Regulatory Failure

03 May Regulatory Failure

Public policy describes government decisions. Like most processes, it comes with its own particular terminology. I have discussed some of this terminology in previous columns.

Today, let’s discuss “regulatory failure”, another public policy term. Regulatory failure admits that government gets its decisions wrong sometimes.

Let’s start by exploring some of the reasons for “regulatory failure” or government getting it wrong.

Sometimes, government decisions are poorly informed. This may be because government is provided with incorrect information by people seeking a particular outcome. Government may also make incorrect assumptions, for example assuming that small businesses easily use software that is complex and difficult.

Sometimes, something that seems obvious turns out to be not obvious. For example, for someone designing transport in a capital city, it may seem obvious that many people use public transport to travel to work – but most people don’t use public transport in regional centres.

Sometimes, there are practical interactions with other government decisions that were not expected. Those decisions might be made by a different part of government without realising the interactions. For example, tax agents are encouraged by government to ensure their clients only use certain accounting software – makes sense, right? Because no tax agent can be across all the foibles and fixes for all the various accounting software packages. But on the other hand, government encourages taxpayers to choose from a “diverse” offering of accounting software. Clearly, the one government decision inhibits the other.

And sometimes, the world moves on. There was a time when government required certain information to be posted to clients. The intention was for clients to be able to make fully informed decisions. Times have changed and many people prefer electronic communications (and don’t read past the first few lines of complex information). When laws were changed to allow government agencies to communicate electronically, some businesses were still required to post letters to clients. Given just how many government laws there are, I suspect that some were just forgotten or left out.

There are all sorts of reasons why government gets its decisions wrong. These are just some examples. This is known as regulatory failure.

Government is not perfect. It makes mistakes.

Government knows that it gets things wrong.

Generally speaking, government wants its decisions to work as well as possible for as many people as possible.

I hope this encourages you to get involved in improving public policy (and addressing regulatory failure). If government has made a poor decision – you can go to them and explain what is wrong with that decision and how to improve it, to achieve better outcomes for Australian society.

This article comes from my column entitled “Here to Help” in Hunter Local, May 2022. If you have an everyday problem just begging for a simple, real world solution, send it to “Here to Help” and let’s see what we can achieve.

Elaine Abery has a closet full of great ideas and empowering solutions. She’s also the Director of Unravelling Red Tape, a company dedicated to helping everyday people, not-for-profits and companies change the world through improved decision-making and legislation.