International Standards and Risk Assessments

RegulationDeveloping a Regulation Impact Statement
Sunday, December 14, 2014
Publication author(s):
The Department of the Prime Minister and Cabinet
Publication abstract:

The Government released its Industry Innovation and Competitiveness Agenda on 14 October 2014. A major component of this policy announcement was that the Government will adopt the principle that if a system, service or product has been approved under a trusted international standard or risk assessment, then our regulators should not impose any additional requirements for approval in Australia, unless it can be demonstrated that there is a good reason to do so.

International Standards and Risk Assessments

As at 1 December 2014

The Government released its Industry Innovation and Competitiveness Agenda on 14 October 2014. A major component of this policy announcement was that the Government will adopt the principle that if a system, service or product has been approved under a trusted international standard or risk assessment, then our regulators should not impose any additional requirements for approval in Australia, unless it can be demonstrated that there is a good reason to do so.

The option to accept trusted international standards and risk assessments has always existed for deregulatory reforms, and the Government’s decision now formalises this. Particularly for portfolios that have struggled to find red tape savings, the Government’s policy on international standards and risk assessments could offer a pathway for developing reforms. Portfolios are required to take the lead in implementing the policy as part of their contribution to remove ineffective and unnecessary red tape in the areas of regulation they are responsible for. Portfolios could also establish projects with other portfolios in regulatory areas of joint or overlapping responsibility. Trusted international standards and risk assessments in this context could include those agreed multilaterally (e.g. through the WTO) or standards or assessments from certain overseas jurisdictions that are at the forefront of international best practice. We note that this policy applies to Australian Government regulation and not to the states and territories. We are working separately with states and territories through the Council of Australian Governments and will keep you informed of progress.

Next Steps

In forming a view of the burden imposed by regulations, portfolios will be required specifically to assess the extent to which opportunities exist for the acceptance or adoption of trusted international standards and risk assessments, or greater alignment with them, as part of the Government’s deregulation agenda. The Government has asked PM&C to track and report progress against this principle, including by publishing progress on repeal days and in annual deregulation reports.

Portfolios are expected to consider the immediate opportunities for applying international standards and risk assessments in the concrete reform priorities that they will develop by the end of 2014 as input into the deregulation forward work programme. Where scope for reform exists for the adoption of international standards and risk assessments, or greater alignment with them, these opportunities will need to be implemented in a manner that is consistent with portfolios delivering on their 2015 and 2016 red tape targets and the Government achieving its overall $1 billion annual deregulation objective.

To ensure a thorough review, ministers or secretaries are responsible for communicating with regulators in their portfolio and key business and other stakeholders seeking their views on their standards and risk assessment processes against the principle. It will be important that this communication makes it clear that the objective is to reduce regulatory burden and remove barriers to trade. While the policy is silent on the timing of this, PM&C suggests that communication with regulators and stakeholders should occur before the end of 2014.

Portfolios are required to develop clear criteria that they can use to assess the potential adoption of international standards and risk assessments. Given that circumstances differ between portfolios, these criteria are up to individual portfolios. However, there is no room for adopting a no-change (or ‘we are in special circumstances’ approach) simply on the basis of for example health or security grounds. The criteria that each portfolio develops will provide an approach to assess opportunities for reform against the principle, and a transparent process through which necessary Australian specific case-by-case requirements will be justified. Portfolios will be expected to make these criteria publicly available in the first quarter of 2015.

In conducting these assessments, portfolios will be required to work with their stakeholder groups to develop criteria for accepting or adopting trusted standards and assessments. These criteria would take into account, among other things, but not be limited to, the following considerations:

  • the legitimacy and applicability to the Australian context of trusted international standards and risk assessments;
  • whether any necessary Australian specific conditions or circumstances warrant distinct regulatory standards or risk assessment processes;
  • how reform might reduce regulatory burden, and how reforms could deliver on ministers’ red tape targets;
  • the ability of Australia to influence trusted international standards and risk assessments to ensure that Australian interests are taken into account;
  • costs and benefits of adopting international regulatory standards; and
  • stakeholder feedback and any other relevant considerations.

