2 September 2015

2007 decision to expand the Renewable Energy Target

Post‑implementation Review – Department of the Environment

On 1 December 2007, the then Government committed to expand the Renewable Energy Target to 45,000 GWh by 2020. The changes aimed to have the equivalent of at least 20 per cent of Australia’s electricity supply generated from renewable sources by 2020.

The proposal was assessed as likely to have a significant regulatory impact on the economy; however a compliant RIS was not prepared to accompany the decision. As such, the Department of the Environment was required to prepare a post-implementation review (PIR) within two years of implementation.

The proposal was implemented in December 2010. A PIR was completed by the Department of the Environment in July 2015 and was assessed as compliant by the Office of Best Practice Regulation. The Government’s Review of the Renewable Energy Target scheme (the Warburton Review) informed several sections of the PIR.

The PIR found that the policy has met its intended objectives to encourage the additional generation of electricity from renewable sources and reduce emissions of greenhouse gases in the electricity sector. However, the PIR concluded that the scheme should be amended given that declining electricity market demand has reduced the need for significant further investment in large-scale generation. The Department of the Environment estimated that the average annual regulatory cost of the policy over the ten‑year period from the beginning of 2010 to be approximately $1.66 billion. This estimate has been agreed with the OBPR.


2 September 2015

Accelerated depreciation for primary producers

Regulation Impact Statement – The Treasury

As part of the 2015-16 Budget, the Australian Government announced accelerated depreciation arrangements for primary producers who purchase water facilities, fodder storage assets or fencing assets from 1 July 2015. On 27 May 2015, the Australian Government announced the measure would be brought forward for assets purchased after 12 May 2015.

Under the new arrangements, primary producers can depreciate new water facilities and fencing assets immediately, and can depreciate fodder storage assets over three years, rather than up to 50 years under the previous arrangements (for fodder storage assets). This will provide farmers an incentive to invest in their businesses, and more effectively store and use water and fodder to better manage periods of drought.

A Regulation Impact Statement (RIS) was prepared and certified by the Treasury under the Australian Government’s best practice regulation requirements, and has been assessed as compliant and consistent with best practice by the Office of Best Practice Regulation (OBPR).

The RIS estimates that the measure will reduce regulatory costs for primary producers by $1.4 million per year by reducing record keeping requirements. The OBPR has agreed to this estimate of regulatory savings.


2 September 2015

Relief for 31 Day Notice Term Deposits

Independent Review – Australian Securities and Investments Commission

On 22 December 2014, the Australian Securities and Investments Commission (ASIC) released a Class Order to provide industry with certainty that term deposits that require 31 days’ notice for early withdrawal will be treated as basic deposit products under the Corporations Act 2001 for a period of 18 months. ASIC has self-assessed that its analysis and consultation followed a similar process to that required for a Regulation Impact Statement. The Office of Best Practice Regulation (OBPR) does not assess independent reviews.

In certifying the analysis and consultation, ASIC did not follow best practice as the self-assessment and agreement to regulatory costs occurred after the decision to release a Class Order was made.

ASIC estimates the reduction in annual regulatory burden is approximately $77.3 million. The OBPR has agreed to the estimated change in regulatory savings.


2 September 2015

Regulation of Registered Financial Corporations

Regulation Impact Statement – Australian Prudential Regulation Authority

On 18 March 2015, the Australian Prudential Regulation Authority (APRA) finalised changes to the banking exemption (Exemption Order) for Registered Financial Corporations (RFCs).

Under the Exemption Order, RFCs that undertake ‘banking business’ as defined in the Banking Act are exempt from the need to be authorised as deposit-taking institutions (ADIs) by APRA. In the context of the previous Exemption Order, this meant that RFCs were able to offer similar services and products to that of an ADI without the same regulatory requirements.

APRA considered there was a close resemblance between RFCs and ADIs, and that, as a result, retail investors were having difficulty distinguishing between the two. The Regulation Impact Statement (RIS) prepared by APRA considered that some retail investors may therefore mistakenly invest in an RFC thinking it was an ADI. Given RFCs do not have the same regulatory assurances as ADIs, APRA considered this could be detrimental to retail investors.

The revised Exemption Order removes the ability of RFCs to offer at-call deposit accounts and imposes stricter conditions on certain terminology and marketing practices by RFCs.

A RIS was prepared and certified by APRA. The OBPR assessed the RIS as compliant but not consistent with best practice because consultation was inadequate and feasible options provided to APRA by stakeholders were not analysed in sufficient depth. APRA has estimated that the average annual regulatory cost of the proposal is $45,000 and this has been agreed by the OBPR.


28 August 2015

Carrier Licence Conditions (Networks supplying Superfast Carriage Services to Residential Customers) Declaration 2014

Regulation Impact Statement – Department of Communications

On 12 December 2014, the Minister for Communications made the Carrier Licence Conditions (Networks supplying Superfast Carriage Services to Residential Customers) Declaration.

The Declaration requires providers of superfast broadband networks who offer services to residential customers to be functionally separated (that is, operate their networks and retail operations at arm’s length) and to offer a 25/5 Mbps wholesale bitstream service to competitors at no more than $27 per month. This is to ensure that these carriers do not discriminate in favour of their own retail operations at the expense of competitors.

A Regulation Impact Statement (RIS) was prepared and certified by the Department of Communications under the Australian Government’s best practice regulation requirements, and has been assessed as compliant and consistent with best practice by the Office of Best Practice Regulation (OBPR).

