3  Preliminary impact and risk assessment

3.1 What is a PIRA?

A preliminary impact and risk assessment (PIRA) is intended to:

• help agencies determine whether Cabinet's RIA requirements apply to a policy initiative for which they are responsible
• help agencies identify the potential range of impacts and risks that might be presented by the regulatory options for a policy initiative or review, in order that these can be appropriately addressed in the regulatory impact analysis undertaken
• help Treasury policy teams determine the level and sort of policy engagement they wish to have with the lead agency on the initiative, and
• help Treasury confirm whether the nature and size of the potential impacts and risks warrant RIAT involvement in providing independent assurance on the quality of the RIS.

3.2 The significance criteria

A regulatory initiative is considered to trigger the significance criteria if the option/s being considered are likely to have:

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

More detail on the types of impacts and risks to be considered is set out in the PIRA template.

3.3 Process for completing the PIRA

The PIRA should be completed by the person with responsibility for the completion of the work or development of the proposal.

It should be started as early as possible in the policy process and provided to your Treasury policy team as soon as you think it contains enough information to help Treasury make a call about the significance of the initiative and therefore whether referral to RIAT is required. This may not require definitive answers to all questions.

3.4 If RIAT involvement is required

If RIAT involvement is required, the next step is to engage with RIAT to determine the nature of their involvement in the policy development process.

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

• provide quality assurance of the RIS for regulatory proposals likely to have a significant impact or risk
• 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 on draft discussion documents and draft terms of reference for major pieces of work (eg, cost benefit analyses)
• providing independent quality assurance of the RIS, and/or
• referring proposals to other departments, agencies or specialists who have relevant expertise in regulatory quality issues or the subject matter.

RIAT has the discretion to allow an agency to retain responsibility, on a case by case basis, for providing assurance of the quality of their RIS even where the impacts or risks are viewed as significant. RIAT may decide not to formally assess the RIS for a significant proposal under the following sorts of circumstances:

• where the policy work has been planned (eg, was on the agency's regulatory plan) and the policy process is robust and has not been rushed
• there is prior agreement between RIAT and the department on the policy frameworks, standards of evidence and types of impacts to be used
• where other relevant departments, agencies, groups or individuals who have expertise in the subject matter have been appropriately involved and consulted
• the agency has demonstrated that it has robust in-house quality assurance arrangements.

The decision to allow an agency to undertake its own quality assurance of a significant proposal is not necessarily final. The conditions on which the decision is made will be set out and agreed with the agency. If any of the conditions change (eg, timeframes become compressed or additional policy options are included) then the agency must advise RIAT and the decision will be reviewed.