The regulatory impact statement is a radical feature of the Victorian scheme. Legislation has been introduced at the Federal level to inadequately take up part of this structure in respect of regulations affecting business. The process is designed to ensure that proper analysis and justification of regulatory proposals occurs and that the public is consulted during the development of significant proposals.
Basically, if a rule imposes any burden on any sector of the community, a RIS is required unless a specific exemption applies. Many regulations are exempted from the RIS process, either because they impose no burden, or because they fall within one of the 5 specific exemptions provided by the guidelines. This does not exempt regulations from the scrutiny of the subcommittee. About 10-15% of all regulations are prepared with a RIS.
When a RIS is required, Schedule 3 to the Subordinate Legislation Act prescribes the matters which must be included. These are mandatory, and enforceable by the courts. From judicial comments in the 1986 case of Philip Morris v State of Victoria  VR 825, it appears that failure to comply may mean that the regulations are invalid.
The Act requires 4 things of an RIS:
2.Identification of the alternative means of meeting those objectives. Note: This requirement presupposes that the threshold question of whether or not there should be regulations has already been made.
4.A summary of the alternatives to making regulations, and why they were considered inappropriate. Note: This is the clause which requires explanation of that threshold question as to whether regulations were required, or whether some other instrument such as a voluntary code, or administrative guidelines, would have been sufficient.
If a document does not provide this, the subcommittee will usually write to the relevant Minister seeking further information or clarification. As a general rule, the more important the regulations, or the more intrusive the provisions, the greater the explanation and justification required in a RIS. Subcommittee reports and recommendations for disallowance have so far arisen only in cases of flagrant disregard for the Schedule 3 requirements, e.g. where none of them are met, yet the regulations have a significant impact on rights or liberties, or deals with important matters
These reports dealt with matters as disparate as the display of health warnings on cigarette packets, fees and penalties set by Local Government Regulations and regulations which detailed the rights of water authorities upon the creation of easements and reserves on new subdivisions of land. In all of these cases the RIS failed to identify alternative means of meeting the objectives of the regulations and neglected to provide any cost benefit analysis of the regulations.
From its extensive experience examining every regulation made in this state, the subcommittee can quite easily assure you that the RIS process has led to better (and perhaps fewer) regulations for Victorians. Our model is gradually being followed by the other States and Territories and has become a model for international reform.
My personal view is that the RIS process strengthens our democracy. Whilst there are many avenues for the citizen and organisations to lobby in respect of Bills in the Parliament, the RIS process offers the only genuine public input into the regulatory process. The process is seen as more important today than ever before because many more substantive issues are being left by Acts to be realised in subordinate legislation. This makes the need for public justification of regulatory proposals much greater, because they are not debated in the public arena, that is, the Parliament.