9 Implementation
RIA requires consideration of how the preferred option would be implemented if agreed. If the option being presented to Cabinet is different, the RIA should also include consideration of how that option could be implemented.
Choices around the implementation and enforcement of a regulatory option can have a major influence on expected compliance rates and whether the expected costs and benefits will materialise (ie,the likely effectiveness of the regulation). Significant costs can be incurred during the implementation stage (such as the costs of monitoring and data collection) so key parameters should be included in the analysis of the costs and benefits of options.
RIA should cover the entire implementation and enforcement stages of the policy by describing the impact of different choices around enforcement strategy on costs and benefits (expected compliance and effectiveness). Consideration should also be given as to how enforcement costs will be funded - although the appropriate level of analysis of implementation will depend on the stage of the policy development process and the magnitude of impact.
It is therefore important to consider some practical implementation issues before key policy and design choices are taken. To the extent that implementation design issues are not covered in the description and analysis of options and impacts, specific implementation considerations include:
- Administration issues, such as which agency will implement and administer the option and how it will function.
- Timing and transitional arrangements eg, delayed or gradual introduction of new requirements, provision of interim assistance.
- Compliance costs minimisation strategies. What implementation strategies will be required, such as an education campaign, the use of electronic technology, form design, advisory services and testing with stakeholders? Is there existing regulation that can be reduced or removed to prevent overlap?
- Implementation risks and their potential impact on the effectiveness of an option. Strategies for mitigating these risks should be explained.
- Information that regulated parties will require in order to comply with the regulation, and how this will be provided (eg, whether there is opportunity to rationalise or “piggyback” on existing information sources or methods of communication).
- Enforcement strategy - how compliance will be enforced, who will undertake this, whether there will be sanctions for non-compliance (eg, warnings, fines, licence suspension, prosecution, and whether there will be gradations of sanction depending on the level/severity of breach), the suitability of risk-based enforcement strategies.
RIA also needs to establish plans for oversight and operational safeguards. Who could (and who will) be best placed to make informed judgements about the operation of the regulatory regime, the enforcement of rules, and the performance of the regulator? These may not be the same groups, but all affected parties should be considered for their likely interest and exposure to regulator discretion and behaviour
The plans for how stakeholders are expected to continue engaging with agencies should also be clearly articulated so that stakeholders can have an indication of likely compliance costs. Imposing information and reporting requirements can create costs that are difficult to quantify without information from affected parties through consultation.
It is important that Agencies strike the right balance between collecting the necessary information to meet their responsibilities to the public, while not requiring information that is unnecessary or unavailable. Agencies and relevant regulators should only collect information essential for enforcing rules or monitoring regulatory objectives and behaviour. They should also ensure that processes are in place to only collect information once - not multiple times redundantly.
The Department of Internal Affairs (DIA) has published Achieving Compliance - A Guide for Compliance Agencies in New Zealand which contains more detail about implementing policies.
The importance of implementation
The prevailing view has been that the implementation of legislation is “something that regulators do”, once the law is passed. This view is changing, as we increasingly recognise that how regulation works in practice has as much to do with factors that influence implementation as the law itself, and these factors can and should be taken into account in the policy development process and regulatory impact analysis.
There are two distinct phases to implementation:
- the initial phase when a new law is introduced, and
- the ongoing administration and review of the law.
The initial phase has distinct characteristics as it is at this point that historical behaviours are required to change in line with the expectations underlying the law. Behaviours are a function of both attitudes and capabilities. In addition, it is often the case that the behaviours of more than one group need to change. Experience suggests that the behaviours that must change to achieve the objectives of the law are often path-dependent and can be deeply embedded, and we typically under-estimate the effort required to effect change. Therefore, we need to allow sufficient time for implementation, to adopt appropriate strategies to facilitate and manage the change process, and undertake sufficient ongoing monitoring and evaluation.
The questions that should be asked at the outset include:
- What groups will be affected by this law (this will bear on the analysis of the status quo; key groups include producers, consumers, regulators, standards bodies etc)?
- What behaviours would we expect these groups to demonstrate if the law is to achieve its intended objectives? Bear in mind that actors respond to their “complete” regulatory environment, which may involve other areas of regulation and legislation than the policy question at hand.
- What might act as a barrier to behavioural change? Put yourself in the shoes of the affected parties – what incentives are in place to influence their behaviours?
- What strategies are likely to work best during the implementation phase to reduce these barriers? This will include consideration of appropriate transition arrangements.
- What monitoring and evaluation strategy is required to identify and address emerging issues that are affecting the effective implementation of the law?
When considering the factors that influence the administration of the law on an ongoing basis, it is important to note that interventions that do not deliver on their intended objectives may reflect poor strategy choice by the regulator rather than the rules themselves. There are two key factors to consider in the analysis:
- Regulators are always in the situation of allocating limited resources. In effect they must make hard choices about where to invest their regulatory capability. Risk-based frameworks are most commonly used today to make resource allocation decisions. In effect these require regulators to make an assessment of the likelihood and consequences of certain adverse events happening, relative to the cost of mitigating them, and use this information to prioritise activity. Dealing with uncertainty is an important dimension of risk-based regulatory action.
- Regulated entities are not homogenous. A strategy that works best for one group may not be effective or necessary for another.
Given these two factors, in addition to revisiting the factors and question outlined above, the questions we should also ask at the outset include:
- Does the proposed law permit risk-based decision making by the regulator?
- Can we be assured that the regulator will take a risk-based approach?
- Does the regulator have the statutory tools to take a “fit for purpose” approach to enforcement?
- Can we be assured that the regulator will take a “fit for purpose” approach?
