Light-handed Regulation: The Case of the Tasmanian Forest Practices System

Abstract

In recent years, governments have shifted away from traditional command and control regulation in favour of more flexible approaches built on notions of trust and co-operation between the regulator and the regulated. Such approaches recognise the limitations of traditional methods in terms of both cost and efficacy, and rather than adopting a constabulary stance, attempt to engage with industry in a constructive way utilising economic incentives and the desire of most firms to 'do the right thing' most of the time. These 'light-handed' approaches work best when public and private interests converge, the degree of risk is low, and there is scope for third party oversight. The Tasmanian government has adopted this light-handed approach in its regulation of logging in native forests. Its Forest Practices System is built on industry co-operation where regulation is conceptualised as a partnership between government and business. This paper assesses the effectiveness of such an approach. It finds that the System has the capacity to overcome some of the hurdles to effective regulation, such as information asymmetry and industry opposition, but is limited in other respects because of a lack of transparency, the absence of third party oversight, the nature of the risk and the potential mismatch between public and private interests.