1Overview

Key points
The Commission provides the Victorian Government with independent advice on business regulation reform and on opportunities for improving Victoria’s competitive position. This report, the Victorian Regulatory System (VRS), contains transparent and detailed data on regulatory performance, enabling government, regulated parties and other stakeholders to identify potential areas of regulatory overlap and duplication, compare regulatory structures to identify areas of best practice and areas for improvement, and provide more informed feedback on regulatory matters.
Key themes from the Commission’s analysisof the Victorian regulatory system include:
  • Victoria’s regulatory framework and the activities of Victoria’s regulators have been stable since the previous edition of the VRS.
  • The number of regulators included in this report has reduced, as some previously state-based regulatory responsibilities have moved to the Commonwealth. Some regulators included in the previous edition have also merged.
  • The number of pages of legislation and regulation enforced by Victoria’s regulators has remainedstable since 2011.
  • The provision of online information on, and access to, licensing and registration processes has increased since 2011.
  • The survey returns indicate that a number of regulators are working together to reduce the administrative burden through formal agreements with other Victorian or Commonwealth regulators.
  • There has been an increase in performance reporting on the timeliness of regulatory procedures.
Although the overall picture is broadly stable in terms of the nature and scope of Victoria’s regulatory architecture, there are positive developments. For example, mergers and other organisational reforms to Victoria’s regulators can help to streamline the interface between regulators and the regulated and better prioritise enforcement and other activities.
There are alsoseveral other changes underway to improve the performance and accountability of Victoria’s regulators. Future editions of the VRS will report the progress of these changes.

1.1Background

Victoria has around sixtyregulatory agencies and units whose primary work is the administration of an area of regulation that affects business and not-for-profit organisations. The work of regulation is important for the public interest: it is also essential that it is done efficiently and that regulatory arrangements are a source of competitive advantage for the State. This need is particularly important for the progress of Victoria’s sophisticated and diverse economy that is built on efficient service sectors, manufacturing and agriculture.

The evidence available to the Commission indicates that overall, the regulatory framework provides significant net benefits to Victoria, and that it is seen as a model of good practice in Australia and overseas. The evidence also suggests that issues, including unnecessary red tape and regulatory burdens, continue to be identified by business and not-for-profit organisations. Ongoing efforts to improve regulatory efficiency and better focus regulatory effort is a continuing task of all regulators, both to reduce imposts on business and to minimise the resources required for effective and efficient regulation.

This publication contributes to this broad improvement task in several ways. First, it provides accessible and transparent data on the regulatory operations of Victoria’s business regulators. Second, it provides information that helps regulators to identify better practice among their peers that might be adopted in their own operations. Such information includes, for example, the rate of adoption of statements of regulatory expectations. Third, it provides a high degree of transparency on the breadth of regulation that falls on businesses and not-for-profit organisations that operate in Victoria.

The VRS alsosupports the work of the Commission, and the Government more broadly, in improving regulatory practice in Victoria by providing a comprehensive overview of regulators and the regulations they administer. By providing detailed information on the Acts and Regulations administered, governance structures,and operational and enforcement activities, the VRS enables agencies and stakeholders to compare best practice across regulators, understand the linkages between various regulatory regimes and identify common approaches and issues among regulators. It also supports the Commission’s obligation to report to the Treasurer on developments in regulation and its enforcement.

The regulators surveyed for this report (Figure 1.1) regulate a wide variety of activities and behaviour of individuals and business to achieve a variety of government objectives. Despite this, they share commonalities such asneeding to: balance rigour and timeliness; foster compliance and enforcement;engage with the parties they regulate; and working toachieve broader government policy goals such, as reducing regulatory burdens.

1.2Scope of the report

The data in this report relate to Victoria’s business regulators (Box 1.1). The reportprovides a comprehensive overview of Victoria’s regulatory framework and sheds light on the wide range of activities undertaken by regulators.

