This guidance note provides information about the Australian Government Guide to Policy Impact Analysis requirements as they apply to sunsetting legislative instruments that have a regulatory impact on businesses, community organisations or individuals.
From 1 April 2015, thousands of instruments began to sunset in the absence of any intervention under the Legislation Act 2003. Some of those instruments have significant impacts on businesses, community organisations or individuals. Under the Australian Government’s policy impact analysis rules, the decision to continue such instruments would normally require the completion of an Impact Analysis. Because of the large number of sunsetting instruments, an alternative process will apply in cases where the sunsetting instrument is being remade without significant change.
Contents
- Summary
- Context
- Impact Analysis requirements for sunsetting instruments
- Threshold test: does the instrument have a more than minor impact?
- Agency self-assessment and certification under Scenario 4
- Assessing the performance of the instrument
- Certification not possible
- Thematic reviews
- Further assistance
- Appendix 1: Frequently asked questions
- Appendix 2: Certification letter template
- References
July 2023
Summary
This guidance note provides information about the Australian Government Guide to Policy Impact Analysis requirements as they apply to sunsetting instruments that impact people, businesses, or community organisations.
From 1 April 2015, thousands of instruments began to sunset in the absence of any intervention under the Legislation Act 2003 (Legislation Act). Some of those instruments have significant impacts on people, businesses, or community organisations. Under the Australian Government’s Policy Impact Analysis framework, the decision to continue such instruments would normally require the completion of Impact Analysis.
Due to the large number of sunsetting instruments, an alternative process has been established in cases where the sunsetting instrument is being remade without significant change. In those cases, where Impact Analysis would otherwise have been required, under the alternative process an agency will be allowed to self-assess the performance of the instrument. This assessment must be informed by a consultation process with affected stakeholders. If the assessment demonstrates the instrument is operating effectively and efficiently, no Impact Analysis will be required. The agency would certify the assessment by their Secretary, Deputy Secretary, or equivalent agency head in a letter. This letter will be published in lieu of publishing an Impact Analysis. The OIA has a template sunsetting certification letter, which agencies are encouraged to use.
If the sunsetting instrument is being remade with amendments that will change some aspect of its substance or effect, Impact Analysis may still need to be completed. Also, if the instrument was not assessed as operating effectively and efficiently, Impact Analysis must be completed before the instrument is remade (whether with or without amendment).
If no Impact Analysis or self-assessment was completed when one would have been required, the agency with policy responsibility for the instrument will be deemed ‘insufficient’ with the Government’s Impact Analysis requirements. A post implementation review1 will be required.
Context
Both the Legislation Act and the Government’s Impact Analysis requirements seek to ensure that suitable review mechanisms exist so that legislative instruments remain fit-for-purpose, necessary and relevant.
All legislative instruments are subject to the sunsetting provisions in the Legislation Act. Under those provisions, instruments that are not exempted will be automatically repealed (sunsetted) after about 10 years, unless action is taken to preserve them.
Impact Analysis requirements for sunsetting instruments
For each sunsetting instrument that an agency is seeking to remake, the agency is required to consult with the Office of Impact Analysis (OIA) to determine whether the instrument has more than minor impacts on individuals, businesses or community organisations. To determine this, the OIA considers the scope of the impacts on individuals, business, and community groups as part of a threshold test2. The impact of remaking a sunsetting instrument is assessed relative to the status quo of there being no instrument in place (i.e. the instrument sunsetting).
Threshold test: does the instrument have a more than minor impact?
This guidance note primarily applies to sunsetting instruments that are to be remade and in their operation have a more than minor impact. Please note that there are no Impact Analysis requirements for legislative instruments that are being permitted to sunset, regardless of the associated impacts.
An instrument is considered to have minor or no regulatory impact if, in its operation:
- there would be no or only a minor impact on people, businesses, or community organisations compared with the status quo of the instrument not being in place; or
- it is purely concerned with the operation of the machinery of government.