We also recognise that circumstances will differ between portfolios and even between issues within portfolios. The applicability of international standards and risk assessments will most likely vary. The policy framework has been designed to provide a high degree of flexibility, where portfolios will be able to determine their own criteria for assessment, in consultation with their stakeholders, and to develop their own work programmes. However, portfolios should note that their response to this policy will be public.

Monitoring and Tracking

PM&C tracks progress against the Government’s $1 billion annual target. PM&C now also tracks portfolio progress in moving to accept or adopt trusted international regulatory standards and risk assessments through the existing (deregulation activity) quarterly reporting process.

The Government has also decided it will report specifically on portfolio progress as part of its semi-annual repeal day updates to Parliament. Portfolios should note that the first time this is likely to occur will be the 2015 Autumn Repeal Day overview. Portfolios will also be required to publish progress in moving to accept or adopt trusted international standards and risk assessments, and any justification for divergence in individual Australian standards as part of their annual deregulation reporting activity. PM&C propose that any decision made by portfolios in response to the principle would form part of the individual portfolio’s annual deregulation report, commencing with the annual report that will be published in early 2016.

The Government has also decided to use the cuttingredtape.gov.au website to invite public submissions to identify examples of divergence from international standards. PM&C will forward these examples to the relevant portfolios for examination. PM&C will monitor progress so that the response can be tracked and reported on the cutting red tape web site.

International standards - frequently asked questions

Accepting and adopting international standards and risk assessments - frequently asked questions

As at 24 April 2015

Why has the Government decided to implement the principle of adopting international standards and risk assessments?

The adoption of international standards and risk assessments can reduce duplication of regulatory approvals, reduce delays, increase competition and improve business competitiveness in Australia. This supports the Government’s overall objective to reduce the regulatory burden on business, community organisations, families and individuals.

One way of reducing regulatory burden is to remove unnecessary duplication of multiple regulatory processes. This includes overseas approvals processes and extra delays that result from imposing Australian‑specific requirements when an approved system, service or product already exists in an international market. That is, where an international standard or risk assessment already exists, the Government has decided that this should be adopted unless it can be demonstrated that there is a good reason to maintain a unique Australian standard or risk assessment.

What is a trusted international standard or risk assessment?

The Government is seeking to adopt an approval process or certification for a service, process or product that already exists in an international market that can be trusted by the Australian Government and the community.

Whether an approved process or certification is judged to be trusted will vary from regulatory framework to framework and will be assessed by portfolios in consultation with stakeholders. Factors that could guide this assessment might include, but are not be limited to, whether the overseas regulating authority has:

  • A credible and consistent track record in regulating;
  • A publicly transparent assessment processes in place and provides full access to reports and the data its regulatory decision is based on;
  • A record of actively managing the quality of approvals and risk assessment (such as peer review, independent assessment, auditing of processes and outcomes).

A trusted international standard may also be defined in an international agreement that Australia is a party to. In this case a regulator’s only role would be to ensure compliance with the standard and not define or specify a unique Australian standard or additional requirements.

For example, on 15 September 2014, the Government removed the requirement to modify rear mudguards on new motorcycles to meet unique Australian Design Rules, which imposed a requirement above the commonly accepted international rules. Abolishing this provision means nearly 70,000 new motorcycles per annum are no longer required to be retro-fitted with rear mudguard extensions. This is estimated to reduce regulatory burden by $14.4 million.[1]

What are the criteria for assessing international standards?

Criteria should be established by each portfolio. The diversity of factors affecting regulatory areas and differences in international coverage of regulation or international agreements means that it is not feasible or desirable to define centrally mandated criteria. Criteria should be developed that are a best fit for the regulatory frameworks in a portfolio and there could be multiple sets of criteria in a portfolio for different regulatory frameworks if the portfolio saw this as appropriate.

The criteria will form the basis for formation of the judgements by portfolios about international standards and risk assessments and will be used in consultations with stakeholders when making decisions about whether to adopt international standards and risk assessments.

