The Shadows of the Law: Contemporary Approaches to Regulation ...

Haines & Gurney REGULATORY CONFLICT 353

The Shadows of the Law: Contemporary Approaches to Regulation and the Problem of Regulatory Conflict* FIONA HAINES and DAVID GURNEY

Regulatory analyses often assume that compliance is desirable, with literature focusing on strategies to encourage “excellence” in adherence to regulatory goals. Yet, it is not unusual for disparate regulatory goals to exist that are based on competing values of what constitutes the “good society.” It is this conflict that forms the substance of this paper. In cases of competing regulatory goals, techniques that encourage exemplary compliance in one area can create incentives to breach regulatory provisions of a competing regime. In such cases, generic regulatory techniques are unable to provide a useful means for resolving regulatory conflict but do allow a political delegation of conflict resolution to the “scientific” strategies of the regulator. In turn, the regulator places responsibility on companies for resolving competing regulatory demands. Successive delegation leads to juridification as well as regulators vying to retain primacy for their regime. This problem is examined through analysis of responsibilities for subcontractor safety under Australian health and safety law and sections of the Australian Trade Practices Act 1974 aimed at protecting competition.

I. INTRODUCTION

Studies of regulation and compliance primarily seek generic characteristics of “good regulatory practice” that can motivate organizations to go “beyond compliance” and excel in their achievement of given aims. The problem of regulation is seen as the problem of designing strategies that engender compliance. The central argument of this paper is that the focus on regulatory techniques has largely viewed the goals of regulatory compliance as unproblematic. Yet, fundamental to regulatory regimes are their underlying

* The authors would like to thank Andrea Shaw for her advice when devising this paper. Also the helpful questions and examples provided by the audience at the Australian Institute of Criminology, Regulatory Institutions Network, Australian National University, and Division of Business and Enterprise, University of South Australia Conference on “Current Issues in Regulation: Enforcement and Compliance,” 2 September 2002, Melbourne, Australia, were much appreciated. Address correspondence to Fiona Haines, Department of Criminology, University of Melbourne, Parkville, Victoria, AUSTRALIA 3010; e-mail: [email protected]. LAW & POLICY, Vol. 25, No. 4, October 2003 ISSN 0265–8240 © Blackwell Publishing Ltd. 2003, 9600 Garsington Road, Oxford OX4 2DQ, UK, and © Blackwell 350 Main Publishing Street,Ltd. Malden, 2003 MA 02148, USA.

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philosophy of what constitutes compliant behavior, behavior that accords with some conceptual “ideal.” These ideals can be disparate, leading to conflicts between regulatory regimes. By focusing on techniques, the conflicts between regulatory regimes remain invisible and the problem of regulatory conflict undertheorized. We argue that there is considerable benefit in bringing the problem of regulatory conflict to center stage, since by doing so we can tease out how regulatory techniques are used (or are ignored) in the context of conflict. Viewing techniques as neutral, progressive elements of governance ignores this complex interaction and deflects attention away from fundamental differences between different regulatory regimes concerning ideal behavior and proper responsibility. These ideological conflicts that underpin regulation render the search for generic characteristics of “useful” compliance measures as either irrelevant to the problem or a source of irritation exacerbating the problem of juridification. Nonetheless, we argue that a focus on “proper” techniques serves a useful political purpose by diverting public attention away from the problem of satisfying the demands of competing constituencies towards the capabilities of scientific knowledge (in this case regulatory techniques) in providing solutions to problems of noncompliance (Habermas 1989). The task of conflict resolution is deflected onto the regulator, who then passes responsibility on to the regulated entity. This process of delegation ensures that conflicts persist that generate legal mechanisms: exemptions notifications and the like in an attempt at resolution, a process that subjects the regulated to an escalating and ever-changing array of rules that they must adhere to lest they be found to be noncompliant or, worse, derelict in their duty. These problems of conflict and its implications for regulatory practice are first outlined at a theoretical level, and then through a vignette of the ideological conflicts between the Trade Practices Act and the Occupational Health and Safety Act in Australia. A. REGULATION AND IDEOLOGY

Acknowledgment of and attention to ideological differences underpinning law and its differential impact is not new (see, e.g., Sutherland 1983:21), and, whilst it has been given some attention within sociological studies of regulation (Shearing 1993; Hawkins 1984), it has a much more extensive history within related fields, in particular conflict of laws within socio-legal studies (see, for an overview, Guzman 2002). Regulatory scholarship is a relatively new field, arguably one emerging because of the ongoing problem of ideological conflict in contemporary democratic societies. However, rather than focusing on the nature of this conflict and how it affects regulatory strategies, the majority of the research and writing in the regulatory arena is premised on improving compliance at the generic level (Baldwin & Cave 1999; Ayres & Braithwaite 1992) or maximizing compliance with a single regulatory goal whether it is improved environmental standards (Hawkins 1984; Gunningham © Blackwell Publishing Ltd. 2003

Haines & Gurney REGULATORY CONFLICT 355 & Grabosky 1998); occupational health and safety (Hopkins 1995; Gunningham & Johnstone 1999; Shapiro & Rabinowitz 2000); equal opportunity (Nanton 1995); or competition and economic regulation (Parker 1999). Conflict when recognized is most often understood as the conflict between compliance and self-interest or profit (Shapiro & Rabinowitz 2000; Tombs 2002) with the moral rightness of improving compliance assumed (see, e.g., Fischel & Sykes 1996:3441). Further, when writing does canvass more than one arena (see, e.g., Drahos & Braithwaite 2000; Sparrow 2000) the emphasis is not on the potential contradiction between regulatory goals, but rather on how one jurisdiction varies from another in its compliance strategies and how sharing ideas for the purpose of maximizing “compliance” is possible. In essence, in comparative research, areas are segmented so that the task can be simplified to maximizing compliance with singular regulatory goals. Further, recent writing on meta-regulation assumes global compliance is realistic and desirable. Conflict is glossed over by delegating responsibility for reducing all risks onto the regulated – without due consideration of the incompatibility of risk reduction in competing areas (Paterson 2000; Parker 2000). In contrast, this paper seeks to encourage greater research and writing by regulatory theorists on the problems of conflicting regulatory goals and the dangers of subsuming content-based discussion with one concerned predominantly with regulatory strategies. Nonetheless, this tendency to leave substantive debate on the desirability of competing regimes to one side is understandable. Research shows that content-based harmonization of regulatory standards (even when the regulatory goals are shared), for example, can get bogged down in interminable discussions (Majone 1998). Not surprisingly, the discussion of substantive disagreement of political strategies and its potential resolution has tended to be put aside in the search for a less politically charged platform within which to solve disputes, one example being the shift to emphasize the value of regulatory competition rather than harmonization (Majone 1998). In related scholarship, too, patterns are similar. In the conflict of laws literature resolution tends to revolve around the intricacies of sovereignty and more recently theoretically based economic analysis of levels of public welfare to indicate what laws should apply in what situations (Guzman 2002). Given this problematic history of harmonizing laws in areas of regulation where there are compatible goals, the challenge for substantive discussion in the context of competing goals is considerable. Further, governments are keen to embrace methods of resolving conflict in a manner that reduces political risk. Regulatory reform promoting generic compliance processes rather than open political debate on the goals to be achieved is seen as one such method (Haines & Sutton 2003). Recent policy initiatives have seen governments, such as the various Australian jurisdictions, both federal and state, that look to both regulation and its reform as the means to marry competing objectives within a broadly neoclassical economic view of the interaction between the state and the market. Commentators © Blackwell Publishing Ltd. 2003

