Regulatory Reform: The Wave After That

A Sequel to Regulatory Reform: The Next Wave

VICTOR PERTON MP
PARLIAMENT OF VICTORIA


CHAIRMAN, LAW REFORM COMMITTEE

Sixth Australasian & Pacific Conference on Delegated Legislation & the Third Australasian and Pacific Conference on the Scrutiny of Bills
Adelaide, 16-18th July 1997

Mr Speaker, Commonwealth colleagues, thank you for the opportunity to participate in this conference. As a result of my eight years experience in the field of Parliamentary Scrutiny of Legislation, I feel passionate about the need to provide and refine good parliamentary scrutiny regimes to protect the human rights and civil rights of the community. This paper I offer touches upon new challenges in the field.

Introduction

There is no doubt that there is community demand for government regulation, particularly to achieve social and environmental goals. At the same time, the public expects government to act more efficiently, to reduce its cost and size to the taxpayers. These contradictory demands amount to calls for both more and less regulation, for both bigger and smaller government. Resolution of this problem is a major challenge facing public administration.

There is increasing pressure on governments to improve the business environment by reducing costs and other impediments. There are increasing demands that regulations be "efficient and effective". In response, governments (or, at least, those that wish to be elected and re-elected) increasingly pledge that they will "cut red tape". However, governments also realise that innovative approaches to regulation and regulatory reform can only succeed if there is public confidence in the system. As one of the Submissions to the Victorian Law Reform Committee inquiry into Regulatory Efficiency noted:

Good regulatory frameworks need to retain public confidence. Without such confidence public outrage may lead to ill advised changes in the event of environmental, consumer, occupational or some other harm

It is this balance between increasing regulatory efficiency while maintaining public confidence in the system that the Victorian Law Reform Committee is attempting to achieve in its present Inquiry into Regulatory Efficiency Legislation.

Those of you who attended the Scrutiny Conference in Wellington earlier this year would have heard my paper on new developments in regulatory reform including negotiated rulemaking, cost-benefit analysis and especially the concept of regulatory flexibility in the form of alternative compliance mechanisms. In fact, the comments made by you at that Conference were summarised in our discussion paper and has informed public debate on regulatory reform in Victoria. Today, I want to focus on the next stage, on the implementation of regulatory flexibility and some of the broad issues that have come up in the Law Reform Committee’s consultations to date. The Law Reform Committee has had a busy four months of consultation and we are now at the stage of working out the logistics of introducing alternative compliance mechanisms to the regulatory framework in Victoria.

Regulatory Reform in Victoria

I believe Victoria is well placed to be innovative with regulatory reform because we have built strong foundations over the last ten years. We have already implemented reforms including:

• mandatory cost-benefit analysis;

• mandatory consultation with interest groups and the general public;

• ten year sunset clauses;

• a strong system of review by an all-party parliamentary committee with disallowance by either house of the bicameral parliament.

In fact, the reforms that Victoria has had in place for ten years are only now being introduced in the United States under the somewhat more glamorous title of ‘regulatory flexibility’. The wide difference in terminology in this general field has lead the Committee to muse that even if we end up deciding against alternative compliance mechanisms, we should rename our Subordinate Legislation Act something appropriately ‘sexy’ like the Regulatory Efficiency Act!!

While at present it has the lead, Victoria has not `cornered the market’ on regulatory innovation. In June this year, I met with officials of the NSW Government Premier’s Department who are grappling with many of the same issues and reform proposals that we are in Victoria. The New South Wales Government have issued a Green Paper entitled Regulatory Innovation: Regulation for Results. In that paper, they opened up discussion on the concept of "regulatory innovation strategies", the common thread of which is expressed to be "that they create room for businesses to influence the means by which they will satisfy the objectives of the regulation".

It has been long recognised that state governments rather than the Commonwealth Government have substantially advanced regulatory reform in Australia. As the OECD has noted, "combined with the emergence of a national internal market, regulatory reform in the states has resulted from, and contributed to, a competition for reform, in which efficient state regulation is seen to give state producers an edge in the market".

The Victorian Law Reform Committee’s recent consultations in Canberra indicate that even the Commonwealth Government, that has been regarded as a long way behind the states on regulatory reform, is taking up the challenge of catching up with the states. Along with National Competition Policy, initiatives such as the Small Business Deregulation Task Force and the Commonwealth Government’s response entitled More Time For Business, recognise the centrality of regulatory reform to improving the economic climate for business and thus enhancing business efficiency.

