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As discussed earlier in this document, departments are required to include a draft RIS and/or questions/discussion of the substantive RIA elements in discussion documents for proposals to which the RIA requirements apply.

This appendix provides best practice guidance - it is not mandatory, though the requirements for discussion documents set out earlier in these Guidelines are. This appendix:

• provides a checklist of the steps you should take when preparing your discussion document
• explains the benefits of covering the problem, options, and impacts of options in your consultation
• provides guidance on how to get more out of consultation when including discussion of the problem, options, and impacts of those options in your discussion document
• provides detailed guidance on the information you should cover and questions you should ask when discussing the problem, options, and impacts of options.

Benefits of Including Discussion of Problem, Options, and Impacts of Options in Consultation

Including discussion of problem, options, and impacts of options in consultation has the following benefits. It:

• helps focus your mind on the problem, options, and impacts of the options early in the policy development process;
• enables you to obtain feedback on your analysis;
• helps focus respondents on the key issues;
• gives the government and stakeholders an assurance that the proposal has been subject to proper analysis and scrutiny as to its necessity, efficiency and net impact on societal welfare; and
• makes the job of undertaking an appropriate level of analysis and writing a high quality final RIS much easier.

Getting More Out of Consultation When Meeting the RIA Requirements

The discussion document's contents page should, where practical, have similar headings to a RIS. This ensures that your discussion document is focussed on the areas in which you need to gather information.

Be clear and accessible. Avoid technical terms. In the rare circumstances in which they must be used, include a glossary. Choose language that will have the most meaning. Your audience may be comfortable with certain jargon or even prefer it.

Keep it short. Shorter documents take less time to read and respond to and therefore are more likely to generate responses.

Include relevant explanatory information. Enough detail is needed to enable respondents to respond in an informed manner, but you should avoid setting out the arguments in a way that will unduly limit debate.

Ask targeted questions that will generate answers that will contribute to your analysis. Ask questions that prompt respondents to confirm and challenge the analysis, including the estimates of magnitude of the impacts. Ask respondents if there are further problems that should be considered, further feasible options that should considered, or further impacts of the options identified. Ask respondents to comment on the impacts of any further options they suggest.

Spell out any assumptions that you have made. You are likely to have made assumptions when considering what the problems are, which options are feasible, and what the impacts of the options are likely to be. You should spell these assumptions out in your discussion document so that respondents have the opportunity to challenge them.

Make the discussion document available in a suitable format.

Translate materials into languages other than English if necessary.

Topics you should cover in your draft RIS or discussion document

Regardless of whether your consultation RIS is in the form of a draft RIS or a set of questions and/or summary discussion, you are aiming to compile the same sorts of information for your final RIS. Therefore, any questions that you put out for consultation are also questions that you should be asking yourself.

Status Quo

You need to state the key features of the current situation, including but not limited to the current regulatory environment. Your consultation document should try to test whether the status quo as drafted is an accurate reflection of affected parties' experiences.

To ensure that the status quo is adequate, you should consider questions like:

• Who is currently affected by a given regulation?
• How they are affected - for example, exactly what steps are they required to take to achieve compliance?
• What would occur if the government were to do nothing?
• Are there any recent developments that will impact on the status quo, independent of this proposal?
• For what reason(s) is the status quo not the preferred option?

Problem

Your consultation RIS may help to establish whether the exact source of the problem has been correctly identified (as opposed to the symptoms). A problem might appear to be regulatory in nature but in fact be to do with an information gap, or be related to enforcement issues.

To assist with defining the fundamental problem being addressed, you should ask the following sorts of questions:

• What is the exact problem that needs addressing?
• Why is the issue a problem?
• Who or what is causing the problem?
• How big (or small) is the problem?

Useful "measures" of the magnitude of the problem may include the:

• number of people/firms affected by the problem;
• net financial cost of maintaining the status quo;
• contribution of the particular sector to the economy;
• area of land affected;
• numbers of plants/animals/species affected;
• distributional impacts to particular groups, sectors or areas; and
• evidence of escalating problems.

