Business compliance costs - a chance to be heard

Simon Watt, Partner | May 2001

1 April heralded greater opportunity for business to have input into the legislative process when the government introduced an initiative to help minimise compliance costs.

Introduction

In a move partly prompted by recent government/business forums, the government has introduced initiatives to minimise compliance costs for businesses and to ensure policies which have compliance cost implications for businesses are subject to scrutiny at an early stage.

Compliance costs are the administrative costs faced by businesses in meeting government requirements, including the costs associated with identifying and understanding regulatory requirements.

From 1 April 2001, all new policy proposals for bills or statutory regulations must now assess business compliance cost implications as part of the policy development process.

When a policy is submitted to Cabinet for consideration, a new section entitled "Business Compliance Cost Statement" (BCCS) must be included in the "Regulatory Impact Statement" that is already required to be submitted.

How can business have its input?

The department, agency or statutory authority responsible for the regulatory proposal is required to prepare a BCCS.

It is not clear to what extent officials will consult directly with business to determine compliance cost implications. Therefore it is important that businesses keep in touch with policy developments to ensure they have input.

This is a significant opportunity for business to shape the legislative process and have its voice heard at an early stage. The only down side is inertia. If companies aren't proactive in making submissions government officials will be left to assess the impact on business for themselves. Companies are in the best position to assess the true compliance costs, not Wellington officials, even with the best of intentions.

What will be included in a BCCS?

The BCCS should identify:

1. the source of any compliance costs;
2. the parties likely to be affected, by sector and size of firm;
3. quantitative (if possible) or qualitative estimates of compliance costs (both in aggregate and upon individual firms, or persons);
4. the longer term implications of the compliance cost for business - are they one-off costs? Will they reduce over time?
5. an assessment of the risks associated with any estimates and a level of confidence that can be placed on the compliance cost assessment;
6. the key issues relating to compliance costs identified in consultation;
7. any overlapping compliance requirements with other agencies; and
8. the steps that were taken to ensure that compliance costs are minimised.

In which situations are BCCSs required?

A BCCS is required for all policy proposals submitted to Cabinet which may have compliance implications for business.

The BCCS is required at the time either "in principle" or "final" decisions on policy are sought from Cabinet, and before the preparation of drafting instructions on the Bill or statutory regulation.

Who reads the BCCS?

The BCCS will be included in the submission which goes to Cabinet. It will also be attached to any press statement announcing the new policy, and lodged on the responsible department's and the Ministry of Economic Development's websites, as well as being included in the explanatory note of any resulting Bill introduced into Parliament.

Is help available?

A regulatory and compliance cost unit is being established in the Ministry of Economic Development to review BCCSs and to provide advice on what needs to be included in the statement. Departments will consult with the unit when preparing a BCCS.

Conclusion

The new requirement is intended to improve the quality of regulation making and to ensure that regulatory proposals are cost effective and justified.

If you have any queries about BCCSs or require assistance in making a submission please contact any member of the Bell Gully Business2Government team.