This is further evidence of the fact that governments and parliaments in Australia are aware of the demands of those being regulated, the pressures these demands place on the regulators, and also of the alternative compliance mechanisms that are available.

Regulation through Co-operative Partnerships

I believe current progress in regulatory reform is more than the knee-jerk reaction of government to the self-interested demands of business. Rather, governments must look at ways of improving their approach to regulation because regulation is increasingly believed to be beyond the capacity of governments to manage on their own (and from their own resources). That being so, there is a wider public interest in regulatory reform.

As a New South Wales Labor Minister pointed out:

In the past, the regulatory reform agenda has been dominated by those who favour small government, on principle… However, the debate has moved on. It is now clear to all those with a…commitment to better government that regulatory reform is close to the core of much public policy development and public administration.

Regulatory reform now not only elicits bipartisan support but also international cooperation. The thesis that the business of regulation is becoming too much for governments to handle has been put by Dr Peter Grabosky, an Australian commentator on regulatory policy. In his words, "governments are not omnicompetent". Nevertheless, governments of many countries have been torn between a pressure to reduce public spending, on the one hand, and an increasing pressure to deliver more, on the other. He has suggested that, this being so, one way of addressing the issue is to harness resources outside the public sector, to mobilise non-governmental resources and to enter into "co-productive" arrangements with those to be regulated.

Thus, governments may achieve more efficient and effective regulation with better compliance if they engineer a regulatory system in which they themselves play a less dominant role, one in which they facilitate the "constructive regulatory participation of private interests", in which their role is in "manipulating incentives in order to facilitate the constructive contributions of non-government interests" and in which they "act as facilitators and brokers, rather than commanders". The Law Reform Committee is of the view that alternative compliance mechanisms could contribute to such a regulatory system where the regulated negotiate the means by which they comply with regulatory standards.

Alternative Compliance Mechanisms

For the benefit of those who missed the Wellington Conference, I will briefly outline what is meant by alternative compliance mechanisms and the proposal that has been put to our Committee. The concept of "Alternative Compliance Mechanisms" (ACM), was first embodied in the (Canadian) Regulatory Efficiency Bill (C-62). Under this 1994 Bill, Ministers would be able to approve alternative methods of complying with regulations pertaining to a particular business or industry. Before a draft "compliance order" is negotiated between the government agency and the relevant business or industry group, there must be consultation with affected parties. It is a key feature of an ACM that, while it does not meet the prescriptive requirements of the relevant regulations, it must nevertheless meet the regulatory objectives of the regulations. In that sense, it focuses on the ends, rather than the means.

However the Canadian proposal has since died. The Bill was the subject of a scathing report by the Standing Joint Committee for the Scrutiny of Regulations (the Canadian Scrutiny Committee) on the basis that the proposal would give the executive undue control and that it was inconsistent with the constitutional values of the rule of law, equality and government accountability.

At its last `outing’, the proposal was defeated in the governing Federal Liberal Party’s caucus room. In 1996, I travelled to Ottawa to interview its authors (the Regulatory Affairs Division of the Treasury Board of Canada), proponents, and opponents. Both before and after my visit, I used internet and e-mail to research the proposal and maintain contacts with those authors, proponents and opponents. It appears to me that the main reason for its defeat was a political assessment that the proposal would be bad politics in that it would be seen as the Liberal Party pandering to its business constituency. A secondary reason for its caucus defeat was a perceived lack of equity in that only large corporations could afford the resources to successfully apply for and maintain an ACM.

The Committee has received a Submission from one of the original designers of the Bill who suggests that the Canadian Committee did not understand the purpose and operation of C-62. The Submission points out that the Canadian Committee ignored recent Canadian case law in relation to their concerns around constitutional values; and that it placed undue emphasis on the inequality in resources (and thus ability to obtain ACMs) while failing to notice that small business in Canada were in favour of the Bill. Finally, the Submission notes that the Canadian Committee has since passed several Bills that gives bureaucrats a much wider, unfettered discretion to exempt the private sector from regulations than C-62 had ever envisaged.

Regulatory Efficiency Legislation - the Victorian proposal

While ACMs may have died in Canada, there is some impetus in Victoria to take up the idea providing the concerns expressed in relation to the Canadian proposal are adequately overcome. As part of its platform for the 1996 election, the Victorian State Government pledged that it would:

Introduce Regulatory Efficiency Legislation which allows business to propose alternative means of compliance with regulatory objectives. This will lower compliance costs across a range of regulations, by allowing business to tailor its method of compliance to suit its specific business circumstances and will build on flexibilities which are already being implemented in relation to specific legislation.

