The Assistant Treasurer today announced that he has asked the Productivity Commission to undertake a review of cost recovery by Commonwealth regulatory, administrative and information agencies - including fees charged under the Trade Practices Act 1974 - and report within twelve months.
The Commission will examine the nature, extent and impact of existing cost recovery practices, and recommend appropriate guidelines for the use of cost recovery (see attached terms of reference).
The inquiry will assist governments to respond in an informed way to concerns expressed by consumers and business - particularly small business - about how cost recovery is being used. The Government considers that a public inquiry by the Productivity Commission is the ideal forum for addressing these issues, a view supported by the Australian Chamber of Commerce and Industry in its new year statement What Business Seeks in the Next Twelve Months.
The inquiry will incorporate a scheduled National Competition Policy review of fees charged under the Trade Practices Act 1974 (TPA fees). Accordingly, the terms of reference for that element of the inquiry reflect the analytical requirements for regulation assessment set out in the Competition Principles Agreement.
The Commission will shortly release an issues paper and invite expressions of interest from anyone wanting to participate in the review. All interested parties are encouraged to make submissions to the Commission and attend its public hearings.
CANBERRA
16 August, 2000
Media contacts:
Richard Allsop Assistant Treasurer’s Office (02) 6277 7360
Ian Douglas Treasury (02) 6263 3262
Robert Kerr Productivity Commission (03) 9653 2293
Cost Recovery by Commonwealth Regulatory, Administrative and Information Agencies - Including fees charged under the Trade Practices Act 1974
PRODUCTIVITY COMMISSION ACT 1998
I, ROD KEMP, Assistant Treasurer, pursuant to Parts 2 and 3 of the Productivity Commission Act 1998, hereby refer the cost recovery arrangements of Commonwealth Government regulatory, administrative and information agencies - including fees charged under the Trade Practices Act 1974 (TPA) - to the Commission for inquiry and report within twelve months of receipt of this reference. The Commission is to hold hearings for the purpose of the inquiry.
Background
2. This inquiry is principally a general review of cost recovery arrangements across Commonwealth regulatory, administrative and information agencies. In addition, the inquiry will incorporate the review of fees charged under the TPA which is required under the Commonwealth Legislation Review Schedule. The inquiry will take into account the analytical requirements for regulation assessment by the Commonwealth, including those set out in the Competition Principles Agreement, where relevant.
Scope of Inquiry
3. The Commission is to report on:
(a) the nature and extent of cost recovery arrangements across Commonwealth Government regulatory, administrative and information agencies, including identification of the activities of those agencies for which cost recovery is undertaken;
(b) factors underlying cost recovery arrangements across Commonwealth Government regulatory, administrative and information agencies;
(c) who benefits from the regulations, administrative activity and information to which cost recovery arrangements are applied; the impact on business, particularly small business, consumers and the community of existing cost recovery arrangements, including any anti-competitive effects and incentive effects;
(d) the impact of cost recovery arrangements on regulatory, administrative and information agencies, including incentive effects;
(e) the consistency of cost recovery arrangements with regulatory best practice;
(f) appropriate guidelines for:
(i) where cost recovery arrangements should be applied;
(ii) whether cost recovery should be full, partial or nil;
(iii) ensuring that cost-recovered activities are necessary and are provided in the most cost-effective manner;
(iv) the design and operation of cost recovery arrangements, including the treatment of small business;
(v) the review of cost recovery arrangements; and
(vi) where necessary, implementation strategies to improve current arrangements.
4. In reporting on matters in 3 above, the Commission should, where relevant, have regard to:
(a) implications of recent and emerging technologies; and
(b) legal constraints on the design and operation of cost recovery arrangements.
5. With respect to fees charged under the TPA, the Commission should have particular regard to:
(a) those fees charged that restrict competition, or which impose costs or confer benefits on business; and
(b) whether cost recovery arrangements that restrict competition should be retained in whole or part, taking into account whether the benefits to the community as a whole outweigh the costs, and whether the objectives of those arrangements can be achieved only by restricting competition.
6. In making its assessment of fees charged under the TPA:
(a) the Commission is to have regard to environmental, welfare and equity considerations; economic and regional development; occupational health and safety; consistency between regulatory regimes and efficient regulatory administration; the interests of consumers generally; the competitiveness of business including small business; compliance costs and the paperwork burden on small business; and the efficient allocation of resources; and
(b) the Commission should:
(i) identify the rationale for fees charged under the TPA;
(ii) clarify and assess the objectives of the fee arrangements;
(iii) identify whether, and to what extent, the fee arrangements impose costs or confer benefits on business or restrict competition;
(iv) identify any relevant alternatives to these fee arrangements;
(v) analyse and, as far as reasonably practical, quantify the benefits, costs and overall effects of the arrangements and alternatives identified in (iv);
(vi) identify the different groups likely to be affected by these arrangements and alternatives;
(vii) list the individuals and groups consulted during the review and outline their views;
(viii) determine a preferred option for the fee arrangements, if any; and
(ix) examine mechanisms for increasing the overall efficiency, including minimising the compliance costs and paper burden on small business, of the arrangements and, where it differs, the preferred option.
7. The Commission should take account of any recent substantive studies relevant to the above issues.
8. In undertaking the review, the Commission is to advertise nationally, consult with key interest groups and affected parties, and produce a report.
9. The Government will consider the Commission’s recommendations, and the Government’s response will be announced as soon as possible after the receipt of the Commission’s report.
ROD KEMP