About cost constraints

Before using the RBM to calculate compliance costs, you may first need to set up the compliance cost constraints at the proposal level. The compliance cost constraints are the basis or assumptions of calculating the compliance costs of your proposal.

Setting up constraints

You may need to set up your constraints based on the following assumptions:

• Whether your costing will affect businesses, community organisations or individuals.
• Whether your ongoing costs per year are constant (never change) or variable (change per year).
• Whether your costing affects businesses or community organisations differently based on their size.
• Whether individuals will be affected.

Note: Compliance costs for most regulatory proposals are constant per year, but some proposals would have variable ongoing costs per year.

Choosing the right size of business

This choice is made at the proposal level.

The RBM provides the following options for costing your proposal: small; medium; large; or community organisations.

Business by size according to the Australian Bureau of Statistics is defined as:

• Small business: if employing less than 20 workers.
• Medium business: if employing 20 or more workers, but less than 200 workers.
• Large business: if employing 200 or more workers.

A community organisation is an organisation engaged in charitable or other community-based activity operating under Australian law and not established for the purpose of making a profit. Community organisations are sometimes referred to as “not for profit” organisations.

Note: Some compliance costs depend on the size or type of the business. For example, a licence fees may vary based on the size of the business, or may be waived for community organisations.

However, the total number of small, medium, large, or community organisations affected by a particular activity must be less than or equal to the corresponding total number affected at the option level.

Calculating the total number of businesses affected at the option level
If you’ve chosen to cost your proposal by size of business and/or community organisation, then each option total will be the sum of costs faced by small and/or medium and/or large and/or community organisations affected by the option you’ve created.

The total number of businesses affected at the activity level
The total number of small, medium, large businesses, and/or community organisations affected at the activity level under an option must always be smaller or equal to the number of corresponding size of organisations at the option level.

Compliance cost reports

The choices you make will not only affect how you calculate your compliance costs, they'll also affect what reports you can see.

The Regulatory burden measure by size of business report, and the present value report by size of business or community organisation, are only available if the segment is costed by size.