For example, a road haulage firm with an integrated anti-fatigue program might have this accredited as an alternative to compliance with detailed driving log requirements, or a business might propose an inspection schedule for major machinery which suits its own maintenance schedule rather than meeting periodic requirements set in regulation.

This commitment was, in turn, taken up by the Executive Council, which (on 28 June 1996) referred the issue of Regulatory Efficiency Legislation to the Law Reform Committee of the Victorian Parliament for inquiry, consideration and report.

A proposal prepared by the Office of Regulation Reform (ORR) to the Victorian Government was made available to the Law Reform Committee. The proposal is similar to that in the Canadian Bill. This raises my suspicion that OECD meetings - which Australian and Canadian regulatory reformers attend - and the use of the Internet result in a process whereby a reform proposal stalled in one jurisdiction will spring up in another!

However this is not necessarily a bad thing. An OECD Committee, the Public Management Committee has a Regulatory Management and Reform Group. This Group endeavours to ensure that regulation and regulatory systems are increasingly internationalised, with best practices being identified and information shared throughout the member countries. An important theme is that as economies globalise, so regulation must be harmonised if it is not to replace tariffs and quotas as the most significant barrier to trade.

In any event, we parliamentarians have taken to the internet too and my Committee has extensively used the internet and its world-wide-web to undertake our process of consultation. We are finding that in a specialised area such as regulatory reform, the internet is a great tool for wide international public consultation. We have placed our Discussion Paper on the internet and have utilised listservers, internet discussion groups and email in the course of the inquiry and it has paid off! We have received excellent comments, suggestions and submissions from experts around the world - contributions have come from as far afield as the Kennedy School of Government at Harvard, London University, and the Canadian Premiers’ departments of Manitoba, New Brunswick, and Saskatchewan.

The ORR proposal seems to have taken into account the reasons for the defeat of the Canadian proposal. There is a requirement that the proposal does not involve any lowering of regulatory standards and an assurance that proponents of Alternative Compliance Mechanisms (ACMs) would, in all cases, be required to demonstrate that their proposals would meet the identified regulatory objectives and performance standards at least as effectively as the specific regulations that they seek to replace. In particular, an ACM would not be approved if it would compromise any safety, health or environmental objectives of the relevant regulations. The proposal includes a requirement that the relevant Minister publish details of the statutory rule affected, the statutory objectives and all relevant criteria used by the Minister to approve the ACM. There is also a commitment to the principles of equality, fairness, competitive neutrality and government accountability will be respected and that government budgetary policy will not be compromised.

The Committee’s Response

The Committee has conducted a series of meetings with relevant federal and New South Wales Agencies. We have held a public hearing for representatives from business organisations, a twilight seminar on regulatory reform and have met with regulatory officers from all Victorian Government Departments to discuss the proposal. We are also in the process of meeting with the heads of the top 100 businesses in Victoria to aid the consultation process. The message we have got so far is that ACMs would be a positive experiment in Victoria where there has been over a decade of experience with regulatory efficiency mechanisms.

We have heard that Victoria already has some positive experience with ACMs in action in the form of our accredited licensees system under the Environmental Protection Act 1970. The accredited licensee system enables a business that can demonstrate a high level of environmental performance and ongoing ability to maintain and improve that performance, to be exempt from prescriptive works approval and licensing requirements. Our wide consultations and discussions have given us a sense for the scope of ACMs in Victoria. The Committee is now at the stage of coming up with a model for the implementation of Regulatory Efficiency Legislation.

The Committee recognises that if the proposal is ultimately adopted in Victoria, it will only succeed if it ensures maximum transparency and accessibility to the general public and, in turn, maximum accountability of the Government to the electorate. It must not simply be a means for the Government to ingratiate itself with big business or a political party’s financial backers.

The Committee is closely examining the Canadian criticisms and has also taken into account some of the comments made about the proposal at Wellington. In formulating a model for Regulatory Efficiency Legislation, one of the first issues we face is how we start such a scheme. The Committee is considering several options for coverage including general application of Regulatory Efficiency Legislation to all subordinate instruments; nominating industries or portfolios where such legislation would apply; scheduling of regulations by Ministers; or using the existing sunsetting provisions as a trigger for the operation of Regulatory Efficiency Legislation. One great benefit that Victoria has is that all our regulations have sunsetted and have gone through a process of review where regulatory objectives have had to be identified for all regulations. One option the Committee is considering is to use this process by 'backcapturing' the regulatory objectives specified in the review for the operation of Regulatory Efficiency Legislation.

