2
Identifying areas of Victorian regulation
for assessment
2.1
Introduction
Regulation is an important tool available to government to assist in achieving
policy objectives and responding to community needs. Victoria’s business
regulators administer around 180 Acts, 200 regulations and over 380 codes of
practice (VCEC 2011a). It is important for Victoria that these regulations are
effective and efficient and not imposing unnecessary burdens on businesses,
not-for-profit organisations (NFPs) and individuals. A key part of the terms of
reference for this inquiry asks the Commission to examine and report on:
specific areas of Victoria’s regulation that are unnecessarily burdensome,
complex, redundant or duplicative

those areas of regulation that should be reformed or reduced as a matter of
priority.
This chapter outlines the Commission’s approach to identifying Victorian
regulations that are unnecessarily burdensome and identifying priority areas for
review and/or reform.

2.2
The Commission’s approach
The Commission’s approach comprises a number of steps, as illustrated in
figure 2.1. The first step developed an initial list of Victorian regulations from a
range of information sources including:





the business and NFP perceptions survey of Victorian regulation
input from inquiry participants (mainly consultations and submissions)
input from government departments, agencies and regulators (Victorian,
Commonwealth and other jurisdictions)
recent regulatory reviews
research undertaken by the Commission.
This initial list of regulations was screened using filtering criteria. The regulations
satisfying these criteria were further analysed (chapters 3–7). The key outcomes
of this analysis were (1) recommendations identifying priority areas of regulation
that warrant review and (2) recommendations identifying specific changes that
can be readily implemented.
IDENTIFYING AREAS OF VICTORIAN REGULATION FOR ASSESSMENT
9
Figure 2.1
Survey &
estimates of
regulatory costs
The Commission’s approach
Input from
departments,
agencies &
regulators
Consultations &
roundtables
Submissions
Recent regulatory
reviews &
research
Initial list of identified issues
with Victorian regulation
Filtering criteria
(1) Victorian regulation
(2) Identified problem (burdensome,
redundant or duplicative)
(3) Extent/scale of problem (businesses,
NFPs & individuals affected)
(4) Recently reviewed &/or reformed
Filtering criteria
Filtered list of identified areas
of Victorian regulation
Analysis of identified areas
of Victorian regulation
Recommendations identifying priorities for
future review & reform
Further analysis
(1) Identify options
(2) Preferred option
(3) Timing and size of payoff
Recommendations identifying specific
changes that can be readily implemented
Source: VCEC.
Generally speaking, the Commission has taken the view that its task is to identify
priorities for reducing regulatory burdens without compromising policy
objectives. In some rare cases, however, it was necessary to look at the
Government’s overarching policy objectives, rather than the much narrower
objectives contained in a potentially costly area of regulation. The recent change
in government has also raised the question of whether burden reduction
opportunities identified by the Commission over the past three years that were
previously not accepted might be reconsidered.
10
PRIORITIES FOR REGULATORY REFORM
2.3
Perceptions survey
Perceptions surveys have been used in a number of OECD countries to examine
regulatory burdens and reform programs (Arndt and Kucet 2010, p. 7). The
Commission, in its recent inquiry into local government regulation, also
commissioned a survey of businesses about their views on local government and
state regulations (VCEC 2010b).
For this inquiry, an additional survey was conducted on business and NFP
perceptions of Victorian regulation. The Commission engaged the Wallis
Consulting Group to survey businesses and NFPs by telephone to ascertain their
perceptions of Victorian (state) regulation and regulators. The survey identified:



areas of Victorian regulation that businesses and NFPs perceive as
unnecessarily burdensome or costly
business and NFP perceptions about the impacts of these areas of
burdensome regulation and their suggestions on how best to address the
unnecessary burdens
areas of Victorian regulation where there is overlap or duplication with
Commonwealth or local government regulation or regulation in other states
or territories.
The survey was developed by the Commission in conjunction with the Wallis
Consulting Group, and was undertaken from 14 October to 21 October 2010.
The main findings of the survey are outlined in the following section. More
detailed results can be found in the Wallis Consulting Group report (Wallis
2011a) and survey data tables (Wallis 2011b), which are available on the
Commission’s website: www.vcec.vic.gov.au.
2.3.1
Main findings
The survey focused on Victorian businesses and NFPs that have dealt with
Victorian regulation in the past three years. A total of 1002 organisations were
surveyed, comprising 902 businesses and 100 NFPs. The survey covered all
industry sectors — based on the Australian New Zealand Standard Industry
Classification (ANZSIC) 1993 (ABS 1993) — except government administration
and defence. Although NFPs can be classified into ANZSIC industry sectors,1
the survey reports the combined results for NFPs as a separate consolidated
sector.
Many NFPs operate in ANZSIC sectors such as education, health and community services, and cultural and
recreational services.
1
IDENTIFYING AREAS OF VICTORIAN REGULATION FOR ASSESSMENT
11
The results reported in this chapter relate primarily to the areas of Victorian
regulation that were perceived as most costly, unnecessarily burdensome and
duplicative with other regulation. The survey probed these areas further and
more detailed results are reported in the Wallis Consulting Group report (Wallis
2011a). The 95 per cent confidence interval is ±2–4 per cent for survey results
based on larger base sizes (that is, 500–900); confidence intervals are wider for
smaller base sizes (including industry level and NFP results) (section 2.3.2).
Recent dealings with Victorian regulation
Across all businesses and NFPs, the main area of Victorian regulation that they
had recent dealings with was occupational health and safety and workers and
transport accident compensation (OHS & WTAC) laws (figure 2.2). Businesses
operating in the mining, construction and manufacturing industries were the
most likely to have recently dealt with OHS & WTAC regulations.
Figure 2.2
Recent dealings with Victorian regulation,
businesses and NFPsa
Per cent
0
20
40
60
80
100
Occupational health & safety, workers & transport accident compensation laws
Administration associated with state taxes & charges
Building & construction laws
Regulations relating to the start up or registration & day-to-day operations of
businesses
Road & transport regulations
Registration requirements for individual professionals or groups of professionals
Planning & land use regulations relating to sub-divisions, environmental impact
statements & heritage overlays
Businesses
Environmental protection legislation
NFPs
Utilities regulation
Fair trading, tenancy & consumer protection laws
Health & food safety legislation
Courts & tribunals
Regulations relating to associations incorporation & fund-raising activities by notfor-profit organisations
Licensing laws for liquor, gambling & racing
Regulations relating to mining, fisheries, forestry & livestock
Other regulations
a Respondents were asked to identify one or more areas of Victorian regulation that they had dealt
with in the past three years. Respondent base (businesses = 902; NFPs = 100).
Source: Wallis 2011b.
12
PRIORITIES FOR REGULATORY REFORM
For NFPs, after OHS & WTAC laws, the principal concerns were with
regulations specific to their operations; namely, regulation around associations
incorporation, fundraising activities and health and food safety. Because many
NFPs provide welfare and related services, NFPs come into contact with health
and food safety regulation disproportionately more than Victorian businesses in
general.
After these areas of regulations, all businesses and NFPs dealt regularly with:



