When regulations are designed well, they can help to boost growth, tackle climate change, and enhance well-being. When not, they can result in unnecessary red tape and reduced trust in government action. Regulations should be clear, sound, and take into account a range of views. Regulatory impact assessment (RIA) supports decision-making by providing objective information about the likely benefits and costs of policy proposals. It is a tool to help governments create transparent, evidence-based policies. All OECD countries require RIA for some prospective regulations.
The Indicators of Regulatory Policy and Governance (iREG) survey measures the quality of OECD countries’ RIA systems. The quality of RIA systems has been improving slowly over time. 23 of 38 OECD countries (61%) plus the EU improved the quality of their RIA systems relating to primary laws between 2018 and 2021 (Figure 5.3). 20 of 38 OECD countries (53%) plus the EU improved RIA systems relating to subordinate regulations over the same period (Figure 5.4). Some countries made substantial improvements. Latvia now requires RIAs to consider budgetary, financial, and administrative costs, and Israel, Portugal and Spain have all strengthened the scrutiny of information provided to decision makers in RIAs.
However, most OECD countries still have significant scope to improve their RIA systems. The areas with the greatest scope for improvement, for both primary laws (Figure 5.3) and subordinate regulations (Figure 5.4), is Oversight and Quality Control (mechanisms to monitor and ensure the quality of impact assessments), followed by Transparency. This remains the case despite the fact that these areas saw the largest improvements between 2018 and 2021.
OECD countries are considering a broader suite of impacts when conducting RIA. Of 34 OECD countries analysed plus the EU, virtually all now require consideration of competition, budgetary, and government impacts of regulatory proposals (Figure 5.5). More than 90% of those OECD countries and the EU now also require consideration of environmental impacts. The same percentage require analysis of small business, gender equality and various social impacts. Chile and Greece, for example, require an assessment of likely gender equity and other social impacts. Austria, France, Flanders in Belgium, and Germany apply “youth checks”. Canada uses Gender-Based Analysis Plus to assess the impacts of policies and programmes on diverse social groups acknowledging intersecting identity factors. However, some relevant impacts remain less likely to be considered in RIAs, especially distributional factors by income and geography e.g. subnational and international impacts. Given the increasing interconnectedness of economies these types of impacts are likely to become ever more important in identifying the benefits and costs of regulatory proposals.
