Applications of Responsive Regulatory Theory in Australia and Overseas

The basic principle of responsive regulation is that regulators should be responsive to the culture, conduct and context of those they seek to regulate when deciding whether a more or less interventionist response is needed. In other words, "soft words before hard words, and carrots before sticks".1 It also recognises the need for a diversity of regulatory strategies and the need for all strategies to be practically grounded and context appropriate.2The model was first developed by Braithwaite and Ayres in their book Responsive Regulation: Transcending the Deregulation Debate, however it is important to emphasise that the development of responsive regulation as a theory has been and continues to be a collective effort, contributed to by numerous scholars and institutions, the most important early development being Neil Gunningham, Peter Grabosky and Darren Sinclair's Smart Regulation(1998) and the most recent developments being John Braithwaite's Regulatory Capitalism: How it Works, Ideas for Making it Work Better (2008) and Valerie Braithwaite's Defiance in Taxation and Governance (2009).The basic principles of responsive regulation are simply illustrated in Ayres and Braithwaite's widely recognised "regulatory pyramid" (below). At the base are advisory and persuasive measures, in the middle are mild administrative sanctions and at the top are more punitive sanctions, determined to be sufficiently undesirable to halt the behaviour of the most determined offenders. According to its authors, regulators should focus most of their activity at the bottom and only escalate measures if absolutely necessary and de-escalate when possible.3 The preference for being at the bottom of the pyramid is a presumptive preference that will often be overridden. Pyramids are more likely to be effective when they have a credible enforcement peak. The following document outlines some examples of responsive regulation applications, both in Australia and overseas. The document tends not to comment conclusively on the success of the approach's application. Often it is difficult to assess even whether responsive regulation principles have been translated into practice in each example or whether they have simply been endorsed aspirationally. Finally, it should be noted that the list is not exhaustive. It simply provides some examples that practitioners might be able to discuss with colleagues who have attempted to implement the approach.