What is ‘regulatory capture’?

‘Regulatory capture’ refers to a scenario where a regulatory agency, mandated to oversee and enforce rules to maintain public interest, ends up being unduly influenced by parties with vested interests, such as the entities it is meant to regulate or special interest groups. This situation can result in the agency making decisions that prioritize the interests of these parties over the broader public interest.

Our approach to avoid regulatory capture

At IPART we recognize the importance of being vigilant against regulatory capture. To support this, we commissioned Centium to develop a tool specifically tailored to evaluate our regulatory capture risk maturity to inform our approach to proactively mitigate these risks.

The tool assesses maturity against six critical risk areas: adherence to public interest principles, organizational culture, structure, processes, transparency, and staff experience and diversity. The results provide insight into areas which should be addressed through our proactive improvement program of work.

Centium conducted a regulatory capture risk maturity assessment in June 2023. They assessed key regulatory functions including Water, Local Government, Energy Networks, and the Energy Savings Scheme. Through this assessment, Centium determined that IPART has effective processes and controls in place to effectively manage regulatory capture risks across the assessed functions.

Moving forward, IPART will undertake regular regulatory capture risk assessments through our internal audit program.

The regulatory capture risk maturity assessment report

You can read the regulatory capture risk maturity assessment report here.

IPART exists to protect the ongoing interests of the people of NSW. As such, we share this report with you as we believe it is crucial for you to understand our proactive approach to risk management and commitment to operating in the public interest.