administration of state taxes and charges (such as payroll tax)
building and construction laws
regulations relating to start up or registration and day-to-day business
operations.
Payroll tax generally applies to employing businesses, whereas NFPs have
relatively fewer dealings with payroll tax, possibly because many NFPs are
exempt from paying this tax.
The industry sectors that came into contact most with building and construction
regulation were construction, health and community services, and property and
business services. In the case of road and transport regulations, the industry
sectors that dealt with these laws regularly were those heavily reliant on transport
activities; namely, transport and storage, primary and construction industries.
All Victorian organisations have dealt with regulations relating to their start up or
registration and day-to-day operations at some point in time. Those most likely
to have done so in the past three years were likely to be operating in the property
and business services and utilities sectors.
Victorian regulation perceived as most costly
OHS & WTAC laws were nominated as being the most costly area of Victorian
regulation for businesses and NFPs (figure 2.3). Businesses that frequently dealt
with OHS & WTAC regulations mentioned that this was their most costly
regulation, especially those operating in the construction and manufacturing
industries.
IDENTIFYING AREAS OF VICTORIAN REGULATION FOR ASSESSMENT
13
Figure 2.3
Victorian regulation perceived as most costly,
businesses and NFPsa
Per cent
0
10
20
30
Occupational health & safety, workers & transport accident compensation laws
Administration associated with state taxes & charges
Planning & land use regulations relating to sub-divisions, environmental impact
statements & heritage overlays
Building & construction laws
Licensing laws for liquor, gambling & racing
Road & transport regulations
Registration requirements for individual professionals or groups of
professionals
Environmental protection legislation
Courts & tribunals
Businesses
NFPs
Fair trading, tenancy & consumer protection laws
Health & food safety legislation
Utilities regulation
Regulations relating to mining, fisheries, forestry & livestock
Regulations relating to the start up or registration & day-to-day operations of
businesses
Regulations relating to associations incorporation & fund-raising activities by
NFP organisations
Education & training regulations
Other regulations
a Respondents were asked to identify from the areas of regulation they had dealt with in the past three
years which were the most costly for their organisation. Respondent base (businesses = 902; NFPs = 100).
Source: Wallis 2011b.
Beyond OHS & WTAC laws, NFPs had mixed views about what other
regulations they saw as being most costly to them. However, the results for
businesses were generally more clear-cut; they saw administration of state taxes
and charges as the next most costly regulatory area. A sizeable number of
businesses also indicated that planning and land use regulation and building and
construction laws were costly areas of regulation.
Victorian regulation perceived as unnecessarily burdensome
Around 58 per cent of businesses and about 45 per cent of NFPs said that they
had dealt with one or more specific pieces of Victorian regulation that imposed
unnecessary burdens or costs on their organisations (figure 2.4).
14
PRIORITIES FOR REGULATORY REFORM
Figure 2.4
Proportion of organisations that perceived
unnecessary regulatory burdensa
Businesses
NFPs
37%
44%
45%
58%
5%
11%
Yes
No
Don't know
Yes
No
Don't know
a Respondents were asked to indicate, among the areas of Victorian regulation they had dealt with in
the past three years, whether they perceived any areas as imposing unnecessary burdens or costs on
their organisation. Respondent base (businesses = 902; NFPs = 100).
Source: Wallis 2011b.
The businesses and NFPs that indicated there was unnecessarily burdensome
regulation were then asked to nominate which areas of regulation they perceived
to be the most burdensome. For business, the five areas mentioned most often
were (figure 2.5):