Box 1.1What is a regulator?
This report defines a regulator as a state government entity (either independent or within a department) that derives, from primary or subordinate legislation, one or more of the following powers in relation to businesses or occupations: inspection; regulatory advice to a third party; licensing; accreditation; and standards monitoring and enforcement.
Entities which do have some regulatory functions, but are not considered state government business regulators are excluded, such as: local government;water corporations; organisations external to government with delegated powers (for example, the Law Institute of Victoria); third party auditors; and Commonwealth and interstate regulators. For further information see the Technical Appendix.

Overview1

Figure 1.2Regulators included in this report

Overview1

1.2.2Regulators included in this report

This report identifies48 business regulators. The Department of Health is considered a single regulator with 11 separate regulatory units, thus there are 59 regulatory units reported in this edition. This is significantly less than 2011, when 65 business regulators and 77 regulatory units were surveyed. This is due to a number of changes in the composition of regulatory bodies in Victoria. Key changes include:

  • The transfer of some regulatory functions to Commonwealth regulators. For example, the 2011 report included 12 state-based boards responsible for the regulation of a number of health professions. This responsibility has now been transferred to a single Commonwealth regulator, the Australian Health Practitioner Regulation Agency.
  • The merger of some statutory regulators. For example, the previous edition reported separate entries for Liquor Licensing and the Victorian Commission for Gambling Regulation. These regulators were merged in February 2012 and are reported in this edition as the Victorian Commission for Gambling and Liquor Regulation.
  • The merger of some departmental regulators. For example, in 2011 this report provided an entry for the Chemical Standards Branch of the Department of Primary Industries. This branch has been abolished and its regulatory functions have been divided between the newly formed Department of Environment and Primary Industries regulators: the Animal, Chemical and Plant Standards Branch, and the Plant, Biosecurity and Product Integrity Branch. These regulators have been reported in their current form in this edition.

Further information on changes to the regulators included in this report can be found in the Technical Appendix.

The reduction in the number of regulators included in this edition must be taken into consideration when comparing indicators from previous editions. In any comparison of data in this edition to the 2011 data set, data relating to the 12 state-based health boards in 2011 has been removed to give a better indication of trends over time and enable a more ‘like-for-like’ comparison. The reduction in the number of regulators does not, in itself, imply a reduction in the regulatory burden on Victorian business and not-for-profit organisations, but it does help simplify the regulatory system.

1.3Key results

This section outlines key themes emerging from the information reported by regulators.[1]

The 59 regulatory units included in this report support a wide range of government objectives and perform a wide range of functions. They also vary significantly in size (staff and expenditure) and breadth (the number of businesses they regulate).

1.3.1Major regulators

The key results and analysis presented in this report cover all Victorian business regulators surveyed. However,in some instances, the Commission has distinguished between ‘major’ and ‘other’ regulators due to the large share of regulatory activity undertaken by the ‘major’ regulators, and the significant difference in their staff numbers, the number of parties they regulate and their level of expenditure relative to ‘other’ regulators.

The list of ‘major’ regulatorsin table 1.1is based on the data provided (such as staff numbers, expenditure and licensed parties) as a proxy for the size of their regulatory activity. Some large organisations included in this report have not been included as major regulators due to the relatively minor role that regulatory functions play in their overall operations, for example, the Country Fire Authority (CFA).

Major regulators are differentiated from others due to thesubstantial difference in the resources available to them and the breadth of their operations compared with the smaller regulators included in this report.The major regulators undertake a significant proportion of the Victorian Government’s regulatory activity. They account for approximately91 per cent of the staff employed by regulators,90 per cent of expenditure, 94 per cent of business permits, licences etc. issued or renewed, and just over 92 per cent of licence fees and revenue collected (excluding CFA, Metropolitan Fire Brigade (MFB) and Parks Victoria).

The list of major regulators has changed from the 2011 edition due to changes in Victoria’s regulators. Excluded from this edition are: Marine Safety Victoria; Public Transport Safety; the Medical Practitioners Board of Victoria; and the Nurses Board of Victoria. The regulators included in this edition are: Transport Safety Victoria (which has replaced Marine Safety Victoria and Public Transport Safety); Land Victoria and the Licensing and Regulation Division of Victoria Police. This keeps the number of major regulators at 20, consistent with previous editions. It also reports the regulators that now make up the Victorian Building Authority in their previous form (i.e. the Building Commission and Plumbing Industry Commission are reported separately as ‘major regulators’ as these regulators were amalgamated on July 1 2013, after the reporting period).

