Red tape savings can't be verified without engaging beneficiaries

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Governments are falling over themselves to claim extraordinary savings in red tape busting. The federal government claimed $4.8 billion were saved in two years. The Victorian government claimed $3.1 billion.

But it’s that latter claim that has had cold water thrown over it as the state’s acting auditor-general Dr Peter Frost says the real figure is anything but clear — and possibly misses the point.

Tabling the Reducing the Burden of Red Tape report in parliament on Wednesday, Frost said Victoria had led the nation in its consistent focus on red tape reduction over the past decade. However, he says greater transparency and accountability is needed to make the claimed monetary savings more credible.

“The longstanding focus on tackling obvious sources of red tape offers diminishing returns. Agencies now need to turn their attention to identifying more complex, cross-portfolio strategies that can drive further improvements in regulatory efficiency and effectiveness.”

Frost added that new regulations must be subject to greater scrutiny and oversight to ensure any additional red tape they create is minimised.

“The ultimate beneficiaries of these initiatives — businesses, not-for-profit organisations, hospitals, schools and private individuals — also need to be able to understand and have confidence in the changes made as a result of red tape reduction initiatives. Agencies should focus on engaging with beneficiaries after the introduction of burden-reduction measures to verify that the claimed savings are real and have resulted in meaningful improvement.”

Frost said the tools provided by the Victorian Department of Treasury and Finance for each of the red tape reduction programs have helped agencies estimate savings. But this is not sufficient to measure the true costs or risks of these efforts. He warned that greater attention is needed to ensure that new initiatives do not cause any adverse social or economic outcomes.

Frost made recommendations to DTF designed to improve stakeholder confidence in the impact of these programs on reducing regulatory burden.

“The government’s new program and commitment to continue its focus on red tape reduction is encouraging, but it needs to improve the selection and evaluation of its initiatives. This has also been highlighted by regulators and the Commissioner for Better Regulation.”

All the agencies and departments involved in the audit accepted the findings and recommendations in principle, with a caveat from the Treasury and Finance’s secretary David Martine:

“As part of the process [endorsed by ministers], DTF provided extensive analysis and advice to government on approaches to establishing the value of the government’s 25% regulatory burden reduction target. This advice is based on established methodologies which DTF believes are suitable for this purpose.”

There was no hesitancy from DTF, however, which provided a work plan on immediate implementation steps and coordinating with the Red Tape Commissioner.