3 September 2014

Non-compliance with the Australian Government’s best practice regulation requirements – Japan-Australia Economic Partnership Agreement (JAEPA) – Department of Foreign Affairs and Trade

On 7 April 2014 Prime Minister Tony Abbott and Prime Minister Shinzo Abe announced the conclusion of negotiations on the Japan-Australia Economic Partnership Agreement (JAEPA). Prime Minister Abbott and Prime Minister Abe signed the agreement on 8 July 2014 in Canberra.

Japan is Australia’s second-largest trading partner, with two-way trade in goods and services reaching nearly $70 billion in 2012-13. Australia and Japan also have significant direct investment relationships. However, there exist a number of tariffs and other barriers which constrain the ability of Australian producers and exporters to build trade, and which limit profitability and expansion opportunities for these businesses. These barriers are particularly significant for Australia’s agriculture sector.

The implementation of the JAEPA will reduce tariffs on a number of Australian exports, with over 97 per cent of Australian trade entering duty free or with preferential access on full implementation, and improve access in some professional services markets. It will also see tariff reductions on a range of Japanese product lines imported into Australia, notably consumer electronics, white goods and motor vehicles.

A Regulation Impact Statement (RIS) was prepared and certified by the Department of Foreign Affairs and Trade to support the decision to endorse the signing of the JAEPA. The Office of Best Practice Regulation’s (OBPR) final assessment was that the Department of Foreign Affairs and Trade (DFAT) is compliant with the Australian Government’s requirements at the final decision point. However, the OBPR did not consider that the RIS represents best practice, having regard to the significance and widespread nature of the likely impacts of the proposal on the Australian economy.

In addition, as a RIS was not prepared for the decision in 2006-07 to enter into negotiations on the Australia-Japan Economic Partnership Agreement, DFAT is non-compliant with the RIS requirements for that stage of the process. As this regulatory change has been assessed as being highly significant, the Government requires a Post-implementation Review to be completed within five years of the agreement being implemented.


2 September 2014

Australian Securities and Investments Commission – Repeal of the Short Sale Tagging Obligation – Regulation Impact Statement

On 27 July 2014, the Australian Securities and Investments Commission (ASIC) repealed the short sale tagging obligation.

Short selling is the sale of financial products that the seller does not own at the time of the sale. Short sale tagging refers to an obligation for market participants to specify the quantity of a sell order that is short at the time the sale order is placed or at the time the trade is reported. This is also known as real-time tagging, as opposed to reporting with a lag, such as end of day reporting.

 

The obligation was introduced in July 2012 (see the original RIS) and was due to commence in July 2014. The original motivation for introducing short sale tagging was to improve data available to the market and to regulators about short selling.

 

The current regulatory regime relies on a largely manual reporting process (known as end of day reporting). However, it was considered that the effectiveness of this regime was limited because approximately 60 per cent of market participants utilise algorithms when trading (rather than the traditional manual method of a broker entering an order into the market) and so therefore could not practically comply with the end of day reporting obligations.

Consultation since July 2012 has revealed significant implementation issues with tagging. Many stakeholders submitted that it was difficult for them to know if, at a given point in time, they were short or long on a particular asset given they could have multiple trading desks taking either position. It was also noted that there have been regulatory and market developments since 2012 that improved the effectiveness of the original (end of day) reporting regime.

In response to stakeholder feedback it was decided to not proceed with short sale tagging.

Removing this obligation was estimated to reduce industry compliance costs by approximately $13 million per year. These savings are mostly the result of avoided implementation costs, such as in relation to IT systems.

The proposal has been assessed as likely to have a measurable but limited impact on the economy.

A Regulation Impact Statement was prepared and certified by ASIC, and has beenassessed as compliant and consistent with best practice by the Office of Best Practice Regulation.

 


1 September 2014

Superstream: Pass Through of Employee Details – Regulation Impact Statement for consultation – The Treasury

On 1 August 2014 the Government released an exposure draft regulation and a draft explanatory statement which seek to amend the Superannuation Industry (Supervisory) Regulations 1994.
The proposed ‘pass-through’ regulation would require any superannuation fund that receives data relating to a contribution being made to another fund to on-forward that data to the other fund – e.g. If Fund ABC received data about a contribution being made to Fund XYZ, then Fund ABC would be required to pass the data onto Fund XYZ.
The proposal has been assessed by the Office of Best Practice Regulation (OBPR) as likely to have a measurable but contained impact on the economy with minor impacts on competition.
A RIS has been prepared by the Treasury for consultation. The Treasury is currently inviting interested parties to comment on the exposure draft and explanatory statement. The closing date for submissions is Monday, 1 September 2014.
The RIS has been certified by the Treasury and was subject to an early assessment by the OBPR.


1 September 2014

Ban on importation of new psychoactive substances – Regulation Impact Statement – Attorney-General’s Department

On 17 July 2014, the Minister for Justice introduced the Crimes Legislation Amendment (Psychoactive Substances and Other Measures) Bill 2014, which proposes to ban the importation of all substances that have a psychoactive effect that are not otherwise regulated. The amendments criminalise the importation of new psychoactive substances and permit Australian Customs and Border Protection Service officers to seize unknown substances that are not existing illicit drugs or do not have a regulated legitimate use.

The ban aims to address the importation of substances which mimic the psychoactive effects of, or are marketed as legal alternatives to, illicit drugs. The underlying concern is that these substances are frequently of unknown origin and are potentially harmful. There are examples where these drugs have proven equally as harmful as existing illicit drugs. The proposal would complement state and territory government actions to control the manufacture, sale and advertisement of these substances.

