Regulatory Burden Measurement Framework

The Australian Government Guide to Policy Impact Analysis discusses the importance of avoiding imposing unnecessary regulatory burden on businesses, individuals and community organisations.

This guidance note provides advice on how to calculate regulatory burden – or regulatory costs – using the Regulatory Burden Measurement framework.

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The Regulatory Burden Measurement Framework

All new policies or changes to existing policies need to have the increase or decrease in costs imposed on businesses, community organisations and individuals quantified using the Regulatory Burden Measurement framework. Additionally, all Impact Analyses need to be accompanied by a regulatory costing.

The framework includes consideration of the following regulatory costs:

• Compliance costs:
• administrative costs
• costs incurred by regulated entities primarily to demonstrate compliance with the policy (usually record keeping and reporting costs)
• substantive compliance costs
• costs incurred to deliver the outcomes being sought (usually purchase and maintenance costs)
• Delay costs:
• expenses and loss of income incurred by an entity through:
• an application delay
• an approval delay.

Administrative Costs

Administrative costs are costs incurred by entities primarily to demonstrate compliance with the policy.

Administrative costs include the time taken to demonstrate compliance with the policy as well as the associated travel costs (for instance, the costs of travelling to a particular location to submit a form or waiting in a queue in order to comply with a requirement).

Some examples of administrative costs are:

• costs of making, keeping and providing records
• costs of notifying the government of certain activities
• costs of conducting tests
• costs of making an application
• compliance costs associated with financial costs, including the costs incurred in complying with government taxes, fees, charges and levies (excluding the actual amount paid)—for example, the time taken to pay a licence fee is a compliance cost.

Substantive compliance costs

Substantive compliance costs are costs incurred to deliver the outcomes being sought. Some examples of substantive compliance costs are:

• costs of providing training to employees to meet regulatory requirements
• costs of purchasing and maintaining plant and equipment
• costs of providing information for third parties, such as providing financial statements to consumers
• costs of operation (for example, energy costs)
• costs of professional services needed to meet regulatory requirements (for example legal, tax and accounting advice)
• costs incurred in purchasing permits through non-government market mechanisms in order to meet a particular outcome.

Government subsidies paid to assist businesses in complying with a requirement need to be subtracted from the compliance cost.

Delay costs

Delay costs are the expenses and loss of income incurred by an entity through one or both of:

• an application delay—the time taken by an entity to complete an administrative application requirement that prevents the party from beginning its intended operations
• an approval delay—the time taken by the regulator to communicate a decision on an administrative application that prevents the party from beginning its intended operations (this includes the time taken to assess and consider an application).

Exclusions from the Regulatory Burden Measurement framework

The following costs are excluded from the Regulatory Burden Measurement framework and are not required to be considered when quantifying an estimate of burden. However, depending on the significance of the following impacts, they should be analysed in the Impact Analysis so the decision maker can understand the importance of the impacts.

• Opportunity costs (unless they relate to a delay)
• Opportunity costs are the value of opportunities that cannot be realised because of the intervention.
• Business-as-usual costs
• Regulatory Burden Measurement framework calculations are to measure regulatory burden over and above what a normally efficient business¹ would pay in the absence of the regulation. For example, a proposal may require all airports to have a perimeter fence, but that might not result in an increase in burden if normal business practice in the absence of any policy is to fence airports.
• Non-compliance and enforcement costs
• This includes costs such as fines for failing to comply with a policy and legal fees, including costs incurred in court and tribunal processes.
• This also includes costs that arise when businesses or individuals fail to comply with government requirements and action is necessary by the business or individual/s to ensure compliance.
• Further, this includes if policies or administrative processes are put in place by government to enforce compliance with the government’s requirements, then these enforcement actions may be outside the scope of the Regulatory Burden Measurement framework. The distinction between compliance and enforcement is important when developing your Impact Analysis; further guidance has been provided at Appendix 3.
• Regulatory impacts related to the administration of courts and tribunals
• This includes changes to the administration of courts and tribunals that are made by the court or tribunal, for example through court rules and practice directions.
• Indirect costs
• These are costs that may arise indirectly from the impacts of changes, including changes to market structure and competition impacts.
• Direct financial costs
• These are charges attached to a policy that are payable to government, such as administrative charges; licence and permit fees; levies; and mandatory insurance premiums (where remitted to government).
• Taxes are also not within scope of the Regulatory Burden Measurement framework. While taxes are often perceived by business to be a burden, they are a revenue raising measure and not strictly a cost associated with regulation.
• Costs of international obligations imposed as a prerequisite for participation in international markets
• These are the costs of, for example, airworthiness directives.
• This exclusion applies only to the cost of performing the obligated activity. It does not exclude the demonstration of compliance to a Commonwealth regulator, such as reporting that the airworthiness activity has been completed.
• Government-to-government policy
• This includes all policy imposed by the Commonwealth on Australian Government, state and territory government, local government and foreign government departments or agencies, and all of their employees where policy is imposed on them as part of their employment. However, this exclusion does not apply to:
• policy imposed on Government Business Enterprises and public universities
• policy imposed on businesses owned by foreign governments.

