Best Practice Regulation Handbook
Appendix G. Business Cost Calculator
This appendix provides additional details about using the Business Cost Calculator (BCC).
The BCC is an IT-based tool designed to assist you to estimate the business compliance costs of various options. The BCC can be accessed from the OBPR website (www.finance.gov.au/obpr). If you have any queries about how to apply the BCC to your regulatory proposal, contact the OBPR.
The Australian Government requires that the compliance costs for business of proposed regulation be considered using the BCC or an approved equivalent tool. Regulations generally impose a wider range of costs than just compliance costs and affect a wider range of stakeholders than just businesses. The way in which the BCC fits into the impact analysis section of a Regulation Impact Statement (RIS) is discussed in Chapter 2.
G1. Scope of the Business Cost Calculator
The BCC has been developed to provide an automated and standard process for quantifying the compliance costs of regulation on business. It enables you to quantify these costs using an activity-based costing methodology.
The BCC is derived from the Standard Cost Model15, designed by the Dutch Government to measure the size of the administrative or ‘paperwork’ burden on business. The BCC defines compliance costs more broadly than the Standard Cost Model and includes all direct compliance costs, not just paperwork costs. This broad definition provides a greater scope for capturing the compliance costs of regulation.
The BCC identifies eight categories of compliance tasks. The ninth category, ‘Other’, is used to capture costs not readily classifiable to one of the other eight (see Table G.1).
G2. Using the Business Cost Calculator
Once you have created an overview of the proposal, the BCC asks you to provide details about the compliance tasks associated with the options, supporting evidence for this information and the level of certainty about this information. There may be a number of compliance tasks (with a number of associated compliance activities) for each option.
For each compliance task, information is required about:
- the category of the compliance task and related compliance activities
- whether the task is an internal cost or outsourced cost
- whether the task is a start-up or ongoing cost
- the number of businesses that will have to undertake that compliance activity
- how long the activity will take and how often it will have to be done
- who will perform the task and the associated labour cost, including on-costs (for tasks carried out internally), or the purchase cost (for tasks that are outsourced or where the task is the purchase of materials or equipment), and
- supporting evidence for this information and the level of certainty.
Table G.1 Compliance task categories in the Business Cost Calculator
Compliance tasks |
Examples |
|---|---|
Notification – businesses incur costs when they are required to report certain events to a regulatory authority, either before or after the event has taken place. |
Businesses may be required to notify a public authority before they are permitted to sell food. |
Education – costs are incurred by business in keeping abreast of regulatory requirements. |
Businesses may be required to obtain the details of new legislation and communicate the new requirements to staff. |
Permission – costs are incurred in applying for and maintaining permission to conduct an activity. |
Businesses may be required to conduct a police check before legally being able to employ staff. |
Purchase cost – in order to comply with regulation, businesses may have to purchase materials or equipment. |
Businesses may be required to have a fire extinguisher on-site. |
Record keeping – businesses incur costs when required to keep statutory documents up to date. |
Businesses may be required to keep records of accidents that occur at the workplace. |
Enforcement – businesses incur costs when cooperating with audits, inspections and regulatory enforcement activities. |
Businesses may have to bear the costs of supervising government inspectors on-site during checks of compliance with non-smoking laws. |
Publication and documentation – costs are incurred when producing documents required for third parties. |
Businesses may be required to display warning signs around dangerous equipment, or to display a sign at the entrance to home-based business premises. |
Procedural – some regulations impose non-administrative costs. |
Businesses may be required to conduct a fire safety drill several times a year. |
Other — when a compliance cost cannot be categorised into one of the above categories, it can be placed into this category. |
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The BCC provides an executive summary called the BCC report and a number of other reports (by business, by size of business or for total businesses) about compliance costs, including:
- compliance costs by cost category
- compliance costs by task
- summary report of total compliance costs, and
- summary of supporting evidence.
Data sources
The information you will require for input into the BCC can come from a variety of sources. The BCC contains a number of links to help you search for data.
Where the detailed information required is not readily available, you may need to acquire it through consultation or research. Some possible ways of collecting data are:
- seeking compliance information from businesses through a consultation process (better feedback may be obtained if business are given some preliminary estimates to comment on)
- approaching industry associations or peak bodies
- surveying businesses, and
- using Australian Bureau of Statistics data, especially on business populations.
Supporting information
The BCC is supported by a comprehensive online help facility; this can be downloaded as a separate document. There is also a worked example available for download from the BCC website.
The OBPR also provides a range of training sessions on the BCC. These sessions include overview sessions as well as one-on-one training. For further information and assistance on the BCC, contact the OBPR at helpdesk@obpr.gov.au.
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Next References |
15. For more information see International SCM Network to Reduce Administrative Burdens (2005).
Contact for information on this page: OBPR contacts page