Reviewing the Stock of Regulation

1. Overarching principles

Consistent with the OECD 2012 Recommendation on Regulatory Policy and Governance (OECD, 2012[1]), there are three high level principles that should have wide applicability, regardless of the institutional settings of individual countries.

Regulatory policy frameworks should explicitly incorporate ex post reviews as an integral and permanent part of the regulatory cycle.

The broadly accepted notion of a “regulatory cycle” recognises that regulations are akin potentially to depreciating assets that require ongoing management and renewal. For reasons just noted, even if they start out well, many regulations may no longer be fit for purpose some years hence. The accumulated costs of this in economic or social terms can be high.

It is fundamental to achieving and sustaining good regulatory outcomes over time, therefore, that regulatory policy systems explicitly incorporate provision for ex post review along with ex ante assessment, and requirements for implementation and enforcement. Where such an integrated approach to ex post reviews is not in place, governments have the opportunity to pursue this as part of a longer term strategy to improve the overall quality of regulation and thereby bring additional benefits to citizens.

Such requirements can in time also help foster a deeper “culture of evaluation” within government, enhancing administrative capability in this area and raising the standard of evaluations themselves. In so doing, it can also help build (or restore) public trust in government’s regulatory role.

A sound system for the ex post reviews of regulation would ensure comprehensive coverage of the regulatory stock over time, while “quality controlling” key reviews and monitoring the operations of the system as a whole.

The stock of regulation remains extensive in all countries, notwithstanding regulatory reforms and red tape reduction programs in many. It is important that opportunities for improving a country’s overall regulatory performance are not missed through oversight or neglect (or resistance). How well reviews are conducted can vary, so a strong system would also have the capacity to guide and monitor review processes. And because such systems themselves normally involve a degree of “learning by doing”, provision for periodically evaluating their overall performance is also needed (see (OECD, 2010[2]), Annex 2), which investigates the broad benefits from administrative burden reduction programmes and develops a possible methodological framework that could be used for evaluating programmes).

Reviews should include an evidence-based assessment of the actual outcomes from regulations, against their rationales and objectives; they should note any lessons and make recommendations to address any performance deficiencies.

Just as ex ante regulatory impact assessment (RIA) processes seek to determine the likely net benefits of a new regulatory initiative, whether in social or economic terms (or both), ex post reviews ideally need to determine the extent to which these have been realised in practice. That would normally include an evaluation not only of compliance costs, but also other costs and benefits that relate to the primary objective of the regulation (e.g. financial stability, harm minimisation, competition, etc.) (Box 1.1). It also means that the financing of any data collection and any subsequent review should be included as part of the costs of the regulatory proposal.

To be useful to policy makers and the public, therefore, it is important that, where needed, ex post reviews draw lessons from past experience and contain recommendations for improvement. These could range from minor amendments to the regulations under review, to their removal or replacement. In turn, this feeds back into (re)design processes, highlighting the need for increased resilience and adaptability of regulatory systems, particularly in the face of rapid technological and environmental changes.

Box 1.1. Examples of ex post reviews in OECD countries

• A review of the regulatory framework for resource development in Canada found that investors could be discouraged by complex rules and processes, threatening the economic viability of major projects. The Ministry of Finance recommended the implementation of the Responsible Resource Development Plan, which included more predictable project reviews, reduced duplication of review processes, strengthened environmental protection, and enhanced consultation with Aboriginal people.

• The Chilean Productivity Commission undertook a review of its copper mining industry. It made a total of 53 recommendations, a number of which specifically related to the copper mining regulatory environment. It recommended that approval processes for large projects be shortened, to ideally not exceed three years. To achieve this, better coordination within and between government agencies would be required. Further recommendations related to improving the industry’s safety and reforming exploration and licencing arrangements.

• The Prime Minister’s Office in Finland published a study on investigating the evaluation and reduction of regulatory burdens. The 2018 study concluded that it could not provide an overall assessment of the regulatory burden due to insufficient information from either budget papers (a “top down” approach) or on a law-by-law basis (a “bottoms up” approach). However the report presented 15 proposals to reduce or avoid regulatory burdens, including recommendations on implementation and legislative drafting.

• The German Finance Ministry conducted an in-depth review in 2017 on standard tax forms for citizens. In its conclusions, the Ministry issued recommendations for simplifying tax forms. Following the review, consultation and co-ordination discussions were held with authorities at the subnational level in order to implement the recommendations.

• In 2015, the Israeli Government announced a five-year plan for the reduction of regulatory burdens. In 2016 some 31 different regulatory areas were reviewed, including laws relating to competition, administrative burdens, compliance costs, compliance with international instruments, risk, and regulatory overlap. For example, the Ministry of Environmental Protection examined the regulatory process in the field of integrated licensing of industries, such as non-ionising radiation and hazardous waste. The Ministry expects ILS 74.5 million in annual savings to the economy by reducing interactions with authorities and creating certainty throughout the life of the licence.