administration of state taxes and charges
OHS & WTAC laws
planning and land use regulations
building and construction laws
road and transport regulations.
IDENTIFYING AREAS OF VICTORIAN REGULATION FOR ASSESSMENT
15
Figure 2.5
Victorian regulation perceived as unnecessarily
burdensome, businesses and NFPsa
0
10
Per cent
20
30
Administration associated with state taxes & charges
Occupational health & safety, workers & transport accident compensation
laws
Planning & land use regulations relating to sub-divisions, environmental
impact statements & heritage overlays
Building & construction laws
Road & transport regulations
Health & food safety legislation
Fair trading, tenancy & consumer protection laws
Licensing laws for liquor, gambling & racing
Registration requirements for individual professionals or groups of
professionals
Businesses
NFPs
Environmental protection legislation
Regulations relating to mining, fisheries, forestry & livestock
Courts & tribunals
Regulations relating to associations incorporation & fund-raising activities by
not-for-profit organisations
Utilities regulation
Regulations relating to the start up or registration & day-to-day operations of
businesses
Education & training regulations
Other regulations
a Respondents were asked to identify, from the areas of Victorian regulation they had dealt with in the
past three years, a single area of regulation (if any) which they perceived as imposing unnecessary
burdens or costs on their organisation. Respondent base only includes businesses and NFPs that
identified burdensome regulations (businesses = 536; NFPs = 45).
Source: Wallis 2011b.
The result for administration of state taxes and charges is primarily driven by
perceptions of the financial cost (for example, payroll tax payments). Perception
surveys in a number of OECD countries have also found that tax regulation is
frequently viewed as particularly burdensome (Arndt and Kucet 2010, p. 11).
Although administration associated with state taxes and charges was nominated
by a significant proportion of businesses across a range of industry sectors, the
highest responses were recorded in the wholesale trade, manufacturing, and
finance and insurance industries (table 2.1).
16
PRIORITIES FOR REGULATORY REFORM
Table 2.1
Areas of Victorian regulation perceived as
unnecessarily burdensomea, selected industriesb
Area of regulation
Industry sector
Administration of state taxes &
charges
Wholesale trade
Manufacturing
27
23
Finance & insurance
22
Miningc
30
Construction
26
Manufacturing
25
Property & business services
15
Primary industries
12
OHS & WTAC
Planning & land use
Construction
Building & construction
8
Electricity, gas & waterc
16
Construction
11
Health & community services
Road & transport
Percentage of
businesses in the sector
8
Transport & storage
28
Primary industries
17
Health & community services
4
a Respondents were asked to identify a single area of Victorian regulation (if any) which they
perceived as imposing unnecessary burdens or costs on their organisation. Respondent base
(businesses = 902). b The industry sectors with the three highest responses (percentage of businesses in
the sector that perceived that area of regulation as burdensome) are reported. c Small base size.
Source: Wallis 2011b.
In contrast, the result for OHS & WTAC regulations largely reflects perceptions
of administrative and substantive compliance costs (such as completing
paperwork, reporting and complying with regulatory requirements). OHS &
WTAC laws were nominated by relatively higher proportions of businesses in the
mining, manufacturing and construction industries (table 2.1). Medium and large
firms were more concerned about these regulations than were smaller firms.
Among NFPs, OHS & WTAC laws were also nominated as being unnecessarily
burdensome followed by regulation of associations incorporation and
fundraising activities, with health and food safety and planning and land use
regulations being placed equal third (figure 2.5).
IDENTIFYING AREAS OF VICTORIAN REGULATION FOR ASSESSMENT
17
Aspects of regulation perceived as costly and time consuming
Of the businesses that perceived unnecessarily burdensome or costly regulation
(about 58 per cent of all businesses in the survey), about 59 per cent said that
they find it difficult to comply with this regulation — although this proportion is
even higher for businesses operating in the mining2, primary industries and
construction sectors.
The aspects of unnecessarily burdensome regulation that were perceived as
imposing the most costs on businesses included paying fees, completing
paperwork and complying with regulatory requirements (such as undertaking
training and purchasing equipment) (figure 2.6).
Figure 2.6
Perceived time and costs associated with
regulatory tasks, businessesa
Per cent
0
10
20
30
40
Completing paperwork, reporting &
follow-up with regulator
Complying with the regulatory
requirements
Inspections, audits & compliance
monitoring
Applying for licences, permits or
gaining other approvals
Time
Waiting for a decision
Cost
Paying a fee
Finding information
Keeping up-to-date with changes
Other
Don't know
a Respondents who perceived regulation as unnecessarily burdensome were asked to identify one or
more aspects of this regulation which they perceived to be time consuming and costly. Respondent
base (businesses = 536. NFPs not shown due to small base).
Source: Wallis 2011b.
The result for ‘paying fees’ partly reflects the many respondents who nominated
the administration of state taxes and charges (payroll tax was often mentioned) as
unnecessarily burdensome or costly.
2
Small base size.
18
PRIORITIES FOR REGULATORY REFORM
The key area that is time consuming for organisations was completing
paperwork, reporting and following up with the regulatory body (figure 2.6).
Businesses in the education, retail trade, and property and business services
sectors were the most likely to find paperwork time consuming.
Overall impact of burdensome regulation
Of the businesses that nominated Victorian regulation as being unnecessarily
burdensome or costly (about 58 per cent of all businesses in the survey), more
than 70 per cent indicated that — after taking costs and benefits into account —
this regulation had a detrimental impact on their business (figure 2.7). Businesses
in electricity, gas and water supply, mining and construction industries were most
likely to report negative impacts.
Figure 2.7
Perceived overall impact, Victorian regulation
perceived as burdensome, businessesa
100%
90%
Positive impact
80%
70%
Can't say
A large positive impact
60%
A small positive impact
50%
Little or no impact
A small negative impact
40%
Negative impact
A large negative impact
30%
20%
10%
0%
a Respondents who nominated burdensome regulation were asked to indicate how big an impact the
regulation has on their organisation, taking the costs and benefits into consideration. Respondent base
(businesses = 536; NFPs not shown due to small base).
Source: Wallis 2011b.
Only 13 per cent of businesses that nominated burdensome regulations said that
this regulation was, on balance, positive for their organisations. These businesses
were more likely to be operating in the transport and storage and education
industries.
IDENTIFYING AREAS OF VICTORIAN REGULATION FOR ASSESSMENT
19
Duplication between Victorian state regulation and other regulation
About one-quarter of all organisations (businesses and NFPs) in the survey
noted duplication or conflict between Victorian regulations and those in force in
other states and/or at other levels of government (figure 2.8). While the majority
of organisations did not perceive any duplication, this result may reflect, to a
large extent, that many businesses and NFPs only operate in Victoria.
Figure 2.8
Perceived duplication between Victorian and
other regulation, businesses and NFPsa
Businesses
NFPs
22%
24%
7%
71%
Yes
No
Don't know
4%
72%
Yes
No
Don't know
a Respondents were asked, in relation to the areas of Victorian regulation they have dealt with in the
past three years, whether there is duplication or conflict across different levels of government.
Respondent base (businesses = 902; NFPs = 100).
Source: Wallis 2011b.
Of those businesses that operate in Victoria and other states or territories in
Australia, and therefore deal with regulation from multiple jurisdictions (about
23 per cent of all businesses in the survey), over 40 per cent perceived
duplication or conflict between Victorian and other regulation. The main areas of
duplication were considered to be:





20
road and transport regulations
OHS & WTAC laws
building and construction laws
planning and land use regulations
administration of state taxes and charges (figure 2.9).
PRIORITIES FOR REGULATORY REFORM
Notably, in the case of road and transport laws, about 70 per cent of businesses
in the transport and storage sector mentioned duplication in this area of
regulation.
Figure 2.9
Perceived duplication between Victorian state
regulation and other regulation, businessesa, b
Per cent
0
5
10
15
20
25
Road & transport regulations
Occupational health & safety, workers
& transport accident compensation
laws
Building & construction laws
Planning & land use regulations
relating to sub-divisions, environmental
impact statements & heritage overlays
Administration associated with state
taxes & charges
Environmental protection legislation
Registration requirements for individual
professionals or groups of
professionals
Health & food safety legislation
a Respondents were asked to nominate one or more areas of Victorian regulation where they
perceived duplication with different levels of government. Respondent base (businesses = 208; NFPs not
shown due to small base). b The areas of regulation not shown in the chart registered results of 3 per
cent or less.
Source: Wallis 2011b.
The main source of duplication is perceived to be with regulations operating in
other states and/or territories (figure 2.10), rather than with the Commonwealth
or local government. This is the case for road and transport laws, OHS &
WTAC laws, building and construction regulations, and the administration of
taxes and charges (table 2.2).
There is also some perceived duplication with Commonwealth and local
government regulations (table 2.2). Businesses perceived duplication between
Victorian and Commonwealth OHS & WTAC and tax regulations, although to a
lesser extent compared with similar regulations in other states and territories.
IDENTIFYING AREAS OF VICTORIAN REGULATION FOR ASSESSMENT
21
Duplication with local government regulations was perceived to be relatively
high in planning and land use laws.3
Figure 2.10
100
Source of duplication with Victorian regulations,
businessesa
Per cent
90
80
70
60
50
40
30
20
10
0
Commonwealth
State/territory
Local
a Respondents who identified duplication were asked whether Victorian regulation doubles up with
Commonwealth, other state or territory, or local regulations. Respondents (businesses = 186; NFP results
not shown due to small base size).
Source: Wallis 2011b.
More than three quarters of businesses that perceived duplication indicated that
it was quite or very costly to their business. According to these respondents, the
key aspects that make duplication costly were duplicative paperwork or reporting
requirements, inconsistent requirements and delays in approval processes
(figure 2.11).
In a survey of businesses conducted as part of the Commission’s recent inquiry into local government
regulation, regulations covering building and construction and planning and land use were the most
commonly reported areas of local government interaction (Roy Morgan Research 2010, p. 1).
3
22
PRIORITIES FOR REGULATORY REFORM
Table 2.2
Source of duplicated regulation with level of
government, businessesa
Area of regulation
Respondents
(no.)
Commonwealth
(%)
Other
states (%)
Local
(%)
Road & transport
32
43
94
15
OHS & WTAC
56
52
79
5
Building & construction
31
34
81
54
Planning & land useb
26
24
68
90
State taxes & charges
31
65
75
11
a Respondents who identified duplication were asked whether Victorian regulation doubles up with
Commonwealth, other state or territory, or local regulations. b Small base size.
Source: Wallis 2011b.
Figure 2.11
Aspects perceived as making duplication costly,
businessesa
Per cent
0
10
20
30
40
50
Duplicative paperwork or reporting
requirements
Inconsistent requirements
Delays in approval processes
Multiple licences, permits or approvals
Multiple fees
Multiple inspections, audits or
monitoring requirements
Fragmented or uncoordinated approval
processes
Time
Keeping up with changes in
legislation/compliance
Consultants' fees
Don't know
a Respondents who identified duplication were asked to nominate one or more aspects of regulation
which make duplication costly. Respondent base (businesses = 186; NFPs not shown due to small base
size).
Source: Wallis 2011b.
IDENTIFYING AREAS OF VICTORIAN REGULATION FOR ASSESSMENT
23
2.3.2
Strengths and limitations of the survey information
A key strength of the survey is that the sample size and structure has been
designed so that the high-level results are broadly representative of businesses in
Victoria. That said, it is important to recognise that, while the number of
interviews in total is large, the number in some industry sectors is small and even
smaller for particular answers to questions. For this reason, the Wallis Consulting
Group commented primarily on survey estimates with a 95 per cent confidence
interval of ±2–4 per cent4 but also commented on any clear patterns evident in
the data (Wallis 2011a, p. 6).
The survey has sought to span all major areas of Victorian regulation. As noted,
there are several hundred Acts and Regulations in Victoria, so it was necessary
for the survey to group these laws and regulations into broad areas of regulation,
which could be readily understood by interviewers and interviewees. These areas
of regulation are used in subsequent chapters of this report.
A potential weakness of perceptions surveys generally is that respondents’
perceptions of regulation may not always align closely with objective analysis.
For many questions in the survey, the results represent the perceptions of those
individuals responding to various questions and may be subject to bias. For
example, a business’s perceptions may not align with outcomes where there are
knowledge imperfections or expectations of regulatory performance have
changed significantly. It is also possible that some business or NFP perceptions
have been shaped by recent dealings with regulation that are infrequent or
outliers and therefore not typical. Such responses can skew the results for
answers to survey questions when sample sizes are small.
To address some possible sources of perception bias, the survey sought
responses from the people in the business or organisation who have the most to
do with industry or other regulators; that is, the people who make sure that a
firm or organisation complies with Victorian regulations. These people are more
likely to have the knowledge and experience to answer the survey questions
accurately.
Sections 2.4–2.6 examine additional sources of information that may assist in
identifying areas of Victorian regulation that are burdensome.
This means that it is highly likely (that is, with 95 per cent probability) that, if a complete census of
organisations were undertaken, the results would be within ±2–4 per cent of the survey estimates.
4
24
PRIORITIES FOR REGULATORY REFORM
2.4
Estimates of regulatory costs in Victoria
Quantitative estimates of the costs imposed on businesses and individuals by
different Victorian regulations would be a useful input to identifying which areas
of regulation should be subject to closer examination.
In 2007, the Department of Treasury and Finance (DTF) estimated that the
administrative cost imposed by state regulation is about $1 billion a year (DTF
2007, p. 5). This estimate, however, does not include other components of
regulatory costs such as financial, substantive compliance and delay costs — nor
does it include costs imposed on parties other than regulated entities (box 2.1).
Moreover, the estimate does not split administrative costs by area of regulation.
Box 2.1
Types of regulatory costs
The Victorian Regulatory Change Measurement Manual defines the following types
of regulatory costs:





Financial costs arise from an obligation to transfer a sum of money to the
Government or the competent authority. Examples include administrative
charges, fees for applying for a permit, and taxes.
Administrative costs, often referred to as ‘red tape’, are the costs of paperwork
incurred by regulated entities, primarily to demonstrate compliance with a
regulation or to allow government to administer the regulation.
Substantive compliance costs are costs that directly lead to the regulated
outcomes being sought. These are often capital and production costs, such as
the purchase of new equipment and the undertaking of specified training.
Delay costs are the expenses and loss of income incurred by a regulated entity
through delays in application and approval processes.
Other costs include those that arise indirectly from the impacts of regulation or
the way it is administered. These costs include impacts on third parties,
innovation, competition, and consumption patterns or resource allocation.
Source: DTF 2009.
The Commission is not aware of any studies that have estimated regulatory costs
for each area of regulation and for each sector (including industries, government
and households) in Victoria. That said, estimates of key components of
regulatory costs on Victorian businesses are available for some areas of
regulation — such as food regulation (KPMG 2007), environmental regulation
(ACG 2009b), and planning and building regulation set by the Victorian
Government but administered by local councils (ACG 2010).
IDENTIFYING AREAS OF VICTORIAN REGULATION FOR ASSESSMENT
25
Recent DTF analysis estimated the costs imposed on Victorian businesses
through statutory rules (that is, regulations under the Subordinate Legislation Act
1994 (Vic)) based on cost information contained in Regulatory Impact
Statements (RISs) from 2005-06 to 2009-10. This analysis found that the
Victorian statutory rules imposing the largest costs on businesses are:
building regulations
occupational health and safety regulations
prescribed waste regulations.