Where the problem involves risks to society or the environment, your problem discussion should seek to clarify the nature of the hazard, the likelihood that it will occur, and the consequences should it occur.

Where there has been previous government agreement on a course of action, the "problem" is not so much a matter of identifying failures, risks, or areas that need improvement. Instead, it should provide background material on the developments that have led to the current proposal. By transparently setting out the government's thinking, the discussion document provides an opportunity for others to clarify the issue from their perspective.

Options

Each of the options that you consider feasible for addressing the problem needs to be stated in your consultation document, which should be open to the potential for further feasible options to be raised during the consultation process. You should also explain why you have rejected certain options, including why any are not feasible. It is important to set out the key features of each option if possible, to enable respondents to draw accurate distinctions between them.

You should ask:

• Have all the feasible options for addressing the problem been included?
• Have all of the key features of each option been set out?
• Is it clear what changes will be made to the status quo under each option?
• Are the differences between each option sufficiently distinct?
• If a preferred option has been established, is it clear why this is preferred over the other options?

Part of the explanation of options is how they will be implemented and reviewed. You should discuss implementation and review in your discussion document.

Your consultation RIS can ask questions on implementation such as:

• which body would be responsible for administering the regulation?
• which other bodies, if any, could be required to play a role?
• is there a clear articulation of the relevant roles and responsibilities?
• what resources does each body require to enable it to fulfil its role?
• how will compliance with the proposal be checked and what are the enforcement arrangements?
• is there any duplication (or contradiction) with existing legislation? Have any opportunities for streamlining the law been explored?
• does the proposal incorporate a transitional period to enable affected parties to adjust from the existing arrangements to the new requirements?
• how will all affected and interested parties become aware of their obligations and rights under the new regulation?

Review and evaluation exercises need to be planned. In the absence of planning, the results may not be sufficiently meaningful for further action (i.e. they do not give a clear or reliable sense of how the regulation is performing - possibly due to inappropriate performance indicators, or lack of information or data by which to measure).

Some suggested questions for your consultation RIS around review are:

• What are the arrangements for undertaking a review or evaluation of the regulation? For example, is there a legislative requirement in terms of a sunset clause or a review clause at a certain point in time, or in certain circumstances? If the clause is time-dependent, has proper consideration been given to what would be the optimal point in time?
• Is it clear how the performance of the regulation will be assessed? Are the objectives defined in such a way that they are conducive towards measuring the performance of the regulation? If not, performance indicators should be designed to provide a basis to measure the effectiveness of the regulation.
• What data and information will be required to undertake an evaluation, and how, when and by whom will this be collected? Are any legislative requirements necessary to enable the collection of information (e.g. to obtain data from other departments)? Are there any issues under the Privacy Act 1993?
• What action will be taken following the results of the evaluation being made known?
• Is there a process for removing or revoking the regulation should it be found to be ineffective or no longer warranted?

Impacts

The assessment of the costs and benefits of each option need not be an attempt to predict all of the likely impacts; it should instead indicate in summary form what you already know about them. An important role of consultation is to gain information for assessing the costs and benefits of the proposed changes and other options being considered. It provides a mechanism to test the reasoning in the proposal and ensure that competing interests are recognised and considered.

All costs and benefits that are likely to be experienced by each affected group should be given consideration, your consultation RIS should seek to ascertain whether all of these have been included. It should also spell out the assumptions used in coming to your estimates of the costs and benefits. For example, the number of firms used in calculating the net impact on a particular industry, or the hourly rate used to determine the cost per worker of performing a prescribed task.

You should ask the following sorts of questions around impacts: Are the costs and benefits attributed to the correct sector (i.e. government, industry, the environment, consumers, society in general)? Are there any additional sectors or sub-sectors that will be affected, and if so, to what extent? Does the document give appropriate weighting to both costs and benefits? Have any distributional costs been adequately reflected? Do the estimates of costs and benefits seem accurate? Are they direct impacts of a given option, or would they eventuate regardless? Are any costs or benefits missing from the consultation RIS?