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Regulatory Impact Analysis

Page updated 21 Sep 2015

Regulatory Impact Analysis (RIA) is an analytical framework that is used by policy makers when developing policies that consider regulatory options. RIA is a best practice regulation making framework used by most developed countries worldwide.

A Regulatory Impact Statement (RIS) is a document that summarises the RIA. The RIS is important as it provides information to decision makers on the impacts of different policy options they have available to them. The RIS is made public so anyone can see what information was available to decision makers when a decision had been made, making it a valuable tool for providing transparency in the decision making process.

The Government expects that departments will:

  • 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
    • careful implementation planning, including ensuring that implementation needs inform policy, and providing for appropriate review arrangements

The table illustrates the RIA framework and what steps are involved in putting together a RIS. See the relevant section in the RIA Handbook for more information.

The RIA Framework and what information a RIS contains

Process Step

   
Describe status quo
  • Base case 'do nothing scenario'
  • Existing regulation
  • Relevant decisions already taken
arrow indicating the process
Define the problem
  • Gap between status quo and intended outcome
  • Size of problem
  • Distinguish cause and effects
Define objectives
  • Where do we want to be (government/society)
  • Define objectives abstractly
Identify options
  • Full range of feasible options
  • Define concretely, quantify net benefit
Analyse options 
  • Impacts - costs, benefits, incidence, magnitude
  • Risks
Consultation 
  • Ongoing
  • Who (see CabGuide)
  • Set out views especially when divergent
Conclusions & recommendations 
  • CBA or cost-effectiveness analysis
  • Preferred option or evidence base for option
Implementation
  • Both stages - implementation & enforcement
  • Consider introduction and ongoing administration separately - explain risks and costs
  • How to manage change process
Monitoring, evaluation & review
  • How will agency define success (ongoing)
  • Is intervention still required - consultation  

RIA requirements

Undertaking RIA during the development of policy proposals has been a formal Cabinet requirement since 1998. The RIA requirements apply to any proposal that:

  • considers options that involve creating, amending or repealing legislation (either primary legislation or disallowable instruments for the purposes of the Legislation Act 2012); and
  • is expected to result in a Cabinet paper.

If the RIA requirements apply then a Regulatory Impact Statement (RIS), (summarising the RIA) will need to be completed and quality assured. See the Regulatory Impact Statement section for more information.

Cabinet and committee papers that contain policy proposals must contain a section entitled Regulatory Impact Analysis. The CabGuide section on Regulatory Impact Analysis outlines the RIA requirements and what is required for Cabinet papers.

Regulatory Impact Analysis Evaluations

Treasury periodically commissions external evaluations of Regulatory Impact Statements and their independent Quality Assurance (QA) statements, to assess whether departments are meeting their RIA responsibilities. By identifying examples of good practice and common problems, the evaluations are intended to help departments undertaking RIA as well as enabling Treasury to maintain an overview of how the system is working and where improvements are needed.

See also RIA External Evaluation Publications

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