This analysis also mapped the costs of these statutory rules onto industry sectors
in Victoria. Construction is the sector most heavily affected by the costs of
statutory rules (figure 2.12). Transport, utilities and communications, and
agriculture are also disproportionately affected. The costs borne by these sectors,
in particular, significantly outweigh their shares in gross state product.
Figure 2.12
Cost of statutory rules, by industry in Victoria
Per cent of total
0
5
10
15
20
25
30
35
Construction
Transport, utilities & communications
Community, social & personal
services
Cost of statutory rules (%)
Manufacturing
Gross state product (%)
Finance, insurance & property
Agriculture
Wholesale & retail trade
Mining
Source: DTF 2010a.
However, the data underpinning this analysis only refer to the costs resulting
from the implementation of statutory rules and do not include the costs resulting
from legislation, subordinate instruments and local laws.5 The estimates only
Subordinate instruments that are not statutory rules under the Subordinate Legislation Act include, for
example, rules, orders or schemes made under statutory powers by ministers; licences and permits issued
5
26
PRIORITIES FOR REGULATORY REFORM
include the regulatory burden placed on business and do not consider the burden
on government or individuals. In addition, it was necessary to apply some
judgement in allocating costs to industry sectors.
While the limitations of the available data on regulatory costs should be kept in
mind, these data can be used — together with other information sources — to
help identify areas of regulation for further investigation. As noted, the
Commission’s approach draws on a range of information sources.
2.5
Input from inquiry participants
The terms of reference for this inquiry require the Commission to consult with
key interest groups and affected parties. The Commission released an issues
paper early in the inquiry, outlining its consultation strategy. The paper sought
views from interested parties on, among other issues, which areas of Victorian
regulation are the most burdensome and complex and which areas are redundant
or duplicative.
The Commission held group discussions and separate meetings with a wide
range of organisations (appendix A). The consultation program included:



four group discussions early in the inquiry, involving 21 participants from
business or industry groups, community groups, regulators, and academics
meetings with individual businesses, NFPs and peak bodies. The
Department of Business and Innovation also organised 14 meetings, on
behalf of the Commission, with individual Victorian businesses and business
associations in a range of industry sectors.
meetings and teleconferences with government departments, agencies and
regulators in Victoria and other jurisdictions. The Commission also asked
for and received suggestions from Victorian government departments on
areas in which regulatory reform should be considered.
In addition, the issues paper sought public submissions from interested parties.
In response, the Commission received 34 submissions; many of which
commented on areas of Victorian regulation that were perceived as burdensome.
Several of these submissions were from industry peak bodies that collected and
presented views on areas of regulation from a range of businesses they represent.
2.6
Recent regulatory reviews
As part of its research program, the Commission examined the analysis, findings
and/or recommendations of recent regulatory reviews and RISs. The purpose
under state government authority; codes of practice or conduct with statutory force; co-regulation; and
guidance with statutory force (DTF 2009, p. 5).
IDENTIFYING AREAS OF VICTORIAN REGULATION FOR ASSESSMENT
27
was to identify any regulation that is unnecessarily burdensome, duplicative or
redundant.
The Commission examined recent reviews of Victorian regulation such as the
State Services Authority (SSA) review of not-for-profit regulation in Victoria
(SSA 2007), the Hanks review into accident compensation arrangements (Hanks
2008) and other reviews which are cited in subsequent chapters. In view of the
recent change in government, the Commission also revisited recommendations
from its inquiries in the past four years that the former Government did not
accept or accepted only in part.
In addition, the Commission examined the recent annual reviews — undertaken
by the Productivity Commission — of the burdens on business (PC 2009b; PC
2010c) and noted any issues relevant to Victorian regulation. These reports
identified some areas where there appears to be duplication between state and
Commonwealth regulatory arrangements.
2.7
Comparing and contrasting key sources of
information
Figure 2.13 compares the frequency with which different areas of Victorian
regulation were cited in the perceptions survey as being unnecessarily
burdensome with the frequency they were identified in ‘other sources’ (that is,
direct input from inquiry participants and recent reports) as burdensome or
otherwise problematic.
While most areas of regulation were cited in both the survey and other sources,
there are some marked differences. Some areas featured more strongly in the
survey than in other sources; in particular:


administration of state taxes and charges
OHS & WTAC schemes.
The survey results — which are based on a large sample of businesses — raise
the question of why these perceptions are not borne out in the submissions and
consultations. A possible reason for this difference may be that the survey is
picking up regulations with an impact on many businesses whereas other sources
are identifying regulations with a large impact on a few businesses.
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PRIORITIES FOR REGULATORY REFORM
Figure 2.13
Areas of Victorian business regulation,
comparing the business perceptions survey and
other sourcesa, b
Per cent of total
0
5
10
15
20
25
30
Administration associated with state taxes & charges
Occupational health & safety, workers & transport accident compensation laws
Planning & land use regulations relating to sub-divisions, environmental impact
statements & heritage overlays
Building & construction laws
Road & transport regulations
Health & food safety legislation
Fair trading, tenancy & consumer protection laws
Licensing laws for liquor, gambling & racing
Perceptions survey
Direct input & research
Registration requirements for individual professionals or groups of professionals
Environmental protection legislation
Regulations relating to mining, fisheries, forestry & livestock
Courts & tribunals
Utilities regulation
Other regulations
Multiple areas of regulation
a For the survey, the frequency was calculated from business respondents who identified one or more
areas of Victorian regulation as unnecessarily burdensome (base = circa 530). For other sources (that is,
submissions, consultations and research), the frequency was calculated from potential issues identified
in these areas of regulation (base = circa 170). b ‘Other regulations’ includes, education and training,
child care and protection, and anti-discrimination regulations.
Sources: Wallis 2011b; VCEC analysis.
The Commission expected several areas of regulation to be raised in submissions
that, in the event, were not mentioned. The lack of any substantive reference in
submissions to the costs of state taxes was surprising especially given the
experience of the Banks review of Commonwealth regulation, in which
administrative costs of Commonwealth taxation figured prominently (Regulation
Taskforce 2006, p. 107). The Commission welcomes further submissions that
would help it to understand better the matters raised in the perceptions survey.
Conversely, some areas of regulation featured more strongly in other sources
than in the survey including, for example, environment protection legislation,
health and food safety laws, and road and transport regulations.
Based on direct input and recent reports, the Commission has identified a
substantial number of possible issues that relate to different areas of Victorian
regulation. Most issues are concentrated in the following areas:
IDENTIFYING AREAS OF VICTORIAN REGULATION FOR ASSESSMENT
29





