What Level of Analysis Is Required?
The following text is taken from the RIA Guidelines, but has been reiterated here because it is best practice.
72. The level of analysis needs to be enough to enable the decision-maker to be confident about which option is best and the impacts this will have. It should be commensurate with the significance/magnitude of the proposal. There are four parts to this:
- identify the range of feasible options (i.e. the possible options that would meet the public policy objective and solve the problem);
- identify the impacts of each option;
- assess the magnitude of each impact; and
- choose the preferred option.
73. Doing this analysis requires information gathering, which is likely to involve:
- consulting affected and interested parties (stakeholders, experts, and within Government);
- collecting data; and
- researching experiences within New Zealand and overseas.
How Much Analysis Is Enough?
74. This is necessarily a judgement call, but as a guide the level of analysis should be enough to enable the decision-maker to be confident about which option is best and the impacts this will have. You need to think carefully about what they need to establish to make the case for the preferred option being better than alternative options (including the status quo). Some guidelines are set out below.
75. Unless the proposal is very minor, regardless of the significance/magnitude of the proposal:
- all feasible options should be considered;
- all impacts should be identified, including all costs (including business compliance costs), benefits, risks, and other impacts - this includes health, environmental, economic, social, and cultural costs and benefits;
- a qualitative or quantitative assessment of each impact's magnitude should be made (i.e. how large or small each impact is); and
- there should be clear reasons why the preferred option has been chosen over the other options.
76. For proposals that are relatively small, a mainly textual/qualitative analysis is acceptable - the level of quantification can be less than if the proposal is significant. If a fully quantitative analysis was done for a small proposal, the level of analysis would be more than is commensurate with the magnitude of the proposal (and would not be a good use of Government resources). Some costs and benefits, such as health and environmental costs and benefits, can be difficult to quantify. However, where viable, quantification of the magnitude of impacts is expected, even in a mainly qualitative/textual analysis. Normally providing some quantification is not difficult - you need to turn your mind to what you can calculate/estimate. A prime reason for the analysis being inadequate is that there is little or no quantification.
77. Identifying all impacts is important, including identifying all types of impacts (cultural, economic etc). To ensure that impacts are properly identified, you need to think beyond what the direct impacts are. It is common for indirect impacts to be missed - for example, impacts of general regulation often have unforeseen impacts on specific sectors, such as the education sector.
78. For proposals that are more significant/of a larger magnitude, the following is expected:
- more information gathering - wider consultation, more data collection, more research;
- more rigorous analysis;
- all impacts of all options need to be quantified where possible; and
- there needs to be evidence of clear and detailed reasons why the preferred option has been chosen, including any relevant assumptions, formal quantitative cost-benefit analysis where possible (especially where the proposal is very significant), and any judgements made outside of the impact analysis.
79. In most cases the analysis will be inadequate if:
- no options other than the preferred option were properly considered;
- impacts were not identified, especially major impacts; and
- no or little attempt was made at quantification, especially where the impacts in question are relatively easy to quantify.
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