This independent blog collects news about projects or achievements in regulatory reform / better regulation. It is edited by Charles H. Montin. All opinions expressed are given on a personal basis.
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22 February 2012

Stoiber Group report published

Yesterday the Commission made public “Europe can do better”, the report of the High Level Group of Independent Stakeholders on Administrative Burdens, chaired by Dr E. Stoiber (Germany). The report, which was due since November last year, was handed in yesterday to Mr Barroso, who in a press release is reported to have said that “It shows impressive examples how Member States implement EU law in an intelligent way so that its positive effects can unfold and are not hampered by unnecessary administrative burden at national level. I call on Member States to look at these examples and learn from them. Through mutual inspiration on smart regulation we can further improve the business environment and support growth and jobs in Europe." In summary, the report, which lists 74 best practices makes the point that there is ample scope for improving the implementation of EU legislation. The online press pack includes a useful update on measures proposed and delivered under the Action Plan for reducing administrative burdens in the EU (especially figures concerning delivery).

21 February 2012

Senate delays simplification of regulation on local authorities (France)

In these last weeks of the parliamentary session, there is a flurry of activity in simplification, with unfortunately perhaps more haste than speed.

1/ A new bill from the Senate floor, especially targeted at lowering the regulatory burden for local authorities (a case of excessive "regulation inside government" - RIG) was probably filed too late. Following a mission entrusted by President Sarkozy, Senator Doligé presented in June 2011 a report on the simplification of the "normative edifice" applying to local government containing some 248 practical measures. The bill now enacts the proposals requiring changes in legislation. There had been hopes that it would be discussed and perhaps adopted before the presidential elections, but when it came to agenda setting earlier this month, the bill was sent to commission reading, thereby delaying adoption in such a short timeframe. The main reason for the move is that the text includes a number of (rather contentious for some) principles, such as "the proportionality of norms according to the size of the local authority" to alleviate the compliance burden of the smaller entities. The discussion in commission highlighted the risk of introducing an "inequality of citizens" in respect of local public services, such as social services which are provided by the communes.

2/ The government was hoping to crown its local finance policy with this bill: the minister in charge has made known his surprise at the Senate's move, recalling the main stages of the policy. In 2008, it had established a dedicated unit within Parliament to systematically check new legislation for burdens imposed on local authorities (the " consultative commission on the evaluation of norms") and in the wake of the April 2010 conference on deficits, a moratorium on new norms applying to local authorities (see circulars dated 6 July 2010 and 17 February 2011.) Further impetus was given by President Sarkozy himself in a speech to the association of maires in November 2010.
The economic relevance of the issue was again highlighted by the organisation by the presidency of a conference on local finance, at the Elysée palace on 10 February (see good press file from the "association of Départements") just before the launch of the presidential election campaign.

3/ the Senate voted yesterday (20 Feb) to bury the 7th simplification law, following up on its opposition in principle to "catch-all" texts (lois "fourre-tout") restated on 15 Februrary in a negative commission report. To understand the move, it is useful to remember that following its last part renewal, the Senate does not have the same political majority as the National Assembly and the Government.
In its second reading on 31 January under the "accelerated procedure", the National Assembly had mocked the Senate's apparent reluctance to adopt new legislative techniques. It is probable that the National Assembly will use its constitutional prerogative to orverride the Senate's opposition and enact the simplification omnibus.

17 February 2012

PFI/PPP under fire

Among the priorities to be addressed within regulatory reform, the institution of a suitable legal framework to associate private capital to public investment projects is often quoted, under the name of private finance initiative (PFI). The PFI model was introduced in the 1990s in the UK as a way of using private funding to pay for major public infrastructure projects such as roads, prisons and schools. In a PFI agreement, the private sector obtains finance to design, build and operate a facility for the benefit of the public. In return the public sector will grant its private sector partner a long-term contract to run the facility and will pay a monthly fee over the life of the project to repay the loan. With some twenty years' experience, the formula is now quite well known, but the associated costs of covering the funding and project risks are now better known. Last November, the UK government launched a review of the system, with a view to reform. A 'call for evidence' on a replacement funding method that would "draw on private sector innovation but at a lower cost to the taxpayer" closed on 10 February.
The PFI model was introduced in the 1990s as a way of using private funding to pay for major public infrastructure projects such as roads, prisons and schools. In a PFI agreement, the private sector obtains finance to design, build and operate a facility for the benefit of the public. In return the public sector will grant its private sector partner a long-term contract to run the facility and will pay a monthly fee over the life of the project to repay the loan. With some twenty years' experience, the formula is now quite well known, but the associated costs of covering the funding and project risks are now better known. Last November, the UK government launched a review of the system, with a view to reform. A 'call for evidence' on a replacement funding method that would "draw on private sector innovation but at a lower cost to the taxpayer" closed on 10 February.
This week, the National Audit Office added fuel to the discussion in a report stating that PFI investors are overcharging for risk. "Public sector authorities could be paying more than they should to equity investors who are charging more than they should to offset risk in projects funded by way of the PFI. Investors selling shares in PFI schemes early in order to fund future projects are typically receiving high returns of "between 15 and 30%" – well above an expected return of 12-15% at the point the contracts are signed... PFI projects are traditionally split into the 'construction' and 'operation' phases, with the construction phase being the most risky. Although investors theoretically bear these risks, which can include contractors failing to deliver or project costs being higher than anticipated, such risks are generally passed on to contractors in the project subcontracts. Additionally, the Government is a "very safe credit risk".
The same questioning in ongoing in France, where a full page in Le Monde made the point that the hidden debt arising from past PFI could be an unexploded bomb, especially for local authorities and hospitals.The French debate is summarized by an academic in an article published yesterday under the title "PFI: an opportunity or a curse for the State?".
There are also useful resources managed by the European PPP resource centre (EPEC).

