Fitness-for-purpose assessment and ratings

Assessment dimensions

The four assessment dimensions are:

• Effectiveness – to what extent does the system deliver the intended outcomes and impacts?
• Efficiency – to what extent does the system minimise unintended consequences and undue costs and burdens?
• Resilience – how well does the system cope with variation, change and pressures?
• Fairness and accountability – how well does the system respect rights and deliver good process?

These dimensions for assessing regulatory systems are used by all seven main regulatory departments (MBIE, Ministry for the Environment, Ministry of Health, Department of Internal Affairs, Ministry of Justice, Ministry for Primary Industries, Ministry of Transport).

Guidance for assessing each dimension

The Treasury has provided guidance for assessing each dimension of fitness for purpose as follows.

Effectiveness

To what extent does the system deliver the intended outcomes and impacts?

This may include looking at elements such as:

• The nature, incidence and significance of the impacts, intended and otherwise (who it impacts, how and to what extent).
• The extent of compliance/non-compliance with the system (overall and for different groups).
• The internal coherence and completeness of the system. Gaps, overlaps or inconsistencies that impact effectiveness.
• How the system intersects with related regulatory systems and how this impacts effectiveness.

Efficiency

To what extent does the system minimise unintended consequences and undue costs and burdens?

This may include looking at elements such as:

• The proportionality of the system, ie how well the burden of rules and their enforcement matches the risks to be mitigated/benefits expected. Burden includes restrictions on rights and freedoms, resource and capability requirements, and ease of administration/use/compliance.
• How easy or difficult the regulators and the regulated parties find the system to administer/use/comply with.
• The extent to which the system provides predictability and certainty for regulated parties.
• The degree to which actual outcomes justify the overall economic, administrative and legislative (rights) costs, including unintended consequences.

Resilience

How well does the system cope with variation, change and pressures?

This may include looking at elements such as:

• The responsiveness of the system to changing context and circumstances, eg changes in the regulated community/technology/wider society, changes in demand (increase or decrease).
• How well the system enables innovation/takes account of different circumstances where appropriate.
• The continued relevance of the system objectives, regulatory or market failure, whether it is still the best way to address the failure/opportunity.

Fairness and accountability

How well does the system respect rights and deliver good process?

This may include looking at elements such as :

• How the system respects and delivers on the principles of natural justice, ie accountability, fair and impartial decision-making, opportunities for those affected by decisions to be heard, and opportunities for review or appeal.
• The clarity and certainty of the regulatory instruments that underpin the system, and the accessibility and transparency of the requirements.
• How the system supports public and/or stakeholder participation in system design and improvements. 

Ratings

MBIE has developed possible five ratings for the dimensions:

1. System performing well against criteria.
2. System has some issues against criteria.
3. System has significant issues against criteria.
4. System failing against criteria or at serious risk of doing so.
5. Assessment against criteria not possible due to lack of information, system too new.

How the assessment is done

The fitness-for-purpose assessment is a self-assessment by MBIE.  It draws on a wide range of information about the system, including any policy review, any regulatory system assessment that MBIE has carried out, customer and stakeholder surveys, and feedback from Ministers and system participants.