Book Review: The Tools of Regulation

Good policy is all very well but it is meaningless without good execution. The Tools of Regulation focuses on execution: what processes and tools are available to government regulators to achieve desired regulatory outcomes?

Six broad approaches are adopted to analyse and classify regulatory tools: economic, transactional, authorisational, structural, informational and legal. These tools not only include the traditional ‘command and control’ statutory methods, but also taxes and charges, subsidies, licences, accreditations, contracts, grants and information campaigns as forms of regulation.

Regulation, under this conceptualisation, is not just about enforcement but about the prosaic, day-to-day factors that operate to influence behaviour and produce regulatory outcomes. These factors form the ‘webs of influence’ that operate at different times and in different contexts to produce ‘normal’ behaviour. These influences include market forces, social norms, ethics, codes of conduct and practice, guidelines, standards, business processes and technological constraints.

Regulation is as much about achieving regularity as it is about preventing deviance.

For a busy practitioner, regulator or regulatee or novice scholar, the theoretical literature can be challenging and obscure. This book however provides the reader with a practical, simple and accessible guide to modern regulation in whatever field of regulation they are interested. The author is Professor Arie Freiberg, Dean of Monash University Law School. While the text seems squarely aimed at public servants and those dealing with them, it should be mandatory reading for all politicians who seem to exercise only the options not to regulate or to legislate.

The text is well organised and despite its academic approach and fairly dry subject matter, leads the reader on a well set out course of the who, what, where, when, why and how of regulating the actors in a society in line with government policy.

In defence of the status quo, Professor Freiberg points out that, while, for some, the regulatory burden of laws is burdensome or restrictive, especially in business, others find reassurance in the web of regulation. Regulation enables us to reduce the economic and psychological transactional costs of living in a complex and highly specialised society. For example, food labels may be relied on and are heavily regulated (though some would argue not enough especially in relation to where a product was made).

As all lawyers will have discovered, much of our legal system is based on contract law and it is essential to underpin trust and confidence in the capitalist system. The author also makes the link between risk-management, over-regulation and appropriate assignment of responsibility. However the research presented in the text shows that the public emphasises the positive or negative outcome of an event over its likelihood. This leads to great attention to the type of regulatory steps aimed at preventing terrorist activity and the comparative lack of interest in that aimed at preventing automobile accidents when the latter are far more likely to have a direct impact on any particular individual.

The text has 12 chapters including : Who Regulates, The Regulatory Process, Regulatory Methods, Legal Regulation and Evaluating Regulation. Black Letter lawyers will be most interested in Chapter 10 which sets out the familiar tools such as Acts, subordinate legislation, codes of conduct or practice, guidelines and accords as well as the range of sanctions, criminal (imprisonment, fines, confiscation, community service, probation, compliance programs, training orders and compensation and restoration orders) and civil (fines, warnings, audits, improvement notices, show causes, injunctions, banning orders, disclosure orders and mandatory publications).

The book is a thorough and useful exploration of why regulation may achieve its aims even if poorly implemented or enforced, and even if examples of its failure are easy to find. It also gives the reader plenty of tools to work out whether a better form of regulation might have been chosen. For those in government, with an administrative law bent or generally interested in understanding or influencing how the web of laws is made and sustained, this is a worthy read.

Andrew Sinclair