The Business Compliance Cost Calculator
The Business Compliance Cost Calculator is a software tool that allows government officials to calculate the true costs for businesses of any regulations they are recommending to government. The tool is designed to assist policy makers to create higher quality regulation in a uniform and efficient manner.
Compliance costs are those additional costs borne by the business owner that arise as a result of complying with the regulation. For example, a (hypothetical) new rule could require all engineering firms to report, in a prescribed format, the quantity of a particular hazardous chemical kept on their premises as at 1 October each year. Most firms would already have such information as part of their normal record keeping. Therefore the compliance cost for each firm would include the additional staff time and any other resources needed to collect this information from existing systems and complete the form on 1 October each year.
The costs that are calculated in this tool include fees, time, and capital requirements and also includes start-up and one-off costs. In general, some examples of the kinds of costs involved are: fees for consents; payments for signs, guards, manuals, or courses for safe work practice; and payments for software or professional fees. These costs often have a disproportionate impact on small and medium-sized enterprises, which make up approximately 97 percent of total businesses in the New Zealand economy.
The key use of the calculator is to imbed high quality policy development processes into policy making entities, ensuring that the impact on business is to reduce or eliminate compliance costs. The other function is to improve communication between stakeholders on the quantum of regulatory burden and to provide a standard method of reporting and communicating regulatory burden.
Cabinet has agreed that the tool is to be implemented as a pilot programme within government departments and its effectiveness evaluated over two years. This decision was made as part of the government's Quality Regulation Review as a commitment to improve the quality of regulation as it is being developed.
A similar type of tool has been used successfully in Australia and some European countries, and the Australian model is currently being adapted for use in the New Zealand environment.
It is envisaged that in the long-term, use of this tool will support greater productivity and competitiveness by allowing more resources to be applied to core business activities.
From 2008 it is expected that all policy proposals that impact on businesses will include the results from the calculation using this tool. Initially the calculator will be available through the Ministry of Economic Development and will be available on line by the end of May 2008.
To find out how to access this tool, or for more information, contact Patti Poole, Senior Advisor, Small & Medium Enterprises, Ministry of Economic Development (04) 474 2917.
Author: Patti Poole
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