The Committee clearly understands that the proposal must not involve any inappropriate delegation of legislative power to the Executive Government. Transparency and accountability must be guiding principles for any proposed legislation. It will be necessary for the Minister to be accountable to the Parliament and the general public for any exercise of that power. This could be achieved by ensuring that proposed ACMs - and the criteria by which they are to be judged - are published and subject to input from stakeholders and the public. The Australian Competition and Consumer Commission (ACCC) has suggested that the Minister should have extensive legislative criteria for the approval of ACMs. The Committee is also considering whether there should be any legislative right of appeal for an ACM that is rejected. The Committee believes that it is imperative to ensure that the ACM is a public document. Our current thinking is that there will be no intellectual property attached to an ACM. The ACM will be a public document that upon ministerial approval can be utilised by other businesses. This will be beneficial to poorly resourced businesses and small businesses in particular.

A further measure we are examining to counter any potential criticism regarding the lack of applicability of ACMs to small business, is to allow industry groups to draw up and apply for an ACM. Individual businesses would have to sign the ACM but the resource intensive work would be done by the industry group.

Our consultations also suggest that ACMs should be tabled in Parliament and be subject to disallowance in a similar manner to subordinate legislation. In my opinion, ACMs will only be politically acceptable if they are subject to the same level of parliamentary scrutiny as the regulation they replace. Thus they must be subject to disallowance by either house of parliament with appropriate examination by the Scrutiny of Acts and Regulations Committee (SARC).

A further issue for the Committee is what criteria should be used in the scrutiny of ACMs? Should the criteria mirror those used by SARC to scrutinise subordinate legislation or should it be narrower, focusing on whether the ACM has met the published criteria and regulatory objectives? Chris Sidoti, the federal Human Rights Commissioner suggested to the Committee that human rights and social justice concerns should be criteria in the scrutiny of ACMs. However, the Committee also has to decide whether such concerns should be restricted to the scrutiny of ACMs or whether they should also play a role in the approval of ACMs. The Committee is also grappling with some of the mechanics of the scheme such as the best way to penalise non-compliance of ACMs, procedures for sunsetting of ACMs along with the regulations they replace and circumstances where revocation, termination or suspension of ACMs would be appropriate.

The Committee has yet to decide on the final model for ACMs. While there are several questions and options for the Committee to consider, my current thinking is that ACMs will have a fairly narrow operation in the short term. We envisage that ACMs would provide the ideal mechanism for businesses involved with rapidly developing technology where prescriptive, command and control type regulation becomes obsolete. The Committee believes that ACMs can provide the impetus and acceleration required to achieve the ultimate aim of performance-based regulations. The Committee is, for instance, considering the option that once you have three ACMs in relation to a regulation, that regulation sunsets with the view of rewriting it in performance based terms to ensure the necessary flexibility. There has also been the suggestion that Regulatory Efficiency Legislation, if introduced, be reviewed within the first five years of operation. While most agree that we need regulatory flexibility, the trick seems to be finding the right mix of checks and balances in the system without complicating the process to the point where it loses its benefits.

RIS

In the process of our consultations we have also gained valuable insights into the deficiencies inherent in the current system. I note that there continues to be concern with the efficacy of the RIS system.

We have received some important evidence, in relation to the regulatory impact statement (RIS) process, that has forced me to question my longstanding view that the RIS procedures worked and that they helped to make regulations in Victoria both more effective and more efficient. After questioning those views and looking at the evidence, I do believe that the RIS process is of benefit to the Victorian community but that it can be further improved.

The questioning of my earlier view arose as a result of consultation between the Law Reform Committee of Victoria and the major business organisations of the State. In the consultation, representatives of major business and industry groups asserted that the RIS process is not working as the Victorian Parliament intended. The allegation is made that bureaucrats have hijacked the process and that there should be greater consultation at the early stage before a decision to regulate has been made. The allegation is made that the RIS has become a mere justification for a political imperative to regulate. As Martin Soutter from the Business Council said:

I think the problem with the process is that those who go through the RIS already know the outcome they want and they tailor their approach to achieve that outcome.

The evidence and submissions received on the issue suggest that at the very least, there needs to be further work done by parliament and the government to investigate the validity of some of the criticisms made of the current RIS process and to ensure that the system works to the benefit of all.

