Regulation Overload

Australia is going through a phase of challenging overregulation. We are not alone. Many countries are struggling with the question, "When is a new regulation, too much regulation?"

We need to start by examining why regulation exists. Regulation is generally a form of control over a situation that someone believes needs controlling. To unpack that statement, let's start with "someone believes needs controlling." Who is the someone? In many cases, it is a politician or bureaucrat responding to a real or perceived issue. Why does the situation need to be controlled? Probably because either something happened that caused problems, or it is a new situation and there are no boundaries (think AI).

An entertainment venue is too noisy, so create a regulation to limit noise. A truck crashes because it is overloaded, leading to regulations about truck load limits. Cheap food imports are contaminated, so establish regulations on food safety. Houses don't have enough ventilation, so create a regulation about the number of windows in a home. Everything can be solved if we just have enough regulations.

But regulations rarely go away. I am sure if we dig deep enough, we will find rules about the use of a horse and cart. About the maximum number of lashes that can be administered for adultery.

Another aspect of regulations is overlap. Regulations can be put in place by Federal, State and Local Government authorities. They can be put in place by different departments that see the situation as something they should monitor and have aspects they should control.

The Federal Government sees itself as having a role in approving imported materials used in housing. The State Government decides it will regulate which materials can be used in houses in that State. The Local Council wants to maintain the heritage features of a suburb and defines what materials can be used. So, three bodies are regulating materials for a house.

It gets worse. The government agency responsible for monitoring imports has regulations on materials brought into the country. The Department of Environment wants to make sure materials are environmentally suitable. The Health Department wants to ensure that they contain no prohibited chemicals. The Department of Labour needs to ensure that it will not harm workers.  Then, States have departments that cover similar areas, so they have their own regulations, which may or may not align with Federal agencies.

In isolation, each agency would argue that it should have a say in the control of a situation. In reality, they might not agree with another tier of government, and there is no compulsion to reach an agreement.

The question is how it can be solved. The logical way is to define roles and responsibilities for each tier and make sure they do not overlap or underlap. It is an argument for abolishing one or more levels of Government, but that is not something likely to happen in the next hundred years.

Another approach is to have a blitz of action in certain areas by a task force charged with removing red tape in a particular industry. This happens from time to time, but it is closing the door after the horse has bolted. It needs a major crisis to force governments to cooperate in this manner and give up power.

Many decades ago, I heard a story of a company in the USA. I'm not sure, but it may have been Microsoft. They had a problem with customers getting to talk to the right person. Very often, the person who tried to help had no idea that another employee or department should have handled the issue.

They set up a group of people who knew a little about everything relating to how the business worked, and who was responsible for what. They had no deep knowledge about any one area. They were generalists rather than specialists.

If someone wanted to know who made a component in a computer, they knew who to contact. If a customer had a suggestion about changing a user manual, the customer could be directed to the person who wrote the manual. If it was an enquiry about distribution, they were directed to the person who handled new distributors. In addition, staff could contact the group to find out how to do their job. "I work in accounts in the USA and want to know who is responsible for a delivery that never arrived in Australia."

This group acted like an "Information Triage". Just as triage in a hospital rates the urgency of the patient and directs them to a doctor who can help, the information triage directed people to a department that could help.

I never heard what happened to the department, but it probably fell foul of management because it was addressing a problem that no longer existed. Customers were not getting passed from one area to another, so there was no longer a problem. Close the department. It is called cost-cutting.

Perhaps what we need is "Regulation Triage". A group of people who can look at new regulations and understand what similar regulation already exists. Point regulators to existing controls and force them to create effective regulations. In some cases, it might have to be modified, and in other cases, a slight change to the existing regulation might cover the purpose of the new regulation.

This doesn't cover the issue of over-regulation. Sometimes the question never asked is, "What is the cost, and what is the benefit of this piece of regulation?" If the cost of compliance outweighs the cost of implementation, should the regulation exist? Measuring the costs is not always straightforward. How do you measure the cost of complying with safety requirements for people working on a roof against the cost of accidents? It may be possible to put a monetary value on safety equipment versus the medical expenses of accident victims, but not on the pain and suffering of victims and their families.

In 2017, in the UK, the cladding on the Grenfell Tower caught fire, and over 70 people died. The exterior cladding did not comply with existing regulations. The inquest made recommendations to the government that introduced a set of regulations that were previously deemed unnecessary. The regulations were duplicated around the world.

If the regulation had been in force when the building was constructed, the fire would never have happened. If a fire had broken out, it could have been contained. Now, around the world, buildings are having their cladding replaced. So, building regulations do have a role.

The question is how much regulation is needed. It is neither an easy question nor one that will get agreement across all parties. To a builder, there will always be too much regulation. To some government officials, there should be more regulation. They will argue that asbestos should have been regulated. That building in flood-prone areas should not have occurred; that fire-retardant regulations should have been in place in bushfire regions.

There is no easy answer. The best we can hope for is to reduce duplicate regulations and use regulatory triage to review new regulations.