Regulatory reviews, strategies

From monitoring and analysis of  ‘what is happening’ by with regulations across a number of key Australian working industries since the 1990s, it is clear the regulatory climate for Australian business has barely improved over 20 years, notwithstanding repeated pledges by governments.  Sandra Welsman’s 2006 ‘Promises, Realities’ paper distills the ‘red tape record’ and identifies, in particular:

  • Regulatory review processes are not functioning as projected to forestall red tape
  • Need to extend critical review processes to all forms of rules, even judge-made law
  • Science-based standards and technical rules are a new front-line of regulatory build-up
  • A major challenge will be to shift regulators back out of the ‘entrepreneurial and innovation space’.

‘Issues with rules’ identified in reviews and pursued through strategies and submissions include:stump

Big effects from ‘little rules’ – COAG minimum effective regulation policy must be applied at all levels of regulation – legislation, to statutory instruments and quasi-regulation (orders, notices, codes) and especially the fast-multiplying standards and ‘compliance guidelines’.

Uniform poor regulation will increase costs – uniform regulations across Australia, if achievable, will not fix poor regulation structures nor negative impacts of sets of rules, intended or otherwise.

Inefficiency from blanket rules – regulation by national systems with blanket rules unless held  to a framework, can be excessive and costly for businesses where practices in sizeable parts of industries differ for commercial, environmental and market reasons.

Remove commercial factors from the law of the land – unless the nation wants public regulators to be making commercial decisions; laws should set the baseline public requirement. such as for safety.

Competition principles are policy to be applied – across all sectors, where Australia harnesses competition, and encourages private providers to improve services, governments should ensure open competition, level playing fields, competitive neutrality.

Regulator performance as a productivity factor – more and more industries ae highly regulated; there is an onus on governments to ensure that regulator performance keeps pace with industry developments, and that agency staffing and capacity is not a bottleneck to innovation, responsiveness and productivity advances.

Regulatory creep is a reality – ‘the hidden menace of the red tape burden’ – and adds to costs by pressuring businesses to over-comply. The costs are regulatory burden to the business and Australia. Creep can occur during development of regulatory systems and through:-

  • Unclear rules, where confusion about standards, guidance and regulation leaves people not knowing what is expected of them, and what is needed for compliance with the law
  • Regulation developed or expanded by non-statutory means, including industry systems, co-regulation, science and enforcement processes that extend beyond baseline needs
  • Guidance – its status, how it is developed and used to influence enforcement activity and compliance, with potential unnecessary burdens at extra cost
  • Quasi-regulation giving much discretion to regulators and, because of its convenience and lack of scrutiny, sometimes used as ‘backdoor regulation’
  • Quasi-regulation such as Guidelines, being pitched at so-called ‘best practice’ levels (a commercial decision) rather than minimum effective regulation
  • Industry self-regulation gaining imprimatur of agencies and being lifted into legislation.


Regulation reviews. strategies. submissions

Sector-wide regulation issues analyses 2007-2009. Independent Reports for Industries then submissions  to Productivity Commission Reviews of Regulatory Burdens on Business – • Primary Sectors 2007 • Manufacturing and Distributive Trades 2008 • Social and economic infrastructure services 2009 • plus strategic submissions to reviews in Chemicals, Quarantine-Biosecurity, Higher Education Review.

‘[The submission] represents a strong and comprehensive critique of the current system’, ED 3.2009

[The Review Panel chair] commented … it was among the very best of those received. … of over 300 submissions … was in the top few percent for quality of argument and ideas.’ Executive Director 9.2008

Rules Impacting on the Meat Industry 2007-08, comprehensive, independent review of regulations for the whole Industry, on processing, work, transport, standards (also followed issues from 1998 Industry Review by Sandra Welsman. Led into submissions to multiple reviews of regulations.

Compelling reading for those with an interest in the long term viability of the industry. Industry Executive Director 7.2007

Ministerial panels: Review of Quota Administrative Arrangements for Beef Exported to the United States and EU 2005, and in 2008 for Dairy Exports to the US and EU. Analysis of history and impact of quota administration schemes on industry conduct, concerns and investment, in changing innovation and competition policy circumstances, shifting global marketplaces. Industry consultation, submissions with mixed positions. New market-oriented regulatory regimes recommended to Federal Ministers 2005, 2008.

Business Regulation – promises, realities, futures. Original research and analysis paper (ssrn dl) presented to John Howard’s Decade Conference, Canberra 3.2006.

