Fair Work review fails government's own rules test

THE government's review of the Fair Work Act is inconsistent with its own regulatory review guidelines.

Since 1985, Australian governments have required all regulatory proposals with significant effects on business to include a Regulatory Impact Statement. On coming to office, the Rudd government committed to a "rigorous" RIS process, but it exempted the Fair Work Act from a RIS, instead requiring a process known as the Post Implementation Review.

It said PIRs, including a "comprehensive" one for the FWA, would be carried out "within one to two years of the regulation being implemented".

The government's handbook on best practice regulation makes it clear this requires far broader terms of reference than the government has specified for the FWA review. The government has narrowed the scope of the review so it can only consider whether the FWA is "operating as intended".

However, according to the handbook, PIRs should consider the nature of the problem the legislation aims at addressing, its broad objectives and whether they could be met in a more efficient way. Moreover, the review itself must be certified by the Office of Best Practice Regulation as meeting these criteria.

Originally, this office was part of the Productivity Commission. The Rudd government shifted it to the Department of Finance, but claimed it would still operate independently of ministerial control. Here, then is a test of that independence: the OBPR should reject this review as not meeting the criteria for regulatory analysis. This review should have gone, with proper terms of reference, to the Productivity Commission, which is truly independent and has the expertise required.