1. Session 3 General RIA Training 6–8 July 2009 EuropeAid/125317/D/SER/TR
Regulatory Reform and RIA 1

2. Broad arguments for regulatory reform
Enhance the competitiveness of the economy
Reduce costs to the economy and society
Facilitate market openness
Minimize information asymmetries
Avoid regulatory capture
Gain support and interest from the public/civil society
Improve transparency

3. What is meant by regulatory reform?
OECD says:
’The goal of regulatory reform is to improve national economies and enhance their ability to adapt to change.’
Regulatory reform involves
Policies to improve governance
Approach to ensure well drafted, crafted and implemented regulations

4. International Trends in Regulatory Reform
Initial phases included deregulation of industries. Deregulation, however, in most cases was re-regulation
The OECD, began to give attention to how regulations were made, i.e. formulation of policies, drafting, implementation and reviewing
Many countries have adopted policies focusing on improving the quality of regulations and the quality of governance

5. Main elements of regulatory reform
Institutions
Improve quality of new regulations
Flow
Regulatory management system
Upgrade quality of existing regulation
Stock 5

6. Principles for OECD agenda on regulatory reform
I. Build a regulatory management system
Strategic medium-term regulatory reform policy (5 years)
Engines of reform at the centre of government
II. Build the institutions to carry out good regulation
Inspections reforms
Due process
III. Improve the quality of new regulations (flow)
RIA
Transparency and Stakeholder consultation
IV. Upgrade quality of existing regulations (stock)
Targeted deregulation, simplification, codification
Reducing administrative burdens (SCM)

7. Principles for EU Better Regulation
Necessity
This principle demands that, before putting a new policy into effect, the public authorities assess whether or not it is necessary to introduce new regulations
Proportionality
Any regulation must strike a balance between the advantages that it provides and the constraints it imposes. It is the responsibility of the Member States and the Commission to identify those regulatory instruments which are most proportionate to the aims
Subsidiarity
Accountability
Accessibility
Simplicity
Transparency

8. UK – 5 principles on better regulation
Proportionate: intervene when necessary, remedies appropriate to the risk, costs identified and minimised
EX: All the options for achieving policy objectives must be considered – not just prescriptive regulation. Alternatives may be more effective and cheaper to apply
Accountable: justify decisions, and be subject to public scrutiny
EX: Clearly explain how and why final decisions have been reached
Consistent: rules and standards must be joined up and implemented fairly
EX: Regulators should be consistent with each other, and work together in a joined-up way
Transparent: be open, and keep regulations simple and user friendly.
EX: Policy objectives, including the need for regulation, should be clearly defined and effectively communicated to all interested parties.
Targeted: be focused on the problem, and minimise side effects
EX: Regulations should focus on the problem and avoid a scattergun approach

9. Some tools used in regulatory reform
Regulatory impact assessment
Consultation
Simplification
Reducing administrative burdens
Alternatives to regulation

10. RIA is a evidence-based process for regulatory decision making
This involves:
Asking questions in a structured format
Transparent policy debate
Empirical justification
Systematic examination of potential impact
Coherence in legislation
Communication with decion-makers and stakeholders
A learning process to solve problems

11. The goals of using RIA Transparency Better communication
Alternative ways of regulation to enhance efficiency
Improve decision making
Improve regulatory quality
Positive macroeconomic effects

12. Steps in the RIA Process
Problem Definition and Risk Profiling
Define and refine problem (to get broadest range of potential solutions)
Profile magnitude, risk levels and distribution (groups, sectors etc)
Describe the current situation
Setting objectives
Selecting Options and Assessing Impacts
Initial consultation (to validate previous steps)
Select options
Select method, scope and depth of analysis
Collect data on cost and benefits
Prepare Analysis, Consult and Refine Proposal
Analyze, compare options and present it to stakeholders
Refine and finalize RIA and proposal after consultation

13. Example UK: What a regulatory impact assessment
is expected to cover
Identifies the objectives of the regulatory proposal
Assesses the risks that the proposed regulations are addressing
Identifies the benefits of each option including the "do nothing" option
Looks at all costs including indirect costs
Identifies options for action – securing compliance
Impact on small businesses
Takes the views of those affected, and is clear about assumptions and options for discussion
Establishes criteria for monitoring and evaluation
Summarises and makes recommendations to Ministers, having regard to the views expressed in public consultation
Source:Cabinet Office,August 2000,Good Policy Making:A Guide to Regulatory Impact Assessment. Executive

14. Where RIA made a difference?
EXAMPLE: EU – REACH
Regulation on the European Chemical Industry
RIA used to discuss various alternatives
Revision was made to make compliance easier (based on feedback)
Revisions done without significantly changing the benefits
RESULT: Cost reduced from €10 billion to €2 billion

15. Introducing effective RIA –
good practices identified in OECD countries
Maximise political commitment to RIA
Allocate responsibilities for RIA programme elements carefully
Train the regulators
Use a consistent but flexible analytical method
Develop and implement data collection strategies
Target RIA efforts
Integrate RIA with the policy-making process, beginning as early as possible
Communicate the results
Involve the public extensively
Apply RIA to existing as well as new regulation