Regulation Review - IPART - NSW Government

4 Estimating the impacts of recommended reforms
Box 4.2
Methods for assessing economy-wide regulatory impacts
Equilibrium modelling
Partial equilibrium models typically estimate the impact of a reform on a specific industry.
For example, changes to the industry’s inputs, outputs or profitability over time.
General equilibrium models – which describe the main relationships between inputs and
outputs in the economy – then estimate how these changes flow on to other industries
and sectors of the economy.
Econometric analysis
Econometrics is a set of statistical tools that can be used to determine whether regulatory
reforms affect variables of interest. For example, the US Small Business Administration
employed a regression analysis to examine what impact reductions in the regulatory
burden (or changes in the ‘Regulatory Quality Index’) would have on a country’s
economic activity (as measured by GDP per capita).
Sources: Productivity Commission, Identifying and evaluating regulation reforms, 2011, p xxxviii. Crain NV &
Crain MW, The Impact of Regulatory Costs on Small Firms, report for the Small Business Administration Office
of Advocacy, September 2010, http://archive.sba.gov/advo/research/rs371tot.pdf (accessed 11 September
2012).
4.2.3 Considering the distributional impacts of our recommended reforms
A further consideration is that changes to regulations or regulatory practices will
likely have differing impacts on different sectors of the community. For example,
the burden of regulation is not always uniformly distributed among small,
medium and large businesses.
The Australian Chamber of Commerce and Industry (ACCI) has argued that
small and medium sized enterprises can bear a disproportionate burden of the
costs of meeting regulatory obligations, “primarily due to the differential impact
of the costs involved with improvements and administrative requirements
resulting from the fixed-cost nature of compliance”. 92 The US Small Business
Administration also found that regulatory cost per employee was at least 36%
higher in small businesses (