8 Conclusions and recommendations
It is crucial for RIA, and particularly for the summary of the analysis in the RIS, to clearly explain what decisions are required, what choices are available, and what stage of the policy process the RIA reflects. Failing to clearly articulate the difference between the status quo and the outcome that is being presented via the Cabinet recommendations (either the preferred option or any of the alternatives) will limit the transparency of the RIA.
There are various ways of summarising and presenting the outcomes of options analysis. Summary information to convey includes:
- For each option, a summary of the main costs, benefits and risks and overall (net) impacts, in relation to the status quo. This should include aggregates (eg, economy-wide totals).
- Key assumptions underlying estimates of net benefits. For example, the assumptions around expected compliance rates.
The usual methods of presenting convincing options analysis in a RIS to meet the RIA requirements include:
- cost-benefit analysis (CBA) if feasible - an assessment of net-benefits including quantitatively, and if necessary qualitatively, estimated impacts (see Treasury's Cost-Benefit Analysis Primer)
- cost-effectiveness analysis, if feasible - to determine the least cost method of achieving a policy objective or standard, and
- incentive analysis - if an option's design is intended to change the behaviour of certain groups.
Any conclusions regarding the impacts of different options should ideally be expressed in terms of net present values (NPVs) over a reasonable time-horizon. Any weighting of risks should also be made explicit. That is, it should be made clear how trade-offs have been made (eg, between a high-risk/low cost option, and a low-risk/high cost option).
The OECD Introductory Handbook for Undertaking RIA contains greater detail about these methods[9]. In each case, the aim is to compare the likely situation under the status quo with each option and conclude which option is preferred according to the objectives and a judgement about net-benefits. While there should be enough impact analysis to be able to compare options, a greater level of effort should go into analysing the impacts of the preferred option and the recommendation in the Cabinet paper (which may be different).
It is unlikely that a RIS or discussion document can meet the RIA requirements if no clear methodology for assessing options has been explained, or if the analysis has not been articulated convincingly to inform decisions.
Presenting a summary of the options analysis
There are multiple ways of summarising the RIA in a RIS and the presentation should be tailored to how the option has been described. For example, different parts of the problem and option may need to be described separately. A conclusion about the preferred option is not always required or possible, but the RIS requires at least a brief, clear statement to summarise options and set out the evidence base on which a decision would rest on.
A simple table can be a useful way to organise the options, structure the summary of the options analysis, and describe the net-benefits (efficiency) alongside the options' ability to achieve the stated policy objectives (effectiveness). This is just one of many potential example tables for summarising the results of RIA.
| Options | Objectives | Impacts | Overall Assessment | |
|---|---|---|---|---|
| Are they met? How? | Net Effects | Risks | Preferred? Why? | |
| Option 1 | Describe | +/- | Describe | Describe |
| Option 2 | Describe | +/- | Describe | Describe |
| Option 3 | Describe | +/- | Describe | Describe |
Notes
- [9]Available online at: http://www.oecd.org/gov/regulatory-policy/44789472.pdf