Table 1 summarises different sunsetting instrument scenarios, and actions required for each under the Government’s Policy Impact Analysis framework. For instruments with more than minor impacts, an agency may need to complete Impact Analysis or prepare a self-assessment letter to the OIA.
| Scenario | Impact Analysis requirements |
|---|---|
|
No Impact Analysis required. |
|
No Impact Analysis required. The agency to engage with OIA closer to the new sunset date. |
|
No Impact Analysis required. |
|
Following consultation, the agency may assess the regulations are operating efficiently and effectively, and certify this in a letter, in lieu of an Impact Analysis process (template sunsetting certification letter). |
|
Impact Analysis is required to be finalised with the OIA before the decision is made to remake the regulations. The Impact Analysis is only required to reflect the proposed changes to the instrument. |
|
If impacts are more than minor compared to the status quo that the instrument is not in place, Impact Analysis is required. Costs/savings will need to be quantified within the Impact Analysis. No Impact Analysis is required if the impacts are no more than minor. |
Agency self-assessment and certification under Scenario 4
Due to the large number of sunsetting instruments, the OIA provides agencies with the option of using a streamlined process in lieu of preparing Impact Analysis. This applies when the agency:
- has considered the necessity for the instrument to continue and found that there is a genuine need for ongoing regulation in some form
- has reviewed the performance of the instrument and found that it is fit for purpose (that is, the regulation or policy setting is efficient and effective in achieving the Government’s objectives), and
- intends for the sunsetting instrument to be remade without significant changes.
In this situation, the agency would ordinarily need to prepare an Impact Analysis (since this is a change to the status quo, which is that the instrument sunsets). However, in these particular circumstances, instead of completing an Impact Analysis, an agency’s Secretary, Deputy Secretary, or equivalent agency head may write a letter to OIA. The letter must certify that they have reviewed and assessed the performance of the instrument and found that it is achieving its objectives efficiently and effectively. The certification letter needs to state that the agency’s assessment was informed by appropriate consultation with relevant stakeholders. The OIA has a template sunsetting certification letter, which agencies are encouraged to use.
Before the instrument is tabled in Parliament, agencies must send the certification letter to OIA for publication.
This process is considered to meet the Australian Government’s Impact Analysis requirements for the remaking of the sunsetting instrument. An agency may still choose to complete Impact Analysis instead.
It is the agency’s responsibility to contact the OIA early in the process of remaking sunsetting instruments. The agency should allow enough time to incorporate the Impact Analysis into the decision making process.
Regulatory costs / saving
For instruments with regulatory impacts, an agency must complete a regulatory costing consistent with the regulatory Burden Measurement framework. Please note the specific calculation requirements for each Scenario explained below.
Under Scenario 1 in Table 1, the regulatory costs or savings of the instrument sunsetting must be costed. If the existence of the instrument imposes a net regulatory burden, then the cessation of its operation will reflect a regulatory saving of the same magnitude.
In Scenarios 3, 4 and 5, the regulatory costing is the difference of the proposed changes to the existing regulations. The regulatory costing must measure the proposed changes against the status quo if the unamended instrument were permitted to continue. Therefore, costings should reflect the net impact of those changes, whether regulatory (net cost) or deregulatory (net saving). This must be calculated in accordance with the Regulatory Burden Measurement framework.
Under Scenario 6 in Table 1, regulatory costs/savings are calculated against the fact that the instrument ceases to exist.
Table 2 outlines how regulatory costs/savings must be recorded and provided to the OIA relevant to each scenario.
| Scenario (see Table 1 for details) | Regulatory costing requirements |
|---|---|
|
1 |
Regulatory savings are quantified, recorded and provided to the OIA. |
|
2 |
Nil required. The instrument continues without change. |
|
3 |
If the instrument is remade with changes, regulatory savings are quantified, recorded and provided to the OIA as well as kept by the agency. Note: regulatory costing is not required where the instrument is remade without changes. |
|
4 |
Regulatory costs and savings are quantified and recorded in the certification letter (template sunsetting certification letter). |
|
5 |
Any regulatory costs/savings need to be quantified as part of the development of the Impact Analysis. |
|
6 |
Regulatory costs/savings do not need to be quantified. If Impact Analysis is required, they need to be quantified as part of the development of the Impact Analysis. |
Assessing the performance of the instrument
The assessment of whether a sunsetting instrument is operating effectively and efficiently needs to be informed by data about the performance and impacts of the instrument. Obtaining data on impacts almost always requires direct consultation with affected stakeholders. Consultation for multiple sunsetting instruments affecting a single stakeholder group can be conducted together, even if the agency has not formally applied to the Attorney‑General to treat those instruments as part of a thematic review.
The consultation can be conducted online. The agency must give stakeholders clear information on the consultation process they are following and specify the information they are seeking, and the preferred mode for responses. The agency could consider issuing a discussion paper to provide this information.
The agency is responsible for the proposed approach to consultation, which must be certified by the relevant departmental secretary or deputy secretary (or agency head or deputy head). The consultation should be designed to obtain information on whether the instrument is operating effectively and efficiently.
