What is the policy problem you are trying to solve?

In this introductory section of the RIS, you must:

  • Clearly identify and define the problem you are trying to solve.
  • Demonstrate why it is a problem: are there risks or other dangers to be mitigated?
  • Offer evidence about the magnitude of the problem and the costs of not doing anything.
  • Describe the businesses, community organisations or individuals affected by the problem.
  • Explain which, if any, current government measures have sought to address this problem.
  • Establish why those measures are not working.

Defining the problem is the best place to start

If you can define the problem satisfactorily, the rest of your analysis will follow logically. If your problem is poorly defined, the resulting process will be confusing and difficult to resolve.

Identify who is likely to be affected, what is the nature of the impact they will experience and how will they respond to your proposals.

Think carefully about when and how to consult with affected stakeholders. Should they be part of the process of developing the policy itself? Do you have a consultation strategy with clear objectives?

When you begin your analysis, think about the broad nature of the problem you face. There are a relatively small number of situations that justify direct government intervention in the form of regulation. Your policy analysis is most likely to begin from one of the following starting points.

Market failure

Are you addressing an imbalance of market power generating inefficient outcomes? Are you trying to improve the availability or quality of market information, goods or services to a group of community organisations or individuals who cannot access them now? Has an issue arisen over the need to clarify property rights? Is there undesirable or avoidable market instability or inequality? How serious is it? Can you be sure the market is unlikely to come up with a solution by itself?

Regulatory failure

Has a previous attempt to regulate failed? Have old regulations failed to keep up with new circumstances? Is there a legitimate public outcry about an issue of public importance?

Unacceptable hazard or risk

Is there a new or emerging safety or environmental problem? Are people exposed to risks they are ill-equipped to deal with? Are you trying to manage a public health issue that has suddenly taken on a life of its own?

Keeping risk in perspective

Be careful not to be distracted by the symptoms of a problem or media interpretations of it. Identify the underlying cause of the problem, its seriousness and your capacity to deal with it. For example, if faced with a rising incidence of food poisoning in the community, a regulator’s first obligation would be to gather facts, assess the cause, potential for harm and the scale of the problem and then consider the policy options.

If the probable cause of a food poisoning outbreak is poor food handling techniques in restaurants and cafes, is this a one-off example, or is the problem widespread and likely to lead to more serious outbreaks? Is there a case for government intervention?

Remember: regulation cannot eliminate risk entirely; sometimes it just shifts risk. Our role as policy makers is to provide advice to governments about acceptable levels of risk—taking into account the possible consequences—and how much it will cost the community to reduce or eliminate that risk.

Risk: likelihood versus consequences

Consider the likelihood of risk as well as the consequences of the risk. It’s natural for media or lobby groups to focus on controversial or emotive aspects of potential policy decisions, but is the cost of regulating in proportion to the real-world risk? Can risk be eliminated entirely? Who should pay? How much risk is acceptable under the circumstances?

As policy makers, we must balance the desired outcomes of regulation against the burden imposed on potentially large numbers of businesses, community organisations and individuals to achieve that outcome.

Remember that regulatory action is not risk free; how confident are you that your proposed solution will work?

What are the genuine consequences of no action?

Analyse how the problem has been dealt with in the past or is currently regulated by Commonwealth, state, territory or local government regulations or by governments overseas. Are there deficiencies in the existing approach?

Why does current regulation not properly address the identified problem? Is it a problem of design or implementation, or both? How can you be sure your policy options will succeed where others have failed?