Of course, this raises the question as to how the validity of the criticisms is to be assessed. This question is not unique to Victoria. In Queensland, regulatory impact statements have only been required for significant subordinate legislation for the past two years. The Deputy Chairman of the Queensland Parliament’s Scrutiny of Legislation Committee has indicated there has been bipartisan concern about the fact that RISs have been produced for only 0.5 per cent of all regulations produced, whereas in other jurisdictions that figure tends to run around about 20 per cent. The Queensland Government has resolved to undertake a major review, which has not yet published any papers.

Those rough quantitative estimates available support the assertion that the RIS process does benefit the community. The Victorian ORR estimates about 20 per cent of regulatory proposals coming to their attention via RIS drafts are either modified substantially or withdrawn resulting in cost savings running into tens of millions of dollars. The 20% figure would underestimate the effect, in that many poor proposals do not proceed beyond a rough draft. Similarly, a [United States Environment Protection Agency] analysis of their experience with Cost Benefit analysis estimated that it had saved the economy $1,000 for every $1 spent doing it.

In my opinion, the performance of the RIS cannot be examined in isolation but must be examined as part of the system of lawmaking. Before an RIS is prepared, there is consultation within the public service and between the public service and stakeholders. Many regulatory proposals are rejected at this stage and converted to self-regulation or other alternative solutions to the regulatory problem. It is therefore inherent in the RIS process that a preliminary decision to regulate has been taken before the RIS is prepared. The fact that the RIS needs to be prepared is important in itself.

This point was well made by an RIS sceptic who has received some conversion. Mr Stephen Argument in his presentation on the first day of this conference admitted his conversion.

"I have had a recent conversion in relation to the issue of regulatory impact statements. When I did my work on quasi legislation I was very sceptical about regulatory impact statements largely because it seemed to me that people were advocating regulatory impacts statements as a way of overcoming what I regarded as the main problems with a lot of delegated legislation in that it was not subject to proper scrutiny. The argument seemed to be that, because regulatory impact statements lag greater public scrutiny, in some way this greater public scrutiny cured the lack of parliamentary scrutiny that this material had.

I still hold that view but, as I said, I recently did some work this year with the Law Reform Committee of the Victorian Parliament in which I had a much closer look at the way the Regulatory Impact Statement process works in Victoria. I have to say that I came out with some very positive conclusions, both about the process itself and, in particular, the way it operates in Victoria.

The reasons why I was impressed by what I discovered in relation to Victoria was that one of the advantages of having something like a Regulatory Impact Statement process is that it forces the bureaucracy to go through various steps in order to get their delegated legislation into force. I have often thought that it is a great advantage if you can effectively force the bureaucracy to think a little more before it does things. The more they are allowed to just go out and act and take legislative type action without having to go through any sort of formal process or any thought process, the greater chance there is for mistakes being made and for ill thought out legislation being made.

One of the things about the Victorian system is that there is a very definite and ordered process that departments have to go through in order to make delegated legislation.

One of the requirements in Victoria is that a Regulatory Impact Statement demonstrates that the proponents of the delegated legislation have actually considered the alternatives."

Further, in determining whether the process works we have to acknowledge the work of the Victorian Scrutiny on Acts and Regulations Committee. This Committee reviews every regulation and every Regulatory Impact Statement. It has rejected regulations on the basis of the inadequacy of the Regulatory Impact Statement.

You don’t just have to take my word on this. In an exchange at the Sixth Australasian & Pacific Conference on Delegated Legislation & the Third Australasian and Pacific Conference on the Scrutiny of Bills, Adelaide, 16 July 1997, this view was verified by Stephen Argument who does not have the emotional stake that I have in the issue.

THE HON. ROBERT LAWSON (SA): May I direct a question to Stephen Argument on the question of regulatory impact statements? South Australia is one jurisdiction which has not yet adopted regulatory impact statements and there is a fair degree of reluctance to do so and scepticism about the process. For long we have had requirements for family impact statements, regional impact statements, budget impact statements, environmental impact statements and the like, and the Cabinet handbook requires agencies to address all those issues in putting forward any proposal, whether for regulation or other measure, to Cabinet.

The reluctance in South Australia to embrace yet another impact statement is that they do become perfunctory and I think policy makers, or some of them, in influential positions, and notwithstanding all the injunctions of competition policy and the like, are rather recalcitrant in this matter of introducing regulatory impact statements.

