1. REGULATORY POLICY AND GOVERNANCE FOR STRENGTHENING COMPETITIVENESS
University of Economics, Prague
Daniel Trnka
Regulatory Policy Division,
Directorate for Public Governance and Territorial Development
OECD 1 1

2. WHAT IS REGULATION?
WHY REGULATORY POLICY?

3. How OECD defines regulation?
Regulation concerns how governments intervene in the economy in pursuit of social, economic and environmental objectives through laws and other instruments.
How governments try to influence the behavior of citizens, businesses, public sector, NGOs
OECD putting emphasis on ensuring regulatory quality
good regulation where needed to protect health, safety, and the environment, and to enhance the functioning of markets,
deregulation where free markets work better. 3 3

4. Why focus on regulation?
Regulation is one of the three key levers of formal state power (together with taxing and spending).
Economic performance, public service efficiency, and service delivery to business and citizens depends on regulatory quality
Countries with sound regulatory systems have more resilient economies and are better able to respond to shocks in a shorter timeframe 4 4

5. GDP per capita gains from broad regulatory reforms in 10-year horizon
This means that if countries would align their regulatory regimes with the best performing OECD countries, this would be reflected in a GDP growth of between 3 and 19%. 5 5

6. 6 6

7. EVIDENCE-BASED
REGULATION-MAKING

8. Developing new regulations
Is regulation the best available means to address the policy objective?
Different alternatives should be analysed
Their costs and benefits should be estimated
Benefits should always justify costs
The process should be transparent and open to stakeholders 8 8

9. Regulatory Impact Assessment
“RIA is a systematic policy tool used to examine and measure the likely benefits, costs and effects of new or existing regulation”
A tool to control the quality of regulation
A tool to ensure accountability: ruling for those who do the rules….
Evidence based policy tool
*In USA, all potential benefits and costs of all draft regulations with significant impact must be quantified. 9 9

10. The process of Regulatory Impact Assessment
Policy objectives
Definition
Identification
(Non-)Regulatory Options
Assessment
Costs
Consultation
Involving Stakeholders
Design
Enforcement, Compliance and monitoring mechanisms
After RIA is prepared: DECISION MAKING
Policy context
Benefits
Selection
Best Option
Other impacts 10 10

11. Main challenges in implementing RIA
Problem identification
Availability of data, quantification of impacts
RIA on every law?
Quality control (oversight)
Presentation / Communication
Integrate RIA up-stream (early in decision- making)
Integrate RIA down-stream (“closing the loop”)
Training
*In the UK, the independent Regulatory Policy Committee consisting of representatives of businesses, trade unions and other civil society organisations has a right to return a legislative proposal to the Ministry before it is sent to the Cabinet if the proposal does not contain a high quality impact assessment. A simila body exists in the Czech Republic – the RIA Board - komise/komise-pro-hodnoceni-dopadu-regulace-89151/ 11 11

12. OPENNESS, PUBLIC CONSULTATIONS AND STAKEHOLDER ENGAGEMENT

13. Transparency and Openness
Stakeholders have a right to participate in the regulation-making process
They have the right information on real- life effects of regulations
May propose different solutions to the problem
Increases a sense of ownership among stakeholders
New ways of participation – social media 13 13

14. Identifying alternative solutions Assessing costs and benefits
When to consult?
Defining a problem
Identifying alternative solutions
Assessing costs and benefits
Drafting regulations
Evaluation 14 14

15. ADMINISTRATIVE SIMPLIFICATION
REDUCING BUREAUCRACY
CUTTING RED TAPE
ADMINISTRATIVE SIMPLIFICATION

17. Rationalising existing regulations
Large stock of regulation has accumulated over time
Sometimes led to a “regulatory jungle”*
May impede competition, employment, innovation**
Pressures from both sides – to reduce regulatory burdens but at the same time to protect even more
Need of systematic, periodic reviews and simplification to keep regulations “fit for purpose”
* For example, a fitness centre in Greece needs 75 different licenses. Most of them have to be renewed annually. This makes the business of running a fitness centre significantly more costly (most of fitness centres in Greece have to employ one person to deal only with licensing).
** The administrative burdens in the Czech Republic were calculated in 2005 as 86 bln CZK. 17 17

18. Ways of reducing regulatory burden
Dealing with the stock of regulation – review, consolidation and codification
Streamlining of procedures, harmonising, one-stop shops
Employing ICTs, data sharing
Risk-based approaches (inspections)
Measurement and reduction of administrative burden
Common Commencement Dates,
One-In X-Out 18 18

19. Administrative burden reduction
Big momentum in the 90’s and 2000’s
Difficult areas – employment, environment, tax administration, planning and licenses and permits
Mostly focusing on businesses but also citizens and public administration
Quantitative targets for reduction
SCM and its modifications used across OECD
Challenges – cutting dead wood, too much focus on numbers, communication with stakeholders
Tendencies – more qualitative approach, focus on irritants, stakeholders’ involvement, widening on other costs 19 19

20. Standard Cost Model
A tool to measure administrative costs and express them in monetary terms
Advantages:
SCM makes costs ‘visible’
Easy to measure, monitor & communicate
Uniformity, transparency, reliability and comparability
Commitment & awareness of policymakers
Enables to set a target distribute it across administration
Disadvantages:
May be too costly
Focus only on one part of costs, not benefits 20 20

21. The methodology for AC measurement
The Standard Cost Model
Possible to differentiate between particular regulations,
ministries, sectors of regulation
AS only as one of the solutions. Global problem – complex solutions 21 21

22. Compliance, enforcement and inspections
Essential for achieving the objectives
Is the level of compliance measured, analysed?
Enforcement – role of inspections
Risk-based methods, better targeting, more efficiency
Providing advice, improved compliance
Co-operation with policy-makers
Role of regulators D 22 22

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24. THANK YOU! 24 24