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have captured this by reference to the regulatory state as the quintessential progressive form of government (Braithwaite 2000). In the regulatory state, the emphasis on technical competence in the application of compliance techniques provides a mechanism through which governments can attempt to depoliticize competing values that underlie regulatory goals (Habermas 1989). Further, there is an emerging consensus regarding what is considered as “best regulatory practice” discernible across a range of regulatory regimes that extend from policies on optimal forms of rule making, regulatory strategy, and regulatory enforcement. These techniques have then been reformulated through various offices of regulation reform (Victoria. Office of Regulation Reform n.d.; Organisation for Economic Cooperation and Development 2000) or regulation review (U.S. Office of Management and Budget 1986; Cabinet Office [Regulatory Impact Unit] 2000) that aim to make regulation consistent with market principles by emphasizing greater efficiency and flexibility that are at once less intrusive in day-to-day business practice but also more effective in terms of problem solving. Despite this emerging consensus, the ideological conflict between regulatory goals is not so easily dispensed with. Conflict is not hard to find. Examples include those between employee safety and pregnancy (Randall & Baker 1994); employee safety and disability rights (Daniels 2003); environmental protection and competition law (Bennett 2000), health and antitrust (Geis 1991); and indigenous rights and environmental protection (Cocklin & Wall 1997) as well as the messy arena of utilities privatization, environmental goals, and equity of access (Maloney 2001; Watters 2003). Such areas call for substantive resolution, not merely a decision about relevant regulatory techniques, proper jurisdiction, or generalized discussions of global welfare. Further, each of these “resolutions” (a focus on technique, jurisdiction, and so on) can become tools in the ideological struggle. Jurisdiction hunting itself is a well-worn method for achieving optimal outcomes, ones that match not only protagonists’ material interests but also ideological preference (for a recent example see Sobczak 2003; Compa 2002). In each of these cases the ability of strategies designed to extract maximal compliance with a single regulatory goal to resolve dilemmas encompassing goal conflict is minimal. Here, promotion of greater compliance in one arena may be counterproductive, leading to greater tension in the other with devolution of political tension resurfacing in regulatory agency disagreements. A recent example of this was the conflict between environmental and competition regulation in the privatization of water utilities in the United Kingdom, during which stern remarks were made by the resource regulator against the competition regulator stating that “. . . it is not his [the competition regulator’s] job to regulate a fellow regulator” (Maloney 2001:634). Indeed, recent research on the European Union suggests that the era of technocratic resolution of political difference may become progressively more difficult. In that context, Harcourt and Radaelli (1999) argue that inefficiency and prolonged conflict may be an inevitable corollary to increased democracy. If this is the case, then research © Blackwell Publishing Ltd. 2003

Haines & Gurney REGULATORY CONFLICT 357 by regulatory scholars on such conflicts, their impact on regulatees, and methods for resolution seem critical. How might regulatory scholarship begin such a focus on conflict? A useful first step is identification of current political justifications for regulation and their underlying rationale. Clearly there are many, but in contemporary Western democracies it is “market failure” that is most often seen as the primary justification for regulatory intervention (see for example Baldwin & Cave 1999:9). Justified in this way, market failure provides an apparent consensus behind the need for regulation. However, conceptions of “the market” suggest a particular view of the principal relationship that underlies society, between self-interested individuals (Self 1993; Hood 1998) that forms the normative backdrop for regulatory intervention.2 Clearly though, other ideologies also are at play in the regulatory pantheon. The examples of regulatory conflict cited above are testament to competing visions for the good society – alternatively one that promotes care and responsibility between individuals within a firm (occupational health and safety); care and responsibility of individuals and organizations to the environment (environmental goals); efficient production and distribution of goods and services (competition); empowerment (disability law); and so on. Regulatory goals in each of these arenas contain competing visions of both “proper relationships” and ideal forms of social order. The task for regulatory scholarship would be to identify different regulatory motivations and resulting strategies each use to elicit support and attain public and political legitimacy. Progress has been made in understanding such ideological conflict and its relevance to regulation. Hood’s (1998) work in The Art of the State is particularly helpful in understanding the fundamental paradigm differences between the justification for regulation and the regulatory framework that ensues. His analysis, following Mary Douglas (1966, 1992), is that four master categories or principal ideologies underpin regulatory regimes and regulatory reform: individualism, hierarchism, egalitarianism, and fatalism. Individualism, as discussed above, is characterized by self-interested individuals interacting through the market, hierarchism by “command and control” structures of strict lines of authority, and clear procedures. Hierarchism is reflected in a paternalistic ethos where those in positions of authority are responsible for weaker individuals in society through norms of hierarchy and responsibility (Hood 1998:73–97). It is these two forms that are most clearly seen in writing on regulation, in the emphasis in “command and control” structures and “welfare” principles (both with a hierachist conception of control and authority) (Reiss 1984), contrasted with the more recent shifts towards “flexible” regulation that emphasize the potential within the market and systems of self-regulation to control corporate behavior (Shearing 1993; Grabosky 1994). Nonetheless, the other two are reflected in certain regulatory regimes. Egalitarianism, the emphasis on collective decision-making and case-by-case resolution of the issues historically is best exemplified through professional self-regulation (Salter 2001) and more recently through ideas such as tripartism © Blackwell Publishing Ltd. 2003

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(Ayres & Braithwaite 1992) and Nongovernmental Organization (NGO) involvement in the regulatory process (Drahos & Braithwaite 2000). Fatalism, regimes characterized by little cooperation but rigid adherence to rules, is also seen, most often though in critiques of “command and control” regulatory forms as well as ritualistic adherence to audit requirements (Power 1999).3 These ideological differences, though, are glossed over when the principal justification for regulation is stated as “market failure.” Such a view places individualism (to use Hood’s term) as an ideal societal form at center stage, raising its status as a rationale for regulatory intervention to scientific fact (Habermas 1989). Regulatory review processes flowing from this ideological base require regulations be reviewed in light of their cost to competition to ensure that they do not place an unacceptable burden on competitiveness. Individual initiative must not be stifled (Victoria. Office of Regulation Reform n.d.; Organisation for Economic Cooperation and Development 2000; U.S. Office of Management and Budget 1986; Cabinet Office [Regulatory Impact Unit] 2000). Competing regulatory arenas must justify their regimes through the lens of competitiveness and economic efficiency. Regimes with a different ideological starting point (such as welfare or paternalism, for example) then rely on loose economic arguments of the material and competitive benefits of high compliance, such as “safety pays” arguments in the occupational health and safety sphere (Hopkins 1999) to sell their regulatory policies to both their political masters and their industrial audience. It is the dynamic of ideological conflict between regulatory goals and the way the conflict is played out through regulatory struggle and notions of good regulatory practice that interests us here. The analysis below explores how “good regulatory practice” is either irrelevant to, or exacerbates conflict, and the ensuing problems for the regulatee. The chosen vehicle for teasing this out further is the conflict between the aims of competition law and health and safety law within Australia. The specific site of conflict is that between “chain of responsibility” provisions, a regulatory strategy that places liability along the contracting or production chain for harm that occurs lower down that chain4 and requirements under trade practices legislation to ensure an open, competitive market. Australia has been at the forefront of regulatory reform initiatives aimed at removing impediments to “efficient markets” by encouraging competition both between states and internationally (Morgan forthcoming 2003). It also has a well-developed state-based health and safety regulatory framework, based on a Robens philosophy of collective effort to remove safety risks (Johnstone 1997). In Hood’s (1998) terms, the goals of competition law are individualistic, whilst the goals of safety law are paternalistic or hierarchist. That there is an ideological interface between the two bodies of law becomes clear when the objects of the different bodies of law analyzed in the discussion below are examined. The stated objects of workplace health and safety law such as the Victorian Occupational Health and Safety Act (1985) include the protection of the

