Impact analysis, within the context of preparing Cabinet material, is a process of defining the policy or operational problem that needs to be addressed, identifying policy objectives, and the full range of feasible options for addressing that problem.
Impact analysis helps advisers and decision-makers to avoid the potential pitfalls that arise from natural human biases and mental shortcuts, and thus to make well-informed decisions. It includes analysis of those options for their potential impacts and assesses costs, benefits, and risks, and involves consultation, implementation planning, and arranging the plan for ongoing monitoring, evaluation, and review.
Cabinet requires two specific kinds of impact analysis to be undertaken:
Regulatory Impact Statements (RIS)
Impact analysis should be undertaken for any policy work involving regulatory options or proposals that may result in a paper being submitted to Cabinet. A regulatory option or proposal is one that will result in the creation, amendment, or repeal of legislation.
A RIS is normally provided when papers are submitted to Cabinet for policy approval. The RIS should be independently assessed before it is submitted as part of a Cabinet paper.
The Treasury Regulatory Quality Team 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. The Team should be involved early to confirm the process and for advice, including the appropriate templates to use, and the most appropriate party to undertake quality assurance on the RIS.
As outlined in the Cabinet policy paper template, a statement must be included in the Impact Analysis section of a Cabinet paper, under a Regulatory Impact Statement heading, explaining whether the impact analysis requirements apply (and if not, then why, referring to the exemption claimed as confirmed by the Treasury), and whether a RIS is prepared and attached to the Cabinet paper (and if not, then why). A statement which provides an independent assessment of the overall quality of the analysis must also be included, in line with the findings of the quality assurance process.
The full text of a RIS 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 RIS's in bills and SOPs, and the requirement for departments to supply 40 printed copies of the RIS to the Bills Office.
Further information about impact analysis requirements, including templates, detail about the types of proposals that are exempt, and the process for managing inadequate impact analyses, can be found on the Treasury website and in the circular Impact Analysis Requirements [CO (20) 2].
Climate Implications of Policy Assessment (CIPA) requirements
To ensure that Ministers are aware of the implications a decision may have for New Zealand’s future greenhouse gas emissions, Cabinet requires central government agencies to estimate and disclose the greenhouse gas emission implications for proposals in which decreasing those emissions has been identified as a key policy objective, or for which:
- the direct impact on greenhouse gas emissions is likely to be equal to or above 0.5 million tonnes CO2-e within the first ten years of the proposal period; or
- the direct impact on greenhouse gas emissions is likely to be equal to or above 3 million tonnes of CO2-e within the first 30 years of the proposal period for forestry related proposals.
A CIPA is normally provided when papers are submitted to Cabinet for policy approval. The CIPA should be independently assessed before it is submitted as part of a Cabinet paper.
The Climate Implications of Policy Assessment team in the Ministry for the Environment should be contacted early in the policy process, using the CIPA engagement form on the Ministry’s website, if it is expected that a policy proposal will have significant emission impacts. The Ministry’s website also includes a toolkit to help assess the greenhouse gas emissions of policy options and proposals. Agencies may need to undertake some preliminary analysis in order to help the Ministry determine whether a CIPA disclosure will be required.
The CIPA disclosure requirements don’t replace the need to include greenhouse gas emission impacts in RIS’s, or better business case analysis in situations where those Cabinet requirements apply.
As outlined in the Cabinet policy paper template, a statement must be included in the Impact Analysis section of a Cabinet paper, under a Climate Implications of Policy Assessment heading, which provides:
- an explanation of whether the CIPA disclosure requirements apply for a proposal which meets the criteria
- a summary of the key findings of the analysis
- a statement on whether a CIPA disclosure sheet is attached to the Cabinet paper, and
- the statement provided by the CIPA Team on the overall quality of the information set out in the disclosure.
The completed CIPA disclosure sheet attached to a Cabinet submission should be released together with the relevant paper in accordance with the proactive release policy for Cabinet material (taking into account the provisions of the Official Information Act 1982).
Further information about the CIPA requirements, including templates, detail about the types of proposals that are exempt, and the process for managing inadequate impact analyses, can also be found on the Ministry for the Environment’s website and in the circular Climate implications of Policy Assessment Requirements [CO (20) 3].