For further guidance on consultation, please see OIA’s Best Practice Consultation guidance note.
Definitions: Effective and efficient
Effectiveness relates to the degree to which objectives are achieved and the extent to which targeted problems are solved. Is the instrument achieving its purpose?
In the context of regulation, an assessment of efficiency needs to balance the costs of administering and complying with the regulation against the regulatory objectives. In particular, to be considered efficient, regulation should be achieving its objectives in a least-cost way.
For both effectiveness and efficiency, the baseline for comparison should be a case where no regulation is in force.
Certification not possible
In some cases, it may be that the only feasible option is to remake a sunsetting instrument without changes, despite problems with its performance. If the agency’s assessment of regulatory performance indicates that the sunsetting instrument is either not effective or not efficient, an Impact Analysis will be required to have the instrument remade. In most cases, the performance assessment will indicate that changes to the instrument are desirable, but the agency may wish to consider continuing the instrument unchanged as one of the options in the Impact Analysis. The agency needs to undertake consultation on the options as in a normal Impact Analysis process, and the Impact Analysis will be published on the OIA’s website at Published Impact Analyses once it has been completed and a decision has been announced.
Impact Analysis is also required if the instrument is being remade with changes that would have a more than minor impact on businesses, community organisations or individuals in its operation. If the instrument is being remade with changes, the Impact Analysis is only required to reflect the proposed changes. These regulatory costs should be calculated using the Regulatory Burden Measurement framework. For all other impacts in the Impact Analysis, the comparison of impacts is against the base case of the instrument having sunset (which is the status quo if no action is taken).
Interaction between this process and other reviews
Where an instrument that is sunsetting is subject to a review, if remaking the instrument requires Impact Analysis, it makes sense for that review to be designed to meet the Impact Analysis requirements where possible. OIA can advise on draft terms of reference to ensure that the proposed review meets the Impact Analysis requirements.
In some cases, an existing review will already have considered the issues of regulatory performance or other matters relevant to Impact Analysis. Where such a review exists, there is no need to conduct additional impact analysis, as long as the review was conducted recently enough for its findings to remain relevant for the Impact Analysis.
If the agency suspects that Impact Analysis might be required for the remaking of a particular instrument or set of instruments, they should contact the OIA as soon as possible, preferably 12 months before the proposed date of commencement of the new or amended instrument. This allows for the Impact Analysis to be finalised early enough for remade instruments to be subject to the normal parliamentary process for legislative instruments, including any disallowance period that might apply.
Thematic reviews
Related instruments can be grouped for a thematic review, and their sunsetting dates altered to enable this. In most cases, the OIA considers the combined impacts of those instruments together in a single Impact Analysis process. Applications for sunset-altering instruments to enable thematic review are made to the Attorney‑General. For more information about applying for a thematic review, contact the Administrative Law and Legislative Frameworks Section in the Attorney‑General’s Department.
Handling thematic reviews
Where the Attorney-General has issued a sunset-altering instrument under the Legislation Act to align the sunsetting dates of two or more instruments to enable a thematic review, impact analysis framework questions should apply to the group of instruments as a whole.
To further streamline processes under this option, sunsetting instruments from multiple thematic reviews can be grouped, and the process applied to the group. A request for input from the public through established channels, such as a current website, will be an adequate form of consultation. This should reduce the costs of consultation, for both agencies and affected stakeholders.
If the agency is undertaking a thematic review, they should contact OIA to discuss how the Impact Analysis requirements will apply in that process.
If Impact Analysis is required
The OIA will assess the agency’s Impact Analysis in the same way as it assesses all others. It is best to discuss with the OIA early in the process to establish the scope and expectations for the Impact Analysis.
Transparency and publication of documents
The following documents are published under the Australian Government’s Impact Analysis requirements:
- If the agency has prepared an Impact Analysis, it will be published on the Department of the Prime Minister and Cabinet’s website at Published Impact Analyses once the decision has been announced. The Impact Analysis must also be included in the instrument’s explanatory material.
- If the agency has assessed the performance of the sunsetting instrument and determined that the instrument is performing effectively and efficiently, that assessment (signed off at secretary, deputy secretary or equivalent agency head level) will be published.
Regulatory costings
Where a regulatory costing is required, the costs must be quantified using the Regulatory Burden Measurement framework discussed in the Regulatory Burden Measurement Framework guidance note.
Further assistance
For questions or further assistance on Impact Analyses or regulatory costings in the sunsetting process, contact OIA by email at helpdesk-oia@pmc.gov.au or call (02) 6271 6270.
