Getting New Regulation Right the First Time

BRUCE McCLURE, General Manager of the CMPA reports on the State Government’s decision to review the costs of implementing Federal OH&S laws.

OUR State Government has recently released a report by PricewaterhouseCoopers Australia on the impact of the Federal Governments proposed Commonwealth harmonised occupational health and safety laws which confirms the CMPA’s concerns that these laws would significantly impact on our members.

The CMPA following the release of an issues paper in July 2011 by Safe Work Australia (SWA) presented a submission to SWA on the 23 September 2011. From this submission a number of pertinent extracts have been reproduced in this article:

HARMONISATION

Intuitively, the concept of harmonising occupational health and safety laws in Australia makes perfect sense. The benefits of harmonisation will accrue to those businesses that either transcends jurisdictional borders or that have separate operations in each jurisdiction. Harmonising regulatory controls for these businesses means that they will have one set of rules to comply with – one set of training programmes, one set of administrative response documents, one set of regulatory approaches and it makes perfect sense. For the regulators as well there are similar benefits although often States have their own variations to national standards.

The benefits of harmonisation are not so obvious for the remaining State-based businesses, and indeed the majority of our membership. They are already used to complying with one set of rules so there will not be particular benefits or savings for them. In fact, while harmonisation can result in the lowest common denominator being applied, what is necessary to avoid is that it does not impose additional cost burdens on business and industry UNLESS it can be demonstrably shown that there has been a breakdown and, in the case of OH&S, there is a flattening out or, worse, an increasing trend in workplace accidents and fatalities.

Supporting this position, it is recommended that any harmonisation be undertaken on the principle that it will not impose any additional regulatory requirements on businesses in the country. This policy position underpins other initiatives, such as the national occupational licensing scheme under COAG’s National Partnership Agreement to Deliver a Seamless National Economy and should be applied in this initiative.

REGULATORY IMPACT STATEMENT

We note with considerable concern that the required Regulatory Impact Statement that should assess the costs and benefits of the regulatory proposal was not finalised at the time of publication of the draft Model Regulations. It is understood the Federal Office of Best Practice Regulation signed off on the National RIS on Friday 9 September 2011. The analysis in the RIS should assist development of the policy initiative – it should not merely be part of the process to implement a decision. The RIS provides the necessary rigorous assessment of the problems being evidenced, the arising objectives, and makes assessments of the various viable options to achieve the objectives. It’s difficult to understand how a credible decision can be made about new regulatory controls over an industry without such a rigorous assessment. Were business decisions made in a similar fashion the business would be short-lived and most likely face bankruptcy.

The Victorian Government has publicly expressed the view that it is supportive of the principle of harmonisation subject to satisfactory assessment of the regulatory impacts and benefits to Victoria. “Any harmonised national OHS framework must benefit Victorian businesses, and not result in increased compliance costs and more onerous regulations,” was stated by the Victoria Government Assistant Treasurer Hon Gordon Rich-Phillips MLC on the 14 September 2011.

Due to insufficient information provided in the National Regulatory Impact Statements to assess the impacts of the proposed laws on Victoria, the Victorian Government announced that Victoria will not be in a position to proceed until a Victorian-specific impact assessment has been undertaken. PricewaterhouseCoopers (PwC) was engaged late last year to prepare a Supplementary Impact Statement to assess the impact of adopting the Model WHS laws in Victoria.

The report by PwC which was released on the 4 April 2012 has shown that it is estimated that it will cost Victorian businesses $3.4 billion over the next five years. This includes $812 million to transition to the new model and $587 million a year in the first five years in ongoing costs to businesses and most of those costs will be borne by small enterprises which make up 90 per cent of Victorian businesses. The PwC assessment also shows only three of twenty proposed changes would have a positive impact on Victorian businesses. The State Government has made it quite clear that many small and medium-sized businesses do not have the ability to readily adapt to the changes that would be required under the proposed laws and that businesses will incur costs as they try to understand their obligations under the new laws.

At this stage the Victorian State Government has not declared its final position on the proposed national harmonised occupational health and safety laws but the media releases to date would tend to indicate that the government will not implement the Federal OH & S laws.

The comments coming from other states and in particular media sources from other industry media groups have been of interest.

One particular industry magazine editor has accused the Victorian Government of “hindering the introduction of a harmonised OHS system for no other reason than partisan and State interests”. He then goes on to state “for Victoria and Western Australia to be out of step on this issues and aft er two years of deliberation, is indefensible”.

I suspect that the majority of businesses in Victoria would totally disagree with these statements.

On this issue the current Victorian State Government has shown that it has a concern about the impact on Victorian businesses. The CMPA represents family businesses and this proposed harmonisation of OH&S laws as shown by the PwC report, would have resulted in major costs on our members in Victoria. With all the other bureaucratic increases in red tape and regulations in this state over the last few years, the Victorian government needs to be applauded in this instance for their stance on this particular issue.

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