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Compliance, Enforcement and Innovation

Compliance, Enforcement and Innovation. Neil Gunningham, Professor, Regulatory Institutions Network and School of Resources, Environment and Society Australian National University. The Regulatory Challenge. to induce compliance ease of enforcement promoting innovation.

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Compliance, Enforcement and Innovation

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  1. Compliance, Enforcement and Innovation Neil Gunningham, Professor, Regulatory Institutions Network and School of Resources, Environment and Society Australian National University

  2. The Regulatory Challenge • to induce compliance • ease of enforcement • promoting innovation

  3. The shifting regulatory landscape • The contracting state • Increasing power and sophistication of NGOs • Increasing interest of commercial third parties in environmental issues • The changing roles of business

  4. Regulating Large Point Sources: Beyond Traditional Licencing • Load based licencing and other MBIs • Environment Improvement Plans (facilitative regulation) • Regulatory Flexibility • Operator and Pollution Risk Assessment (OPRA) • Enforceable undertakings

  5. The ‘license model’ • Views businesses as constrained by a multi-faceted ‘licence to operate’ • Corporate behaviour explained by interactions between regulatory, social and economic licences - Efficiency and effectiveness of technology based command and control - The importance of Social Licence: underpinned by Informational regulation, and empowering NGOs and communities

  6. The role of Meta Regulation • Recognises the limitations of the state to deal with complex environmental issues • Focus on procedures rather than prescribing behaviour • State shifts to meta-regulation and meta-risk management - Government monitoring of self-monitoring, or the regulation of self-regulation - To monitor and seek to re-make the risk management systems of regulatees • Enforcement means refusing accreditation

  7. The future? • Corporate shaming (informational regulation) • Economic instruments and market signals (Load Based Licenses) • Processes and systems – ‘locking in continuous improvement’ (Meta Regulation, EIPs , Regulatory Flexibility) • Harnessing second and third parties as surrogate enforcers • The role of Government- steering not rowing? • Traditional enforcement

  8. The Challenge of SMEs • Lack of resources • lack of awareness and expertise • lack of receptivity to environment issues • sheer numbers of such enterprises • limited inspection resources makes conventional enforcement impractical

  9. Overcoming limited regulatory resources • actively encourage duty holders to regulate themselves, • give them a positive incentive to do so.

  10. Self-audit and self-management • Agency requests the firm to conduct and return self-assessment check lists • threats to inspect combined with self-audit program as alternative to inspection achieved far higher response rate • key is maintaining a credible threat of enforcement (spot checks, and occasional inspections, blitz and bluff)

  11. Thinking Laterally • Buyer Supplier Relationships -Powerful source of leverage over SMEs • The Role of Surrogate Regulators:- Vehicle Repair Workshops

  12. Conclusions • Focus on win-win solutions with short term pay-offs • persuade SMEs to do more for themselves via self-inspection, self-audits • provide incentives for all the above • Exploit greatest sources of leverage • provide a credible underpinning of direct regulation

  13. Regulating Diffuse Source Pollution • Farm management practices ( eg environmental farm plans, BMPs, EMS, Codes of Practice) • Landscape changes (fencing, buffer strips, re-vegetation, riparian zones a, contour landscaping, soil modification etc) • Land Use Changes (planning law etc)

  14. Which compliance mechanism? • Voluntarism • Positive incentives- financial subsidy, cost sharing programs, or auctioned grants • Negative incentives (eg cross-compliance) • Mandatory changes (eg buffer zones)

  15. A phased approach? • The need for trade offs: effectiveness, efficiency, equity and political acceptability • Phase 1: positive incentives (process standards, landscape changes) and planning controls • Phase 2: negative incentives and regulation - environmental general duty to the land, • enforced through mandatory self-auditing and random third party audits); • mandatory specification standards (eg buffer zones); • levy or sliding charge re adoption of env farm plan

  16. Enforceable Undertakings Administrative Notices Penalty notice Warnings and negotiated outcomes Advice and Information

  17. Incapacitation Fines and other punitive action High Court Fine and other punitive action Lower Court )

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