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Haines & Gurney REGULATORY CONFLICT 359 “health, safety and welfare of persons at work” (sec. 6). Thus, the legislation is driven by a primary policy of protection of the interests of workers – a paternalistic aim. On the other hand, the object of the Trade Practices Act is to “enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection. (sec. 2).”5 Here the law is aimed to maximize the “efficiency” of the market by equalizing competitive access – an individualistic aim. Public welfare is achieved through the “invisible hand” of efficient markets and innovative competitors (Hilmer 1993; Victoria. Office of Regulation Reform n.d.). Both acts regulate – that is, they exert control through legislation and ancillary legislation. But their goals differ in terms of their conception of the “ideal” state of affairs between a market and welfare ideology. Competition law emphasizes the freedom of the individual entity in the market. Access and participation in the market is the primary concern, and competition within the market is essential. Cooperation is frowned upon. On the other hand, occupational health and safety law requires one entity to take care of the interests of another. It constrains competition by disallowing reduced emphasis on worker safety as a means of securing “competitive advantage.” Here, the social benefit of worker safety is prioritized over competition outcomes.

II. REGULATORY THEORY AND PRACTICE

A. OPTIMAL REGULATORY STRATEGIES IN THEORY

To understand how this conflict draws on regulatory techniques, the first task is to map out what are currently seen as optimal strategies. In the arena of rule making, outcome- or performance-based standards are seen as the best means to encourage meaningful compliance with regulatory aims, not merely compliance with the rule (Robens 1972; May & Burby 1998; Victoria. Office of Regulation Reform n.d.; Gunningham & Johnstone 1999). Much regulatory reform within Australia emphasizes the benefits of an outcome- or performance-based regulatory regime (see Industry Commission 1995). Rules that define compliance by way of outcome (for example, a safe workplace), rather than defining compliance according to prescriptive criteria or adherence to a specified process are preferred (Gunningham & Johnstone 1999). Without emphasis on the substance at issue, both those aiming to reduce ill health at work and those aiming to enhance competition find outcome standards attractive. Second, organizational commitment must be secured. This has long been the mantra of scholars in the arena of occupational health and safety (see Braithwaite 1985) but has more recently moved to encompass a wide range of regulatory goals. This makes sense if outcomes, not compliance with

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prescriptive rules, are the central issue here. Commitment by the organization to the goals of compliance is necessary for maximum compliance outcomes (Black 1997) and to avoid strategic manipulation of regulations (McMullan & Perrier 2002). Further, regulation scholars argue that this commitment requires a motivated leadership group (Hopkins 1995), but must filter down through the organization as a whole. In short, compliance must become institutionalized. Nurturing a compliance culture, an “attitude” of the organization that values compliance goals alongside those of profit and business success (Makkai & Braithwaite 1993; Parker 1999; Luttig 2000) is important, and a means to enhance the effectiveness of outcome-based standards. In order for ongoing commitment to the goals of regulation to be secured, compliance needs to be seen as an everyday part of business activity (Reasons 1997; Standards Australia 1998; Gunningham & Johnstone 1999). This corporate culture then shapes behavior so that members act in a manner that recognizes that the success of the organization is best achieved by ongoing compliance with regulatory goals (Brooks 1988). With such a commitment in place, prescriptive rules can be kept to a minimum, increasing the clarity of the regulatory regime. Again, as long as the focus is on the need for commitment, but not the substance of that commitment, there is widespread agreement. Regulators also must be innovative and flexible. This is achieved in several ways. To be at the forefront of their profession, regulators must engender cultural change through their regulatory activities (Gunningham & Johnstone 1999; Sparrow 2000), change that promotes the “win/win” ideas of compliance and business success. This harmonization of compliance and success goals needs compliance experts (Parker 1999) and a regulatory community that can maintain the profile of the regime. It is a complex task, and other players in the “regulatory space” might be needed for assistance (Shearing 1993; Gunningham & Grabosky 1998; Kagan, Gunningham & Thornton 2003). The emphasis is on drawing on the creativity of the regulated through encouragement and prompting from a wide range of sources in devising the most efficient and effective means of achieving a given regulatory outcome (Reasons 1997; Gunningham & Johnstone 1999). Regulation should aim to enhance self-regulation (Ayres & Braithwaite 1992). The regulated has the resources and motivation to maximize the efficiency of a given regulatory demand, and so should be free to choose the means by which outcomes are achieved. Each of these elements has considerable appeal that resonates with notions of entrepreneurship and the market (Grabosky 1995). Critically, it is envisaged that this regulatory strategy will result in companies extending their commitment, to go “beyond compliance” and become exemplars of commitment to regulatory goals (Braithwaite 1985; Ayres & Braithwaite 1992; Reasons 1997; Gunningham & Johnstone 1999; Parker 1999). Regulatory scholarship extends beyond setting the regulatory framework to methods of regulatory enforcement. Excellence in compliance is not achieved by regulatory strategies in isolation from enforcement. Regulatory