environment protection legislation
road and transport regulations
health and food safety laws
planning and land use legislation
NFP regulation.
Following the Commission’s approach, the issues raised in these and other areas
of Victorian regulation were then filtered using the criteria outlined in
section 2.8.
2.8
Filtering criteria
The following criteria were used to screen the possible problems for further
assessment:




regulation that is imposed by the Victorian Government
regulation that is unnecessarily burdensome, complex, redundant or
duplicative
regulation that could be readily changed to reduce burden and/or where
reform would affect a large number of businesses, NFPs or individuals
regulation that has not been the subject of recent reforms — unless there is
evidence of substantial burdens on businesses, NFPs or the wider
community that have arisen from or not been addressed by those reforms.
The Commission has also addressed some areas that are the subject of Council
of Australian Government (COAG) reforms, with a view to distilling lessons
from those experiences about the process and obtaining the best outcomes from
national initiatives for regulatory harmonisation. Chapter 8 discusses
Commonwealth-state regulatory issues.
2.8.1
Regulation imposed by the Victorian Government
This inquiry has focused primarily on Victorian state regulation. While some
participants have commented on regulation imposed by other jurisdictions
(Commonwealth, local, and other states and territories), the Commission has
generally considered these to be beyond the scope of the inquiry, except where
there is overlap or duplication with Victorian state regulation.
Regulation imposed by the Victorian Government but administered by local
government is considered within scope where it is not among the areas examined
in the Commission’s recent inquiry into local government regulation in Victoria
(VCEC 2010b).
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PRIORITIES FOR REGULATORY REFORM
2.8.2
Unnecessarily burdensome regulation
Regulation imposes unnecessary costs when there is a more efficient means of
achieving the Government’s objectives. Identifying unnecessarily burdensome
regulation generally involves assessing current arrangements against the
principles of good regulation and/or observed best practice.
The Commission has also sought to identify redundant and duplicative
regulation. Regulations can become redundant if the Government’s policy
objectives change, or the economy or society changes, so that the regulation is
no longer relevant. Regulation may also be overtaken by other policy measures
intended to achieve the same result, making it unnecessary.
Regulations may be duplicative if there is similar regulation intended to achieve
the same result implemented by the same or different levels of government. For
example, overlap between two pieces of Victorian regulation or Victorian
regulation that overlaps with that enacted by the Commonwealth or local
government.
2.8.3
Likely impact of reforming burdensome regulation
The terms of reference ask the Commission to inquire into those areas of
regulation that should be reformed or reduced as a matter of priority. The
Commission has focused much of its attention on identifying opportunities to
reduce or eliminate any unnecessary costs that Victorian regulation imposes
without compromising pre-existing objectives (although, in some cases, the
objectives may need to be revisited by the Government). The key benefit of
reforming unnecessarily burdensome regulation therefore would be savings in
regulatory costs without compromising the benefits of regulation. Where reform
would transfer costs among different sectors, it is important that, overall, the
reform results in a net gain to the community.
The Commission has focused its effort on areas likely to deliver the largest cost
savings, but it has also looked at areas where reform can be readily achieved even
though the savings may be smaller. That said, cumulatively these ‘smaller’
reforms may have a significant impact.
While some information sources may point directly to particular areas of
regulation where there is scope for large cost savings, for many other areas it is
not as clear cut without further analysis. The Department of Justice (DOJ) stated
that:
… with all regulatory schemes the “devil is in the detail”. During DoJ’s
Consumer Affairs Legislation Modernisation (CALM) project a range of
regulatory schemes were reviewed and the largest administrative burden was in
IDENTIFYING AREAS OF VICTORIAN REGULATION FOR ASSESSMENT
31
one clause of one Act. It is not always clear at the “helicopter view” level where
the greatest burdens are. (sub. 23, p. 8)
The Commission recognises the limitations of a ‘high level’ or ‘top down’
approach to examining regulation. For instance, while available estimates of
regulatory costs may point to areas of regulation or specific regulations where
costs appear to be relatively high, it cannot be concluded that high regulatory
costs signify the presence of unnecessary costs. Further analysis — which draws
on more specific information — is required to determine whether there are
unnecessary burdens.
In addition to identifying unnecessary burdens, the Commission has sought to
identify opportunities to improve Victorian regulation in other ways — such as
by clarifying objectives, enhancing transparency and accountability, and
strengthening institutional arrangements — that would produce additional
benefits for the community.
2.8.4
Recently reformed or reviewed regulation
The Commission has sought to focus on those regulations that have not been
subject to recent reform. Only in exceptional cases will it re-examine recently
reformed regulation; that is, where there is substantial evidence that the reforms
have not addressed previously identified problems or have created new ones.
As noted in section 2.6, there have been numerous reviews of Victorian and
Commonwealth regulation in recent years. While the Commission has sought to
avoid covering the same ground as these investigations, it may examine and
comment on the reforms recommended by those reviews and the progress in
implementing them.
2.9
Areas of regulation for further examination
The identified problems that meet the filtering criteria fall into the areas of
regulation shown in figure 2.14 and are examined in chapters 3–6. Issues that cut
across multiple areas of regulation are examined in chapter 7.
These areas are largely reflected in the results of the perceptions survey. The
survey also pointed to state taxes and charges and OHS & WTAC as key areas of
regulation perceived as imposing unnecessary burdens. However, as noted above,
there have been few submissions on regulatory burdens arising from these areas
of regulation, and the Commission seeks further information on these matters.
Of the potential issues identified (around 200), a significant number did not
satisfy the filtering criteria and were not examined further by the Commission.
For instance, in the area of food safety regulation, the reported issue of food
safety plans was not examined because these have been subject to recent reform.
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PRIORITIES FOR REGULATORY REFORM
Figure 2.14
Victorian regulation examined by the
Commissiona
Victorian state regulation
Environment & land
use regulation
● Environment
protection
● Primary industries
Workplace & labour
regulation
Social regulation
Health & consumer
regulation
● Education
● Liquor & gambling
● Roads & transport
● Occupational health
& safety
● Not-for-profit
organisations
● Health & food safety
● Workers’
compensation
● Child protection
● Tenancies
● Planning & land use
● Building &
construction
Chapter 3
● Social housing
● State taxes &
charges
Chapter 4
● Fair trading &
consumer protection
● Anti-discrimination
Chapter 5
Chapter 6
a The broad categories have been used as a device to loosely group regulations for discussion and
presentational purposes in this report. The categories are not intended as a formal taxonomy.
Source: VCEC.
In addition, some reported issues met the filtering criteria but further analysis
suggested that there was not a problem or the problem was relatively minor in
severity and/or extent. The Commission went to considerable effort to verify
reported problems, by research and consultation. For example, in the area of
health and food safety regulation, it was reported that there is duplication of fruit
fly audits in Victoria but, upon closer examination (including discussions with
those directly affected), it appears that the cost of duplication is minor. In many
areas, more consultation is needed, particularly with relevant regulators. For a
number of issues, the discussion in this report is based on the views of one
submission. In these cases, the Commission is seeking the views of other
businesses to determine if the problem is more widespread.
IDENTIFYING AREAS OF VICTORIAN REGULATION FOR ASSESSMENT
33
The Commission welcomes feedback on the draft report, including on its
decisions to include (or not to include) various areas of regulation.6 Where there
are any particular regulations that meet the filtering criteria but have not been
examined in this report, the Commission welcomes advice and input from
interested parties to identify these regulations and provide information or
evidence of any significant unnecessary burden or other problems.
Information request
Are you aware of particular Victorian regulations that are imposing unnecessary burdens on
business and/or the community but which have not been examined in this draft report? If so,
could you please provide information on these regulations and the particular problem(s)?
The Commission also welcomes comment on the analysis and draft
recommendations contained in the subsequent chapters.
2.10
Guide to priority areas
This inquiry has scanned all major areas of Victorian regulation, guided primarily
by information obtained from the perceptions survey, consultations,
submissions, and additional research. The following chapters (chapters 3–7)
examine the identified problems or issues in more depth.
As a result of this analysis, the Commission has developed around 30 draft
recommendations across a diverse range of regulatory areas. In addition, the
report contains a large number of information requests which — subject to the
information received — could ultimately lead to further recommendations.
Taken as a whole, the current draft recommendations would constitute a
significant regulatory reform agenda which could not all be actioned immediately.
To prioritise the regulatory areas, the Commission considered each area against
four criteria:




the size of the regulatory burden, and the potential benefit to
competitiveness, productivity and liveability over the short and long term
from addressing the area
the capacity for improvement without compromising policy objectives
the extent to which the issues are well understood and the need for action is
clear
the policy environment is changing substantially and existing regulation is
likely to be obsolete or obsolescent.
A summary list of the potential issues identified will be available on the Commission’s website
(www.vcec.vic.gov.au).
6
34
PRIORITIES FOR REGULATORY REFORM
Based on these criteria, the Commission considers that the areas of highest
priority are:
(1)
(2)
(3)
(4)
(5)
environment protection and climate change
planning and land use regulation
vocational education and training regulation
taxi cab and hire car services regulation
liquor licensing regulation.
The Commission also considers that, in addition to these five priority areas, there
are other areas that could potentially be included in the list but which require
more research and analysis. These potential priority areas are:




occupational health and safety and workers compensation
administration of state taxes and charges
road safety regulation
fair trading regulation.
This priority list does not imply that the other draft recommendations in this
report are unimportant. As noted in chapter 9, an implementation program
should be developed outlining actions and timeframes to ensure that all the
recommendations are eventually implemented.
IDENTIFYING AREAS OF VICTORIAN REGULATION FOR ASSESSMENT
35
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PRIORITIES FOR REGULATORY REFORM