Report

Regulator engagement with small business: research report

9 Oct 2013
Description

This report argues that regulators can do more to reduce the compliance and enforcement burdens they impose on small businesses.

Key points:

  • Small businesses feel the burden of regulation more strongly than other businesses. Almost universally, their lack of staff, time and resources present challenges in understanding and fulfilling compliance obligations.
  • How small businesses 'experience' regulation has as much to do with the engagement approaches of regulators as it does with the regulations. Regulators are generally committed to effective engagement and to minimising unnecessary burdens, but many do not have robust frameworks to ensure high level ideals consistently translate to good practices on the ground.
  • Regulator culture is crucial. Those regulators with effective engagement practices have adjusted their culture by focusing on senior management priorities, training and skills of enforcement staff, performance monitoring, stakeholder feedback, and rewarding behaviour consistent with desired practices.
  • Regulators' communications can be more responsive to small business needs and capacities. In particular:
    • tailoring information requirements around data already collected by businesses
    • greater use of industry associations to disseminate information
    • ensuring regulatory information can be readily found on websites
    • enabling timely access to regulatory staff, would improve small business experiences with regulators.
  • There is scope for increased targeting of those businesses and activities which present a higher risk to communities, and for adoption of lesser compliance cost approaches for lower risk businesses, such as less frequent inspections or less onerous reporting requirements.
    • When done well, such targeting is likely to achieve outcomes at a lower cost than an engagement approach based on strict application of a small business definition.
  • Governments can improve engagement outcomes by ensuring the frameworks within which regulators operate do not inhibit adoption of leading practices. This includes ensuring regulators have access to an appropriate range of compliance and enforcement tools, and resourcing to effectively achieve the policy objectives behind their regulatory responsibilities.
    • Where regulators are inadequately resourced, either some risks to communities go unmitigated or the costs of mitigation are pushed onto those regulated (including small businesses). Governments should provide regulators with explicit guidance on regulatory priorities, given limited resources.
  • Regulator discretion in compliance monitoring and enforcement must be accompanied by appropriate guidance and transparency and accountability measures as well as a separation of education and enforcement roles, where feasible. Governments should ensure low cost mediation services for the resolution of disputes, particularly with local governments.
  • More widespread use could be made of formal cooperation arrangements between regulators, including lead agency models to facilitate joint compliance checks and proactive sharing of compliance information.
  • Continuous improvement in regulator performance requires ongoing monitoring of the effectiveness of delivery approaches and costs imposed on business. Governments should require regulators to report against engagement principles and encourage regulator forums which exchange views on good practice and build professional capacity.
Publication Details
Published year only: 
2013
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