Wednesday, August 26, 2015

Regulatory design–at least get that roughly right

The current OSH bill debate shows that even if one agrees that regulation is the way to deal comprehensively with OSH matters it is worth paying attention to a few fundamentals of regulatory design:

  1. Do focus on the outcome you want, not a heap of “inputs” you hope will fix things. Almost anyone is going to beat an MP at picking the best things to do;
  2. Focussing on outcomes tends to avoid picking worm farms, big worms with legs farms, “obvious” risks like operating a mini golf course while “missing” killer risks;
  3. Inspectors of inputs, persons wielding clipboards and ticking boxes are no panacea and often find it as hard to get buy in as a Parking Warden finds feeling the love.

Once the “input” is ticked people have no incentive to keep trying. Outcome based regulation which says “we don't care how you get there but by God you better make it or we will hang you” allows at least two productive things to happen:

  1. There is good reason to keep on trying, innovating, training and doing absolutely whatever to get safe. Insurers know that too and pressurise policy holders; and,
  2. Where amorphous and intangible factors like a “culture of safety and good occupational health” are critical – as in this case – there is an incentive to build, develop, grow and maintain such a culture. Ticking a box marked “culture” never did anything.

It does require two things governments can be good at when they want to be – setting clear standards and enforcing them. Best will in the world governments can never be the best at picking winners.

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