  • Abstract: Enterprises, governments and communities have traversed three identifiable phases of regulation review since the early 1990s: Red Tape Reduction, National Competition Policy, and Process Streamlining. While Competition Policy reviews achieved structural change in some industries, on balance the regulation climate for business has advanced little. As external pressures sharpen, reminiscent of the early 1990s, attention returns to ‘regulatory ossification’. This was partly acknowledged by the Howard Government in convening another Red-tape Taskforce in its tenth year of power (adding to a long string of federal and state exercises). Arguably, Australia faces income challenges not yet imagined, with stark competition on productivity, resources and regulation fronts. There could be a window to respond with ‘new-era’ regulation innovation that harnesses Australian societal and economic characteristics. This would require a paradigm-shift in thinking and critical probing of policy and regulatory practices. Principles for questioning and reframing core elements of business regulation for a ‘new-era’ are outlined. Change drivers are discussed.

Business Regulation in Australia – a stocktake of reform 2004-05. Concept paper, reform ideas, analysis, discussion basis for the Business Council of Australia. Developed from regulatory explorations and reviews since the 1990s. This provided evidenced analysis – in advance of the 2006 Taskforce review – that, on balance, the regulatory climate for Australian business had improved little over 15 years, and provided inputs on reform frontlines.

Processing Chain Rules Strategy Study. AFFA National Industry Development Program competitive grant, 2000. Food safety, marketing and exporting. Consideration of reasons for and feasibility of change, development of a framework and action plan for an Industry Quality System.

Productivity Commission Inquiry on Cost Recovery by Federal Agencies. Submission on food processing and inspection regulation – logic, policy, law and issues – public benefit of rules not removed’ by National Competition Policy reviews, for RMAC 2000.

This] will be enormously helpful … We’re always very grateful when we get submissions where people have actually taken the effort to … get below just what their own organisation is doing and think about the principles … It gives us very, very useful guidance.’  Presiding Commissioner PC Cost Recovery Inquiry 12.2000 (transcript)

Review of Regulatory Environment – Australian Pork Industry. For the National Industry Development Program AFFA 1999. Lateral investigation of Federal and State government and industry rules impacting on production and processing, especially rules affecting export, cost and supply of feed, business operations, rural and regional impacts, social and environmental issues.

‘… excellent … developed with detail, explanation and analysis of complex points for a range of audiences. … the report is an independent assessment … and identifies several important areas for consideration and possible further action by both industry and government.’ Chair NPIDP & APC

‘Your work has clearly opened a window of opportunity … of long term benefit …  and lead to a further strengthening of our export opportunities.’ AFFA 2000

National Competition Policy (NCP) Review of the Wheat Marketing Act (Wheat Single Desk). Development of the Pork Council submission to meet combined needs of an industry of producers and wheat growers, 2000.

Regulations Impact Study, Rules Impacting on the Industry & Principles for Reform 1998. For the Meat Industry Council. Industry interviews, in-depth research, and innovative analysis of law, policy, theory and reality. Developed and argued a two tier structure for regulation of meat processing and sale and a single Australian meat safety standard. A key input for 2000 NCP review of Export Control Act and its reforms. Citations include th Australian Industrial Relations Commission.

The Welsman Report (Meat Industry Council, 1998) signalled the need to reduce the regulatory burden on industry. Its acceptance facilitated a transition from a highly prescriptive, adversarial regulatory context to a more co-operative, co-regulatory relationship between the Australian Quarantine and Inspection Service (AQIS) and industry.’ Food Science Australia (2007) Predictive microbiology report – The industry impact.

‘The best review I’ve seen of the industry’s structures.’ Chair Victorian Meat Authority, reported in ‘Red blooded’ [Obstacles to the expansion of domestic processors into red meat export markets] The Australian 11 Sept 1998

‘Sandra Welsman did an outstanding job in successfully completing [the Review]…detailed desk analysis and interviews with many industry enterprise managers. … was impeccably researched and has generated a great deal of industry debate. … high regard for her intellectual ability and preparedness to stand up and be counted in putting forward a well researched view.’ CEO MIC 1998

Commercial power and competitor litigation. Welsman (1996) 24 Australian Business Law Review 85. Substantial analysis of Australian and USA law and litigation practices.  It’s all so new, Senior Counsel. ssrn dl

  • Abstract: On occasion, it might appear that the primary objective of an action in court (or in an administrative forum) by a business against a competitor, is to apply anti-competitive pressure, rather than to resolve some legal dispute. Such occurrences, which gain significance as competition policy objectives broaden, have been identified in various jurisdictions. Case examples assist the distinguishing of such anti-competitive conduct, but there is no clear line. In Australia, avenues for redress for such conduct are relatively unexplored, for reasons which likely include cost and risk. There could be mis-use of market power under TPA Part IV. The development of the USA antitrust doctrine of ‘sham litigation’ (Noerr-Pennington), and its usefulness, are examined in this context. Where the instigator has ‘commercial power’ but not market power, redress might be found in tort law, for interference with business or for abuse of process. However, this is not of great comfort to a smaller business being ‘pursued’, as these are not established pathways.