Relevant population for assessing costs

The relevant population for the purposes of quantifying costs can include businesses, community organisations and individuals.

An individual is a person who is subject to Australian law, whose activities have an impact in Australia and who either:

• interacts with the Australian Government, or
• is affected by an Australian Government policy.

All activities of individuals are captured, including those that are income-generating, such as meeting licensing requirements for employment, and those that do not relate to income, such as obtaining visas and passports.

• See the People guidance note for further information.
• The relevant population also includes businesses or community organisations operating or seeking to operate in Australia, regardless of ownership. This includes:
• foreign businesses that do not currently have any operations in Australia but may be exporting to or investing in Australia (for example foreign businesses making foreign investment applications)
• Australian businesses or community organisations operating overseas, to the extent that Australian policies affect their overseas operations.

Regulatory burden estimate table

A regulatory burden estimate (RBE) table (Table 1) needs to be populated and reproduced in your Impact Analysis (or in the certification letter for an Impact Analysis Equivalent²). A RBE table needs to be prepared for every viable option in the Impact Analysis.

Table 1: Regulatory burden estimate (RBE) table

Average annual regulatory costs (from business as usual)

Change in costs ($ million)	Business	Community organisations	Individuals	Total change in costs
Total, by sector	$	$	$	$

Calculating annual impact

Regulatory costs need to be presented as average annual impacts.

You should cost your proposal over a 10-year default duration of the policy. A shorter period may be more appropriate if the proposed policy is to end sooner, such as for a time-limited grant programme that ends (along with all regulatory costs) after three years or budget proposal that is only in place for a limited time (for example, 4 years).

Costs are presented in real terms (also referred to as constant prices) as average annual figures in all cases. For example, the wage rate for a particular activity would be the same hourly rate used across the entire 10 years – it is not inflated to take account of inflation. Discount rates are not to be applied to these figures, unless they are used in a fully quantified cost benefit analysis of a proposal.

• For proposals for which the cost does not vary over time, the impact of the change in the first year can be treated as the average annual impact.
• For proposals that impose varying costs over time, the total change over the duration of the proposal should be divided by that duration to calculate the average annual impact.
• For one-off and start-up costs, the cost should be divided by the duration of the proposal to calculate the average annual impact.

The average annual change in regulatory costs is measured against ‘business as usual’ costs. Therefore, the costs should be the burden over and above what a normally efficient business would pay in costs in the absence of the policy.

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Inter-jurisdictional reforms

The net impact of national reforms that result in a change to Commonwealth legislation or practices, or are a result of direct Commonwealth incentives or conditions, should be quantified using the Regulatory Burden Measurement framework. This applies to decisions made by National Cabinet, ministerial councils and intergovernmental standard-setting bodies where there is a level of Commonwealth involvement.

The impacts would need to take into account the costs imposed or removed by the Commonwealth as well as those imposed or removed by states and territories.

For example, if as part of a National Cabinet reform the Commonwealth removes regulations, resulting in a reduction of regulatory costs to business of $10 million per year, but as part of the agreed reform states and territories are required to impose additional requirements resulting in new costs to business of $2 million per year, then savings of $8 million per year would be realised.

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How to estimate changes in regulatory burden

As a starting point, consider the obligations that are being placed on businesses, community organisations and individuals. Think about administrative, substantive compliance and delay costs that businesses, community organisations and individuals may be facing. For example:

• What activities will businesses have to undertake under the new or revised regulation?
• How will community organisations comply with the new or revised regulation?
• What equipment will businesses have to acquire?
• What changes to existing processes may be required by individuals?

To understand how stakeholders might be affected under a proposed policy, it is important to identify how they operate in current regulatory or non-regulatory environments. This will help you to identify business-as-usual costs and to quantify changes to the regulatory burden under the proposed policy.

