Friday 19 January 2018

Better regulation could start with a lot better organisation

MORE is sometimes less, especially when it comes to "red tape" -- the perennial complaint from business that government regulation and legislation add unnecessarily to costs and stifle entrepreneurship.

In May, Public Expenditure and Reform Minister Brendan Howlin announced that oversight of "better regulation" for business is now a matter for three departments instead of one, but left several questions unanswered as to how this would improve matters in practice.

The Department of Communications, Energy and Natural Resources will now deal with economic sectoral regulation; the Department of Jobs, Enterprise and Innovation will deal with reducing "red tape" and interaction between business, citizens and government organisations; and the Department of Public Expenditure and Reform will have functions relating to training and advice to government departments in applying the important Regulatory Impact Assessments (RIAs).

Traditionally, the Department of the Taoiseach took the lead in overseeing the better regulation function -- the term used for improving the regulatory environment for business.

Fundamental factor

Does regulation need such dedicated attention? The answer is yes, if one is to believe the Organisation for Economic Co-operation and Development (OECD). The OECD published a report on Ireland in October 2010 which concluded that "regulatory as well as policy failures were a fundamental factor underlying the downturn".

It also argued that better regulation has an important role to play in restoring stability following the fiscal crisis.

"Better regulation is supportive of fiscal consolidation, as it can help to make the public sector and public services more efficient, including the use of e-government to reduce paperwork inside the administration, the reviewing of policy on enforcement, and reduction in the number of agencies."

Now there is no single department discharging this function in Ireland. The Department of the Taoiseach's website states that its site on better regulation was "disbanded in July 2011".

However, historic publications relating to better regulation, from 2005 through 2010, are still available on the website.

Even with the three-way split of responsibilities, the question arises as to whether there is sufficient oversight for Regulatory Impact Assessment. This is supposed to examine all new regulations for their impact on business and the economy.

In his Dail statement in May, Minister Howlin saw his RIA responsibilities as being confined to having his department co-ordinate with other departments as regards residual functions relating to training and advice in their conduct of RlAs.

Training and advice are two important dimensions of regulatory impact assessments. But there is silence as regards other important dimensions. First, there is no mention as to who is taking overall responsibility for the delivery of the commitments in the Programme for Government on the use of RIAs in the development of policy and legislation.

It may be recalled that the programme gave a commitment that the Government would "require departments to publish Regulatory Impact Assessments before decisions are taken, thereby offering a further channel to obtain the views of civil society on new rules and regulations".

Surprisingly, in the light of this, Mr Howlin merely states that "in general the practice to date has been that RlAs were only published once a Bill or Statutory Instrument was published".

Omission

A second omission is the lack of reference to who will take responsibility to ensure that RIAs are of good quality. They should not just be a box-ticking exercise.

A central department should have formal authority to send poor RIAs back to the original departments. It is important that there be a central control function to ensure that departments produce timely and adequate RIAs.

This is a difficult challenge, especially at a time when resources are being cut in the public sector. One solution might be to augment resources through secondments of experts from outside the public sector. Transparent mechanisms to ensure that departments are really held to account on the basis of measurable and published targets could also help.

Thirdly, there is no reference to setting-up a new central RIA website to replace the one previously provided by the Department of the Taoiseach. In the absence of such a website it is impossible to ascertain if the necessary supports for RIAs are in place.

The now defunct website also gave information on the RIA Network -- the system which embraced the officials from departments required to carry out RIAs.

The RIA Network had enabled departments to feed into RIA policy based on their practical experiences and facilitated the practical exchange of views on RIAs as between departments. It is not clear that this network is currently in operation.

While the new arrangements may have their drawbacks, there is at least clarity as to what individual departments are expected to do. But the question does remain as to whether there is sufficient oversight of their actions.

However, it should not be assumed that the absence of a transparent oversight system means there is an absence of good quality RIAs.

Good ones can be found on the websites of the Departments of Finance, Jobs, Enterprise and Innovation, Environment, Community and Local Government and the Department of Public Expenditure and Reform itself (which has a very timely RIA on the Construction Contracts Bill 2010).

Assessments

The issue is not that individual departments are failing to undertake regulatory assessments, but that there is no system, in the absence of central vetting, to ensure that good quality RIAs are being produced. Greater efforts are needed to disseminate the results of the assessments.

One way of spreading the message would be to have a central government website, similar to the one for the Peer Reviews of Information and Communications Technology projects.

Such a website would make RIAs more widely available to business and other interested parties; facilitate the sharing of relevant experiences and recommendations; and help to improve the design of future regulatory policies.

Perhaps this might be best managed by the Department of Public Expenditure and Reform. However, specific location is not the critical issue.

Rather it is a matter of having a 'one-stop-website' so that those wishing to study completed regulatory impact assessments can easily find them.

Tom Ferris is a Consultant Economist specialising in better regulation. He was formerly Senior Economist at the Department of Transport.

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