What are the 3 best practice principles?

Best practice advice

Regulators should seek to improve how they exercise their powers and deliver their legislated functions, while remaining flexible and responsive to changing circumstances. Regulators should take into account and respond to community expectations of good regulatory practice to build trust and public confidence in their operations and in Australia’s regulatory system.

Regulators should embed methodologies to understand the costs, impact and outcomes of regulation and collect evidence of this at a system-wide level, using insights to support and drive improved outcomes.

Best practice requires that regulators consider, and aim to improve on, the combined regulatory burden of governments on business and the community. Regulators should take a whole-of-system perspective, building and maintaining collaborative relationships with other regulators to develop a shared understanding of respective roles and responsibilities, and identify gaps and areas of overlap.

What this means in practice

• have well-defined, communicated and embedded organisational values and culture that articulate the type of regulator and regulatory posture they seek to adopt—such as through the development of cultural or values statements.
• actively build staff capability, including ensuring staff have relevant knowledge of the regulatory craft and the industry they regulate, and have the capacity and are empowered to identify and implement improved practices.
• have in place transparent external accountability processes encouraging procedural fairness, accessibility and responsiveness that builds public trust and confidence in the performance of their regulatory functions—for example, transparent complaints and feedback handling procedures.
• hold themselves to account through internal accountability processes that foster a culture of continuous improvement and reflection—such as holding ex-post reviews of regulatory actions to identify learnings and explore opportunities for improvement, and regular reviews of operating procedures.
• undertake regular and independent performance reviews and take ownership of and respond to recommendations of reviews of their performance such as those conducted by the Australian National Audit Office.
• provide clear information about the rationale for compliance costs and actively engage with stakeholders to identify solutions to avoid or reduce unnecessary costs.
• seek guidance from the Department of Finance on the application of user charging (cost recovery) arrangements, ensuring these align with the Australian Government Charging Framework (for more information see RMG 302 – Australian Government Charging Framework under Tools and templates).
• take a broad perspective of the regulatory environment, including conducting environmental scans and considering best practice examples from other jurisdictions and regulatory systems.
• identify and minimise duplication and harmonise activities with other regulators to achieve better regulatory outcomes, including establishing clear operational scopes, sharing intelligence and producing common guidance.
• actively share learnings and insights by participating in communities of practice, engaging with other regulators and stakeholders to reflect on best practice and lessons learned, including failures.

Best practice advice

Best practice regulators take a risk-based approach to operational policy development, administration, compliance and enforcement activities, and are informed by data, evidence and intelligence. A risk-based approach allows a regulator to properly assess the risks of non-compliance and respond in a proportionate way to the harm being managed. Tolerances may be deliberately tight where there are, for example, risks to human life.

Strategic management of risk can also improve efficiency by prioritising resources to the areas of highest risk, and increase compliance by focusing limited resources on the areas of the greatest risk of non-compliance. It can also reduce the overall compliance and cost burden by minimising government intervention where the risks are relatively low.

Data and digital technology can be leveraged to help regulators better understand and manage risks. This requires building capability and having the right infrastructure to support effective data use and digital literacy. Regulators should also consider opportunities to collaborate with other regulators and across government entities to use existing data and digital solutions to minimise regulatory burden and cost.

Regulators should consider where compliance could be streamlined and, where appropriate, consider the business practices of regulated entities, allowing them to adopt innovative approaches to meet their obligations.

Regulators should also continually monitor the environment they operate to ensure regulatory approaches keep pace with changes in technology, industry practices and community expectations, and effect change accordingly.

What this means in practice

• consider the risks, cost effectiveness and impact of regulatory action, both before and after the regulatory action has commenced
• maintain a compliance and enforcement strategy that articulates the regulator’s approach to risk and how this informs decision-making, publishing where appropriate
• focus on risk culture, build staff understanding of regulator’s approach to risk and how it flows to day-to-day decision making
• build staff and organisational data capability and digital literacy, drawing on expertise to support effective use, including regulatory technology (RegTech) solutions
• use intelligence and data, including data points such as enterprise size, to inform a risk-based approach to compliance and enforcement
• actively monitor and plan for risks of market changes and new business models that may have flow-on effects for operations, including those on the edge of, or just outside, a regulator’s legal objectives, functions and role
• modify their regulatory approach to encourage voluntary compliance where appropriate and focus compliance and enforcement activity where risks and impact of harm are greatest
• commit to publish the data they hold and share data across regulators where permitted and appropriate
• take into account the cumulative burden of regulations, including the impact on smaller businesses and sole traders, when establishing and implementing processes
• seek to achieve their objectives while ensuring that economic outcomes, such as impacts on competition, innovation and growth, are explicitly considered in implementation
• are receptive to diverse views about implementation of regulation, while ensuring the integrity of the regulatory system.

Regulators are transparent and responsive communications, implementing regulations in a modern and collaborative way

Best practice advice

Best practice regulators are transparent, open and responsive to feedback on how they operate, engaging in genuine 2-way dialogue with stakeholders and the broader community on their performance.

Transparency in process supports community trust by demonstrating a regulator’s priorities and integrity. Regulators should clearly communicate regulatory processes and be transparent about the decision-making criteria.

Genuine consultation processes are in place to ensure that stakeholders are engaged in essential decisions that involve them, with critical information shared in a timely way. Best practice regulators embed processes to provide the public with opportunities to provide feedback on operational regulatory design, including co-design of solutions where appropriate.

What this means in practice

• engage genuinely and regularly with stakeholders, including regulated entities, other regulators and the community, including on the development of and reporting against meaningful performance measures
• seek out real time stakeholder feedback to inform regulatory decisions, and loop back in a timely way on outcomes
• offer a range of consultation mechanisms to ensure small businesses, sole traders and the wider community are able to easily engage and provide feedback
• establish processes that enable meaningful and timely stakeholder engagement by providing early notification of operational changes
• provide guidance and information that is relevant, clear, concise and easily accessible to help regulated entities understand their obligations and responsibilities to encourage voluntary compliance
• are transparent in their decision-making and, where possible, provide reasons for regulatory decisions or share anonymised compliance or enforcement ‘case summaries’
• implement innovative approaches in considering regulatory or policy issues such as ‘regulatory sandboxes’.