Reducing red tape in the APS

Chapter 1. Introduction

Background

Recent initiatives to reduce regulatory overlap and overreach provided the stimulus for this report. These initiatives included the Report of the Taskforce on Reducing Burdens on Business, headed by Gary Banks (the Banks Report ¹) and the work of an interdepartmental committee on red tape in internal Australian Government administration, chaired by the Department of Finance and Administration (Finance). The Banks Report identified practical options for reducing the regulatory compliance burden on business, while the interdepartmental committee identified options for reducing the compliance burden on Australian Government entities.

At its February 2006 meeting, COAG identified regulatory reform as a key priority. COAG committed to reducing the regulatory burden imposed by the three levels of government, including through the establishment and maintenance of effective arrangements to maximise the efficiency of new and amended regulation and avoid unnecessary compliance costs.²

Internal red tape will not be reduced without ongoing effort. This requires accurate analysis of new and existing regulatory and administrative requirements imposed on agencies. Following the work of the interdepartmental committee, MAC commissioned the development of a framework to promote the ongoing reduction of red tape and to minimise new red tape within the Australian Government. The framework draws on the experience of agencies to identify some practical steps to cut red tape.

This report deals with regulatory and administrative requirements that affect only the Australian Government. It does not deal with requirements imposed on industry or with requirements that affect both industry and government. Those requirements are dealt with by the Banks Report and other work underway in government.

What is red tape?

For the purposes of this report, ‘red tape’ is defined as:

regulatory or administrative requirements that are unwarranted, ineffective or not the most efficient option for delivering the required outcome.

Regulatory or administrative requirements may be broadly categorised into Australian Government-wide requirements (e.g. procurement guidelines) or those requirements that agencies impose upon themselves (e.g. components of, or particular approaches to, Chief Executive’s Instructions (CEIs)).

Far from all regulatory or administrative requirements are red tape. Many are necessary to assist the functioning of government and to deliver government policy. However, red tape can all too easily result from inadequate consideration of the costs and benefits of requirements during their development and over their regulatory life.

The emergence of red tape

Red tape in Australian Government administration has built up over many years. As in the private sector, there is a tendency for regulatory and administrative requirements to be placed upon government agencies to address the concerns of the day. In some cases, such requirements were never appropriate; in others, they ceased to be appropriate with the passage of time, improvements to technology and the lessons of experience.

To a large extent, the growth of red tape reflects a general attitude of risk aversion in regulatory and administrative decision-making, both in Australia and overseas. The Chairman of the Productivity Commission, Mr Gary Banks, has commented:

A fundamental driver of the demand for regulation in recent years has been increasing ‘risk aversion’ in many spheres of life. Regulation has come to be seen as a panacea for many of society’s ills and as a means of protecting people from inherent risks of daily life. Any adverse event—especially where it involves loss of life, possessions, amenity or money—is laid at government’s door for a regulatory fix. The pressure on government to ‘do something’ is heightened by intense, if short lived, media attention ... ³

The impact of red tape

Red tape directs scarce taxpayers’ funds away from the provision of advice and the delivery of government programmes. The Banks Report noted that the costs include extra time, paperwork and capital outlays, and that red tape ‘deflects management from the core activities of the business’.⁴ Operationally, red tape can result in confusion about objectives and processes, decrease productivity and adversely affect employees’ job satisfaction. The overall result is poor outcomes for public servants, the government, the taxpayer and the public.

The Australian National Audit Office estimated the cost of reporting against the Senate Order on Departmental and Agency Contracts for 2003–04 to be approximately $2.4 million for all Financial Management and Accountability Act 1997 (FMA Act) agencies.⁵

While agencies should be appropriately accountable for contracts, and transparency is important, reporting arrangements do impose costs.

Reducing red tape will not only save money, but will contribute to a whole- of-government cultural change away from risk aversion. It will also increase productivity and efficiency, and sharpen the focus of the Australian Government on delivering results for the community.

A framework to cut red tape

This report sets out a principles-based framework for the review of existing regulatory and administrative requirements, as well as for the scrutiny of proposed new requirements. It reinforces good policy development practices and proactive ongoing management of requirements by agencies.

The framework is relevant to the implementation of laws, government policy, administrative fiat or other rules for the internal administration of Australian Government agencies. It potentially encompasses both legislative instruments and the wide range of requirements with which government or an agency’s Chief Executive reasonably expects compliance. It is not intended to apply to explanatory material provided for information purposes.

The framework will require Australian Government agencies to introduce some additional processes. However, it would be wrong to conclude that it will increase the overall administrative and regulatory burden. The reduction in the burden across agencies that should result from a more rigorous approach to the development of new, and review of existing, requirements will more than offset the additional requirements in those agencies responsible for them. The framework will also help to ensure that agencies that are subject to requirements have the opportunity to input into their development and review.

The proposed framework will help officials to assess the extent to which regulatory and administrative responses are proportionate to the issue of concern. The relationship between the issue and the response can change over time. Where it has changed, agencies should review and streamline the response, thereby contributing to an ongoing reduction in red tape.

1 Regulation Taskforce 2006, Rethinking Regulation: Report of the Taskforce on Reducing Regulatory Burdens on Business, <http://www.pm.gov.au/docs/RethinkingRegulation.pdf>

2 Council of Australian Governments 2006, Communique, 10 February.

3 G. Banks 2006, ‘Reducing the regulatory burden: the way forward’, speech given at the Monash Centre for Regulatory Studies, Melbourne, 17 May, <http://www.pc.gov.au/speeches/>

4 Regulation Taskforce 2006, Rethinking Regulation: Report of the Taskforce on Reducing Regulatory Burdens on Business, p. ii, <http://www.pm.gov.au/docs/RethinkingRegulation.pdf>

5 Australian National Audit Office 2005–06, Reporting of Expenditure on Consultants, Audit Report No. 27, p. 64.

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