INTHEBLACK December 2021 - Magazine - Page 43
Above: Keddie Waller, CPA Australia
“When business fails to provide services
or products in a way that meets community
expectations, the community looks to
government to regulate,” Morton says.
“That’s why my main message to business
and industry remains that you are vitally
responsible for the regulatory environment
you operate in.”
“COMMAND AND CONTROL” UNFIT
FOR PURPOSE
Until the middle of the 20th century,
populations largely accepted the command and
control model of lawmaking and regulation, says
van der Heijden.
“We’re hardwired to regulate and be regulated,”
he comments. “I’m not saying we prefer a
totalitarian government. I’m saying we prefer a
predictable environment in which I know that
if I’m doing A, B will follow.”
Since the 1950s, partly in response to
governments’ misuse of regulatory powers
to favour particular sectors, there have been
successive attempts at reform.
Van der Heijden describes the main thrust
of these reforms as goal-based regulation. This
“WE’RE
HARDWIRED TO
REGULATE AND
BE REGULATED.
I’M NOT SAYING
WE PREFER A
TOTALITARIAN
GOVERNMENT.
I’M SAYING WE
PREFER A
PREDICTABLE
ENVIRONMENT
IN WHICH I
KNOW THAT IF
I’M DOING A, B
WILL FOLLOW.”
PROFESSOR JEROEN VAN
DER HEIJDEN, VICTORIA
UNIVERSITY OF WELLINGTON
is a model we are all familiar with: government does
not tell the target of regulation exactly what to do,
but instead what needs to be achieved. Then, the
government’s regulator assesses the degree of success.
Goal-based regulation brings its own compliance
burden, as well as placing considerable strain on
regulators, and it doesn’t always work.
Successive inquiries into the Australian financial
services, aged care and disability sectors, and even
natural disaster management, have uncovered serious
systemic failures in sectors that were highly regulated
before the inquiries.
The likelihood of yet more regulation is casting a
shadow over these industries, particularly financial
services, where the prospect seems to be the last
straw for the many financial advisers who are leaving
the industry.
Good regulation means moving away from the
polarising view that an ideological choice is required
between “big government” and “small government”.
“I’m very much a supporter of what they call
‘rolling rule regimes’ to drive innovation,” says van
der Heijden.
“Take, for instance, environmental sustainability in
the built environment. We already have the technology
and understanding of how to build environmentally
sustainable and climate-resilient houses. But what
is being regulated right now is not even near the
state-of-the-art of what can be done. What is being
demanded by regulators is the minimum.
“In a more dynamic regime, the government
sets expectations for five years from now, which is
effectively a sunset clause on current regulations.
And then the government commits to working with
industry to set new standards after that.”
Theories may come and go, but ALRC general
counsel Matt Corrigan is in no doubt about one thing.
“In any complex industry, there is going to be a need
for rules. Our view is that good regulation is about
where those rules go and how they are written.”
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