1. 1 Regulation Inside Government: Reducing Administrative Burdens 14-15 March 2006, Mexico City, Mexico Glen Hepburn, Administrator, Regulatory Policy Division, Organisation for Economic Co-operation and Development (OECD) E-mail glen.hepburn@oecd.org

2. 2 Outline of presentation What is regulation inside government? Why regulate inside government? Why is it an important issue? What tools can be used to improve regulation inside government and reduce administrative burdens?

3. 3 What is regulation inside government? Regulation: The diverse set of instruments by which governments set requirements on –1) enterprises and citizens –2) the public sector itself – that is, regulation inside government

4. 4 What is regulation inside government? “Regulation inside government”: –When a public administration unit has mandate to regulate activities of another public body at arms-length (formal rules, oversight, inspection and audit systems) Comprises three components –Regulator administrative unit with an ‘official mandate’ to regulate –Arms-length regulation using regulatory standards, monitoring and enforcement –Regulated bodies separate from the regulator

5. 5 What is regulation inside government? Different/complementary to other public management control types: self-control, single hierarchy or quasi- markets Importantly it excludes direct ‘chain of command’ management relationships

6. 6 Why regulate inside government? Regulation in the ‘public interest’ –Benevolent legislators and regulators –Regulating to overcome problems or ‘market failures’ –Acting in the public interest rather than narrow sectional interests

7. 7 Why regulate inside government? Theories of regulation of business Analogues for regulation inside government Regulation captured by regulated bodies Regulation captured by public sector workers, e.g. rules to stop public/private competition Regulation in the interests of regulators Regulation establishing cosy relationships with regulated bodies, or increases complexity to nurture career objectives of bureaucrats Costly regulation - lack of cooperation between regulators and regulated bodies, high transaction cost Regulators and regulated bodies play costly ‘cat and mouse’ games

8. 8 Why is it an important issue? Instrumental in defining obligations, standards, procedures, accountability, etc. Establishes a framework for the provision of public services Influences the interface between the public and private sector

9. 9 Why is it an important issue? But can also have unanticipated effects such as unnecessary administrative burdens Mutually incoherent regulations Inconsistent implementation and enforcement

10. 10 Why is it an important issue? Regulation inside government is important but is often overlooked: why? –Where is the constituency for change? –Costs are hidden – but they are there –Costs are borne by business, taxpayers and the community

11. 11 What tools can be used to improve regulation inside government? The tool box for improving the regulation of the private sector is extensive –Regulatory Impact Analysis (RIA) –Consideration of alternatives to regulation –Transparency of procedures –Consultation and communication with stakeholders –Risk based enforcement –Systems for appeals by affected groups

12. 12 What tools can be used to improve regulation inside government? Measurement of burdens is likely to play an important role –This has proved to be the case with private sector regulation

13. 13 What tools can be used to improve regulation inside government? Possible challenges to using these tools –Cultural shift: More systematic considerations to public sector units regulating other public bodies at arms-length –Apply and adapt tools/institutions to improve private sector regulation to public service and public sector regulation

14. 14 How do we make progress? Make it a political priority Set an example – leadership and incentives Constituency building Compare and benchmark Communicate the results

15. 15 To know more about OECD’s work on Regulatory Reform ….. http://www.oecd.org/regref 