Table 1.2Major Victorian regulators/regulatory units 2011-12a

Regulator / Staff (FTE) / Expenditure ($m) / Licensed/ registered parties / Revenue from licences/ registrations ($m)
Building Commissionb / 120 / 29.6 / Not supplied / 2.4
Children's Services / 113 / 11.1 / 4134 / 0.4
Consumer Affairs Victoria / 421.8 / 105.5 / 410883 / 22.5
Earth Resources Regulation Branch / 45.8 / 9.2 / 1716 / 65.2
Energy Safe Victoria / 114.6 / 29.2 / 40384 / 3.5
EnvironmentProtection Authority / 364 / 135.3 / 491 / 11.5
Essential Services Commission / 66.8 / 14.3 / 191 / 10.3
Fisheries Victoria / Not supplied / 16 / 1281c / 8.9
Land Victoria / 259 / 33.5 / Not applicable / 220.8
Licensing and Regulation Division-Victoria Police / 92.1 / 9 / 225346 / 13.2
Plumbing Industry
Commissionb / 53.7 / 15 / 24886 / 4.2
State Revenue Office / 490.5 / 76.4 / Not applicable / Not applicabled
Transport Safety Victoria / 119 / 28.9 / 474403 / 2.2
VicRoads / 2872 / 144.8e / f / 111.8
Victorian Commission for Gambling and Liquor Regulation / 243.0 / 44.5 / 56054 / 26.6
Victorian Equal Opportunity and Human Rights Commission / 65.7 / 8.7 / Not applicable / Not applicable
Victorian Institute of Teaching / 54.6 / 11 / 118765 / 9.1
Victorian Registration and Qualifications Authority / 48.1 / 11.4 / 2757 / 1.1
Victorian Taxi Directorate / 146 / 77 / 44451 / 16.4
Victorian WorkCover Authority / 1098 / 275.3 / 816206 / 5.6
Total / 6787.7 / 1085.7 / 2 221 948g / 535.6h

Notes:aMay include resources and activities for non-regulatory functions or supporting other related statutory bodies.bNow part of the Victorian Building Authority.cExcludes 300,411 recreational fishing licences.dData not applicable because it was not possible to differentiate between licensing fee income and state taxes.eExpenditure on registration and licencing as reported in 2011-12 annual report. Total expenditure for 2011-12 was $1.5 billion. f Data not included in this table because it was not possible to differentiate between business and household activity for vehicles and licences.gExcludes VicRoads.hThis figure is significantly higher than the 2011 edition due to the inclusion of Land Victoria.

Source:VCEC 2013 regulator database

TheCommission notes that the staff and expenditure reported in table 1.1 (or in the regulator profiles included in chapter 4) may not be engaged solely in the regulatory activities undertaken by the regulator. The figures reported may include, for example, related service delivery and/or policy functions and activities.

The 39 regulators not considered ‘major’ for the purposes of this report similarly regulate a diverse range of businesses. The regulatory function they perform is smaller than that of the major regulators and this is generally reflected in their staff numbers, revenue, regulated parties and expenditure. Excluding the MFB, the CFA and Parks Victoria, the 36 remaining ‘non-major’ regulators employ about 700 full time equivalent staff, have just less than 40 000 licences or registered parties, collect $40 million in fees and spend just under $250 million on administrative and enforcement activities.

1.3.2Legislative framework

Acts and Regulations

A simple, but imperfect, measure of the extent of regulation is the number of separate pieces of primary legislation (Acts) and statutory rules (Regulations for the purposes of this report) that regulators administer or enforce — and the associated number of pages of these forms of legislation (for potential shortcomings see VCEC 2009, 29).