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Haines & Gurney REGULATORY CONFLICT 361 strategies aimed at encouraging organizational behavior that extends “beyond compliance” must be underpinned by a rational enforcement strategy (Ayres & Braithwaite 1992; Gunningham & Johnstone 1999; Parker 2000). Enforcement policy and practice must signal to the regulated that the regulator is “fair but tough.” Pyramidal approaches to enforcement are encouraged where nonadversarial, nonpunitive enforcement measures aimed to build on trust between regulators and regulated are used in the first instance. These must inexorably resort to increased levels of punitive and intrusive measures should persuasion and cooperation fail (Ayres & Braithwaite 1992). Trust in the compliance activity of the regulator must be verified and, should it be found absent, stricter enforcement measures must follow. Ayres & Braithwaite (ibid.) argue that pyramidal enforcement strategies work best when the measures at the top of the pyramid are truly feared. Criminal penalties and licence revocation (in essence corporate capital punishment) are seen to enhance the integrity of measures imposed lower down the pyramid. There needs to be an ability to escalate signals to the regulated that noncompliant behavior will not be tolerated (ibid.:35–40). Recourse to these higher-level sanctions is necessary to act as a signal to others that the regulator is serious in its regulatory endeavor (Croall 1992:15; Gunningham & Johnstone 1999). There has also been a move to enhance the deterrent effect of punitive techniques by emphasizing individual liability of directors and senior managers (Hopkins 1995). The efficacy of individual liability as a compliance tool has long been debated within the regulatory community (for a summary of the debate see Fisse & Braithwaite 1993:chap. 2; Clinard & Yeager 1980). What is unique about the current debate is the way individual liability is seen as a way of ensuring strong leadership within companies with respect to compliance by targetting deterrence based strategies at “nominated officers” (Gunningham & Johnstone 1999; Wen Tsu’ai 1990; Hopkins 1995). In an apparently deft move, the need for senior management to “champion” compliance within a particular regulatory regime (and engender a compliance culture) and the need to make criminal penalties feared by those who are in a position to make meaningful resource allocations are solved by a single policy initiative. B. OPTIMAL REGULATORY STRATEGIES IN AUSTRALIAN HEALTH AND SAFETY AND COMPETITION REGIMES

The policy directions advocated both by the competition regulator within Australia, the Australian Competition and Consumer Commission (ACCC), and the health and safety regulator within one Australian jurisdiction, Victorian Worksafe, are indicative of this trend. The ACCC has argued for a number of years for the need for increased use of criminal penalties and in particular for the penalties to be personalized through the use of imprisonment

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for offences such as “hard core” cartels, a stepping up of the punitiveness of penalties available under the Trade Practices Act 1974 (Cth) (Fels 2002; ACCC 2002). The use of criminal penalties is seen by the ACCC as a way of creating a strong incentive to comply voluntarily and “internalise” a commitment to compliance with trade practices law, by way of developing a culture of compliance, rather than relying on companies merely responding to enforcement activity (Parker 1999). In the area of health and safety, maximum allowable penalties across Australia have increased dramatically. In addition, there are persistent calls for the introduction of Industrial Manslaughter laws (Victorian Trades Hall Council 2002). The Victorian Crimes (Workplace Deaths and Serious Injuries) Bill (Vic) is one example of this trend.6 The bill contained two complimentary proposals, both consistent with these new models of regulatory thinking. The first was an increase in penalties for breaches of occupational health and safety law, designed to increase the deterrent effect of the law. The second was the introduction of new offences such as industrial manslaughter, designed to create legal avenues that were easier for prosecutors to bring criminal proceedings in the event of a workplace fatality or serious injury (Hulls & Cameron 2000). These initiatives increase the weight at the top of the enforcement pyramid with increased emphasis on the prosecution of individuals seen to encourage leadership in health and safety (Hopkins 1995). Consistent with the pyramid model, less intrusive and punitive responses are still intended to be the primary response in both regimes, yet both argue that the deterrent effect in their operation will be enhanced by the possibility of recourse to criminal penalties. At a practical level, these trends in regulatory theorising and regulatory practice taken as a whole appear a genuine step forward. There is a level of sophistication in both that goes beyond historical debates on the “punish/ persuade” divide. Organizational processes are better accounted for, and the importance of symbolism in the law, particularly with respect to the criminal law, also is better understood and increasingly taken up in the policy arena. Regulation, as a discrete endeavor has “grown up.”

III. INTERFACES BETWEEN BODIES OF REGULATION

Each initiative described above assumes that regulatory goals are compatible if not singular. The comfortable consensus within what might be termed “good regulatory practice” hides a far more messy reality (see also Australian Law Reform Commission 2002; Teubner 1998), particularly at interfaces between regulatory regimes that are based on separate ideological underpinnings. It is in these areas of interface that the consensus on good regulatory practice is either irrelevant or can exacerbate problems for companies in their attempts to comply with disparate demands. The vignette below analyzes one such interface, the divergent regulatory responsibilities of principal companies when they decide to use a contractor to undertake certain tasks. © Blackwell Publishing Ltd. 2003

Haines & Gurney REGULATORY CONFLICT 363 A. REGULATORY DEMANDS IN USING THE SERVICES OF A CONTRACTOR

Tendering work is common in many industries and has experienced a surge of popularity in the past fifteen years (Burgess 1997; Haines 1997; Australian Centre for Industrial Relations Research and Training 1999). From a business standpoint it is seen as a way of obtaining a good or service that is “noncore” to the overall business goals. Competition between tenderers can put them under pressure to do the work well and cheaply (Drucker 1992). The company can engage the contractor who fulfils the requirements of the principal company at the least cost. Contracting out, splintering companies into discrete units, fits an individualistic orientation well, whereby multiple contractors and principles can compete to create a lean, efficient market. 1. Health and Safety Regulatory Requirements Regulators, particularly those in the safety area, have long been concerned with contracting out, in part because they understand well its threat to the ethos of health and safety. It is most often verbalized in an apprehension of the way that principal companies may be able to “contract out” risk, and so absolve themselves of regulatory responsibilities (Quinlan 1999). To tackle this problem, regulators have sought to extend definitions of responsibility beyond the company gate or company payroll. In health and safety, legislation throughout Australia now states that responsibility for employee welfare extends to contractor and subcontractor employees (for a description see Johnstone 1997). Principal companies must ascertain that the contracted work can be done safely and without risks to health, just as they would for their own employee. This step can be understood as a method of injecting paternalism into the market, through identifying principal organizations whose responsibility it is to “take care” of another. How are these responsibilities discharged? To assure the health and safety regulator that all is well, the principal commercial or noncommercial organization (hereafter “principal”) has several options. One way of attempting to avoid liability is for the principal to prefer in the tendering process those contractors that can demonstrate a high standard of occupational health and safety. That is, to seek assurances from a contractor before it is engaged (National Occupational Health & Safety Commission 1998). This might be done in several practical ways. For example, the principal might require tendering contractors to provide evidence of accreditation or training from a trusted, nominated safety and accreditation agency. Alternatively, a principal party might work together with other principals in the same or similar industry, perhaps through their industry association or employer organization, in drawing up lists of preferred contractors with a safe working history (Rees 1994). Organizations may also formalize an alert system to warn each other so as to avoid a particular contractor on the basis © Blackwell Publishing Ltd. 2003

