Aligning culture and expectations of regulators

14 Mar 2017

How do you know if a regulator is good at what they do? That was the question I helped the Department of Health and Human Services Victoria to answer when they asked me to develop a regulator performance oversight strategy.

 

The department promised to develop the strategy after an unflattering Victorian Auditor General’s audit report in 2015. The report described the health regulators as having a ‘low level of maturity’ and said the department didn’t understand how its regulators were performing. It pointed to a linear accountability structure which meant each regulator reported to their CEO or deputy secretary, to the Secretary and then the Minister. But the senior executive team didn't have an overview. They needed a departmental strategy to monitor their regulators' performance and to drive standards of regulatory practice.

 

Defining a good regulator

The department has 14 regulators. They cover a lot of things from safe use of legal drugs and poisons, to communicable disease control, radiation safety, and maintaining standards in human services. Each regulator is unique with its own laws to administer, different types of businesses and risks to manage, and different tools. So there wasn't much use for a ‘one size fits all’ approach that looks at measures such as how many prosecutions each year.

 

The Australian National Audit Office’s definition of a ‘better practice regulator’ offers a more practical approach. It focuses on the outcomes the regulator is designed to achieve and whether. It says a better practice regulator:

  • has well defined regulatory objectives 

  • applies a risk based approach to prioritising activities 

  • uses information as a source of intelligence

  • is transparent and accountable through clear policies 

  • actively engages with stakeholders and

  • monitors and reports on their performance and the effectiveness of their regime.

3 steps to a strategy

When the department asked me to develop the strategy, the first thing I did was talk to the regulators. Over many months we worked collaboratively to build up a picture of each regulator’s functions, the outcomes they were designed to achieve, the practices and tools they use to monitor and promote compliance, and their performance reporting. An essential part of that conversation has to be about identifying opportunities for improvement. 

 

Leadership is crucial if a strategy is ever to be implemented. So early in the project I identified people who have the authority and influence to effect change. In this case that meant the Deputy Secretaries and directors with responsibility for the biggest regulators. Other potential champions with an interest in regulators' practices are the chief legal officer and  the head of strategic planning.

 

Next I had to work out how to engage the department’s executive board, comprised of the Secretary and Deputy Secretaries. That meant researching the board's top priorities so I could shape my proposed strategy in terms of what’s important to them. And I made the strategy look easy, with a set of actions that were easily achievable.

 

At the centre of the strategy was a new annual report to the board that would give them the information they needed to monitor performance and drive improvements. The regulators already do a lot of public reporting. The department was awash with them. But they lacked a coherent framework in terms of measuring the regulators' performance.

 

Reports but no information 

 

The department's regulators do four types of public annual reports:

  • 'performance reporting' in annual reports quantifying outputs against budget allocations eg number of licences issues, inpections of cooling towers, calls to food safety hotlines

  • progress reports on regulators' progress in implementing their responses to annual Ministerial Statements of Expectations which reflect the government’s priorities for regulation (eg reducing the regulatory burden and vigorously enforcing the ban on commercial tanning units)

  • specific reports required by their legislation, such as how many people access IVF treatments each year and whether Victoria had safe drinking water

  • reports for the Commissioner for Better Regulation’s biennial inventory of regulation of business, the Victorian Regulatory System.

I designed a new annual report to the board that draws on the reporting the regulators are already doing but framed in terms of the elements of a better practice regulator. It would tell the board things like the key activities of each regulator, how their actions are achieving the regulatory objectives, what their stakeholders think of them, staffing, budget and recommended improvements. 

 

Hopefully the new reports will keep the department debating: what are the outcomes each regulator is meant to achieve and are they making a difference?

 

Amanda Cornwall was engaged under a contract by the Department of Health and Human Services in 2016 to develop the strategy and assist with developing legislative policy.

 

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