Regulation affects many areas of life, allowing us to travel safely, buy and sell goods and services, start businesses, protect the environment, ensure buildings and workplaces are safe, and medicines are assessed. Despite its importance, working in a regulatory context may not sound too glamorous or exciting. The reality is that regulation and compliance are important and valuable, as our experience during COVID-19 and the banking royal commission have readily demonstrated.
Regulation has a poor reputation, possibly because so much of the public narrative is about cutting red and green tape, as though regulation is inherently undesirable. A New Zealand Productivity Commission paper, Regulatory Institutions and Practices, commenting on how regulation is “the poor cousin of government”, states that:
“In comparison with taxation, spending or monetary policy, little attention is paid to regulation. There is no annual review of regulation, as there is with government spending (the Budget). We do not know how much of our income is taken up by complying with regulations, as we do with our tax bills. And unlike spending, tax or monetary policy, there is no one minister or agency in charge of regulation. This lack of attention has real consequences. Although the ‘price’ of regulation in general may often be invisible, the costs of poor regulation are all too clear, as the events of the Global Financial Crisis, Pike River and leaky buildings have demonstrated. Rapid changes in technology and markets make the need for good regulation ever more pressing. Better regulation may be the best opportunity to reduce the pressure for more regulation.”
When considering a role in regulation, there are some aspects to consider. One is, that there is no one definition of regulation and an organisation may have a mix of functions and roles, some of which many not be regulatory.
The Australian Government Guide to Regulatory Impact Analysis provides this definition of regulation:
“Regulation is any rule endorsed by government where there is an expectation of compliance. It includes legislation, regulations, quasi-regulations, and any other aspect of regulator behaviour that can influence or compel specific behaviour by business and the community. It also includes the requirements imposed by the Commonwealth’s procurement, grants and the cost-recovery frameworks. Regulation may exist in the form of “black letter” law (Acts of Parliament, Regulations and other formal instruments). Regulation may also exist in the form of “grey letter’ law, which may include mandatory codes of practice, guidance notes, industry–government agreements and accreditation schemes. Quasi-regulation describes those arrangements where government influences businesses to comply, but which do not form part of explicit government regulation. Quasi-regulation occurs when an industry sector takes voluntary action to self-regulate (such as through an industry code), under an assumption the Government may consider action if the industry action was not taken.”
One of the families in the APSC’s Job Families model Compliance and regulation. These roles examine, assess, inspect and investigate compliance with applicable legislation and organisational frameworks. Job Functions in this family are: Enforcement, Inspection, Investigation, Maritime, Regulation/compliance.
Not all roles perform the above-mention Job Functions. Some provide support such as a Legal Counsel at the Australian Charities and Not-for-profits Commission, which is the independent national regulator of charities. The Legal Counsel’s role is to research, analyse and provide timely high quality legal advice on a range of areas of law in a regulatory context, including administrative law, privacy law and charity law.
Whether an agency has a regulatory role is not always clear. The ACCC lists some of the Commonwealth regulatory agencies. It may not be clear from an organisation’s name that have a regulatory role.
ANZSOC’s National Regulators Community of Practice (NRCoP) produces valuable resources about regulators. NRCoP is an active network of public sector regulators from all three levels of government and from every regulatory sector, professional background, role and level of seniority. Its objectives are to support participants and agencies to become more professional and capable regulators and to promote the public value and importance of regulation as a key task of government and thereby, to deliver better citizen outcomes.
The NZ report sets out six types of regulatory functions: making rules or standards; informing and educating; approving/banning activities; promoting and monitoring compliance; handling complaints from the public; and enforcing compliance where breaches are suspected. Arie Freiberg and Monica Pfeffer refer in their NRCoP article ‘Does knowing you’re a regulator make a difference?’ to the NZ report, which points out that to be categorised as a public sector regulator an organisation needs to be responsible for at least two of these six functions. The writers suggest that knowing you’re a regulator matters because it gives access to a wealth of professional expertise and “having a ‘regulatory mindset’ supports regulators to think differently from their policy and program delivery colleagues about many aspects of their work.”
NRCoP’s Compliance in a crisis conversations canvassed three key questions about responding to COVID-19: functional agility; staff deployment; and joint regulatory operations. Over the course of the discussion, several themes emerged, as did insights and lessons learned for the future. Key among them were:
- “the need to be agile across a range of dimensions, including accelerating the transition to digital
- the importance of collaborating better with regulatory peers and building ongoing relationships
- the need to ensure clear and consistent definitions between agencies when tasks like ‘compliance’ are shared.”
Another useful insight was that regulation is a transferable skill, and is not so specialised that it cannot transfer between regulators. The writers point out that: “Regulators tend to overestimate their specialised knowledge and differences from other regulators and underestimate the degree of commonality between all regulators.”
Regulators require core capabilities, specialised skills, and deep sector knowledge. The NZ report discusses regulators’ skill requirements:
“Regulators require core capabilities but apply them in unique ways. While these capabilities are expressed as generic skills, each area of regulation is different, requiring tailored application in each unique regulatory environment. Regulatory agencies need people with specialised skills such as legal skills, forensic accountancy skills, engineering skills, veterinary skills or skills in microbiology and food science. These people are likely to belong to and identify with their own professional grouping – the legal, accounting, or engineering professions, for example. They are required to apply their professional expertise and knowledge to a particular set of circumstances – to meet the objectives of the regulatory agency. Technical skills become more important as regulatory regimes become more sophisticated, demanding more of regulated parties but also more of regulators.”
Two factors the report discusses are the amount of discretion front-line staff have and the need to manage risk.
The Institute of Public Administration Australia produced Regulatory Professional Capability Guidance in 2015. The guidance is based on a broad regulatory cycle comprising three components: Make, Operate, and Review. It discusses contextual issues, and explains regulatory professional capability domains.
In addition to understanding the value of regulation, and relevant skills and knowledge, applicants for regulatory roles may need to be familiar with current government thinking. For example, the Australian Government introduced the Regulator Performance Framework to provide common performance measures to assess how Australian Government regulators operate. The Framework is designed to assess only one aspect of a regulator’s performance—the extent to which it minimises regulatory burden in the course of fulfilling its other activities. It should be seen as only one component of the broader performance of regulators.
There are six mandated common outcomes-based key performance indicators (KPIs) that cover reducing regulatory burden, communication, risk-based and proportionate approaches to regulation, efficient and coordinated monitoring, transparency, and continuous improvement of regulatory frameworks.
As the ANAO points out, based on audit insights, “regulation is an important function of the Australian Government and high-quality regulation is crucial for the protection and proper functioning of the economy, society and the environment.” Audit findings on the implementation of risk-based regulation identified five key learning areas: collection and management of compliance information; assessment of compliance risk; implementation of risk-based compliance programs; record keeping; and measuring performance.
In summary, if you are considering a regulatory role, understand:
- The value and importance of regulation.
- The skills, knowledge, and capabilities needed by regulators.
- Relevant government frameworks.