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of its health and safety credentials. These methods give the company some comfort about the health and safety credentials of the independent contractor whose services they are engaging. 2. Problems of Health and Safety Regulatory Demands in Light of the Regulatory Interface with Competition Requirements However, these methods of “screening” contractors for health and safety performance create risks of the company breaching the Part IV competition provisions of the Trade Practices Act 1974 (Cth). For instance, to require a contractor to obtain accreditation or training from a specified agency is likely to constitute a third-line force in breach of section 47(6) of the Act. This provision has been interpreted by the courts to mean that a company will breach the law if it agrees to acquire services of another only on condition that the other party in turn acquire the services from some nominated third party (Miller 2001). Therefore, if a company requires a contractor to obtain accreditation or training from a specified agency as a condition of acquiring their services, then it will be in breach of the provision. Unlike some other competition provisions in the Act, third-line forcing per se is prohibited. This means a company will breach the provision by doing the conduct, even in the absence of anticompetitive intent or anticompetitive effect. Further, the company does not need to state that it requires tendering contractors to obtain this accreditation to fall foul of the provision. Rather, under section 47(13)(a) of the Act, conditions that are “ascertainable only by inference from the conduct of persons or from other relevant circumstances” will be sufficient to constitute a third-line force. This means that companies need to be particularly vigilant in their communications with suppliers and customers to ensure that they are not considered to be imposing an implied condition. Thus, it is difficult to obtain the desired outcome without imposing a third-line force.7 An attempt by the company to meet with others in the industry to draw up a preferred list of contractors or identify which contractors to avoid on the basis of occupational health and safety performance may also fall foul of the Act’s “boycott” provisions. Arguably, also it could open up the possibility of collusion between companies, one of the most serious offences under the Act. However, industry and employer associations are encouraged by health and safety consultants to draw up lists of preferred contractors as a way of ensuring safe working practice (Wiiki 1997; Shaw 2000), as “hands on” experience of contractors’ work is more effective in ensuring good safety practice than paper-based evidence presented at the time of tendering (Bottomley 1999). Further, collaboration between competing organizations to set standards and share information is a key part of design of occupational health and safety law in Australia. The Robens Report (1972), on which much occupational health and safety legislation both within the United Kingdom and Australia is based, stated that, “We feel very strongly that this © Blackwell Publishing Ltd. 2003

Haines & Gurney REGULATORY CONFLICT 365 should include more emphasis in future on joint action at the industry level” (Robens 1972:30). 3. Dealing with the Regulatory Interface In terms of the way both bodies of law are framed there is no strict legal inconsistency here. There are a number of ways that compliance with both sets of provisions is possible, but none appear in the regulatory prescriptions above in terms of maximizing compliance with a single regulatory aim and all involve additional cost to the principal. For instance, if the company engages direct employees it will not fall foul of the Trade Practices Act as section 4 expressly excludes application of the Act to formal employment relationships. Second, instead of requiring contractors to acquire a particular accreditation, the principal company could simply state that tenders must demonstrate a high commitment to health and safety and leave the means by which they do so open. This does not involve a third-line force. However, in both cases costs for the principal increase – in the first example, by increasing its workforce and, in the second, by increasing the resources necessary to assess the tender documents to determine the tenderer’s occupational health and safety credentials. A related approach would be to require safety accreditation, but not specify from whom. Again there are costs associated with evaluation of each of the accreditation schemes by the principal company and, in the event that there is only one or a few accreditation agencies offering such services, this may still be considered a third-line force under section 47(13)(a) of the Act. While there is not a strict legal inconsistency between the regulatory regimes, the simplest and most efficient ways of ascertaining the health and safety credentials of a contractor are likely to cause an infringement of the Trade Practices Act. Further, “optimal” regulatory strategies provide little guidance concerning how this conflict can be resolved. Regulators do understand there is a problem. They are, however, reluctant to cede control to another regulator with the result that conflict resolution is dealt with in a case-by-case manner. In the case of occupational health and safety, resolution is decided when a safety breach has reached court. The obligation under the Victorian Occupational Health and Safety Act only requires such steps to be taken as are “practicable” (as defined in section 4 of the Act), practicability being a major issue in court (Johnstone 1997). Trade practices legislation allows resolution at an earlier stage. Provisions in the Trade Practices Act enable the ACCC to excuse certain types of anticompetitive conduct through accepting company applications to receive a “notification” or by granting an “authorization.” This allows the ACCC to decide exceptions earlier than the occupational health and safety regulator. However, there are substantial costs involved in preparing this documentation to the satisfaction of the ACCC. The exemption from the law only applies to the particular piece of conduct that is the subject of the authorization or notification, and, in the case of notifications provided under the Act, the exemption may be © Blackwell Publishing Ltd. 2003

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withdrawn by the ACCC at a later date. Each new call for tender by the principal company could require application for authorization or notification. Most important, the ACCC is a competition regulator. Its policy commitment is to the competition regime. Given its individualistic orientation, it may not be able to “objectively” weigh up the extent to which competition is to be sacrificed in the name of a competing policy agenda when it is faced with an application for an exemption from certain of the provisions of the Trade Practices Act. In short, for the ACCC limited paternalism is conceded grudgingly, but only on a case-by-case basis. Alternative forms of resolution deal with issues of legalities and sovereignty (familiar to the conflict of laws literature), rather than substance. Lanham (2001:19) notes that criminal law does not require a party to comply with one law when it would absolutely preclude compliance with another. Freiberg (1992:14) also points out that a breach of one law if caused by a genuine attempt to comply with another law will be treated more leniently by the courts, although in this case it will not absolve a party from liability. Further, section 109 of the Australian Constitution prevents State and Commonwealth governments from creating legislation that is strictly inconsistent with the legislation of the other government. It states that “when a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.” In the case above, the legislation of the ACCC as the federal regulator would prevail. Whilst this should provide some comfort to the ACCC it does little to address the real problem of tensions between competing regulatory obligations. B. COMPETING REGULATORY INCENTIVES AND “BEYOND COMPLIANCE”

Such resolutions, however, remain invisible to the bulk of the regulatory literature, concerned as it is principally with a single regulatory aim. In the rudimentary example above what is highlighted in both the problem and the limited avenues for resolution is the irrelevance of the regulatory prescriptions when faced with multiple and contradictory regulatory aims. This is particularly the case when “command and control” measures are center stage – that is, when the discussion revolves around whether to “punish” or “persuade” the organization to comply with a single goal. What is explored in this section is the potential that such prescriptions might exacerbate conflict. This is in part because contemporary scholarship is not simply concerned with minimal compliance; rather, regulatory theorists seek to motivate company behavior that goes “beyond compliance” (Gunningham & Johnstone 1999). Indeed companies may simply go beyond compliance because of the uncertainty created in general rules about what minimal compliance might actually mean. The combination of uncertainty and increased threat of punitive enforcement in the event of failure to meet legal standards lead companies to want to go “beyond compliance” to make sure that they are free from liability – and this

