Regulatory Impact Assessment (RIA) is a critical tool for designing smarter regulation. It involves a structured analysis of the policy problem and options to resolve it, analysing the impacts of each option before deciding which is best. Through RIAs, policymakers can identify the most effective and least burdensome regulatory approaches, assess effects across a range of stakeholder groups, and make well-informed choices. The OECD has developed best practice principles and guidelines for conducting RIAs to promote a culture of evidence-based policymaking, which have been widely adopted by member countries and beyond.
Measuring regulation
Evidence is at the centre of regulating for results. Governments face complex challenges while society expects actions that maximise benefits and minimise costs. To make policies that meet these goals, governments need a smarter approach that uses evidence and risk-based approaches to make decisions. This avoids ill-conceived regulations that lead to public dissatisfaction and erode trust in government. Evidence-based regulation is crucial for tackling the most pressing problems of our time, including the climate crisis and the rising cost of living.
Key messages
Engaging businesses, civil society organisations, citizens, and others is crucial for designing regulations that are responsive to the needs and concerns of those they impact. This involves a range of activities, from public consultations and hearings to more collaborative approaches like co-design. By actively involving stakeholders throughout the process, policymakers can gather valuable insights, tap into diverse expertise, and build consensus around regulatory objectives and solutions. This approach enhances the quality, transparency, legitimacy and accountability of regulatory decisions, while also helping to identify potential implementation challenges and unintended consequences.
As society evolves, so too must the regulations that govern it. What may have been a smart, effective regulation in the past could become outdated, inefficient, or even counterproductive over time. This is why regularly reviewing existing regulations is a crucial part of smarter regulation. By assessing regulations, policymakers can understand what has worked, what has not and where updates, improvements or even repeals are needed. This process helps to ensure that regulations continue to serve the public interest, respond to emerging challenges, and minimise unnecessary burdens on businesses and citizens. The OECD has developed best practice principles on reviewing the stock of existing regulations, which emphasise the importance of establishing systematic review processes, setting clear objectives and criteria for reviews, and engaging stakeholders throughout the process.
To support countries in adopting and implementing smarter regulatory approaches, the OECD has developed the Indicators of Regulatory Policy and Governance (iREG). The iREG is a unique tool that assesses the extent to which countries have put in place the necessary institutional arrangements, processes, and tools to make RIA, stakeholder engagement and regulatory review work in practice.
The iREG involves a comprehensive survey of OECD member and partner countries, results of which are presented in the flagship OECD Regulatory Policy Outlook. By measuring and benchmarking performance, the OECD helps governments identify areas for improvement, learn from good practices, and track progress over time to foster a culture of continuous improvement.
Context
Regulatory Impact Assessment (RIA) adoption is growing, but there is room for improvement
The iREG data shows that while most OECD countries have adopted RIA as a key tool for evidence-based policymaking, there is significant variation in the extent to which RIA is consistently applied in practice. Many countries still face challenges in ensuring that RIA is conducted for all significant regulatory proposals, that the analysis is of high quality, and that RIA results are effectively used to inform decision-making. The Regulatory Policy Outlook 2021 highlights the need for countries to strengthen their RIA systems, build capacity for conducting high-quality analysis, and foster a culture of evidence-based policymaking across government.
Stakeholder engagement is increasingly recognized as essential, but practices vary widely
The iREG data reveals that OECD countries are increasingly recognising the importance of stakeholder engagement in the regulatory process. Most countries have established formal requirements and guidelines for conducting stakeholder consultations. However, the scope, depth, and timing of engagement practices vary widely across countries and regulatory areas. The Regulatory Policy Outlook 2021 emphasizes the need for countries to adopt more systematic and inclusive approaches to stakeholder engagement, using a mix of consultation methods, engaging stakeholders early in the policy process, and providing clear feedback on how their inputs have been considered.
Review is the least developed of the three regulatory tools
The iREG data indicates that ex post review is the least developed of the three key regulatory tools, with many OECD countries lacking systematic processes for evaluating the performance of existing regulations. While some countries have established requirements for periodic reviews or sunset clauses, the scope and quality of these reviews are often limited. The Regulatory Policy Outlook 2021 stresses the importance of strengthening ex post review practices, developing clear guidelines and methodologies for assessing regulatory performance, and using the results of reviews to inform future policy decisions and regulatory improvements.
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