Regulatory Sandboxes

The NSW Government endorses the use of regulatory sandboxes to improve the competitiveness of doing business in NSW.

The Regulatory Sandbox initiative encourages innovators to raise regulatory barriers with the relevant regulator and allows innovators to negotiate testing environments for new business models or products that are constrained by or outside of existing regulations. 

A regulatory sandbox is a risk-controlled, time limited testing environment that enables:

  • A business to reduce uncertainty and manage regulatory risks during the testing stage of its innovative product or business model
  • A regulator to test adaptive regulatory responses to disruption in the market.

Success factors of regulatory sandboxes:

  • The parameters are co-designed by government and stakeholders
  • Risks are controlled
  • It is time limited
  • It is open to all businesses - the process of application and approval is transparent
  • The parameters are clearly communicated and participants are bound by the conditions set by the regulator.

The NSW Government announced that it will soon establish its first ever Productivity Commission to drive microeconomic reform and tackle burdensome regulation in NSW.

The Commission, led by the NSW Productivity Commissioner, will spearhead a reform agenda, focused on four core themes:

  • Making it easier to do business
  • Lowering the cost of living
  • Making housing more affordable
  • Making NSW the easiest state to move to.

An online portal, to be released shortly, will allow citizens and businesses to identify the most important regulatory roadblocks, and provide fresh ideas to reduce the burden.

In addition, Innovation NSW is investigating sectors that are facing impending disruption, where there is a significant presence of businesses in NSW, and where there is the potential for significant net community benefit. We are kick starting conversations between businesses and regulators, to proactively address disruption and improve the competitiveness of doing business in NSW.


Lessons learned

When we asked businesses to tell us which NSW regulations have created barriers testing their innovative products or services, we found many businesses were unclear of the how their product fit within existing regulation or whether there were regulatory barriers to market entry.

So we have compiled the following Tips for Innovators to assist you in your journey:

  • If you are unclear about which regulation applies to your innovation seek legal advice. A complete directory of regulations is available here 
  • Engage with the relevant regulator early and often when you are preparing to test your innovation and you are unclear of the regulatory environment in which you are operating. 
  • Make use of all the supports available to small businesses in NSW:
    • Business Connect provides general and specialist business advice and government information to startups and SMEs
    • Small Business Commission’s website lists useful business sites and includes a list of government agencies and their responsibilities.
    • Commonwealth Government's support for small business is listed here they also have a Small Business Support Line on 1800 777 275.