Efficient and Effective Regulation - Case Study

Background

ONRSR is funded by industry and contributions from state and territory governments. It is not supported by a government treasury. Most industry funding is provided via annual fees. Both accredited and registered operators are subject to annual fees, and certain projects also attract major project fees.

The review of ONRSR’s efficiency and effectiveness was carried out by an independent consultant. The scope of the review included work to:

• assess the degree that ONRSR was an effective national regulator.
• assess and validate that ONRSR was efficient and the total funding necessary to deliver the functions and activities outlined in the Rail Safety National Law (South Australia) Act 2012 (RSNL).

Calculating the Cost of Regulation

The first step in the review and assessment of ONRSR’s productivity and proficiency was to calculate the efficient cost of regulation. Fundamental to the process was a back-to-basics analysis of ONRSR’s functions and objectives to establish how much it should cost for the Regulator to do business on an annual basis.

This process involved gaining a comprehensive understanding of what ONRSR does by documenting the key activities, tasks and capabilities it uses to meet its responsibilities under RSNL. This in turn allowed staff effort and indirect costs, such as corporate and administrative expenses, to be attributed to the identified outputs to create an activity-based costing model. (1) The whole process which also applied a government and industry expectations lens, established an appropriate staff profile (numbers and capabilities) for delivering the activities required under RSNL.

Importantly the independent review found that “77.2% of ONRSR’s regulatory cost base is directed to regulation” and “At 22.8 percent of ONRSR's regulatory cost base, the cost of corporate services and non-regulatory executive oversight is proportionately lower than other similar regulators…”

Efficiency of Regulation

Knowing what it costs to do business efficiently was only one piece of the efficiency and effectiveness puzzle. ONRSR also needed to understand if it was properly focused on efficient operation. In other words, did it have the right enablers in place to ensure the cost of regulation was sustainable?

To measure efficiency, the review drew on the concept of a ‘proficient entity’ which was a way of applying the Australian Government Charging Framework’s concept of a ‘proficient officer’ (2) in an organisational context.

To achieve efficiency, a proficient entity must implement the following efficiency enablers:

• Workforce alignment – aligned in number, expertise and seniority
• Technologically enabled – to facilitate efficiency of process and functions
• Geographically positioned – effectively to acquit operational requirements
• Efficient process flows – to achieve operations exclusive of uncontrollable constraints
• Operational change – continually considered and implemented.

The review found ONRSR had appropriately implemented each of the enablers. In particular, ONRSR’s workforce contains the right level of expertise and seniority so that work is undertaken by staff at the right levels, with the appropriate geographic placement to facilitate interactions with operators and respond to incidents. From the perspective of rail transport operators, ONRSR’s setup makes it easier for them to access regulatory services nationally than under the previous jurisdiction-based system, which in turn fosters better communication and collaboration. ONRSR’s efforts to consciously manage its cost base over time and to find both time and cost efficiencies were also recognised - specifically efforts to turn single purpose regulatory travel journeys into multipurpose regulatory trips that combined compliance, monitoring and education.

The review also noted ONRSR’s pursuit of improved efficiencies via the current program of technology upgrades.

“The review concludes that ONRSR is efficient, to the degree of efficiency it would be reasonable to expect of such an organisation. ONRSR is deliberate in improving operational processes and is actively focussing on projects such as technology enhancement to improve efficiency more broadly.”

Effectiveness of Regulation

To complete the picture, an assessment of ONRSR’s effectiveness as a regulator was required. This assessment used a framework based on guidance from the Commonwealth’s Department of Finance and the Australian National Audit Office which described the seven elements of an effective regulator:

1. Policy and legislative remit – the regulatory environment set by Government
2. Regulatory strategy – how regulatory outcomes are achieved through key functions, operational structure, risk appetite and performance information 
3. Fit-for-purpose regulatory policies, procedures and guidance
4. Risk-based approach to education, monitoring, investigation and enforcement
5. Performance data to measure and inform regulatory outcomes 
6. Evidenced-based regulatory decisions
7. A suite of enforcement measures to address non-compliance.

The review identified multiple inputs to effectiveness that are being well deployed by ONRSR including: 

• An obvious national consistency in the approach to regulation 
• The application of regulation, tailored to each sector of operators 
• The national distribution of staff, balanced to the requirements of each ONRSR office
• Travel regimes aligned to engaging with operators but also designed with consideration of ONRSR’s compliance regime and cost effectiveness of travel 
• Accident and incident investigation deployed in a nationally consistent manner.

ONRSR was recognised for seeking opportunities for continuous improvement, in particular its current focus on improving the use of operational data to inform intelligence, strategic planning and performance reporting. ONRSR’s 2025-2026 Corporate Plan seeks to leverage data and intelligence to enhance our approach to risk-based regulation and a key initiative will be to implement the Regulatory Intelligence Strategy starting with the data and information model to support regulatory decision making. 

The review also noted that ONRSR is well placed to further enhance its approach through: 

• Fully implementing a sector approach – see our National Sector Safety Themes 
• Improving stakeholder engagement – see our Engagement and Education Strategy. 

“ONRSR is actively enhancing regulatory intelligence and data. This, coupled with better performance data will move ONRSR … to a more problem centric regulatory that combines a risk-based approach with strategies to address underlying rail safety issues that fall within its remit.”

Conclusions

The review concluded that ONRSR is operating efficiently and effectively, noting that:

“The organisation continually focusses on improving this position to ensure safety outcomes are improved on behalf of the Australian population.”

“Noting improvement programs underway to further mature ONRSR, this review has evidenced multiple instances which describe a high degree of proficiency in ONRSR’s regulatory deployment. Consequently, this review concludes that overall, ONRSR is operating effectively.”

“…ONRSR’s delivery is effective and is delivered with efficiency. The organisation continually focuses on improving this position to ensure safety outcomes are improved on behalf of the Australian population.”

ONRSR will use the information collected through the review and its strategic priorities to continue to proficiently deploy regulatory resources and expertise to further enhance its regulatory output, with a focus on addressing underlying rail safety issues for the benefit of all Australians.

(1) Activity-based costing (ABC) is a system that allocates costs to products and services based on the actual activities that consume those resources, rather than using a traditional single rate. By identifying specific activities as cost drivers and tracking their consumption, ABC provides a more accurate picture of a product's true cost, enabling better pricing decisions and helping identify opportunities for cost reduction and process improvement.

(2) An Australian Government proficient officer is generally understood to mean a skilled and experienced member of the Australian Public Service (APS), potentially an Authorised Officer, who possesses specialised professional knowledge and can apply it to various tasks like policy advice, data analysis, or implementing regulations. The term ‘proficient’ aligns with the APS Work Level Standards, which describe officers who can interpret and apply professional documentation, manage data, and undertake moderately complex technical tasks.