5 Identify the full range of feasible options
Identify the full range of policy options that may fully or partially achieve the stated objectives and thereby address the identified problem. This should include both regulatory and non-regulatory options. Within regulatory options, a representative and pertinent spectrum of viable regulatory forms should be considered.
If the range of options has been previously limited by Cabinet or by specific Ministers, this should be made clear as part of describing the status quo.
If the range of feasible options for responding to an identified problem has been restricted without a formal Cabinet decision, the reasoning behind this direction should be explained by setting out the policy objectives in the RIS. Where policy work has been limited without detailed analysis, the agency may need to outline the implications of this in the RIS, and in particular the Agency Disclosure Statement.
It is not always possible to analyse every possible combination or permutation of policy tools within options-there might be an infinite range of options. Unless past decisions limit the set of options that can be considered, RIA should identify and describe:
- the status quo scenario projected forward - where no further regulatory changes occur (behaviour may still be expected to change over time)
- one or more non-regulatory options (eg, education, industry self-regulation)
- one or more regulatory options, and
- what would happen without regulation or government intervention (if different from the status quo).
If deliberately excluding feasible options, or options that affected parties are likely to think are feasible, the RIA (and subsequent RIS) should explain why. If these exclusions or restrictions would lead to any shortcomings in the analysis, or increase the risks or making the decision, this should be noted in the Agency Disclosure Statement (ADS) within the subsequent RIS.
Regulatory alternatives
A variety of regulatory and non-regulatory instruments are available to achieve the government's objectives. Selecting the right instrument will depend on the problem to be addressed and the overall policy objective.
Non-regulatory options include education campaigns and subsidies. These options seek to influence individual preferences but do not guarantee that changes in behaviour will occur. Examples include:
- drink-driving advertising campaigns that seek to reduce drink driving rates, and
- home insulation subsidies that seek to encourage home insulation improvements.
Self-regulation options can be used where a group can exert control over its membership, for example an industry body regulating its members. This can include standards used by industry members, for example the Advertising Standards Authority's Code for Advertising to Children, or establish a consumer complaints mechanism, for example the Insurance and Savings Ombudsman.
The government may also use co-regulatory options, which combine elements of self-regulation and government regulation. Co-regulation involves government oversight or ratification of self-regulatory instruments.
Alternatively, the government can directly control outcomes through regulation. For example, occupational licensing could be introduced where only licensed individuals are able to perform particular tasks, such as builders. Or, individuals could be required to be licensed before they are able to work in a particular profession, such as working as a physiotherapist.
Mandatory standards and codes could be introduced to control the outcome or process used. Performance based standards and codes specify the outcome that is to be achieved. In contrast, prescriptive-based standards and codes specify the technical detail around how the outcome is to be achieved. For example, if the government wished to improve vehicle safety it could introduce a standard that drivers must have a 90% survival rate in a head on crash at 50 km/h (performance based). Alternatively, the standard could require that cars have seatbelts and front and side airbags (prescription).
Regulatory options can also seek to influence behaviour, such as making information disclosure mandatory (eg, nutritional information on food packaging). This does not require consumers to make healthy food decisions but provides more information to assist their decision making.
Alternatively, the government can regulate more directly, by prohibiting certain conduct or actions. Drink driving offences are an example of this, where driving with over 80 milligrams of alcohol for every 100mls of blood is prohibited.
In many cases, there will not be one answer and a number of instruments used in conjunction may be the most effective way of addressing the problem. For example, education campaigns can be used to increase compliance with legal requirements such as the blood alcohol limits while driving.
5.1 Levels of analysis
Generally speaking, the level of analysis undertaken (detail and depth) should be commensurate with the magnitude of the problem and the size of the potential impacts of the options being considered. There is often judgment required to determine how much analysis is appropriate in particular circumstances and the Regulatory Impact Analysis Team (RIAT) can provide advice on this.
Sometimes it is appropriate to narrow down the initial range of options, and undertake comprehensive analysis on a more limited set of options, as this enables analytical resources to be focused on those options most likely to deliver net benefits[5]. In these circumstances, the objectives against which the full range of options was assessed should be explained, and the way they were applied made explicit (eg, if any objectives were weighted more highly than others). An example of this process is where a multi-criteria analysis[6] is employed to narrow down the set of options subject to full cost benefit analysis. Initial options may also be narrowed down through early consultation processes.
New regulation should not conflict with or duplicate existing legislation or regulations. It is therefore also important to consider how a regulatory option will interact with the stock of regulation, including whether there is scope to reduce or remove any existing regulations.
Notes
- [5]If there is a preferred option, the greatest effort should go towards analysing this, and the second-most preferred option.
- [6]Multi-criteria analysis is a way of appraising and ranking policy options against a given set of objectives or criteria. It is not an alternative to cost benefit analysis since it evaluates options' likely effectiveness in achieving the objectives - rather than the overall efficiency from a New Zealand net-public benefits perspective.