The following are not intended as a direction to portfolios on the criteria required. Rather they are a suggestion to provide a starting point for portfolios to develop their own criteria.

Suggested text to provide a basis for developing criteria.

Any recommended unique Australian system should not impose additional requirements beyond those already applied under a trusted international regulation, unless it can be demonstrated that there is good reason to do so. The Government is seeking to align regulatory processes as much as possible to eliminate or minimise the regulatory compliance burden, including the costs of unnecessary delay of applicants who have already obtained regulatory approval overseas.

When an approved system, service or product already exist in an international market or an international agreement exists and it meets the Australian policy objectives adequately, the following criteria could form a basis for authorities to assess the potential for Australia to adopt and accept international standards and risk assessments and remove duplicate and/or unnecessary Australian-specific standards and risk assessment processes.

  • Does the authority that has approved the system, service or product have:
    • A credible and consistent track record in regulating?
    • Publicly transparent assessment processes in place and provide full access to reports and the data that its regulatory decisions are based on?
    • Actively manage the quality of approvals and risk assessment (such as peer review, independent assessment, auditing of processes and outcomes)?
  • In practice, if an adequate international standard or risk assessment exists, it should be adopted unless:
    • There is objective and independently verifiable evidence of unique Australian conditions that supports Australian-specific requirements (for example, genuine health and safety risks or environmental factors) that are not adequately addressed through the adoption of international standards and risk assessments;
    • The adoption of an international standard or risk assessment would conflict with the delivery of transparently-stated Government policy objectives (for example, tobacco plain packaging or local content rules for broadcasting services);
    • An assessment that the least-regulatory cost option is already being implemented in Australia, or independent evidence that Australia is already at least-regulatory cost and would continue to remain at the forefront of world-best-practice.
    • Wider regulatory costs and benefits of adopting Australian-specific requirements, including the potential costs from fragmentation between Commonwealth regulations and those of the Australian states and territories; or
    • Whether a decision by Australia to not undertake regulatory approvals and risk assessments, or adopt/accept international standards or risks assessments could affect its international standing, trading position, existing bilateral agreements, or its ability to negotiate international agreements.

What if the principle does not apply to our regulations?

Undertaking the Government’s agreed process will determine this and there is no option to do nothing based on a judgement by a portfolio. The Government’s policy requires that a process be gone through to establish the application of international standards in an objective and transparent manner. Therefore, criteria still need to be established and assessment against the criteria made. This assessment should include stakeholder consultations.

How is the policy to be applied?

This will vary from portfolio to portfolio and even within portfolios. The application of the policy needs to be assessed on a case-by-case basis. While international standards could include international agreements, portfolios should also examine the processes around local regulatory approvals and question whether duplication in approvals can be removed, for example by recognising the licensing of a piece of equipment or process by a reputable overseas regulatory agency.

Where it is judged that a separate Australian approvals process still needs to occur, it could be possible to better align those processes with overseas best practice. This could allow parts of the approval process to occur automatically, leading to focus on the part that matters for Australia, reducing the application costs and delays for proponents.

What if Australia is considered a world leader in a particular area of standards?

This will need to be evaluated by the Government’s agreed process. Criteria still need to be established and assessment against the criteria made. This assessment should include stakeholder consultations. We would expect if Australia is a world leader or best practice, then evidence of this and the costs involved in moving to a different system would be provided to decision makers when the regulatory framework or system is reviewed.

What if a decision is made to adopt international standards and risk assessments?

Any proposed change to regulation will require the usual policy approval processes, including assessment through a Regulation Impact Statement if required.

What if there are two or more international standards and risk assessment systems that could be adopted, but they conflict?

This is a matter for portfolios to assess as part of the process they go through. In order to guide portfolios and stakeholders in forming these assessments, the Government has asked that portfolios develop clear and transparent criteria for which the adoption or acceptance of international standards and risk assessments would be judged. In assessing which standard or standards to adopt, portfolios should make the reasons for their assessment clear and articulate any costs and benefits underlying the choice of standards.

 

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