Cost impacts are mostly limited to individuals and businesses that have sought to test the boundaries of existing illicit drug laws. There are also potential costs for businesses or individuals in demonstrating why a suspicious import should not be seized. However, it was assessed that there would only be rare cases where a legitimate import would be caught.

The proposal has been assessed as likely to have a limited impact on the economy with minor impacts on competition.

A Regulation Impact Statement (RIS) was prepared and certified by the Department under the March 2014 Australian Government best practice regulation requirements, and has been assessed as compliant by the Office of Best Practice Regulation. As the RIS was not able to demonstrate the net benefit of the proposal to the standard required by the best practice regulation requirements, it made no recommendation for regulatory change. However, the RIS noted that the Government may still choose to intervene on a precautionary basis to stop the growth of the market and reduce use. The Government has adopted this precautionary approach and has decided to regulate.

A Regulation Impact Statement (RIS) for consultation was previously prepared by the Attorney-General’s Department and was published on 6 May 2014.

The OBPR advises that the preparation of the RIS was not consistent with best practice because the RIS was not consulted on for at least 30 days. More details are provided in the OBPR’s assessment advice to the Attorney-General’s Department.

The RIS estimates there is no annual regulatory cost burden. The OBPR has agreed to the regulatory cost estimate.


14 August 2014

Commonwealth Regulatory Burden Measure

The Regulatory Burden Measure (https://rbm.obpr.gov.au/) has been published by the Office of Best Practice Regulation.

Under the Australian Government Guide to Regulation, all regulatory costs, whether arising from new regulations or changes to existing regulation, and associated offsetting regulatory savings must be quantified using the Regulatory Burden Measure, consistent with the Regulatory Burden Measurement framework.

Agencies are required to use the Regulatory Burden Measure to quantify costs and cost offsets, unless an alternative is agreed with the Office of Best Practice Regulation. Any alternative must be consistent with the Regulatory Burden Measurement framework.

The Regulatory Burden Measure supersedes the Business Cost Calculator and should be used from now on, unless continuing work on an existing Business Cost Calculator costing. Note, the Regulatory Burden Measure cannot read Business Cost Calculator save files, so the old Business Cost Calculator remains available to provide support for agencies that need access to regulatory costings created using the Business Cost Calculator (https://old-bcc.obpr.gov.au).


13 August 2014

Sunsetting legislative instruments guidance note

The Office of Best Practice Regulation (OBPR) has published a range of guidance material associated with the Australian Government Guide to Regulation.

Starting from 1 April 2015, thousands of instruments will begin to sunset in the absence of any intervention under the Legislative Instruments Act 2003. Some of those instruments have significant impacts on businesses, community organisations or individuals. Under the Australian Government’s regulatory impact analysis rules, the decision to continue such instruments would normally require the completion of a Regulation Impact Statement (RIS). Because of the large number of sunsetting instruments, an alternative process will apply in cases where the sunsetting instrument is being remade without significant change.

This guidance note provides information about the RIS requirements as they apply to sunsetting instruments that have a regulatory impact on businesses, community organisations or individuals.


13 August 2014

Commonwealth programmes guidance note

The Office of Best Practice Regulation (OBPR) has published a range of guidance material associated with the Australian Government Guide to Regulation.

This guidance note supplements the Guide to Regulation by providing additional information to help policy makers understand whether a Regulation Impact Statement is required for proposed changes to a programme (including government benefits, grants, procurement, and cost recovery arrangements). This note provides information on how to quantify the regulatory costs of such proposals in line with the Regulatory Burden Measurement framework.


13 August 2014

Competition and regulation guidance note

The Office of Best Practice Regulation (OBPR) has published a range of guidance material associated with the Australian Government Guide to Regulation.

The way businesses compete against each other greatly affects the welfare of consumers. In the absence of competition, consumers are likely to be worse off. Competition can also be a driver of efficiency and innovation, both of which lead to enhanced productivity. For that reason, the Guide to Regulation and the COAG Best Practice Regulation Guide, require that the competition impacts of new regulatory proposals be examined in a Regulation Impact Statement (RIS).

Furthermore, both the Guide to Regulation and the COAG Guide require additional ‘competition tests’ for a RIS that recommends a regulatory proposal that the OBPR has assessed as restricting competition.

The purpose of this guidance note is to assist policy makers to understand the RIS requirements associated with these additional tests.


13 August 2014

Environmental valuation and uncertainty research report

This research report has been produced by the Office of Best Practice Regulation (OBPR), a division of the Department of the Prime Minister and Cabinet, in consultation with the Department of Environment. It was prompted by a recognised need to improve the quality of guidance material relating to environmental valuation in regulatory impact analysis, and through discussions with community organisations.

Its aim is to enhance the capacity of Australian Government departments and agencies to undertake cost-benefit analysis of policies that are likely to have an environmental impact, or that are characterised by significant uncertainty. The particular emphasis in this report is on the preparation of Regulation Impact Statements. However, the relatively general nature of the document means it is likely to be of use to a broader audience, including policy officers in other jurisdictions working on initiatives that require environmental valuation.


13 August 2014

Post-implementation reviews guidance note

The Office of Best Practice Regulation (OBPR) has published a range of guidance material associated with the Australian Government Guide to Regulation.

Australian Government agencies must undertake a post-implementation review (PIR) for all regulatory changes that have major impacts on the economy. PIRs must also be prepared when regulation has been introduced, removed, or significantly changed without a regulation impact statement.

This guidance note provides more information on PIR requirements.