Drafting Policies for Effective Implementation By Josef Konvitz Head of Division Regulatory Reform Division 1
What is the Problem? Turning Wishes into Reality Defining the policy objective Matching instruments with outcomes Monitoring and evaluating Policy cycle: Regulations as means to an end 2
Key Questions about Regulations and Policies Has the objective been defined correctly? Is government action justified? Is a regulation necessary? Can business, citizens comply at reasonable cost? Are existing regulations reviewed? Are the appropriate levels and institutions engaged? 3
Strategies for Assuring Regulatory Quality I. Building a regulatory management system Regulate the regulators through transparency and accountability mechanisms (laws, policies, institutions, procedures, enforcement, etc.) II. Improving the quality of new regulations Control of the flow (consultation, RIA, alternatives, co-ordination, etc.) III. Upgrading the quality of existing regulations Control of the stock (deregulation, up-dating, codification and restatement, administrative simplification) 4
OECD Regulatory Policy Concept Regulatory quality is the driving principle behind reform today Deregulation where markets work better than governments Re-regulation and new regulatory institutions where markets cannot work without governments More efficient government and social regulations to achieve high standards of health, safety and environmental protection at lower economic cost 5
Main Elements of a Regulatory Policy What is a good regulation? The 1995 OECD Checklist for Regulatory Quality The 1997 OECD Recommendations on Regulatory Reform The 2005 OECD Principles for Regulatory Quality and Performance Set a Regulatory Policy Efficiency, transparency & accountability Assure political support Institution building Set a strategy to drive the Policy Capacity building for Improving rule-making Reviewing existing regulations Implement the Policy 6
Regulatory policies improve the functioning of markets Boosts consumer benefits reducing prices for services and products such as electricity, transport, and health care, and by increasing choice and service quality. Supports sustainable, non-inflationary growth Improves competitiveness Reducing the cost structure of exporting and upstream sectors in regional and global markets. Fosters flexibility and innovation Increases job creation by creating new job opportunities, and by doing so reducing fiscal demands on social security, particularly important in ageing populations. Reduces risk of crisis due to external shocks 7
Progress Visible developments Regulatory policy is now on governments road map Rapidly emerging best practices across all fronts Specific achievements, for example with transparency Visible development of more competitive markets But Whole of government approach to high quality regulation not yet achieved Uneven progress across OECD countries: a growing gap between leaders and the rest Regulatory reform often still perceived to mean a one-off effort on specific issues, rather than a continuous, dynamic process. 8
How to do it: governance and reform Short-term costs, long-term gains Cascade effect, from top down Develop an economic perspective Well-organised opponents, but diffuse and scattered supporters Stakeholder consultation, advocacy councils Ministerial co-ordination units Bureaucratic resistance and "regulatory capture", shortage of qualified staff Build in a strong RIA process, end of year scorecard Incentives to act 9
Lessons of experience Leadership as most important ingredient for success Crises as catalyst for change Harmful effects of a short-term perspective Role of central regulatory bodies to change administrative culture Need for communication strategy to build constituency for reform Getting the level of intervention right 10
Future challenges (1) Cultural change: needs to be promoted across government A culture which is fully aware of the importance of good regulation is not yet fully embedded in administrations Improving the State-citizen relationship is a start, efforts are now needed to improve capacities for effective rule-making Particular weaknesses are the integration of competition principles, and communication between trade policy and regulatory officials Evaluation: integrating the lessons of past experiences Developing a better understanding of the link between regulatory processes and regulatory performance Learning from failures as well as successes Further development and integration of best practices Communication: engaging all stakeholders Engaging currently marginalised but important stakeholders such as SMEs and foreigners Dealing with vested interests Engaging all relevant stakeholders, including the general public 11
Future challenges (2) Putting regulatory policy to work The current agenda still needs attention Deregulation of closed and sheltered product and service markets is still needed in many countries Reforms of the network sectors need to continued, in some cases more vigorously An emerging challenge: the public sector The public sector regulation within government and of public services has been comparatively neglected The public spending to GDP ratio in the OECD is 40%, so the potential for raising economic performance and social welfare through the application of regulatory quality to this part of the economy is huge Managing competition in public services is an important area for the regulatory State Public services at the local government level need special attention 12
Towards the future: interface between the public and private sectors Management of complexity of policy objectives, with often unexpected outcomes Greater use of alternatives to regulation Evaluation of regulations and of their social and economic impacts Risk awareness Extending coverage to public services such as education, health, environment 13