Regulatory impact analysis and Regulatory Impact Statements

Introduction

This section provides information on the regulatory impact analysis (RIA), including:

  • advice on how to know whether RIA and a Regulatory Impact Statement (RIS) are required;
  • completing a preliminary impact and risk assessment (PIRA) and the involvement of the Treasury;
  • guidance on the information that should be included in a RIS;
  • the requirement for independent quality assurance of RISs;
  • the RIA requirements for Cabinet and Cabinet committee papers;
  • the process for publishing RISs.

The Regulatory Impact Analysis Team (RIAT) in the Treasury must be involved in any regulatory proposal that is likely to have a significant impact or risk, and should be contacted in relation to any other RIA or RIS queries.

How do I know whether regulatory impact analysis and a Regulatory Impact Statement is required?

When regulatory impact analysis is required

The RIA framework encourages an evidence-based approach to policy development, which helps to ensure that all practical options for addressing the problem have been considered and that the benefits of the preferred option not only exceed the costs, but will also deliver the highest level of net benefit.

RIA should be undertaken for any policy work involving regulatory options (the potential introduction of new legislation (bills or regulations) or changes to/the repeal of existing legislation) that may result in a paper being submitted to Cabinet.  RIA involves the preparation of a RIS that summarises that RIA that has been undertaken. 

A RIS is normally provided when papers are submitted to Cabinet for policy approval.  Review the section on uploading papers into CabNet provides for information about uploading RISs as attachments to papers in CabNet

In rare circumstances, the policy proposals that require a RIS and the draft regulations may be submitted together. In such cases, the usual procedure is for the paper to be submitted to the relevant policy Cabinet committee, rather than directly to the Cabinet Legislation Committee (LEG).

A RIS is also required for the following:

  • Supplementary Order Papers (SOP):  the policy content of possible amendments to a bill may be such that further approval from Cabinet is needed for new policy or to alter existing policy approval.  If so, the original RIS should be updated to indicate how the changes affect the impact analysis.  Alternatively, a new RIS should be provided to accompany the Cabinet paper containing the SOP;

  • international treaties:  all multilateral treaties or major bilateral treaties of particular significant require the preparation of a National Interest Analysis (NIA).  An “extended NIA”, which must be prepared for all treaties with regulatory impacts, includes the requirements otherwise considered in a RIS, so a separate, standalone RIS is not required in these circumstances;

  • discussion documents:  RIA requirements apply to the development of discussion documents that include consideration of options with potential regulatory implications.  To meet these requirements, either the RIA elements can be included in the body of the discussion document, or a draft RIS or consultation RIS can be attached to the discussion document.

When the regulatory impact analysis requirements do not apply

The RIA requirements do not apply where the proposal:

  • involves technical “revisions” or consolidations that substantially re-enact the current law to improve legislative clarity or navigability (including the fixing of errors, the clarification of the existing legislative intent, and the reconciliation of inconsistencies), or would repeal or remove redundant legislative provisions;
  • is suitable for inclusion in a Statutes Amendment Bill;
  • provides solely for the commencement of existing legislation or legislative provisions;
  • needs to be authorised in an Appropriation Bill or an Imprest Supply Bill;
  • is for a Subordinate Legislation (Confirmation and Validation) Bill relating to regulations that have already been made;
  • implements deeds of settlement for Treaty of Waitangi claims, other than those that would amend or affect existing regulatory arrangements;
  • brings into effect recognition agreements under the Marine and Coastal Area (Takutai Moana) Act 2011;
  • is essential (the minimum necessary) to comply with existing international obligations that are binding on New Zealand;
  • has no or only minor impacts on businesses, individuals, or not for profit entities (e.g. for certain changes to the government’s internal administrative or governance arrangements, such as the transfer of responsibilities, staff, or assets between government agencies).

Preliminary impact and risk assessment and involvement of the Treasury

RIAT must be involved in any proposal that is likely to have a significant impact or risk, which means that the regulatory option being considered is likely to have:

  • significant direct impacts or flow on effects on New Zealand society, the economy, or the environment; and/or
  • significant policy risks, implementation risks, or uncertainty.

To determine RIAT’s involvement, the agency should complete a PIRA using the PIRA template at the earliest possible stage of policy development, and submit the PIRA to the relevant Treasury policy team.  The Treasury policy team will then confirm the PIRA, whether the RIA regime applies, and whether RIAT’s involvement is required.

If RIAT’s involvement is not required, the agency is responsible for ensuring the provision of independent quality assurance.

If RIAT’s involvement is required, agencies undertaking RIA should engage with RIAT at an early stage to determine the nature of its involvement.  RIAT may, on a case by case basis, allow an agency to assure the quality of its own RIS for some significant proposals (if, however, any of the conditions on which the decision to allow an agency to undertake its own quality assurance of a significant proposal is made change, the agency must advise RIAT).

What information should be included in the Regulatory Impact Statement?

The RIS is a government agency document that sets out the agency's best advice on the problem definition, objectives, identification, and analysis of the full range of practical options. The RIS should be prepared before the Cabinet paper.

The RIS, which is a summary of the RIA, should be prepared before the Cabinet paper.  The required information, and a suggested RIS template, is provided on the Treasury’s website.  The RIS must contain the following information:

  • an agency disclosure statement (which discloses information to highlight any key gaps, assumptions, dependencies and significant constraints, caveats/uncertainties in the analysis, and is signed by the person with responsibility for the preparation of the RIS);
  • a description of existing arrangements and the status quo;
  • a problem definition;
  • objectives;
  • identification of the full range of practical options;
  • an impact analysis – analysis of the costs (or possible economic losses), benefits, and risks of options with quantification (to the extent possible);
  • consultation;
  • conclusions and recommendations;
  • implementation plans and risks;
  • likely levels of compliance and enforcement;
  • arrangements for monitoring, evaluation, and review.

Independent quality assurance of Regulatory Impact Statements

Independent quality assurance, by the authoring agency or RIAT, must be undertaken on all RISs using specified assessment criteria.  If the quality assurance is undertaken by the authoring agency, it must be done by a person or group not directly involved in preparing the RIS.  A statement on the quality of the impact analysis must be provided in the Cabinet paper.

The Treasury may advise the Minister of Finance and the Minister for Regulatory Reform of any regulatory proposal that does not meet the RIA requirements.  Significant regulatory proposals that do not meet the RIA requirements, but that are agreed to, will be subject to a post-implementation review.

Regulatory impact analysis requirements for Cabinet and Cabinet committee papers

Cabinet papers that contain policy proposals must contain a section entitled “Regulatory Impact Analysis”, with the following parts:

1. Regulatory Impact Analysis Requirements

A statement explaining whether the RIA requirements apply (if not, it should explain why, referring to the exemption claimed, where appropriate), and whether a RIS has been prepared and is attached to the Cabinet paper (if not, it should explain why).

2. Quality of Impact Analysis

An agency or RIAT opinion on the quality of the analysis that states the following:

“[Name of team or position of person completing opinion] has reviewed the Regulatory Impact Statement prepared by [name of agency] and associated supporting material, and

[Statement on whether the reviewer considers that the information and analysis summarised in the RIS meets/does not meet/partially meets the quality assurance criteria;

[Comment on any issues that have been identified in relation to any of the dimensions of quality set out in the quality assurance guidance]”

Publishing Regulatory Impact Statements

The full text of RISs must be published on the websites of the authoring agency and the Treasury (taking into account the provisions of the Official Information Act 1982). The Parliamentary Counsel Office provides guidance on the form and location of RIS’ in bills and SOPs, and the requirement for departments to supply 40 printed copies of the RIS to the Bills Office.