It is your responsibility to consider the available data to ensure the estimates of regulatory burden are as accurate as possible. In cases where there genuinely is no data available to use in the quantification, assumptions need to be used and need to be reasonable and defensible.

There are three main steps to be taken in quantifying regulatory costs:

• Consider the nature of the costs (start-up, ongoing fixed/variable).
• Cost the relevant three classes of regulatory costs (administrative, substantive compliance and delay costs) to businesses, individuals and community organisations.
• Where Impact Analysis is required, summarise the costs in the RBE table for inclusion in the Impact Analysis (or certification letter for an Impact Analysis Equivalent)

Step 1: Nature of the costs

Determine the nature of the costs, which can have a significant impact on the final costing. You should ask:

• Are the costs start-up or ongoing costs?
• If the costs are ongoing costs, are they constant or variable?
• Will the costs apply differently based on the size of the businesses or community organisation involved? Will they apply differently based on other characteristics?

Are the costs start-up or ongoing costs?

Start-up costs are costs incurred by stakeholders in the first year of the policy. They tend to be one-off purchase costs that need to be paid to comply with the policy. Start-up costs are averaged over the life of the policy in order to calculate the average annual regulatory cost.

Ongoing costs are costs incurred from year to year of the policy, not just in the first year. The calculation of ongoing costs depends on the whether the ongoing cost is constant or variable.

Are the ongoing costs constant or variable?

Variable costs are expected to change from year to year. For example, using the default 10-year duration of a policy, if a business incurs regulatory costs every two years into perpetuity then to calculate the average annual regulatory cost of the proposal the costs over 10 years should be summed and then divided by 10.

Do costs vary by size of business or community organisation?

Where the effect of an option on businesses or community organisations can vary significantly, consider whether you should disaggregate the sector into small, medium and large cohorts. This will provide you with important information about the regulatory burden on different groups of stakeholders.

Step 2: Costing activities

Identify each activity that is required to be costed.

The three cost categories that should be considered are administrative costs, substantive compliance costs and delay costs.

If the cost is an administrative cost, it would normally be considered a labour cost. Substantive compliance costs would normally be purchase costs.

The formula used for labour costs for businesses and community organisations is:

Labour cost = Price × Quantity

= (Time required × Labour cost) × (Times performed × Number of businesses or community organisations × Number of staff)

Where:

Time required is the internal time required per staff member, in hours, for businesses or community organisations to perform a regulatory task.

Labour cost is the hourly wage rate plus any non-wage costs of employees. The hourly wage rate is the gross wage received by an employee. Non-wage costs of employees should include any on-costs associated with the wage, such as payroll tax and superannuation, as well as any overhead costs such as rent, telephone and IT equipment. Appendix 2 provides more information on labour rates, including the treatment of on‑costs and overheads.

Times performed is the number of times an activity is performed per year per staff member. For example, if something is required twice a month, the value would be 24.

Number of businesses or community organisations is the number affected by a particular regulatory obligation. Consider the expected compliance rate and whether this would have an impact on the number of businesses or community organisations.

Number of staff is the number of staff members per business or community organisation who perform the activity.

The formula used for labour costs for individuals is:

Labour cost = Price × Quantity

= (Time required × Labour cost) × (Times performed × Number of individuals)

Where:

Labour cost is the rate per hour for individuals not in paid employment or not in the course of their employment (such as leisure time). Unless there is strong evidence to use a different rate, a default rate should be used. Appendix 2 provides more information on this default rate.

Times performed is the number of times an activity is performed per year per individual.

Number of individuals is the number affected by a particular obligation. Consider the expected compliance rate and whether this would have an impact on the number of individuals.

The formula used for purchase costs is:

Purchase cost = Price × Quantity

= (Purchase cost) × (Times performed × Number of businesses or community organisations)

Where:

Purchase cost is the cost of purchasing a product or purchasing external services (for example, buying a safety guard required by policy, when the safety guard would not normally have been bought at the start‑up of an operation).

Measuring delay costs is more complex and might not necessarily involve estimating labour costs or purchase costs. Often, once the policy is implemented, delay costs could be considered as administrative costs, compliance costs, or both.

Delay costs should only be calculated when a business is waiting on government action to commence trading. For example, an entity may have to wait six months to obtain government approvals to sell a product on the Australian market. Where the entity is otherwise able to begin trading on the day it lodges its application, the delay costs comprise lost sales over the six-month approvals period. However, if the entity is not ready to commence trading until four months after lodging the application, the delay costs will comprise only two months of lost sales.