Stephen, you said that initially you were sceptical about them but, having seen the Victorian experience, your fears have been allayed to some extent. Could you tell us, briefly, what you found in Victoria about the way in which these statements operate in Victoria that allayed the obvious scepticism anyone would have about a measure of this kind?

MR STEPHEN ARGUMENT (ACT): I still do have some scepticism about this, but one of the things about the regulatory impact statement in Victoria that I thought was useful was the fact that it imposed the extra level of discipline on bureaucrats, forcing them to think about certain things in developing delegated legislation. There is that aspect to it. But, from my limited work I do not think you can say that in Victoria it has become a perfunctory type process.

The regulatory impact statements do seem to be subject to fairly detailed examination by the Victorian committee and there does not seem to be any sense of the committee just letting regulatory impact statements go through and giving them the tick. The committee is quite prepared to pick up these things. I looked at a couple of examples, and I think Victor Perton mentioned one, where the Office of Regulation Reform had taken issue with a regulatory impact statement prepared by a particular department and had taken them on: one part of the Government taking on another part of the Government and saying, `This regulatory impact statement is not up to what is required.' That is a second aspect of it. From my limited study, my impression is that it does seem they are taking it seriously in Victoria and it is not just ticking a couple of boxes and putting in a bit of paper that does not tell you much.

LIS

The OECD has noted regulatory reform efforts in Australia has been limited by the exclusion of underlying statutes:

An obvious gap in many of the management and reform activities carried out in Australia is that they focus on lower-level regulation and not on the principal legislation.

At the Commonwealth level, the Government’s response to the Small Business Deregulation Task Force Report has brought in new arrangements whereby an RIS will have to be prepared and tabled in Parliament for all primary legislation. The Committee’s initial research shows that legislative impact statements (or an RIS for Primary Legislation) are very rare with Finland and The Netherlands being the only OECD jurisdictions to have such a system in place. We have received some evidence indicating that government departments avoid the RIS process by placing the requirements in the primary legislation. In light of this evidence and considering that legislative impact statements are now mandatory at the Commonwealth level, it will be an issue that the Committee carefully considers in its final report.

Conclusion

In the 1980s a priority for regulatory reform was to reduce the number of regulations. Despite the fact that in Victoria and New South Wales, the volume of regulation has been almost halved with the impact of sunset clauses and regulatory impact statements, there is still a perception among business that regulations are on the increase. This partly suggests that we need to work hard to ensure that the general public and business understands what we are doing. It also suggests that a reduction in the number of regulations does not automatically mean a reduction in the regulatory burden on business. Regulatory reform is no longer a matter of mere deregulation, but must now focus on improving the quality of regulations by reducing their legal and technical complexity and enhancing their effectiveness by increasing flexibility and transparency.

Government should ensure that the resourcefulness of the private sector is brought to bear on regulatory mechanisms - whether it be by consulting the private sector on the form and content of regulations or by inviting the private sector to use its own expertise (and resources) to develop alternative compliance mechanisms. One Commonwealth treasury official lamented the fact that business organisations rarely get involved in the regulation making stage and yet are the first to complain about regulations and their onerous requirements. Even if there are very few Alternative Compliance Mechanisms produced because of the high cost of preparation, we will have opened a door to business and an avenue of counter-attack to criticism. We will be able to invite the critics of regulation to propose alternative means better benefiting the community and themselves.

Regardless of the benefits of regulatory reform, ultimately the success of reform is dependent on public confidence. The Committee’s consultations to date have suggested that while ACMs will be beneficial to business, there needs to be a big sales job done because public confidence in regulations remains a real issue. Public confidence in such a system will only be developed and maintained if there is vigorous parliamentary and public scrutiny. We need to ensure that commentators and the press acknowledge the efforts of governments who do explore and implement innovative regulatory strategies.

Ultimately governments need to recognise that there is no one solution to the myriad concerns surrounding regulations. Rather,

[w]e should acknowledge that at the end of the day regulation is needed to protect the community and that there must be some sort of bottom line — a lower base, if you like — that provides a measure of protection for the community from those who would behave egregiously. There should, therefore, be an attempt in setting regulation to look at both carrots and sticks. Obviously you need the existence of sticks for people who will simply not comply with the rules as the community might expect, but equally regulation or alternative regulation should fundamentally be aimed at achieving best-practice outcomes in the community, and I think this is the real challenge before Parliament: not simply to regulate in a way that will stop people doing things that might kill or harm people, but to do things in a way that encourages all … to adopt best-practice outcomes.