• In 2014, an administrative burden review in the United States examined the response of agencies to Executive Order 13610, Identifying and Reducing Regulatory Burdens. In the first iteration of periodic reports implementing the Executive Order, Executive Departments and Agencies identified more than 100 initiatives producing an estimated annual reduction in paperwork burden of more than 100 million hours.

Source: (OECD, 2018[3]); (Comisión Nacional de Productividad, 2017[4]); (Prime Minister’s Office: Government Research Activities (Finland), 2018[5]); (Ministry of Finance (Germany), 2020[6]); (Prime Minister’s Office: Better Regulation Unit (Israel), 2017[7]); (Office of Management and Budget: Office of Information and Regulatory Affairs (United States), 2016[8]).

There need to be oversight and accountability systems within government administrations to provide ongoing assurance that significant areas of regulation will not be missed and that reviews are conducted appropriately.

If regulatory agencies and their ministries are left entirely to their own devices, there is a risk that important areas of regulation will not be reviewed, or that reviews will sometimes occur too late (in response to a mishap or “crisis”) or that they will not be conducted sufficiently well to inform decisions about the retention or amendment of the regulations concerned. The move to impose RIA requirements within most OECD governments is recognition of this reality.

The functions of such oversight bodies include providing advice about the regulatory assessment obligations of relevant departments and ministries, as well as monitoring compliance. Such bodies will generally also be well-placed to provide or arrange training in review processes and methods for departmental officials.

There are benefits in institutional arrangements that combine oversight of the processes for ex ante as well as ex post assessment, and that do so across the whole of government.

The fact that regulations undergo a number of phases following their initial development argues for oversight and accountability mechanisms that encompass the whole of the “regulatory cycle”. In particular, there is a connection between ex ante and ex post evaluations, with the former setting up the latter and ex post reviews being conducted in the light of ex ante assessments, as well as helping to inform further evaluations of new or amended regulation (Box 1.2).

Box 1.2. Examples linking ex ante and ex post regulatory oversight in OECD member countries

• Austria has established the system of “Wirkungsorientierte Folgenabschätzung”, which introduces systematic requirements for both ex ante and ex post assessments, and requires major regulations to be evaluated after five years. The Federal Performance Management Office is responsible for ensuring the quality of both ex ante and ex post assessments. In its 2017 report, a regulatory proposal relating to Funding Alpine Infrastructure was highlighted as it explicitly stated that in order to assess the regulation’s actual success, impact-orientated data would be required that would allow for progress to be accurately measured. The evidence base would then be expected to form the basis of the ex post evaluation when the regulation was due for review.

• The Regulatory Scrutiny Board of the European Commission conducts reviews of ex ante impact assessments, as well as selected ex post evaluations. Its 2017 annual report analysed how impact assessments and ex post evaluations were assessed when regulatory proposals were subject to an informal “upstream meeting” early in the review process with staff of the Commission’s services. It generally found that the final impact assessment result had improved where upstream meetings took place – which also tended to be in more complex regulatory areas. The same could not be said for ex post evaluations and it was queried whether the limited impact was due to the upstream meeting taking place too late in the evaluation process.

Source: (Austrian Bundesministerium für Öffentlichen Dienst und Sport, 2018[9]); (Regulatory Scrutiny Board (European Commission), 2018[10]).

This dual oversight role should ideally be located in a dedicated unit within a single ministry or agency that has a government-wide purview. This is likely to provide greater scope for consistency, skill development, relationship building, and the retention of relevant institutional knowledge. Examples include the oversight bodies from Finland, Mexico, the United Kingdom, and the European Union (Table 1.1).1

Table 1.1. Bodies responsible for overseeing both ex ante impact assessment and ex post evaluation

OECD member country	Name of oversight body
Australia	Office of Best Practice Regulation (OBPR)
Austria	Federal Performance Management Office (Federal Chancellery)
Austria	Ministry of Finance
Denmark	The Inter-Ministerial EU Implementation Committee
Estonia	Shared responsibility between Legislative Quality Division, Legislative Policy Department, Ministry of Justice
European Commission	Regulatory Scrutiny Board (RSB)
European Commission	Secretary General (SG)
Finland	Finnish Council of Regulatory Impact Analysis
Germany	Better Regulation Unit, Federal Chancellery
Greece	Better Regulation Office of the General Secretariat of the Government
Israel	Better Regulation Division in the Office of the Prime Minister
Italy	Department of legal and legislative affairs (DAGL) of the Presidency of the Council of Ministers
Italy	Impact Assessment Independent Unit
Japan	Administrative Evaluation Bureau in the Ministry of Internal Affairs and communications
Korea	Korea Development Institute (Regulatory Research Center)
Korea	Korea Institute of Public Administration (Regulatory Research Center)
Korea	Regulatory Reform Committee (RRC)
Luxembourg	Ministry of the Civil Service and Administrative Reform
Mexico	National Commission for Regulatory Improvement (CONAMER)
Poland	Shared responsibility between Government Programming Board supported by Regulatory Impact Assessment Department within the Chancellery of the Prime Minister
Poland	Regulatory Risk Assessment Department in the Ministry of Economic Development
Spain	Oficina de Coordinación y Calidad Normativa
United Kingdom	Regulatory Policy Committee (RPC)
United States	Office of Information and Regulatory Affairs

Note: The table is based on information available for 70 bodies reported in the survey which are responsible for quality control of regulatory management tools.

Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.

The type of ex post review, and its timing or “triggers”, are generally best determined at the time regulations are being made.

At the stage when regulations are being developed, there would generally be a clearer appreciation of the sort of review that would be most appropriate, given the nature of the regulation, its context and any potential uncertainties about its effects. There is the further advantage that at this point relevant expertise is more likely to be on hand. This approach also enables early consideration of data needs and provision for their collection, which can play a crucial role.

It follows that it would be desirable for it to be a requirement of ex ante assessments that the question of ex post reviews be addressed, and an appropriate review type specified in the regulation impact statement (RIS) or other documentation.

Departments and agencies should provide advance notice of forthcoming reviews of regulation (ideally in the form of an annual “forward regulatory review plan”).

Reviews of regulation are often critically dependent on the extent and quality of inputs from those affected by or interested in the regulations concerned. Such inputs are needed both for assessing impacts and outcomes, and also to promote acceptance and support for any regulatory changes that may result. Stakeholder preparation for a review can require considerable data gathering and analysis, which takes time and resources. Adequate notice can facilitate stakeholder preparation. And information relating to other scheduled reviews can help stakeholders prioritise their efforts and more generally help avoid “review fatigue”. Forward regulatory planning is becoming more commonplace across the OECD membership, although only around one-third of member countries currently do so for subordinate regulations (Figure 1.1).

Figure 1.1. Online lists used in regulatory forward planning

Note: Data is based on 34 OECD member countries and the European Union.

Source: Indicators of Regulatory Policy and Governance Surveys 2014 and 2017, http://oe.cd/ireg.

There should be explicit provision in agency budgets to cover the costs of reviewing the regulations for which they have responsibility.

Under constrained budgets, ex post reviews of regulation can be displaced by activities seen as being more urgent and important at the time. Without explicit provision for the resourcing of reviews, they may either be deferred or avoided, or undertaken in a form inadequate for the purpose (for example, with limited consultation). Reviews need to be seen as an integral part of a department or agency’s regulatory functions, rather than an “extra” and this is more likely to be the case with dedicated resourcing.

References

[9] Austrian Bundesministerium für Öffentlichen Dienst und Sport (2018), Bericht über die wirkungsorientierte Folgenabschätzung: Bericht gemäß § 68 Abs. 5, BHG 2013 iVm § 6, Wirkungscontrollingverordnung, https://www.oeffentlicherdienst.gv.at/wirkungsorientierte_verwaltung/dokumente/WFA-Bericht_2017_WEB_2.pdf?6wd8ir.

[4] Comisión Nacional de Productividad (2017), Productivity in the Chilean Copper Mining Industry, http://www.comisiondeproductividad.cl/wp-content/uploads/2018/09/Productivity_copper.pdf.

[6] Ministry of Finance (Germany) (2020), Simplifying tax declarations, https://www.bundesregierung.de/breg-en/issues/wirksam-regieren-with-citizens-for-citizens/topics/simplifying-tax-declarations-392142.

[3] OECD (2018), OECD Regulatory Policy Outlook 2018, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264303072-en.

[11] OECD (2015), OECD Regulatory Policy Outlook 2015, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264238770-en.

[1] OECD (2012), Recommendation of the Council on Regulatory Policy and Governance, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264209022-en.

[2] OECD (2010), Why Is Administrative Simplification So Complicated?: Looking beyond 2010, Cutting Red Tape, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264089754-en.

[8] Office of Management and Budget: Office of Information and Regulatory Affairs (United States) (2016), Information Collection Budget of the United States Government, http://www.whitehouse.gov/omb/inforeg_infocoll/.

[7] Prime Minister’s Office: Better Regulation Unit (Israel) (2017), Regulatory Burden Reduction Summary 2016, http://185.70.251.162/uploads/reports/7/Regulation2016_ENG2.pdf.

[5] Prime Minister’s Office: Government Research Activities (Finland) (2018), Julkaisija ja julkaisuaika Valtioneuvoston kanslia (Evaluation and reduction of regulatory burden), https://tietokayttoon.fi/documents/10616/6354562/27-2018-S%C3%A4%C3%A4ntelytaakan+arviointi+ja+v%C3%A4hent%C3%A4minen.pdf/f32dc48f-4dcf-4088-b7fe-67d50f3b23ac?version=1.0.

[10] Regulatory Scrutiny Board (European Commission) (2018), Annual Report 2017, https://ec.europa.eu/info/sites/info/files/rsb-report-2017_en.pdf.

Note

← 1.  The 2015 and 2018 Regulatory Policy Outlooks (OECD, 2015[11]), (OECD, 2018[3]) highlight the emergence in the past ten years of bodies established at arm’s length from government and tasked with the scrutiny of regulatory management tools, most notably RIA, and to a lesser extent, ex post evaluation.