The Government Regulatory Technology Report 2022: optimism meets barriers to progress

This guest editorial was written for the ANZSOG/National Regulators Community of practice monthly newsletter, highlighting new additions to the Regulation Policy and Practice collection on APO. The RP&P collection brings together a range of practical resources from national, local and state/territory governments, regulatory agencies and external institutions conducting monitoring, inquiries and reviews. You can receive this newsletter by  joining the ANZSOG/National Regulators Community of Practice (membership is free) or  subscribe to the newsletter directly.

By Simon Corden

The use of technology by regulators (RegTech) has the potential to improve how regulators operate and how easily and/or effectively those they regulate comply [1]. These technological tools range from workflow systems that help improve granting licences and permits or managing investigations, to the use of remote sensing (such as drones or satellite imagery), to smartphone apps that assist individuals or businesses to comply, and to the use of artificial intelligence to draw insights from data. 

But how widespread is adoption of these technologies by regulators? We have all seen case studies of many exciting technologies, and reports from the Productivity Commission (2020) and ACMA (2021) – but what we haven’t known until now was how frequently these tools are being deployed, trialled, or under-consideration.  

A survey of Australian and New Zealand regulators by Objective Corporation, an Australian-based RegTech firm, sheds light on this question. For the first time it provides a snapshot of the benefits a wide range of regulators seek from RegTech, the barriers they encounter, and the level of deployment across a range of different technologies. 

The survey confirmed that there are lots of exciting and innovative uses of various forms of technology being used by regulators. But overall, at this stage, many more regulators are at the stage of planning and considering, or trialling and partially deploying, the various technologies than have them fully deployed.  It would be fair to say that most, but clearly not all, regulators’ use of technology is just scratching the surface. 

In the survey regulators were asked about adoption of 29 technologies.  Those who responded could answer some or all the detailed questions, and there were about 85 regulators who responded to most of the survey questions.  

Low uptake of beneficial technology

Broadly speaking the survey showed that adoption of technology to transform permitting and licensing regulatory functions still has a long way to go.  

Web-based portals or mobile apps for permitting are seen as highly relevant, but to date, only 25 per cent reported that they had fully deployed this. More encouragingly 44 per cent are trialling or partially deploying these systems. Chatbots, or automated legal guidance can make it easier for the regulated, but raises lots of policy issues (Blank & Osofsky 2022). Chatbots are currently only deployed by 3 per cent of regulators. 

A frequent complaint of individuals and businesses is that they can’t track how applications are progressing. Expectations are now clearly higher when you can track your Amazon parcel from Manila to Melbourne, but at this stage only 14 per cent of regulators reported that they had fully deployed systems that allow applicants to track approval progress. 

Virtually every regulator now aspires to be risk-based, which often means targeting, compliance and enforcement activity is informed by a holistic understanding of the entities being regulated.  

And while 90 per cent believe an integrated licensing and investigation system is relevant to their agency, currently only 18 per cent have a single view of each regulated entity. When I have discussed this with my fellow NRCoP members, the sense is that this progress is disappointing but not surprising. We all acknowledge that separate legacy systems makes this hard. 

Almost everyone considered data sharing across agencies and/or jurisdictions as relevant to their activities. So many of us have seen powerful examples of where sharing data has supported both triggering voluntary compliance or informed enforcement activity, noting it can also raise important policy and privacy issues (PM&C 2019).  

However, based on our survey, only 14 per cent of regulators are currently sharing data. 

There are lots of innovative RegTech implementations of artificial or augmented intelligence. Those of you who saw the September NRCoP 2021 webinar would have learnt of an innovative use of artificial intelligence by Anne Lenz’s team at Brisbane City Council. They were using this technology to log the times that disruptive dogs barked on remote sound recordings they collected rather than review them manually. If your next door neighbour has a frequently barking dog, you know how useful collecting that evidence could be. 

And more broadly, regulators are increasingly needing to manage and analyse large and complex data sets so this technology is highly relevant. Yet currently only 2 per cent of those surveyed have fully deployed these emerging technologies. 

The survey also asked about digital strategies, noting that governments across Australia and New Zealand have made it a priority to improve their use of digital tools as outlined in whole-of-government strategies. However, currently only one-third of those who responded were aware of the existence of a documented strategy within their agency to guide how they better use technology to achieve their regulatory objectives. 

What is holding back progress?

Regulators need to be smart buyers and smart at implementation. But more than two thirds of respondents say IT capacity and capability is a barrier, along with the perennial issue of funding.  

Lack of awareness of market offerings was also frequently cited as a barrier, and that is where industry or sector groups like the RegTech Association, G-Reg in Aotearoa New Zealand, or Australia’s National Regulators’ Community of Practice have a role to play. 

The survey found that across Australia and Aotearoa New Zealand regulators’ use of technology is just scratching the surface. In summary: 

First, regulators recognise there are benefits from increased adoption of various forms of RegTech for both the regulator seeking to achieve better outcomes and regulated entities seeking an easier way to comply. 

Second, regulators are seeking to embrace more sophisticated risk-based, intelligence-led approaches but not all have the foundational IT systems to collect, collate and analyse information. 

Third, many regulators have deployed the various technologies we examined but many more are trialling or have various technologies under consideration.  

Finally, this survey has highlighted the opportunities ahead and the appetite for more collaboration across the sector. The full survey results can be found here.

Simon Corden is an independent public policy consultant, part-time commissioner of Victoria’s Essential Services Commission, and former chair of the National Regulators’ Community of Practice. 

[1] This article focuses on the implementation of RegTech by regulators. Business also implement RegTech to assist them comply.