Discussion Paper Summary

October 1996

Assessing Costs and Benefits in Consumer Policy Development

The technique of evaluating the relative merit of a proposal by use of a cost benefit analysis is well recognised as a key tool in Government agency decision making. However, traditional models of cost and benefit analysis have often left policy makers a little in the cold with the focus on often complex economic equations and conceptual rigour.

The objective of developing a framework for the development of consumer policy is to ensure that costs and benefits of proposals are assessed and become part of the process of decision making. Rather than being a strict cost/benefit analysis tool, this framework is intended to act as a process to guide the minds of policy makers so that all relevant criteria in developing the proposal are taken into account and balanced one against the other to the best outcome.

This framework of cost and benefit analysis, as an integral part of policy development, fits into the Ministry's strategic goals of operational excellence and professionalism. It is designed to be transparent, so that stakeholders and interested parties can see how we reach our conclusions and be satisfied that they are made through a rigorous and robust process.

Consultation is a key part of getting the right information, testing ideas and options and involving interested parties appropriately in the process. The credibility, and to some extent the quality, of the outcome will rest on the extent to which relevant groups have been appropriately consulted and have had input into the process. Bear in mind though that the task of assessing costs and benefits in itself will cost industry and community groups. Ineffective consultation is something to avoid.
The framework essentially consists of a series of questions for consideration. Additional explanatory information is included in shaded boxes.

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