2 The purpose of Regulatory Impact Analysis (RIA)

The purpose of Regulatory Impact Analysis (RIA) is to help achieve a high quality regulatory environment by ensuring that regulatory proposals are subject to careful and robust analysis. RIA is intended to provide assurance about whether problems might be adequately addressed through private or non-regulatory arrangements - and to ensure that particular regulatory solutions have been demonstrated to enhance the public interest.

RIA summarised in a Regulatory Impact Statement (RIS) can serve two benefits:

• Enhancing the evidence-base to inform decisions about regulatory proposals - 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 deliver the highest level of net benefit, and
• Transparency - the presentation of agencies' free and frank advice to decision-makers at the relevant decision points provides reassurance that the interests of all sectors of the New Zealand public have been considered. RIA also aims to encourage the public to provide information to enhance the quality of regulatory decisions, to further inform the evidence-base.

2.1  Cabinet's expectations for Regulatory Stewardship

In April 2013, Cabinet agreed to a set of expectations for the public sector's responsibilities for regulation [CAB Min (13) 6/2B refers].

The expectations outline at a high level how agencies should design and implement regulation. The agency should not propose regulatory change without:

• clearly identifying the policy or operational problem it needs to address, and undertaking impact analysis to provide assurance that the case for the proposed change is robust, and
• careful implementation planning, including ensuring that implementation needs inform policy, and providing for appropriate review arrangements.

The full list of stewardship expectations can be found in the Guidance on Regulatory System Reports.[1]

2.2  The role of RIAT

RIAT is an independent unit located within the Treasury. Its role is to:

• provide quality assurance (see Part 5) of the RIS for regulatory proposals likely to have a significant impact or risk
• provide comments on draft discussion documents for significant proposals
• provide general advice on the RIA requirements, and
• help build capability across government to undertake high quality impact analysis. This includes providing guidance and training, for example on appropriate analytical techniques such as cost benefit analysis.

The nature of RIAT's involvement in significant proposals will depend on the characteristics of the proposal and the policy development process, as well as the existing capabilities and internal quality assurance processes of the lead agency. It may involve:

• working alongside agencies to assist them in meeting the RIA requirements, such as by providing comments draft terms of reference for major pieces of work (eg, cost benefit analyses), and
• referring proposals to other departments, agencies or specialists who have relevant expertise in regulatory quality issues or the subject matter.