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Haines & Gurney REGULATORY CONFLICT 367 is exactly what is desired by regulators (DeHart-Davis & Bozeman 2001; Gunningham & Johnstone 1999; Parker 1999). Effectively, the uncertainties in the standards imposed by law combined with the strong incentive to ensure compliance (including increased penalties) means that the law creates “shadows” (Kobayashi 2001; Spence 2001; DeHart-Davis & Bozeman 2001; Tucker 1998; Stanley 1995). Certain conduct may not be strictly required by law, but in the face of uncertainty the organization will likely take extra steps to ensure it is compliant. However, doing more than the law requires, even within a single regulatory regime, may sometimes inhibit rather than assist the attainment of a regulatory goal. The line between “beyond compliance” and “over compliance” is blurred. Literature such as this points to competing incentives and counterproductive effects possible within a single regulatory regime even with a “rational” enforcement strategy (see also Haines 1997:218–41). This “overcompliance” scenario is further complicated in areas where there is a regulatory interface. For instance, overcompliance with trade practices law may not result in negative consequences for competition outcomes (although it may), but it may well mean noncompliance with other legislative requirements, such as occupational health and safety law. The reverse may also be true. Exemplary compliance in health and safety, such as the requirement of nominated accreditation, collaboration with competitors for the purposes of increasing safety (as advocated by Rees 1994), may breach trade practices law through either a third-line force or collusion. However, this “shadowing” pushing regulatees to over-comply is not an accidental side effect of these models of regulation. Rather, models of regulation are designed to have this effect and are encapsulated in the epithet “continuous improvement.” As Gunningham & Johnstone have noted, an important benefit of more flexible, less prescriptive models of regulation is that they encourage the organization to do more than its strict legal requirements (1999:34–35). Research in the competition regulatory arena supports this finding. In her research, Parker (1999) notes that “in settlement discussions, ACCC staff found that they could trade on the fact that companies were willing to do more than was strictly necessary under the Act to save costs and scandal of trial” (ibid.:221). Indeed, when viewed from the perspective of “overdeterrence” rather than “beyond compliance,” each regulatory initiative outlined in Part II.A above can be seen to exacerbate the problem of regulatory conflict. Outcome standards create uncertainties that push towards overcompliance; a focus on compliance cultures propel innovation that may inhibit compliance with one or other body of law. The recent tendencies towards increasing use of criminal penalties, particularly penalties that apply to individuals, also contribute to the problem. Criminal penalties act in a highly symbolic manner to condemn certain behavior. As such, they are most likely to “overdeter” targeted groups (Kobayahsi 2001; Fischel & Sykes 1996).

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IV. REGULATORY INTERFACE, META-REGULATION, AND JURIDIFICATION

Despite the incompatibility of some regulatory goals, rules and processes develop to reduce liability and assure audiences that compliance in each respective area has been achieved (Hopkins 1994; Haines & Sutton 2003). Yet, avoiding liability has only an indirect relationship to improved regulatory outcomes, in part because attention becomes diverted towards “juridified” paper-based assurances rather than substantive outcomes (Hopkins 1994; Sitkin & Beis 1994; Haines 1997). In similar manner, resolution of inconsistency between regulatory regimes is, as demonstrated in the vignette above, often resolved by way of the regulator developing additional legal processes that the regulated must follow. As such, it increases the complexity of the law without resolving or addressing the underlying conflict. This complexity presents further challenges. Regulatory scholars and practitioners have long conceded that the proliferation of complex regulatory demands is problematic (see Robens 1972; Teubner 1998; Haines & Sutton 2003). The term juridification is used to capture the problem and is specifically concerned with the way the legal system tries to resolve inconsistency through the creation of denser and more specific forms of law. Ultimately, then, the conflict – and the juridification that accompanies it – is delegated to the regulated organization through the regulatory innovations of performance standards and manipulation of organizational culture through audit processes and requirements. Juridification is not restricted to law and ancillary legislation; it reaches deep within the company itself to encourage self-regulation of microlevel behavior. To give effect to this regulatory goal, codes of practice, accreditation, and auditing regimes are brought into play and become essential tools by which companies seek to assure regulators and courts of their commitment to compliance (Hopkins 1994; Haines & Sutton 2003). We have become, in Mike Power’s (1999) term, “an audit society.” Problems at the regulatory interface exacerbate the problems of juridification, both outside the corporate boundary and within. Resolution of inconsistencies in regulatory demands is often seen as the responsibility of the regulatee to resolve, through comprehensive compliance management practices (Standards Australia 1998). The one area of regulatory scholarship that attempts to combine disparate areas of regulatory control, “meta-regulation,” or the regulation of selfregulation, (Paterson 2000; Parker 2000) actually takes this to new heights. Meta-regulation requires companies to take account of all risks to noncompliance through a comprehensive risk audit to ensure all threats to compliance are recognized and risks minimized. Such an approach delegates the task of resolving conflict to the regulated entity — which visibly must be seen to comply, through a proliferating audit process. Problems of incompatibility are submerged in audit processes with the regulator’s role reduced to the regulation of self-regulation.

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Haines & Gurney REGULATORY CONFLICT 369 A. WHY IS THIS SITUATION PROBLEMATIC? THE BURDEN IMPOSED ON REGULATED ENTITIES

At one level, it could be argued that this delegation and the subsequent burden on regulated entities are unproblematic. Harmonizing of regulatory objectives is what good corporate citizens do best. Indeed, in economic terms companies increasingly are required to internalize their externalities. Reconciling and prioritizing various demands is just a part of contemporary business life, and difficult decisions need to be made (see, e.g., Mokhiber 1988). Indeed in previous writing one of the authors has suggested that an organization with a “virtuous” culture is one that attempts to “harmonize” competing demands that it faces, rather than dichotomizing demands and forcing choices (Haines 1997:94). On this analysis, the proper role of regulated entities is to determine a way of “blending” or “harmonizing” the various obligations they face.8 There are various nongovernmental bodies that seek to assist companies in this task. For instance, Standards Australia in their compliance management package recommends that organizations appoint a senior officer to be responsible for managing that organization’s compliance with all of its legislative and other regulatory obligations and standards (1998:9). That this officer oversees compliance with all regulatory obligations means that there is some point in the organization at which competing regulatory demands would have to be rationalized. Further, regulatory reform policies specifically argue that the state should not bear the cost of regulating company behavior. The principle of cost neutrality, namely that companies must pay for the cost of their own regulation, is enshrined in most regulatory reform regimes (Victoria. Office of Regulation Reform n.d.; U.S. Office of Management and Budget 1986; Cabinet Office [Regulatory Impact Unit] 2000; Haines & Sutton 2003). This includes the cost of developing a compliance regime that meets all their legal obligations. True to individualistic principles, there should be no drain on the public purse to assist companies in undertaking such responsibilities. Resolving inconsistencies the regulatory interface is costly, and that cost should be borne by the regulated. However, this method of delegating the resolution of regulatory conflict to the regulated brings with it considerable risk, particularly when harmonization is not viable. In short, anomic stresses created by incompatibility within the organization may well result in less than optimal, if not overtly deviant, means of “compliance” (Passas & Nelken 1993; Haines & Sutton 2003). Certainly, the problems of fatalism in Hood’s (1998) terms appear here with ritualistic adherence to rules that bear little relation to actual practice. As research has shown, legal complexity increases opportunity for deviance (Vaughan 1983; Passas & Nelken 1993). By delegating responsibility to companies, we may unwittingly provide them the tools and motivation to avoid the law, and in a manner of their own choosing. The history of auditing

