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CabGuide

Impact analysis and impact statements

Issue date: 
Wednesday, 1 November 2017
Issue status: 
Current
Published by: 
Version note: 

This publication is part of the CabGuide.

Introduction

This section provides information on impact analysis, including:

  • advice on how to know whether an impact analysis is required
  • enabling early engagement with the Treasury's Regulatory Quality Team for impact analysis
  • guidance on the information that should be included in an impact analysis
  • the requirement for independent quality assurance of an impact statement
  • the impact analysis requirements for Cabinet and Cabinet committee papers
  • the process for publishing an impact statement.

The Regulatory Quality Team in the Treasury must be involved in any regulatory proposal that is likely to have a significant impact or risk, and should be contacted with queries relating to impact analysis.

How do I know whether an impact analysis and an impact statement are required?

The impact analysis framework encourages an evidence-based approach to policy development, which helps to ensure that all practical options for addressing the problem have been considered and that the benefits of the preferred option not only exceed the costs, but will also deliver the highest level of net benefit.

Impact analysis should be undertaken for any policy work involving regulatory options or proposals that may result in a paper being submitted to Cabinet. This means any proposal which will ultimately require creating, amending, or repealing Acts or disallowable instruments, even if the regulatory option is not what is finally proposed in a Cabinet paper. 

An impact statement is normally provided when papers are submitted to Cabinet for policy approval. The impact statement should be independently assessed before it is submitted as part of a Cabinet paper. Additional information about this is in the section on the independent quality assurance of impact analyses below.

In rare circumstances, the policy proposals that require an impact analysis and the draft regulations may be submitted together. In such cases, the usual procedure is for the paper to be submitted to the relevant policy Cabinet committee, rather than directly to the Cabinet Legislation Committee (LEG).

Impact analysis is also required for the following:

  • Supplementary Order Papers (SOP):  the policy content of possible amendments to a bill may be such that further approval from Cabinet is needed for new policy or to alter existing policy approval. If so, the original impact statement should be updated to indicate how the changes affect the impact analysis. Alternatively, a new impact statement should be provided to accompany the Cabinet paper containing the SOP
  • international treaties: all multilateral treaties or major bilateral treaties of particular significant require the preparation of a National Interest Analysis (NIA). An “extended NIA”, which must be prepared for all treaties with regulatory impacts, includes the requirements otherwise considered in an impact statement, so a separate, standalone impact statement is not required in these circumstances
  • discussion documents: impact analysis requirements apply to the development of discussion documents that include consideration of options with potential regulatory implications. To meet these requirements, either the impact analysis elements can be included in the body of the discussion document, or a draft impact statement or consultation impact statement can be attached to the discussion document.

When impact analysis requirements do not apply

Impact analysis requirements do not apply where the proposal:

  • involves technical “revisions” or consolidations that substantially re-enact the current law to improve legislative clarity or navigability (including the fixing of errors, the clarification of the existing legislative intent, and the reconciliation of inconsistencies), or would repeal or remove redundant legislative provisions
  • is suitable for inclusion in a Statutes Amendment Bill
  • repeals or removes redundant legislative provisions
  • provides solely for the commencement of existing legislation or legislative provisions;
  • needs to be authorised in an Appropriation Bill or an Imprest Supply Bill
  • is for a Subordinate Legislation (Confirmation and Validation) Bill relating to regulations that have already been made
  • implements deeds of settlement for Treaty of Waitangi claims, other than those that would amend or affect existing regulatory arrangements
  • brings into effect recognition agreements under the Marine and Coastal Area (Takutai Moana) Act 2011
  • is essential (the minimum necessary) to comply with existing international obligations that are binding on New Zealand
  • has no or only minor impacts on businesses, individuals, or not for profit entities (e.g. for certain changes to the government’s internal administrative or governance arrangements, such as the transfer of responsibilities, staff, or assets between government agencies).

Preliminary impact and risk assessment and involvement of the Treasury

The Treasury Regulatory Quality Team must be involved in any proposal that is likely to have a significant impact or risk, which means that the regulatory option being considered is likely to have:

  • significant direct impacts or flow on effects on New Zealand society, the economy, or the environment; and/or
  • significant policy risks, implementation risks, or uncertainty.

