Best Practices on Regulatory Impact Analysis in OECD countries
Regulatory Governance Initiative in South East Europe
Cesar Cordova-Novion Deputy Head OECD Regulatory Reform Programme Sofia, Bulgaria 23 January 2003
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Strategies for Assuring Regulatory Quality
I. Building a regulatory management system
Regulate the regulators through transparency and accountability mechanisms (laws, policies, institutions, enforcement, etc.)
II. Improving the quality of new regulations
Control of the flow (RIA, consultation, alternatives, co-ordination, etc.)
III. Upgrading the quality of existing regulations
Control of the stock (deregulation, up-dating, codification and restatement, formalities, etc.)
Methods to take a regulatory decision
Political Expert Consensus
Benchmarking
Empirical
RIA Best practices
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RIA is required before adopting a regulation in 13 OECD countries
OECD developed ten criteria
OECD 1997 Regulatory Impact Analysis: Best Practices in OECD countries, Paris
Based on
16 countries reviewed under OECD Regulatory Reform Programme
Key issues
Theory VS. Practice
Experimental period and the enforcement
Fine tuning the instrument(s)
A continuous quality process Start small, scale rapidly
Shifting and balancing the emphasis on carrots and sticks Periodic external evaluation of the instrument(s)
Aspects of RIAs in OECD countries
(28 countries)
14 12 11 13 11 11 11 9 8 7 7 11 1998 2000
Number of countries
10 8 6 4 2 0 RIA for draft bills RIA for subordinated regulations RIA quantifies costs 4
RIA quantifies benefits
RIA shows benefits higher than costs
RIA publicly consulted
1. Maximise political commitment to RIA
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Endorsement at the highest levels of government Supported by clear ministerial accountability
Key issues
Embedded in law or secondary regulation Cabinet level document Fragmentation of governance structure and administrative culture Scope of RIA (primary, secondary regs, sectoral regulators, soft-law, subordinated regulations, etc). The role of Parliament 6
2. Allocate responsibilities for RIA programme elements carefully
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Decentralisation
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to ministries and regulators to favour ownership and integration into decision-making
Central unit functions:
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manage RIA process challenge RIAs training and guidance for RIA drafters (also advocate reforms)
Key issues Resources for RIA drafter and for the central unit Credibility of challenge function of the central unit 7 Technical Vs political gate keeper
3. Use a consistent but flexible analytical method
Qualitative Vs. Quantitative analysis Benefit-cost analysis Risk assessment
Key issues
Difficulty to assess benefits Difficulty to assess dynamic effects A standard methodology to provide comparability Low technical skills in the public sector (rule-making training) individual VS cumulative impacts 8
4. Develop and implement data collection strategies
Experts (e.g. interviews) Surveys & studies Panel tests Models
Key issues
Clarity and precision of guidance Evidence-based training Resources for data gathering
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5. Target RIA efforts
Primary and Secondary regulations Thresholds Common sense Two-step approach
Key issues
Setting thresholds The onus of the proof Underestimation of the first RIA in a two-step approach
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6. Integrate RIA with the policy making process and begin as early as possible
Avoid to transform RIA on a justification report or internal red tape Assessment of alternatives to regulations
Key issues
Emphasis on alternatives (including do nothing one) Understanding regulatory compliance Costing enforcement (including lower levels of governments) Tradition of economic instruments 11 Capture of the challenge function
7. Involve the public extensively
Democratic/participation dimension Data gathering mechanisms Increase compliance Accelerate and ease the implementation
Key issues
Time constraints The power of exposure Mandatory publication or not Active consultation techniques (e.g. panel tests) Passive consultation (notice and comments)
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8. Communicate the results
Improves transparency and accountability Improves regulatory compliance Increases trust in government and RIA
Key issues
Parliament may require RIAs for draft laws Response to comments to draft RIAs
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9. Train the regulators
A decision-making technique A vehicle for a cultural change for regulators
Key issues
Guideline and training material (including e-based) Legal Vs evidence-based culture
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10. Apply RIA to existing as well as new regulations
RIA as a performance assessment instrument
Key issues Ex ante Vs ex post evaluation Maximising investment Strategic approach to massive reforms
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Conclusions
Achievements
A better designed and more effective instrument Better understanding of regulatory impacts
Challenges
Implementation Quantification & targeting Increasing objectives/criteria
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