ASIC has unveiled a new initiative to tackle the growing complexity of the regulatory environment in Australia, focusing on its impact on digital governance and data management in the public sector.
“As a community, we rightly value regulation as a necessary part of our lives—to advance and protect the interests of everyone, particularly the vulnerable,” stated ASIC Chair Joe Longo during his address at the ASIC Annual Forum 2024. “And yet, perhaps the single biggest challenge to how effectively regulation can advance and protect the interests of the community and business is its complexity.”
This complexity stems from the growing volume and interconnectedness of legislation and public and government expectations, Longo said.
“The legal and regulatory landscape is increasingly complex,” he said. “We’ve also seen a sharp increase in what the public expects of governments, regulators and business.”
The Australian Law Reform Commission (ALRC) acknowledges this concern, stating that “corporations and financial services legislation has become unnecessarily complex.” Regulated entities incur unnecessary costs when complying with their obligations. Consumers find it difficult to identify their rights. Lawyers struggle to advise their clients with sufficient certainty. Judges have become all too familiar with confronting the ‘usual labyrinthine provisions of the Corporations Act’.”
Navigating regulatory complexity
- Volume and interconnectedness of legislation: Legislation and the complex network of cross-references and definitions challenge public sector agencies significantly. Longo showcased compelling statistics that highlight the issue: “Almost all Commonwealth Acts refer to another Act, and several refer to dozens or even hundreds of Acts. Over 49,000 definitions appear across Commonwealth Acts, and around 13% of all words in these Acts are affected by one of those definitions.”
- Rapid pace of change: New laws and modifications continue to roll out, often driven by evolving issues like climate change and technological progress, creating significant challenges for agencies that strive to maintain compliance.
- Administrative complexity: The intricacies extend beyond the legislation, involving the practices and interactions of regulators, thereby adding more complexity for public sector agencies.
Challenges in digital governance
The regulatory environment poses significant challenges for digital governance and data management in Australia’s public sector.
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- Compliance costs: Organisations must allocate substantial resources to navigate and adhere to a complicated array of regulations, which ultimately detracts from their focus on digital innovation and service delivery.
- Uncertainty and risk: The ongoing ambiguity and frequent modifications in regulations contribute to uncertainty and heighten the risk of non-compliance for public sector agencies.
- Barriers to innovation: Regulations can hinder innovation, challenging agencies as they navigate the regulatory environment and adopt new digital solutions.
- Data privacy and security: Strong measures safeguard sensitive information due to strict regulations concerning data privacy and security. Following these regulations preserves public confidence and prevents legal consequences.
- Technological integration: Technology evolves quickly, requiring ongoing revisions to regulatory structures. Public sector entities must stay informed about these changes to successfully incorporate new technologies.
- Sustainable finance and AI: New regulatory challenges in sustainable finance and artificial intelligence require careful evaluation and adjustment. ASIC stresses these domains by urging leaders in the public sector to align their strategies with the evolving regulatory landscape.
Simplifying regulatory compliance
ASIC is forming a consultative group on simplification to address these challenges. This group will include prominent consumer advocates, business leaders, directors, and representatives from various industry groups. The team focuses on discovering ways to enhance and optimise ASIC’s management of the law, ensuring that its guidance becomes more effective and user-friendly. This collaborative strategy shows ASIC’s commitment to creating an environment where effective regulation boosts data-driven governance instead of hindering it.
The government’s Regulatory Initiatives Grid provides a proactive view of upcoming regulations, highlighting advancements in tackling regulatory burden. ASIC stated, “Our aim is to make compliance clear and manageable. In doing so, we reduce the risk of stalling digital innovation and ensure that public sector agencies can focus on their mission to serve the Australian community effectively.”
ASIC’s initiative tackles regulatory complexity and significantly advances the efficiency and effectiveness of digital government and data management in Australia’s public sector. ASIC streamlines regulations to lower compliance expenses, foster innovation, and improve service delivery for the benefit of all Australians.
ASIC calls on public sector leaders to engage with the Simplification Consultative Group and actively contribute to developing a more efficient regulatory framework that fosters digital advancement while maintaining essential protections. The agency dedicates itself to ensuring clear regulations, emphasising that a straightforward and transparent strategy will prove crucial for the public sector to tackle future challenges and build public confidence.