For further information on the sunsetting process for legislative instruments, contact the Attorney‑General’s Department at sunsetting@ag.gov.au or the Office of Parliamentary Counsel.
Appendix 1: Frequently asked questions
What is sunsetting legislation?
A sunset provision or clause is a measure within an Act or regulation that provides that the law shall cease to have effect after a specific date, unless further action is taken to extend it.
At the Australian Government level, under the Legislation Act, subordinate legislation sunsets on the relevant sunsetting date about 10 years after its registration. The Legislation Act provides for the short-term deferral of sunsetting in specific circumstances, the altering of sunset dates to allow for thematic review of related instruments, and for some limited categories of instrument, exemption from the sunsetting regime as a whole. The Legislation Act also contains measures to stagger the sunsetting date for the ‘backlog’ of instruments that predated the sunsetting regime, to avoid peaks in the number of sunsetting instruments.
What falls under the definition of ‘remaking an instrument without significant changes’?
For the purposes of the Impact Analysis requirements, an instrument has been remade without significant changes if of the following apply:
- The nature of the impacts on business, community organisations, or individuals is minor or unchanged.
- The scope of the impacts is minor or unchanged.
For detailed advice on remaking a sunsetting instrument, the agency should contact the Attorney‑General’s Department or the Office of Parliamentary Counsel.
Instruments seeking exemptions—does the agency still need to do Impact Analysis?
If the agency seeks an exemption from sunsetting, they do not need to prepare Impact Analysis or regulatory costings if the Attorney‑General grants the exemption.
In the event the exemption is not granted, the agency may need to take some action to meet the Impact Analysis requirements if the instrument has a need to continue in some form. If an agency decides that the instrument should be remade without significant changes, they should review the performance of the existing instrument. However, there may be other criteria in this guidance note that mean an agency does not have to do Impact Analysis (for example, if the impacts of the instrument are purely machinery in nature).
How do I determine whether or not the sunsetting legislation is still required?
A threshold decision for the responsible agency is whether the sunsetting instrument will still be required or is spent or otherwise redundant.
If the instrument is not required, it will sunset without further action. Alternatively, the instrument may be nominated for inclusion in a bulk repeal regulation coordinated by the Attorney‑General’s Department.
Appendix 2: Certification letter template
Mr Jason Lange
Executive Director
Office of Impact Analysis
Department of the Prime Minister and Cabinet
Dear Mr Lange
[Title of sunsetting legislation]
I am writing to the Office of Impact Analysis (OIA) regarding the <title of sunsetting legislation>, which, as per the Legislation Act 2003, had been scheduled to sunset on <date>. <However, it has been decided that the instrument is to be remade without significant amendment>.
The <name of agency> certifies that <title of sunsetting legislation> is operating effectively and efficiently, and that therefore Impact Analysis is not required for this legislation to be remade.
The assessment that the legislation is operating effectively and efficiently has been informed by a consultation process which involved <list the main stakeholders consulted>, over the period <specify period of consultation>.
I also note that the regulatory burden to people, business, or community organisations has been quantified using the Australian Government’s Regulatory Burden Measurement framework. These are provided below.
Average annual regulatory costs (from business as usual)
| Change in costs ($ million) | Business | Community organisations | People | Total change in costs |
|---|---|---|---|---|
| Total, by sector | $ | $ | $ | $ |
I acknowledge that OIA will publish this letter for transparency purposes.
If you have any queries about this advice, please contact < contact name> on <XXXX XXXX>, or <contact email address>. {This paragraph will be excluded from publication for privacy}
Yours sincerely
<Name>
<Secretary/Deputy Secretary/Agency Head etc.>
<Department/Agency>
<Date>
References
- See guidance on Post-Implementation ReviewsReturn to footnote 1 ↩
- A full definition of ‘minor or machinery in nature’ is in the User Guide to the Australian Government Guide to Policy Impact AnalysisReturn to footnote 2 ↩
- Under the Legislation Act, the sunsetting date of an instrument may be altered if the Attorney‑General issues a certificate of deferral or a sunset-altering instrument. These instruments do not require Impact Analysis because they are machinery in nature. A certificate of deferral can postpone the sunsetting date of an instrument by up to 12 months. A sunset-altering instrument aligns the sunsetting dates for two or more instruments so that their fitness for purpose may be examined as part of a thematic review process. These instruments can delay the sunsetting date of an included instrument by up to five years. Return to footnote 3 ↩