Cited in multiple papers, reports, submissions, eg. Yeung, Privatizing Competition Regulation, Oxford Journal of Legal Studies, Vol. 18, No. 4 (Winter, 1998) 581-615

Seeing (some) litigation as national investment. Welsman (1995) 33(6) NSW Law Society Journal. Submitted to the LSJ to achieve high exposure during the ALRC inquiry into litigation costs. Published as a Special Feature. Related submission to the ALRC inquiry achieved specific discussion in ALRC report 75, Cost shifting – who pays for litigation? 1995.

  • Begins: Civil Law litigant Mrs M.E. West, who received a NSW Court of Appeal decision in 1986, might be particularly interested in the ALRC’s review of litigation cost rules now underway. In Mrs West’s case, that Court examined the NSW Contracts Review Act 1980 and its concept of statutory unconscionability, for the first time. The Court provided considerable guidance on interpretation and application of the Act. The judgments have been referred to often since. However, by majority decision, Mrs West lost her appeal. Under the ‘costs indemnity rule’, Mrs West had to pay all the winner’s costs as well as her own.

In Queensland Wire, The High Court has provided an elegant backstop to ‘use’ of market power. Welsman (1995) 2 Consumer & Competition Law Journal 280-315. ssrn dl

  • Conclusion: The High Court should be applauded rather than criticised for its sagacity in Queensland Wire. The Court has created a ‘backstop’ to the ‘use’ of market power: a ‘backstop’ located at the perimeter of conduct acceptable in a competitive market, which is quite tangible, yet retains a sufficient degree of ‘mystery’ to exclude it from the realm of ‘regulation’. The High Court has indicated the broad circumstances in which behaviour is likely to prompt an order to change that conduct … Any uncertainty engendered by Queensland Wire adds to the ‘mystery’, and to the impetus for the powerful to behave ‘reasonably’ and consistently with the spirit of competition policy and law, before being taken to the costly and very public forum of the courts, to have imposed on them (if they ‘lose’) a last resort set of prescribed ‘terms and conditions’. The ‘backstop’ embodies within it a sense of commercial and socio-economic reasonableness in the context of the policy intentions of the TPA, and so it is somewhat imprecise. This creates an appropriate degree of ‘marketplace tension’ and is almost certainly the most positive way to ensure that such ‘deregulatory law’ can still evolve in parallel with commercial ingenuity and public expectations.

Among multiple citations: The University of Western Australia, Law School course from 2004 as the ‘objective concept’ paper.

‘Welsman convincingly argues that the test in Queensland Wire is useful because it requires the court to distinguish between acceptable and unacceptable conduct when determining whether s46 … has been breached.’ Coull, [1998] Victoria University of Wellington Law Review 31

Australia’s local land-use planning laws and practices: Competition law’s next challenge? Welsman (1994) 2 Trade Practices Law J 173-187. [This anti-competitive situation was realised by the ACCC in 2008]

  • Summary: In Australia, competition within the economy, and competition policy, is receiving intensifying scrutiny. Federal, State and Territory governments in 1992 agreed principles to be given effect by national competition  policy and law. In early 1994 national commitment to micro-economic reform, including competition policy, was reinforced. Government regulation of industries and markets is recognised as a major issue. Yet, across all industries and markets, every business aspiring to start and to compete, or keen to expand, or determined to innovate in response to markets locally and internationally, will use land and buildings in some way. Very early on almost all businesses come into contact with ‘local land-use planning law’. So traditional is this area of our law, that even less than subtle restrictive practices receive nary a comment. This paper, with reference to NSW regulatory law, submits that planning law and particularly its application, can seriously influence or restrict ‘competition’. An objective examination by the Trade Practices Commission (or successor ACCC), of this field of regulation, and of  the balancing of various ‘public interests’, appears warranted.

These two papers were referenced in Competition policy in OECD countries 1994-1995, Organisation for Economic Cooperation & Development 1997.  Notably, the Australian Competition and Consumer Commission (ACCC) with  ‘found’ zoning laws and their application to be potentially anti-competitive in the ‘Grocery Review’ in 2008.