Regulatory Charging Risk Assessment (CRA) for regulatory charging activities

A CRA is required as part of the development of any regulatory charging policy proposal.  The CRA asks a number of questions to assess the complexity, materiality and sensitivity of implementing a regulatory charge.  The purpose of the CRA is to help government entities to identify and analyse regulatory charging risks. It helps to identify implementation risks and informs the risk engagement strategy adopted by the entity.

Finance has developed a CRA Template [­­word document 77 KB] to help entities undertake this risk assessment. 

The outcome of the CRA is a risk rating, which determines whether the Cost Recovery Implementation Statement needs to be agreed for release by the Finance Minister.  The CRA is also used to assess changes to regulatory charging activities to help determine whether they need to be agreed by the Government.  The CRA rating is dependent on the number of ‘high’, ‘medium’ or ‘low’ responses (see below). 

Table showing the three responses for each risk rating. The responses for a high risk rating is at least three high, responses for medium risk rating is at least one medium or one high and the response for a low risk rating is all low.

There are four stages of the cost recovery process for regulatory activities:

  • Stage 1: Policy approval to cost recover
  • Stage 2: Cost recovery model and CRIS
  • Stage 3: Implementation
  • Stage 4: Portfolio charging review.

A CRA is triggered at Stages 1 and 3 of the cost recovery process for regulatory activities.

Stage 1 – Australian Government policy approval to cost recover

The objective of Stage 1 is to gain policy approval from the Australian Government to charging for a specific government activity.

As part of the policy proposal to the Australian Government, government entities must assess the risks associated with implementing a new regulatory charging activity or making changes to an existing regulatory charging activity. The CRA rating must be agreed with the Department of Finance and included in the policy proposal.

The CRA rating determines whether the Cost Recovery Implementation Statement (CRIS) needs to be agreed for release by the Finance Minister, as well as approved by the responsible Minister. A CRA rating of:

  • high, means that the responsible Minister will need to seek the Finance Minister’s agreement to the release of the CRIS before charging begins
  • medium or low, means that the CRIS can be approved by the responsible Minister and does not require the Finance Minister’s agreement for release before charging begins.

Flow chart showing the CRRA process. Once the CRRA is undertaken, a rating of either High or Medium/Low is given. These ratings require different levels of approval.

By identifying areas of implementation risk, the CRA informs risk engagement strategies and level of documentation. Responsible entities and Ministers determine how to engage with the identified risks (e.g. by providing more detailed information in the CRIS, engaging with stakeholders in different ways or other processes).

Stage 2 - Charging model

The objective of Stage 2 is to develop and document the charging model, prepare legislation, and consult with stakeholders.

A CRA is not triggered at Stage 2 of the charging process for regulatory activities.

Stage 3 – Implementation

A CRA is part of implementing a charging activity. The objective of Stage 3 is to implement and manage the charging activity, while ensuring appropriate transparency, accountability and performance.

During implementation of a regulatory charging activity, entities should undertake a CRA if they anticipate changes to the activity. If the CRA rating is ‘high’ or ‘medium’, then it is likely that the change may be of a policy nature and require approval from the Australian Government. In this case, Stage 1 processes may be triggered and the CRA rating will be included in the policy proposal. If the CRA rating is ‘low’, then it is likely that the change is operational in nature and the relevant approvals can be provided by accountable authorities and responsible Ministers.

Stage 4 - Portfolio charging review

The objective of Stage 4 is for the responsible department of state to review all charging activities within its portfolio.

A CRA is not triggered at Stage 4 of the charging process for regulatory activities. 

Template

Government entities are encouraged to use the CRA template to assist in meeting the regulatory charging risk assessment requirements.

CRA Template [word document 77 KB]

The above information has been adapted for website publication. It should be read in conjunction with the full guidance on the Australian Government Charging Framework [word document 654 KB]. and the Cost Recovery Guidelines [word document 77 MB].

Last updated: 07 June 2016