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within the accountancy field does not augur well for its widespread application to all risks (Sikka et al. 1998). The trend in looking for new ways to hold individual officers within an organization personally liable (e.g. Gunningham & Johnstone 1999; Hopkins 1995) further exacerbates problems for harmonization since the “internal politics” of the organization can determine what focus is given to different obligations and goals by the organization (Rosen 1989; Haines 1997). Within large, complex organizations, the burden on one senior manager for all regulatory compliance, as suggested by Standards Australia (1998), may simply be unrealistic. Rather, within an organization it is more usual to have different departments or officers with different concerns as to how the organization should react to its various regulatory obligations (Mentzger & Schwenk 1990). A number of appointments of senior managers as “nominated officers” for a number of different areas of regulatory concern may exist: a nominated trade practices compliance officer; a nominated occupational health and safety officer; a nominated “environment” officer; and so on. If liability is attached to individuals within organizations on the basis of how well the company performs in the area of regulation for which they are responsible, each relevant individual will have an increased personal stake in the company complying with that particular body of law. However, while that gives them a strong personal incentive to see that the company complies with or exceeds these particular legal obligations, it does not help the company to “harmonize” its various obligations. Rather, it creates a model of liability where the company may become internally divided as to objectives. The occupational health and safety officer insists that approach x be taken to minimize the risk that there will be a health and safety breach for which she is responsible. The trade practices compliance manager insists that approach y, inconsistent with approach x, be adopted so that the chances that the Trade Practices Act will be breached are minimized, shielding him or from personal liability. The resolution might come down to who holds more political influence within the organization and who can make the best case to the organization that there are greater commercial benefits and fewer costs associated with taking particular steps to comply with the area of law with which they are concerned than other, potentially contradictory, steps to comply with other areas of law (Genn 1993). Ultimately, liability will be deflected to the weakest party still acceptable to the regulatory authority, a trajectory seen in the inclusion of “reverse whistleblower” practices for companies found criminally liable, where companies provide a convenient blameworthy individual for regulators to punish (Laufer 2002). B. WHY IS THIS SITUATION PROBLEMATIC? POLITICS AND REGULATORY TECHNIQUES

However, as argued at the beginning of the paper, the problem runs deeper than simply an increase in the burden for regulatees and the potential for © Blackwell Publishing Ltd. 2003

Haines & Gurney REGULATORY CONFLICT 371 new avenues of corporate deviance and deflection of blame. It is a problem of conflict between the ideological bases of different regulatory regimes, not just a problem of inconsistent incentives within regulatory regimes, problematic though that may be. Resolution, then, is not straightforward. Indeed these two bodies of law in the vignette above point to very different ideological underpinnings, both with considerable political purchase. Competition policy goes to the heart of economic management and in particular the need to pursue strategies of economic growth through market efficiency. International economic demands (such as those of the World Trade Organization) weigh heavily in the equation. Decreasing priority on competition, such as shielding companies with good safety practices from competitive challenge would bring with it cries of market manipulation and protectionism, as well as perhaps pandering to sectional interests. Preventing markets from operating efficiently might be seen as a form of fiscal irresponsibility. In contrast, the demand for safety at work forms part of the assurance role of government. Major industrial disasters and examples of deaths and injury at work challenge the legitimacy of government (Hancher & Moran 1998; Haines 1999; Haines 2002). Governments must act to reassure the public in times of threat. Increasing regulatory penalties is one means by which this is achieved. The political arena itself is caught in between the irreconcilable demands for fiscal responsibility and legitimacy. What then is the role for regulatory techniques in these areas of interface? Certainly, where interfaces such as these between different bodies of law and regulation have an inescapably political dimension to them, it seems that it is government that should take responsibility for making a political evaluation about how the different bodies of law are to be rationalized. In the absence of politicians taking responsibility for this, we would argue that regulatory frameworks are more likely to remain fragile creations. It is interesting to note on this point that regulatory theory within the discipline of economic geography takes this understanding of regulatory frameworks as temporary resolutions to enduring institutional conflict as a central theme and beginning point for research and analysis (Gibbs 1996). Studies of regulatory space within socio-legal studies might take some of the lead here and take seriously the manner in which institutions vie for supremacy within that space. There has been some analysis. Shearing notes that “in regulatory space regulatory schemes often compete with each other for control of the ordering process,” a phenomenon he labels “regulatory struggle” (Shearing 1993:74). The regulator will always be competing with other social, economic, and political forces to influence regulatees (Gray & Scholz 1993). Yet, the translation of this insight into an analysis of the nature of regulatory techniques and their use as strategic tools to establish political supremacy is less evident. The recent analysis by Kagan, Gunningham, and Thornton (2003) is instructive in this regard. Building on a growing scholarship of the importance of elements outside of the command and control framework to compliance, Kagan et al. (2003) demonstrate the importance of intensifying © Blackwell Publishing Ltd. 2003

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political pressures and “social licence” pressures to “beyond compliance” strategies in environmental compliance. This demonstrates again the importance of the political arena in the degree to which it supports or suppresses institutions that coalesce around given regulatory arenas. The study could well be extended to understand why such institutions existed in some contexts and yet others they were lacking. Going one step further, a comparative study between regulatory arenas, particularly one based on a different ideological base, could take this research to another level by enquiring whether a “social licence” in one area of regulatory endeavor has implications for political agendas in competing arenas. Reflexive regulatory scholarship needs to map out the ways in which regulatory strategies intersect with political projects. C. REGULATORY STRUGGLE AND REGULATORY BODIES

An alternative programme of research might also explore the consequences of delegation of political leadership to regulatory actors with “regulatory struggle” realized as a struggle between government regulators. There is some evidence that, in the absence of government rationalization, these government agencies compete with each other for influence over the conduct of regulated entities (Maloney 2001). Habermas (1976) provides an account of a “legitimacy deficit” as the reason why government uses symbolic measures to capture public loyalty. However, similar observations could be made about publicly funded and publicly accountable regulators. A regulator must “legitimate” its existence, its funding, and its powers. It does this by affirming the importance of the regulatory goal that it is directed at achieving and by demonstrating how effective it is in achieving that goal. A key determinant of how well the regulator is able to “legitimate” its existence and funding relates to the harm to which the body of regulation is addressed at preventing (Hawkins 1984). Hawkins notes that the “lack of a moral mandate threatens the regulatory agency’s legitimacy and enforcement authority” (ibid.:13). As the “moral authority” of the regulator is often not secured on a perceived moral and political consensus on the ills they seek to control” (ibid.:12–13), the regulator faces the task of having to prove its “legitimacy.” If it cannot maintain the confidence of the government and the public that fund it, then senior management within the agency may be removed or the agency may suffer a reduction in funding or be disbanded. The agency must therefore constantly reinforce the value of its work. Since there may be other government regulators pursuing competing policy objectives, the task of defending the legitimacy of the policy goal of the regulator is a political struggle. In Australia, as elsewhere (Maloney 2001), this has led to regulators having an increased public role in policy debates (cf. Fels 2001, 2002). The political struggle to reinforce the regulator’s legitimacy involves stakeholders becoming involved in supporting the strengthening of a particular regime, for instance, organized labor lobbying for a stronger regime of occupational © Blackwell Publishing Ltd. 2003

Haines & Gurney REGULATORY CONFLICT 373 health and safety regulation (Grabosky & Braithwaite 1986; Harvey 1989; see also Victorian Trades Hall Council 2002). The power held by various participants in the “regulatory community” (Meidinger 1987) to make political demands affect how well the regulator can defend its area of regulation against conflicting policy demands. Across multiple regulatory regimes, there has been an increase in maximum penalties, not surprising as Freiberg (1992) notes, the legislative view of the gravity of an offence is primarily expressed through the maximum penalty that applies. A process of the “ratcheting up” of the punitiveness of penalties available to regulators has already been set in motion (for an equivalent process in the U.S. see Spence 2001; DeHart Davis & Bozeman 2001; Kobayashi 2001). A regulatory agency that wants to reinforce the significance of its area of regulation, and the gravity of the harm it seeks to prevent, has an interest in calling for more punitive maximum penalties to apply in its field of regulation.

