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Developing a Cost Recovery Proposal

Page updated 30 Jun 2017

The government produces a range of services to individuals and private businesses through statutory authority and in some cases enables the costs of these services to be recovered from users. In doing this, the users and public should be assured that the entities are managing their costs efficiently and effectively, and taking appropriate consideration of principles such as transparency and accountability.

A cost recovery proposal that is seeking agreement from Cabinet must meet the RIA requirements. A cost recovery proposal that meets the RIA requirements will, among other things, demonstrate transparency and evidence of efficiency. A Regulatory Impact Statement (RIS) or a Cost Recovery Impact Statement (CRIS) can be completed to meet the requirements. See below for more information on the CRIS.

Cost Recovery Guidance

The Treasury has recently reviewed its cost recovery guidelines. Regulatory proposals that go to Cabinet seeking to introduce new or adjust existing cost recovery arrangements should follow the Treasury’s cost recovery guidelines (Guidelines to Setting Charges in the Public Sector).

Cost Recovery Impact Statements

The Treasury has designed two templates specifically for proposals seeking agreement on cost recovery levels. The two templates have been designed to reflect that there are often different types of cost recovery decisions sought from Cabinet. The templates are designed to elicit the analysis that is already expected for cost recovery proposals in a clearer and more fit for purpose template.

The stage 1 Cost Recovery Impact Statement

The stage 1 Cost Recovery Impact Statement (CRIS) template is designed specifically for proposals seeking policy agreement to cost recover, but not yet seeking policy agreement on cost recovery levels (ie, agreement on cost recovery levels will be sought at a later date). The stage 1 template does not replace the Regulatory Impact Statement (RIS). The stage 1 template should be attached to the RIS.

The purpose of the stage 1 template is to provide a place to clearly explain the policy rationale for cost recovery and to provide a high level cost recovery model, which includes estimates of the cost recovery levels. The RIS is the document that contains the analysis on the proposal that cost recovery is being sought for. The CRIS is the document that contains the analysis for why cost recovery is appropriate.

The stage 2 Cost Recovery Impact Statement

The stage 2 CRIS template is designed specifically for proposals seeking agreement on cost recovery levels. The stage 2 template can replace the Regulatory Impact Statement (RIS) requirement. Consult your Treasury vote analyst to first decide whether this is appropriate. The template will follow the same QA process as a RIS.

The purpose of the stage 2 template is to provide a place to clearly present the information decision makers require in order to make a decision on cost recovery levels.

The diagram below illustrates the information requirements for each of the typical cost recovery stages. Departments are not required to use the templates for cost recovery proposals, however departments may find them easier to use than the current RIS template.

Figure 1: Cost recovery stages and templates
Figure 1 - Cost recovery stages and templates.

If it is not clear what template is most appropriate for a cost recovery proposal please get in touch with the Regulatory Impact Analysis Team (RIAT).

Documents

Documents are available in Adobe PDF. Using PDF Files
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