The regulators included in this report are responsible for the administration of 171 Acts (down from 183) in 2011.[2] Since the 2011 report, 7 new Acts commenced and 13 Acts were repealed.[3]

Table 1.3Changes in included Acts since 2011

New Acts / Repealed Acts
Associations Incorporations Reform Act 2012
Australian Consumer Law and Fair Trading Act 2012
Business Names (Commonwealth Powers) Act 2011
Farm Debt Mediation Act 2012
Fire Services Levy (Monitor Act) 2012
Victorian Commission for Gambling and Liquor Regulation Act 2011
Offshore Petroleum and Greenhouse Gas Storage Act 2010 / Carriers and Innkeepers Act 1958
Equal Opportunity Act 1995
Landlord and Tenant Act 1958
Disposal of Uncollected Goods Act 1961
Business Names Act 1962
Private Agents Act 1966
Associations Incorporation Act 1981
Companies (Administration) Act 1981
Petroleum (Submerged Lands) Act 1982
Plant Health and Products Act 1995
Introduction Agents Act 1997
Fair Trading Act 1999
Health Professions Regulation Act 2005

Source:Commission analysis

The Acts administered by the regulators included in this report consisted of a total of at least 27 809[4] pages (up from 26749pages in 2011). The Acts administered by Victorian regulators vary in length from the 1160 pages of the Gambling Regulation Act 2003 (Vic)(a decrease of 44 pages since 1 January 2011) to the Underseas Mineral Resources Act 1963 (Vic), which is five pages long. Associated with the Acts administered by Victorian Regulators are 191 Regulations which total 9661 pages (up from 9513 in 2011).

In addition to legislation and regulation, Victoria’s regulators are also responsible for administering codes of practice. Of the 59 regulators surveyed in this report, 17administer 106 legislated codes of practice and 26 are responsible for 201non-legislated codes of practice.

Regulatory governance and structure

Getting regulator governance right is important for reducing the overall cost of regulation and improving the performance of regulators. A number of Victorian reviews have identified shortcomings in governance arrangements, including: regulators performing some functions that conflict with their regulatory roles (such as advising Ministers on relevant policy issues, or administering grant schemes open to regulated entities); unclear or shared accountability for particular regulatory functions (especially in areas where local government is also a regulator); gaps in the internal scrutiny of regulatory decisions (such as a process for reviewing enforcement actions to ensure consistency); and gaps in monitoring and reporting on the outcomes and efficiency of regulations (VCEC 2012,3).

There are effectively two types of governance structure for regulators in Victoria. These are:statutory regulatory bodies which exist under the authority of primary legislation; and regulatory bodies that exist as part of a government department.

Of the 59 regulatory units identified in this report, 37 are established on a statutory basis with the regulator operating at arms-length from the Minister and 22 operate as branches of state government departments. This does not mean that those operating as statutory bodies are completely separate from government or Ministers. Some regulators (of both governing body structures) are supported by a branch of a department.For example, Consumer Affairs Victoria is governed by a Director, employed and given specific decision making powers under the FairTradingAct1999(Vic), who is supported by staff employed by the Department of Justice.Other statutory regulators, such as the Environment Protection Authority, have an independent director or chair appointed by the Governor-in-Council, working with staff employed directly by the agency.

1.3.3Stakeholder engagement

Good stakeholder engagement iscrucial for the design and implementation of high quality regulation and for community acceptance of regulation. There are three broad types of engagement reported in the VRS: consultation between regulators and businesses; cooperation between regulators; and consultation between business, regulators and government during the policy making process.

Regulator communication with business

Communication between regulators and businesses is important for efficient regulation. For business, good engagement with a regulator is generally associated with an educative and facilitative regulatory style, rather than a more combative approach (Productivity Commission 2013,3). Where the industry is made up of businesses who wish to comply, but are unsure of how to do so, this approach facilitates compliance and can reduce the costs of enforcement. Alternatively where there are a number of businesses or individuals who are deliberate ‘non-compliers’, a more forceful approach may be necessary.

Regulators can foster compliance by providing appropriate guidance material to businesses. Of the 59 regulators surveyed, 58 provide some form of guidance material. On top of those regulators that indicated ‘many’ when asked about the number of guidance publications they provided to stakeholders, there are over 3000 guidance publications available to regulated businesses and individuals. Although the availability of this material is likely to be useful to businesses, the overall number says nothing of the quality of the material. In communicating regulatory requirements, regulators should place a premium on simplicity, clarity, brevity and accessibility (Productivity Commission2013, 10).