V. CONCLUSION

This paper has set out an argument that regulatory scholarship pay more serious attention to the problem of ideological conflict, particularly at the interface between regulatory regimes. Whilst competing incentives within regulatory regimes have been given some attention within regulatory scholarship, the goals of compliance are often seen as normatively desirable, with compliance seen as virtuous and the alternative a problem of selfish pursuit of profit or incompetence. Conceptualizing the problem of regulation as providing mechanisms that encourage regulatees to excel in their compliance efforts through outcome-based strategies, engendering cultural change, credible enforcement regimes give a perception that the dilemma facing regulators and their clients is relatively simple a choice between doing the right or the wrong thing. Yet a broad sweep of the literature shows that regulatory conflict – between competing ideals – is a common feature of the regulatory landscape. Hood’s (1998) work that traces four competing visions of “ideal” regulatory order offers a useful way to understand the political nature of the regulatory project. With competing visions as the starting point, the complexity of regulation is brought to the fore. Through a legal analysis of the conflict between competition law and health and safety law, the paper analyzed how the techniques promoted to engender exemplary compliance either were irrelevant to or exacerbated the conflict and ensuing problems of juridification, proliferating rules that are themselves the seed of further sites of noncompliance. Recognition of the problem by courts and regulators has seen a caseby-case resolution based on notions of sovereignty, legality, and permission by exception. None of these solutions can gain much from ideas of scholars on “beyond compliance” and optimal strategies that assume a single regulatory goal. Further, recent proposals by regulatory theorists to resolve this © Blackwell Publishing Ltd. 2003

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conflict, through meta-regulation, simply delegate the problem of resolution of the irreconcilable to the regulated entity. Certainly, socio-legal scholarship may glean some insight from regulatory theory within economic geography, where regulatory frameworks are seen primarily as temporary resolutions to institutional conflict. With this starting point the important role for political debate about the “good society” is made plain and the contextual nature of regulation is reemphasized. Based on such debates the importance of a possible rationalization of regulatory goals limited to what is possible within a robust democratic system is highlighted. In contrast, the pursuit of a scientific base for maximizing compliance as a generic good deflects attention away from the political nature of regulation towards measures which provide the illusion of a solution but end up deflecting and potentially exacerbating conflict, juridification, and deviance.

fiona haines is Senior Lecturer at the Department of Criminology, University of Melbourne. david gurney is a solicitor of the Supreme Court of Victoria.

NOTES

1. 2.

3.

4.

Fischel and Sykes (1996) assume unproblematically the moral “rightness” of the competition in the market, in an otherwise excellent, thought-provoking article. This is despite the fact that “market failure” is itself an ideological concept. Economists may argue, for example, that market failure is an essential component of education of consumers, that failure makes risk visible in a manner that provides the opportunity for consumers to see that reduced prices come at a cost (for a discussion see Haines & Sutton 2003:10–13). There are two distinct elements to this. That is that the goals might be shared, but the means to achieve them differ, or that the goals differ. For example, maximizing health might be achieved through professional self-regulation or through a market-based solution (egalitarianism or individualism in Hood’s (1998) terms. Alternatively, the goal might differ as in the vignette described below. Whilst this paper is primarily concerned with ideological conflict in goals, it is recognized that differences in method also confound the regulatory problem. However, it is also the case that means become ends, that the market becomes and end in of itself, or that professional self-regulation (whether doctors, lawyers, architects, or whatever) becomes viewed as the “proper” form of relationships in a given area. In such cases the dispute underlying appropriate means are based on different views about “proper” forms society should take and the appropriate relationships between individuals and groups. “Chain of responsibility” provisions are common in health and safety regimes throughout Australia. Techniques are also being introduced in the truck safety area in Australia. Here the consignor, packer, loader, carrier, and consignee, in addition to the truck driver, can be held liable for an unsafe or overloaded vehicle. In the past, it was the truck driver stopped by police or road transit authorities on the road was held solely liable and fined accordingly. For further details, see Road Transport (Compliance and Enforcement) Bill – Model Provisions –

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5.

6.

7.

8.

Exposure Draft 2002 and, also, Information Bulletin Chain of Responsibility (1999) available at http://www.nrtc.gov.au/publications/bulletin–19.asp?lo=public (accessed 19 September 2002). This paper will not deal with consumer protection. This aspect of the legislation is contained in Part V and brings with it a greater emphasis on paternalism. The primary concern of this paper is the contrast between Part IV of the Act and Occupational Health and Safety law. We will not be referring to Part V of the Trade Practices Act. This bill was recently defeated in the Legislative Council (Upper House) in the Victorian Parliament. However, the structure of the bill is common to proposals elsewhere, most notably in the Australian Capital Territory (ACT) and the United Kingdom. Since it has generated considerable debate it is the most useful example for the purposes of this paper. The problem of third-line forcing has been made more complex in the move to privatize government accreditation schemes. For example, “SafetyMap” was a safety accreditation scheme initially devised and audited by the government regulator. Certification under the scheme has recently been privatized as discussed in an interview with the director of Shaw Idea Pty. Ltd. (Shaw 2002). As a government scheme it was exempt from Trade Practices Act scrutiny, but now certification, as a private endeavor falls under the purview of the competition regulator, the ACCC. Indeed the push to privatize government regulatory functions brings with it considerable potential to exacerbate conflict with competition law. Public interests theorists who see regulatory intervention as self seeking, may welcome this as a means to “reign back” self-interested regulatory endeavors. Safety professionals may well view the same problem differently. The regulatory role is then simply to assess this blending process – as in the new meta-risk management approaches. REFERENCES

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victorian trades hall council (2002) Industrial Manslaughter Update. Available at www.vthc.org.au/campaigns/20020628_OHS.html (accessed 6 August 2002). watters, fiona (2003) The Devil is the Details: The Deregulation of an Essential Service. Unpublished Ph.D. diss., University of Melbourne. wen ts’ai, lim (1990) “Corporations and the Devil’s Dictionary: The Problem of Individual Responsibility for Corporate Crimes,” Sydney Law Review 12:311–45. wiiki, janet (1997) “Contractor Safety Assessments for PSM Compliance: Following up on Contractor Safety Assessments,” Business and Industry Connection Magazine. Available at http://www.icusafety.com/articles/6–97.htm(accessed 2 August 2002). CASES CITED

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Australia Trade Practices Act 1974 (Cth) Occupational Health and Safety Act 1985 (Vic Stat).

© Blackwell Publishing Ltd. 2003