Performance benchmarking of Australian business regulation: Role of local government as regulator

Research report

Released 18 / 07 / 2012

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Key Points

Implementing and enforcing state and territory laws, rather than local laws, dominates local governments’ regulatory workload.
While the Commonwealth has very limited powers to make laws for local government, it can influence them via national frameworks, such as food safety.
In addition to local laws and quasi-regulatory instruments, rules can be imposed on business by ‘decisions’ determined under other laws, such as occurs with permits (including development approvals), licences, leases or registrations. Although they can impose costs on business and/or be anti-competitive, local instruments do not face as much scrutiny as state, territory or Commonwealth regulation.
Burdens on business arise from delays, information requirements, restrictions on approvals, fees and penalties. Local governments can also prevent a business from operating or realising opportunities. Building, planning and land-use regulations impose the largest burdens on business.
Unnecessary business burdens will be lower when local governments regulate well. The most important gaps in the support from states to local governments are:
- insufficient consideration of local governments’ capacity to administer and enforce regulation before a new regulatory role is delegated to them
- limited guidance and training on how to administer and enforce regulations
- no clear indication and ranking of state regulatory priorities.
Leading practices for the states and the Northern Territory, include:
- guidance to local government in writing regulation, such as Victoria’s Guidelines for Local Laws
- incentives for local governments to achieve scale and scope economies in regulatory functions
- periodic assessment of the stock of local regulation and state regulation requiring a local government role
- efficient cost recovery for local government regulatory functions
- guidance to local government in the scrutiny of the impact of laws
- graduated review and appeal systems for both local government decisions and processes
- having regulatory decisions made by bodies which take account of all impacts
- removing or managing the conflicting objectives between local governments’ regulatory and other functions
- a comprehensive central register of the state laws for which local government has a role in administration, enforcement and/or referral.

Media Release

The Role of Local Government as Regulator

The Productivity Commission's final report on Performance Benchmarking of Australian Business Regulation: The Role of Local Government as Regulator identifies a number of areas of local government regulation that place unnecessary regulatory burdens on Australian businesses especially in relation to planning and zoning assessment and building and construction regulation.

In this study for COAG, the Commission examines the regulatory activities of local governments across all states and the Northern Territory. It has identified leading practices in Australia, New Zealand and the United Kingdom which, if implemented more widely, have the potential to lower the costs imposed on business while maintaining the outcomes sought by local government regulation.

The Commission has paid particular attention to the processes under which state, territory and Commonwealth governments delegate regulatory responsibility to local governments, how local laws are developed and monitored, the resourcing of local governments' regulatory activities and the ability of businesses, especially small businesses, to have their concerns addressed through low cost, graduated dispute handling procedures.

Commissioner Warren Mundy said: 'Local governments interact with Australian businesses every day. While poor local decision-making processes can place unnecessary compliance burdens on businesses, especially small ones, it is clear that the first step in addressing these is for the states and the Northern Territory to ensure the regulatory frameworks they require local governments to administer are fit for purpose.'

'Given the huge diversity of local governments across Australia, it is vital that higher levels of government understand the capacity of local government to deliver the desired regulatory outcomes. Where resources and skills are scarce, local government must be given clear guidance as to how to prioritise their regulatory activities.'

'As local governments can inadvertently or incorrectly impose costs on business, it is important that businesses have access to well-defined dispute handling processes that allow complaints and grievances to be considered in an objective and timely manner', Dr Mundy said.

Preliminaries
- Copyright, Terms of reference, Foreword, Abbreviations and Table of Contents
Overview
Leading Practices
Chapter 1 About the study
- 1.1 What the Commission has been asked to do
- 1.2 Conduct of the study
- 1.3 Outline of the report
Chapter 2 Local government in Australia and overseas
- 2.1 Local government diversity
- 2.2 Roles and functions of local government
- 2.3 Current operational environment
- 2.4 Lessons from the United Kingdom and New Zealand
Chapter 3 Governance and regulatory frameworks
- 3.1 Commonwealth laws and national frameworks
- 3.2 State and territory laws
- 3.3 Local government laws
- 3.4 Quasi-regulation
- 3.5 Transparency
- 3.6 Accountability
- 3.7 Reviewing the stock of local government regulation
- 3.8 Complaints and appeals
- 3.9 Subsidiarity 122
- 3.10 Harmonisation
Chapter 4 Capacities of local governments as regulators
- 4.1 Local government perceptions about their capacity to regulate
- 4.2 Financial capacities
- 4.3 Workforce capacities
- 4.4 Capacities to enforce regulation
- 4.5 The role of the state and territory governments in building the capacity of local governments
Chapter 5 Local government coordination and consolidation
- 5.1 The rationale for coordination and consolidation
- 5.2 Legislative and assistance arrangements
- 5.3 Reducing excessive regulatory burdens on business
- 5.4 Improving regulatory efficiency through local government coordination and consolidation
Chapter 6 Business perceptions of local government regulation
- 6.1 A statistical snapshot of business in local government areas
- 6.2 Unnecessary burden of regulation
- 6.3 Regulatory concerns raised in submissions and in consultations
- 6.4 Business perception surveys
- 6.5 Results from the national survey
- 6.6 Areas of local government regulation selected for benchmarking
Chapter 7 Building and construction
- 7.1 Overview of the regulatory framework
- 7.2 The impact on business
Chapter 8 Parking and road transport
- 8.1 Overview of the regulatory framework
- 8.2 The impact on business
- 8.3 Parking
- 8.4 Road access and use
Chapter 9 Food safety
- 9.1 Overview of the regulatory framework
- 9.2 Impact on business
- 9.3 Registration process
- 9.4 Inspection activities
- 9.5 Enforcement measures
- 9.6 Public confidence in the food safety system
- 9.7 Issues concerning specific food businesses
Chapter 10 Public health and safety
- 10.1 Overview of the regulatory framework
- 10.2 The impact on business
- 10.3 Cooling towers and warm water systems
- 10.4 Public swimming pools
- 10.5 Regulation of brothels
- 10.6 Skin penetration activities
- 10.7 Liquor licensing
Chapter 11 Environmental regulation
- 11.1 Overview of the regulatory framework
- 11.2 The impact on business
- 11.3 Water management
- 11.4 Coastal management and sea level rises
- 11.5 Vegetation and weed control
- 11.6 Waste management
- 11.7 Air quality and noise
Chapter 12 Planning, zoning and development assessment
- 12.1 Overview of the regulatory framework
- 12.2 The impact on business
- 12.3 Issues relating to specific industry sectors
Chapter 13 Comments from jurisdictions
Appendix A Conduct of the benchmarking study
Appendix B Approach to gathering information
Appendix C Benchmarking methodology
Appendix D Local government diversity
Appendix E Local government in the United Kingdom and New Zealand
Appendix F State and territory legislation
Appendix G Significant reform of local government
Appendix H Mobile food vendors
Appendix I Principles of best practice regulation
Appendix J Local government coordination and consolidation: legislative and assistance arrangements
Appendix K Building and construction
Appendix L Regional organisations of councils
Appendix M Survey forms
References

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