Delay costs are often incurred through the holding of land and capital. In these cases, you should be careful to consider what the business-as-usual case (that is, without the proposed policy) is expected to be and whether the cost is a delay cost, a substantive compliance cost or an administrative cost. As an illustration of this distinction, consider a policy that results in a business purchasing a machine but, as a result of an application delay, the machine sits idle for two months. The cost of the machine is not considered to be a delay cost, as the machine is needed to comply with the policy, and would instead be a substantive compliance cost. However, the cost of the machine sitting idle is a delay cost and could be calculated as the loss of net income incurred by the business as a result of the machine not being used.

If you believe that a proposed policy is likely to impose delay costs on businesses, community organisations and individuals, you should contact OIA for further guidance on quantifying those costs and incorporating them in the RBE table in the Impact Analysis.

In all cases, the data needs to be derived using the Regulatory Burden Measurement framework.

Step 3: Reporting

The RBE report needs to be completed and included in the Impact Analysis.

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Further information

For further information OIA can be contacted on:

Email: helpdesk-OIA@pmc.gov.au

Phone: 02 6271 6270

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Appendix 1: Frequently asked questions

Is quantification of costs required for all Cabinet submissions?

Yes, where businesses, individuals and/or community organisations are impacted by costs associated with a proposal, Cabinet needs to be informed of those impacts.

Are all costs of a policy required to be quantified in the RBE table?

No; however, any administrative, substantive compliance and delay costs that you identify and that can be estimated practically should be included.

Over what period do costs need to be quantified?

Where presenting regulatory costs in Impact Analysis, the default duration for their quantification is 10 years.

For deregulatory proposals, how should the RBE table be completed?

For proposals that result in reductions in regulatory burden, the proposal should be entered as a negative in the RBE table.

For instance, if a proposal saves regulatory costs for business of $400,000 per year over 10 years and there are no identified new regulatory costs at this stage, the final RBE table would read:

Regulatory burden estimate (RBE) table

Average annual regulatory costs (from business as usual)

Change in costs ($ million)	Business	Community organisations	Individuals	Total change in costs
Total, by sector	($0.4)	$0	$0	($0.4)

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Appendix 2: Default work-related and non-work-related labour rates³

The cost of a proposal that requires individuals to perform a task, whether as part of their employment in a business or community organisation or as a private citizen in their leisure time, needs to be estimated using an appropriate labour rate. It is your responsibility to consider the available data to ensure that the estimates are as accurate as possible.

Work-related labour costs

The labour costs associated with a task for a business or community organisation are quantified by multiplying the time taken to complete the required compliance activity by the hourly cost to the business or community organisation for the relevant staff. This is the cost of complying with the requirement. Where labour-related services are outsourced, such as accountancy or legal services, the cost of those services should be treated as a purchase cost, not a labour cost.

The default hourly cost is based on average weekly earnings, but adjusted to include income tax.⁴ This provides an economy-wide value for employees of $48.67 per hour.⁵ This value needs to be scaled up using a multiplier of 1.75 to account for the non-wage labour on-costs (for example, payroll tax and superannuation) and overhead costs (for example, rent, telephone, electricity and information technology equipment expenses). This results in a scaled up rate of $85.17 per hour ($48.67 multiplied by 1.75). This default should be used in cases where policy cuts across a number of sectors, or where more appropriate labour rates are unknown or would add undue complexity to the costing process.

Where there is strong evidence that a different wage rate or multiplier is readily available and would be more accurate for work-related labour costs, these should be used. For example, you may know the actual overhead and on-costs of the regulated entities, or you may be regulating an individual sector, such as the mining industry or medical practitioners, where a more accurate labour rate proxy for the opportunity cost to the business or community organisation is easily identifiable.

Non-work-related labour costs

Where proposals involve an impact on individuals not in the course of their employment, this leisure time is assumed to be the opportunity cost of the time spent filling in forms. It is a standard economic approach to consider the trade-off between work and leisure such that the marginal value of time spent working equals the marginal value of time spent at leisure. The marginal value of time spent working is approximated across the economy as the average hourly wage, including overtime, after tax. Therefore, the default value that should be used for an individual’s leisure time is based on average weekly earnings and has been estimated at $37 per hour.⁶

It may not always be the case that the trade-off between work and leisure is applicable to all individuals who are affected by a policy. This is typically the case for people not in the labour force, such as unemployed people or pensioners. Therefore, where there is strong evidence that a different rate should apply, you should discuss this with OIA.