The RIS estimates that the measure will increase regulatory costs by $1.8 million per annum. The OBPR has agreed to the estimated regulatory costs and the offsets.


28 August 2015

Liquids, Aerosols and Gels

Post–implementation Review – Department of Infrastructure and Regional Development

On 31 March 2007 the Australian Government implemented measures to reduce the risk to air transport from liquid based explosives. The measures resulted in the restriction of the quantity of LAGs passengers could carry on international flights to, from or through Australia.

A Regulation Impact Statement (RIS) was required but not prepared before the decision to implement the measures was taken. Consequently, the then Department of Infrastructure and Transport was found to be non-compliant with the Government’s RIS requirements and was required to undertake a Post-Implementation Review (PIR).

The PIR found that Australia’s LAGs policy is likely to have been effective in reducing the risk of an attack from liquid based explosives. The costs of implementing the policy are estimated to have been in the order of $51 million over five years. The costs were mostly incurred by operators of Australia’s international airports, in the form of increased staff costs. Airlines with flights directly to Australia were also required to implement measures at the last points of departure. While these costs were generally passed on, passengers also experienced direct costs through increased screening times and, for those unaware of the restrictions, the surrendering of goods that did not comply with the regulations.

The PIR was assessed as compliant by the Office of Best Practice Regulation.


28 August 2015

Basel III disclosure requirements: leverage ratio; liquidity coverage ratio; the identification of potential global systemically important banks; and other minor amendments

Regulation Impact Statement – Australian Prudential Regulation Authority

On 4 May 2015, the Chairman of the Australian Prudential Regulation Authority (APRA) made two determinations that implemented revised prudential standards Prudential Standard APS 110 Capital Adequacy (APS 110) and Prudential Standard APS 330 Public Disclosures (APS 330), which incorporate new disclosure requirements for specified authorised deposit-taking institutions (ADIs).

These requirements are based on additions to the Basel Committee on Banking Supervision’s disclosure framework. They aim to improve the comparability of banking institutions’ risk profiles and facilitate market discipline by providing consistent information about key risk metrics to market participants and other interested parties. The proposal includes requirements for disclosing information regarding the leverage ratio, the liquidity coverage ratio and the identification of potential global systemically important banks.

The Office of Best Practice Regulation (OBPR) has assessed that the process followed by APRA and the level of analysis contained in the Regulation Impact Statement is consistent with best practice. The average annual regulatory cost is estimated by APRA to be $1.0 million and this has been agreed with the OBPR.


28 August 2015

Modernising Australia Post

Regulation Impact Statement – Department of Communications

On 27 July 2015, instruments amending Australia Post’s pricing and performance arrangements were introduced into parliament.

The amendments allow Australia Post to introduce a two-speed letter service – comprising regular and priority services. The regular service would be up to two days slower, which would enable Australia Post to lower costs through reduced need for overnight processing and increased automation of sorting. Daily delivery of mail would continue under both regular and priority mail.

A Regulation Impact Statement (RIS) was prepared and certified by the Department of Communications, and has been assessed as compliant and consistent with best practice by the Office of Best Practice Regulation (OBPR).

The RIS estimates the average annual regulatory cost saving at $211.8 million per annum. The OBPR has agreed to the regulatory cost saving.


27 August 2015

Simplified Transfer Pricing Record Keeping

Independent Review – Australian Tax Office

On 5 February 2015 the Australian Tax Office (ATO) introduced simplified record keeping options for businesses to comply with transfer pricing record provisions as part of a three-year trial.

Transfer pricing is the setting of prices between related parties in order to shift profits and lower tax. The reporting requirements for transfer pricing were imposing an administrative burden on a business disproportionate to its risk of not complying with the transfer pricing rules. The new arrangements offer simplified reporting for small business taxpayers, distributors, intra-group services and low level loans.

The ATO has certified that the Division 815 Implementation Project, which includes a discussion paper on options as an equivalent Regulation Impact Statement (RIS) process. The Office of Best Practice Regulation (OBPR) does not assess reviews that have been certified by agencies.

The ATO estimates that the average annual regulatory cost saving is $80.9 million. The OBPR has agreed to this estimate of savings.

The ATO’s certification of the Division 815 Implementation Project means they are compliant with the Government’s RIS requirements. However, by certifying after the final decision had been made, the ATO did not follow best practice.


26 August 2015

Radiocommunications (Radio-controlled Models) Class Licence 2002

Remaking of sunsetting instrument without amendments – Australian Communications and Media Authority

The Australian Communications and Media Authority (ACMA) remade the Radiocommunications (Radio-controlled Models) Class Licence 2002 on 28 April 2014.

The Class Licence contains the licence conditions, operating requirements and technical parameters associated with the operation of equipment used for the radio control of model aircraft, model watercraft and model landcraft. It is primarily intended to authorise the hobbyist use of radio-controlled models so that its use does not cause interference to the operation of other radiocommunications services.

In line with the Australian Government best practice regulation requirements for sunsetting legislative instruments, the ACMA has assessed the operation of the instrument in consultation with affected stakeholders and has certified that the instrument is operating efficiently and effectively.

Therefore the Office of Best Practice Regulation notes that a Regulation Impact Statement is not required for the regulation to be remade. As the instrument was remade without amendments there are no changes to compliance costs.