis for the decision-making stage. The ORR’s advice is attached to this certificate.

VWA obtained independent advice on the adequacy of the Commonwealth RIS from Concept Research Pty Ltd prior to the release of the proposed Regulations for public comment. Concept Research, in a written advice, noted that the RIS did not provide a specific cost/benefit analysis but argued that the data in the RIS allows an inference that the benefits are likely to exceed the costs of the proposal. Further, the data indicates that the costs for business in Victoria are expected to be significant and likely benefits would exceed costs. Concept Research’s advice is attached to this certificate.

In line with paragraph 5.33 of the SLA Guidelines, I have taken care to ensure that the impact of the scheme, particularly on Victorian business, has been properly assessed and I am satisfied that there has been adequate consultation with the business community. A list of the organisations consulted on the proposed Regulations is contained in the Certificate of Consultation under section 6(c) of the SLA.

The majority of the proposed Regulations will commence on 1 October 2005, however, most of the provisions necessary for enforcement of the scheme will not commence until 1 January 2006. The reason for this delayed commencement is to provide industry and farmers sufficient time to organise compliance strategies.

Office of Regulation Review Attachment

Thank for the draft Regulation Impact Statement (RIS) for the regulation and Control of Ammonium Nitrate.

The Office of Regulation Review (ORR) advises that the RIS meets the Australian Government’s regulatory best practice requirements as set out in the Principles and Guidelines for National Standard Setting and Regulatory Action by Ministerial Councils and Standard Setting Bodies and contains an adequate level of analysis for the decision making stage.

Please note that the ORR ID number for this issue is 5965. Please quote this number for compliance reporting purposes. Mr Jason Walsh is your Department’s contact officer for RIS compliance reporting.
If you have any queries in relation to this advice, please contact me on 6240 3258. Thank you for consulting the ORR.

Concept Research Attachment

I refer to your request to assess the Regulatory Impact Statement in relation to the regulation and control of ammonium nitrate prepared by the Department of Prime Minister and Cabinet. Specifically, the assessment should determine whether the RIS is considered adequate for the purposes of meeting the requirements of the Subordinate Legislation Act 1994.

Section 9(1)(b) of the Act allows, inter alia, for en exemption from the RIS process where the relevant Minister certifies that the proposed statutory rule is required under a national uniform legislation scheme and an assessment of the costs and benefits has been undertaken under that scheme.
Section 10(2) of the Act states that the assessment of the costs and benefits must include an assessment of the economic, environmental and social impact and the likely administration and compliance costs including resource allocation costs.

The RIS canvasses the security related issues with respect to ammonium nitrate – specifically its potential use as a terrorist weapon. The report recommends that security sensitive ammonium nitrate (SSAN) be subject to a licensing system throughout its supply chain in each state and territory. Persons seeking an authority to import, manufacture, store, transport, supply, export, use or dispose of SSAN would be required to:

a. demonstrate a legitimate need for access to SSAN
b. provide safe and secure storage and handling procedures
c. report any loss, theft, attempted theft or unexplained discrepancy
d. undergo background checking
e. be a minimum of 18 years of age, and
f. provide verifiable proof of identity.

The RIS provides evidence of:

i) the amount of SSAN manufactured in Australia
ii) the amount of SSAN imported into Australia
iii) total usage of SSAN by the mining and agricultural sectors (the only users of SSAN)
iv) the number of farmers using SSAN (including use in Victoria)
v) estimated costs of a licence
vi) examples of the costs and lives lost in terrorist incidents involving the use of SSAN.

The RIS does not provide costs associated with increased secure storage. Nor does the RIS provide an explicit estimate of whether the benefits associated with the regulatory proposal would exceed their costs. From an RIS perspective, this is not such a problem as the aim of the regulatory proposal is to prevent (or lower the likelihood of such incidents). Further, it is not known if or when such incidents may occur – for example, year 1, year 10, or year X. This makes conventional economic modelling of the costs and benefits very problematical.

However, the data provided is such as to allow an inference that the benefits are likely to exceed their costs. In other words, should an incident occur, the likely costs associated are such as to easily exceed the costs of compliance with the regulatory proposal. More specifically, the data included in the RIS would indicate that the costs are not expected to be significant in Victoria, given the relatively low use of SSAN compared with the other states and territories and, as a consequence, the likely benefits would exceed their costs in Victoria.

I note that the proposed Regulations will now refer to High Consequence Dangerous Goods rather than SSAN. Further, SSAN will be the only HCDG initially on the associated Schedule and that SSAN will be defined such as to include calcium Ammonium Nitrate (CAN). The following points may be made with respect to these changes:

(i) although the Schedule may subsequently be amended to include other HCDG in addition to SSAN, this will not pose a problem from an RIS perspective. The regulatory analysis can only be undertaken on the goods listed on the Schedule. If other HCDG are subsequently added to the list, these will require an impact assessment at the time of their proposed inclusion:

(ii) the re-definition of SSAN to include CAN should not invalidate the Regulatory Impact Statement in relation to the regulation and control of ammonium nitrate prepared by the Department of Prime Minister and Cabinet. The available evidence would indicate that the inclusion of CAN will not significantly alter the number of affected parties or associated costs.

It should also be noted that should the regulatory proposal proceed, there are no issues related to the competition principles. In other words, the regulatory proposal would not restrict competition.

In conclusion, it is my professional opinion that the RIS can be deemed to be an adequate assessment of the costs and benefits associated with the regulatory proposal for the purpose of compliance with Section 10(2) of the Subordinate Legislation Act 1994. As a consequence, this would allow the proposed Regulations to be exempted from the RIS process under Section 9(1)(b) of the Act.

(k) Commendations

On several occasions this year the Subcommittee has commended Ministers for the particular attention to detail in respect of the work presented to it. The Subcommittee acknowledges properly drawn certificates. The Subcommittee also acknowledges the excellent work from some Departments in responding to the large number of people and organisations who sent in submissions in respect of a particular Regulatory Impact Statement.

Example 1:
SR No. 88 – Safe Drinking Water Regulations 2005

Subcommittee’s Letter[59]

The Regulation Review Subcommittee considered and approved the above Regulations at a meeting on 26 September 2005.

Twenty six submissions were received during the regulatory impact statement process. The Subcommittee was provided with an extremely thorough analysis of the submissions. The comprehensive manner in which the Department summarised the issues facilitated the Subcommittee’s work. In addition, the Department wrote a detailed letter to each organisation or individual responding to the issues raised.

The Subcommittee wishes to acknowledge the outstanding manner with which the Department dealt with the submissions. The Subcommittee commends those involved and requests that you forward its comments to the relevant officers.

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Scrutiny of Acts and Regulations Committee
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