To determine whether the Regulatory Quality Team needs to be involved, the agency should undertake an early engagement process using the early engagement template at the earliest possible stage of policy development.  More information about early engagement is in the Treasury's Guide to Cabinet's Impact Analysis Requirements.  

If the Regulatory Quality Team's involvement is not required, the agency is responsible for ensuring the provision of independent quality assurance.

If the Regulatory Quality Team’s involvement is required, agencies undertaking impact analysis should engage with the Regulatory Quality Team at an early stage to determine the nature of its involvement. The Regulatory Quality Team may, on a case by case basis, allow an agency to assure the quality of its own impact statement for some significant proposals (if, however, any of the conditions on which the decision to allow an agency to undertake its own quality assurance of a significant proposal is made change, the agency must advise the Regulatory Quality Team).

What information should be included in an impact statement?

An impact statement sets out the agency's best advice on the problem definition, objectives, identification, and analysis of the full range of practical options. An impact statement should be prepared before the Cabinet paper.

The required information, and a suggested template, is provided on the Treasury’s website. The impact statement must contain the following information:

  • an agency disclosure statement (which discloses information to highlight any key gaps, assumptions, dependencies and significant constraints, caveats/uncertainties in the analysis, and is signed by the person with responsibility for the preparation of the impact statement)
  • a description of existing arrangements and the status quo
  • a problem definition
  • objectives
  • identification of the full range of practical options
  • an impact analysis – analysis of the costs (or possible economic losses), benefits, and risks of options with quantification (to the extent possible)
  • consultation
  • conclusions and recommendations
  • implementation plans and risks
  • likely levels of compliance and enforcement
  • arrangements for monitoring, evaluation, and review.

Further information about the information an impact statement should contain is in the Treasury's Guide to Cabinet's Impact Analysis Requirements.

Independent quality assurance of impact statements

Independent quality assurance, by the authoring agency or the Treasury's Regulatory Quality Team, must be undertaken on all impact statements using specified assessment criteria. If the quality assurance is undertaken by the authoring agency, it must be done by a person or group not directly involved in preparing the impact statement. A statement on the quality of the impact analysis must be provided in the Cabinet paper.

The Treasury may advise the Minister of Finance and the Minister for Regulatory Reform of any regulatory proposal that does not meet the impact analysis requirements. Significant regulatory proposals that do not meet the impact analysis requirements, but that are agreed to, will be subject to a post-implementation review.

If a Cabinet committee takes substantive decisions on a regulatory proposal with inadequate impact analysis, the responsible Minister must provide a Supplementary Analysis Report to the committee. This Supplementary Analysis must be published along with the original impact assessment.

Impact analysis requirements for Cabinet and Cabinet committee papers

Cabinet papers that contain policy proposals must contain a section entitled “ Impact Analysis”, with the following parts:

1. Impact Analysis Requirements

A statement explaining whether the impact analysis requirements apply (if not, it should explain why, referring to the exemption claimed, where appropriate), and whether an impact statement has been prepared and is attached to the Cabinet paper (if not, it should explain why).

2. Quality of Impact Analysis

An agency or Treasury Regulatory Quality Team opinion on the quality of the analysis that states the following:

“[Name of team or position of person completing opinion] has reviewed the impact statement prepared by [name of agency] and associated supporting material, and

[Statement on whether the reviewer considers that the information and analysis summarised in the impact statement meets/does not meet/partially meets the quality assurance criteria

[Comment on any issues that have been identified in relation to any of the dimensions of quality set out in the quality assurance guidance]”

Publishing impact statements

The full text of an impact statement must be published on the websites of the authoring agency and the Treasury (taking into account the provisions of the Official Information Act 1982). The Parliamentary Counsel Office provides guidance on the form and location of impact statements in bills and SOPs, and the requirement for departments to supply 40 printed copies of the impact statement to the Bills Office.

Last updated: 
Sunday, 23 August 2015

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