The harmonisation of national, local and state-based regulation
It is an accident of history that Australia’s constitutional powers rest with the states and not the Commonwealth. Australia’s federal government is limited to passing laws and managing aspects of government business based on the areas of responsibility the states grant them the authority to do so. This has resulted in system of government that has three tiers – and by any measure, made Australia one of the most over-governed countries in the world.
ASIC is currently putting the finishing touches on the transfer of credit regulation from the states to the Commonwealth; Occupational Health and Safety laws are in the process of being harmonised, school curriculum is being nationalised and there is the threat from the Prime Minister to take control of the entire health system.
These developments are no coincidence. Increasingly, state government is becoming a management function, where the focus should really be on delivering quality public services within specified financial parameters. With more responsibilities shifting from the states to the Commonwealth, state governments are forced to look elsewhere for relevance.
In New South Wales, we have seen a gradual erosion in the planning controls and powers held by local councils. Now, for developments deemed to be of state significance (in most cases, when a capital investment of $50 million is required), applications can be approved by the Planning Minister, bypassing the local process. In addition, smaller developments that require in excess of $5 million in expenditure are referred to planning panels for approval. Once again, these panels have little connection with their local communities. The result here is that local government is fast becoming a ceremonial function that administers all of the politically unsavory aspects of running the state.
In our dealings with our member base, the Australasian Compliance Institute (ACI) finds that having to navigate state based jurisdictional differences creates confusion and concern for many industries. These inconsistencies not only add to an organisation’s compliance costs, but act as a disincentive to create compliance programs that seek to adopt best practice, as opposed to only seeking to meet the black letter of the law, and nothing more. This is especially prevalent in the food industry, and the pesticides industry, where for example, various states have different requirements in terms of labeling. For the industry, this potentially makes labeling of products an inordinately expensive exercise.
The ACI has been informed on numerous occasions that organisations engage in what we call ‘regulatory roulette’ – or what could more formally be called a risk-based approach to compliance. This is where an organisation’s compliance framework and processes are mapped against either the most stringent requirements, or to meet the needs of the most aggressive regulator; even if this means that in some instances, the organisation is subsequently in breach of legislation in another state’s jurisdiction.
Creating an environment where organisations take such risk is neither fair, nor an efficient approach to regulation. While a fully harmonised regulatory regime may remain a pipe dream – we need to recognise that our three tiers of government have well passed their used by date. The argument is supported by the recent moves mentioned above, and is especially true as we move towards regional and international harmonisation of legislation.
While the old Irish proverb suggests that a turkey never votes for an early Christmas, the federated system of government must be elevated – in earnest and quickly – to firmly sit on the national agenda.
Martin Tolar is currently the Chief Executive Officer of the Australasian Compliance Institute. Martin has more than 11 years experience working within the association sector and prior to his appointment at ACI was General Manager at the Australian Financial Markets Association (AFMA), where he was responsible for overseeing and growing its client base, consisting of seven financial market associations. During his time at AFMA, Martin held a variety of other roles including Head of Accreditation and Training and General Manager of Business Development. He has also held a variety of education and business development roles with SIA (now FINSIA – Financial Services Institute of Australia) as well as being a university lecturer in economics, finance and management. Martin possesses a strong understanding of government and its practices, due to his time spent in local and federal government, as a councilor and ministerial adviser.
