California Gov. Edmund G. (Jerry) Brown's chief environmental adviser yesterday proposed sweeping changes in the state regulatory system, including the creation of financial incentives to help regulated industries.

Citing numerous failures in government regulation, California Air Resources Board Chairman Tom Quinn said the current regulatory system is "wasteful," and does not provide "effective solutions to our health, industrial safety and environmental problems."

In keeping with Brown's new-found fiscal conservatism, Quinn called for a new kind of regulation "which relies on... economic incentives, competition and the forces of the market-place."

Quinn's proposal, a dramatic departure from the traditional liberal-environmentalist views he and Brown held before the passage of Proposition 13, calls for continued cost-benefit studies to justify proposed regulations and as yet unspecified economic incentives to encourage some industries to clean up their own.

While the ideas put forth by Quinn are not new, California would be the first state to implement them at the level he proposes.

Quinn named three specific areas that he said illustrated the need for reform: health care, environmental protection and occupational health and safety.

"Government regulations, he said, including unnecessary government-induced health care costs, already contribute at least 2 percent to the annual inflation rate."

In the environmental area, he added, "society will spend some $500 billion in the next decade to clean our air and water.

"Government efforts to improve workplace safety have been wasteful, inefficient and accomplished very little, so more of the same does not appear to be the answer."

In a speech before a citizens' group called Los Angeles Town Hall, Quinn yesterday outlined his plan calling for:

The creation of a regulatory reform panel comprised of business and labor leaders, legal experts and economists to develop legislative recommendations. The panel will present its findings to the governor and legislature and recommend ways to form a new system of regulation.

The development of procedures for public review of the costs and benefits of proposed and existing regulations.

"To some extent this process is already under way," Quinn said, "but the new approach will require a more formalized and more thorough review." He said a detailed cost-benefit analysis will be required for every major regulation, and it will include the cost both to the government and the private sector.

Although it will be "difficult" to quantify many health-related benefits in terms of dollars, Quinn said, "at least... public health benefits can be clearly and explicitly stated."

In the cost-benefit approach, Quinn is also calling for a long-term review of state regulation "to expand the analysis of regulation beyond those reports prepared by the regulators themselves."

This proposal calls for an unprecedented impact reporting that presumably would monitor the results of regulation, and help "all of us -- business, environmentalists, government and the general public," to evaluate the effectiveness of regulation, Quinn said.

"The growing convergence of liberal and conservative thought, of business and environmentalist views," Quinn said in a reference to the shifting of political stance by the Brown administration, "offers for the first time in many years an opportunity for a constructive, cooperative effort to solve some serious and vexing problems."