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Appendix 3: Enforcement and compliance under the Regulatory Burden Measurement framework

This appendix is intended to provide greater clarity for agencies around mutual obligations including what should, and what should not be quantified under the Regulatory Burden Measurement framework.

In general, all compliance costs (administrative and substantial compliance) are quantifiable under the Regulatory Burden Measurement framework, whereas all enforcement costs are excluded.

Agencies’ interpretations of mutual obligation vary, and are often based on how the term is applied in legislation and regulations that portfolios administer and enforce. For example, in the context of welfare assistance the term mutual obligation is based on a concept that welfare assistance provided to the unemployed should involve some return responsibilities for the recipient (demonstrating that a job seeker is actively seeking work). This, or any other, mutual obligation could conceivably involve compliance activities, enforcement action or a combination of these.

Rather than the focus being on the mutual obligation itself, the key question for the purposes of the Regulatory Burden Measurement framework is on any changes to regulatory costs as a result of a government proposal. That is, the concept of mutual obligation is not the primary consideration. In the context of the example above, the Regulatory Burden Measurement framework should consider:

• Is the requirement for a job seeker receiving welfare payments to demonstrate they are actively seeking work compliance, enforcement or a combination of the two?
• If the activity is compliance then the Regulatory Burden Measurement framework applies, and if it is considered enforcement then it is out of scope of the Regulatory Burden Measurement framework.

In considering whether a particular activity is compliance or enforcement, it is important to establish what the Government objective is with a particular policy.

The overwhelming majority of interactions by the community with the government are broadly:

• voluntary, for example unemployed persons seeking welfare assistance; applying for a grant or procurement
• administrative, for example changing personal details with Centrelink
• regulatory, for example undertaking accredited training to comply with licensing conditions.

These are generally compliance activities either expected or regulated by Government or voluntarily actioned by businesses and individuals. For these reasons, it is reasonable to assume that such activities would be categorised as compliance.

This is the default position. Therefore all regulatory costs (administrative, substantive compliance, and delay costs) arising from these activities are costed under the Regulatory Burden Measurement framework.

Individuals and businesses need to perform certain activities in order to meet obligations. As individuals, businesses and the community need to undertake these activities to comply with regulation, these costs fall within the Regulatory Burden Measurement framework. If, on the other hand, policies or administrative processes are put in place to enforce compliance with regulation, these costs may fall outside the Regulatory Burden Measurement framework. If policies or administrative processes are put in place by government to influence or direct certain behaviour (that is, to ensure compliance with government requirements), then these enforcement actions would be outside the scope of the Regulatory Burden Measurement framework (just as non-compliance activities are excluded from the Regulatory Burden Measurement framework).

To avoid applying the default position (that all costs relate to compliance), agencies need to clearly demonstrate where their new proposals are an enforcement action. These actions are not costed under the Regulatory Burden Measurement framework.

From a practical point of view, proposals will often involve a combination of compliance and enforcement actions. In these cases, it will generally be very difficult to measure this mix. As such, costings can be based on either 100 per cent compliance or 100 per cent enforcement rather than requiring a mix. Agencies will not need to demonstrate that regulatory costs are 100 per cent compliance or 100 per cent enforcement to present a 100 per cent costing.

Agencies have the discretion to estimate a split between the two if accurate data is readily available and they feel that the benefits of such estimation would outweigh the additional complexity.

1. A normally efficient business is defined as an entity that handles its regulatory tasks no better or worse than another.Return to footnote 1 ↩
2. Refer to the Impact Analysis Equivalent Guidance Note for further details on where this applies.Return to footnote 2 ↩
3. Note, labour rates are generally updated biennially. The next update is scheduled for February 2026 to coincide with the next release of the ABS data, though this is yet to be confirmed.Return to footnote 3 ↩
4. Average weekly earnings estimates are published by the Australian Bureau of Statistics (ABS) before tax.Return to footnote 4 ↩
5.  Based on Employee Earnings and Hours, Australia, released January 2024. Data Cube 6 - Full-time non-managerial employees paid at the adult rate. Calculated using the ATO’s online Simple Tax Calculator, 2022-23 tax rates.Return to footnote 5 ↩
6. Note that this value should only be used to value individuals’ time while not in paid employment for individuals residing in Australia. A more appropriate value should be used when valuing the time of individuals residing outside Australia, depending on the average hourly rate in the country where they are living.Return to footnote 6 ↩

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