Regulation Review - IPART - NSW Government

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4 Estimating the impacts of recommended reforms 4.2 Estimating reduced regulatory costs from our recommended reforms Regulatory reform can reduce or eliminate direct regulatory costs to the regulated group of businesses and/or individuals. Depending on the scope of the reform, it can also have indirect impacts – eg, flow-on impacts on other parties of sectors of the economy. Furthermore, reform can re-distribute resources and/or costs (eg, from one business group or industry to another, or from business to government, or from one level of government to another, or from one group within the community to another). For this review, we will: estimate the direct cost savings as a result of our recommended reforms consider and, where possible, evaluate indirect impacts of our recommendations consider the distributional impacts of our recommended reforms. 4.2.1 Estimating direct cost savings from regulatory reform The purpose of our review is to make recommendations that improve the efficiency of local government compliance and enforcement activities. These recommendations will be aimed at reducing unnecessary regulatory (or ‘red tape’) costs to businesses and individuals. As outlined in Chapter 3, these costs include: administrative costs substantive compliance costs fees and charges delay costs. The sections below discuss, in general terms, how we propose to estimate the reductions in these costs as a result of our recommended reforms. This is based on methodologies outlined in BRO’s 2012 Guidelines for estimating savings under the red tape reduction target. Although, the methodologies for estimating cost savings are relatively simple, the challenge is obtaining the necessary data. For this will be largely reliant on the input of stakeholders, including businesses, local councils, NSW Government agencies and the community. We hope to receive this via submissions to this paper, as well as through our own research and follow-up consultation with stakeholders. 50 IPART Regulation Review
4 Estimating the impacts of recommended reforms Administrative costs Administrative costs are incurred when demonstrating compliance with a regulation (eg, by providing information to a regulator) and through information-related activities (eg, completing and lodging forms and applications). 81 Administrative costs often equate to the time taken to provide a regulator with necessary paperwork multiplied by the value of this time. They may also include the cost of purchasing expert advice (eg, technical or legal experts) to assist in providing necessary information to regulators. BRO notes that administrative cost savings to business and the community may be realised through reforms which: move from paper to electronic applications or information collection consolidate separate administrative tasks into a single task place the administrative burden on the regulator. 82 To estimate administrative cost savings of a recommended reform, we will seek to: identify the task(s) removed if the reform were to be implemented – eg, removal of a requirement to report information to a regulator place a time and dollar value on the removed task – eg, removal of the reporting requirement may save regulated businesses, on average, 7 hours of staff time per annum 83 , and the value of this would be equal to 7 x the relevant hourly wage rate x an employee on-cost multiplier multiply the value of the removed task by the relevant population of businesses or individuals affected – eg, if removal of the reporting requirement saves regulated businesses, on average, $400 per annum and there are 100 regulated businesses, then the annual cost saving of the removed task is $40,000. BRO notes that effective consultation should assist the measurement of administrative cost savings. This is because business, not-for-profit organisations, government departments, and individuals can provide information on appropriate wage rates and the time it takes to perform the tasks necessary to comply with regulation or interact with regulators. 84 81 NSW Better Regulation Office, Guidelines for estimating savings under the red tape reduction target, February 2012, p 12. 82 Ibid. 83 That is, 7 hours of a ‘Full-Time Equivalent’ (FTE) employee. 84 Ibid. Regulation Review IPART 51
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Regulation Review - IPART - NSW Government

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