Administrative simplification investigated by MENA and OECD

On 14-15 February, a seminar on Administrative Simplification in MENA and OECD Countries was organised jointly by the Ministry of Public Administration and Justice of Hungary and the MENA-OECD Governance Programme.The objective of this capacity building seminar for public officials in MENA countries on "Making Life Easier for Citizens and Businesses" was to facilitate the implementation of administrative simplification strategies in MENA countries and to deepen the knowledge about tools to streamline procedures, render regulations more effective and include stakeholders in consultation processes. I attended the seminar and can testify that it was fully successful, thanks to the hospitality of the Hungarian government, and the contributions from both MENA and OECD countries, that identified challenges and solutions to measure administrative burdens, consult stakeholders and design simplification programmes.The lively discussions helped participants ascertain how these various components could be brought together to implement an effective better regulation policy and "make life easire for citizens and business". All contributions will soon be published on the Governance Programme page.

Plain language for smart regulation (US, FR, SE)

This blog has not yet fully addressed the important issue of the promotion of plain language as a component of a smart regulation policy. As summarized in an online article by Federal Computer, recent developments in the United States give us the opportunity to look at international best practice.
"The Plain Language Action and Information Network (PLAIN) is a community of (US) federal employees dedicated to the idea that citizens deserve clear communications from government." Their first concern was the quality of regulations, but they later widened the scope of their action. The Office of Management and Budget issued new government guidelines in 2011. More recently, Cass Sunstein circulated a memorandum on "Clarifying regulatory requirements: executive summaries" with a template of a summary.
Significant efforts had been made in the francophone world, where purity of language has always been a prime concern since the XVIIth century and naturally pervaded the administration. In 2009, a seminar organised by the Walloon authorities brought together several French speaking countries to discuss ways and means of improving official forms: see Colloque francophone for the proceedings.
Resources developped at the time are still online:
  • Québec : brochure « rédiger simplement »
  • Belgium: Guide des formulaires
  • France had an active policy until 2006, with an advisory body composed of linguists and experts that built a number of linguistic tools in support of simple language. Among them, a lexicon, to "translate" officialese into good French and an IT based application for the same purpose. This policy was part of the wider objective of making the administration more understandable, the other main effort being to simplify and improve official forms. The last report from COSLA(2006) summarizes the policy, which is part of the modernisation of the state programme.
Another country that has had an ongoing policy for plain language in the administration is Sweden.
It would be helpful to colleagues if other examples of plain language policies could be pointed out.

BR in Ireland: wrong track?

Interesting discussion on the Smart Regulation LinkedIn group: Colin Scottt read the report "Action Plan for Jobs" for us and posted two excepts under the title: "Good News/Bad News on Better Regulation in Ireland"
  • "There is recognition of the importance of driving the regulatory reform agenda in the Programme for Government." (p36).
  • "This responsibility was formerly within the Department of Taoiseach and there is now a lacuna at the centre of Government as this responsibility has yet to be reassigned" (p37).
Scott Jacobs comments that "That is the same approach the US government has taken at least 10 times, each time huge results are self-reported by each regulator, and yet only trivial changes are actually made. For regulatory review to work, we must recognise that self-review has never worked in any country, and move on to more serious and workable reform designs."
I agree with both Scotts, we need a dedicated and objective unit to impulse reform, and monitor results.

07 February 2012

French government announces new Red Tape Reduction Commission

The two main authorities in charge of simplfication (minister and president of legal commission in National Assembly) issued a joint press release yesterday to acclaim the vote by the first chamber of the 7th simplification "omnibus", in spite of Senate opposition (for the history see previous post). The Government has asked for this bill to be discussed under the urgent procedure, to have a chance of passing it before the end of the legislature (just after the May presidential election). In such a case of non-agreement between the two chambers, the National Assembly predominates.
The press release summarizes recent government achievements: following a cycle of consultation of business, issuance of a package of 145 measures saving business about 1 billion euros.
The simplification bill under parliament scrutiny comprises 25 measures stemming from the consultation, among which the legal base for the " business digital safe" (to avoid multiple submission of the same information).
Finally, to give the simplification drive some permanent basis, the minister will convene on 6 March the first meeting of a new "Red Tape Reduction Commission" which will comprise experts, entrepreneurs and officials. This standing consultative Commission will monitor implementation of simplification decisions and suggest new measures. The preceding stakeholder committee, composed mainly of MPs, had not met for more than three years.

Update on international regulatory cooperation

In times of economic turmoil, there is an increased risk that governments will be tempted to engage in "regulatory competition" and use regulation to promote national interests in contravention with their international commitments, and to give a temporary boost to competiveness. The risk seems greates in the area of financial services, as a number of countries like the US adopt tough financial reforms to reassure their citizens that they are proactive in dealing with financial instability and speculation. In some cases, there can be consequences for foreign firms operating on their markets, and even abroad. An article on Reuters.com of two days ago summarizes the current tension under the catchy title "ET, the new alien scaring global markets" where ET stands here for "extraterritoriality", or legal effect beyond borders of a national law. The article shows the risks of regulatory competition, and the need for international regulatory cooperation (IRC), or coordination, to avoid negative economic effects.
The European Union provides a good forum to broach these sensitive issues with major economic competing blocs such as the US and Japan. See the DG Enterprise page on IRC which reports on EC cooperation with a number of governments around the world to remove regulatory barriers viewed as a significant impediment to trade and investment. With the US for instance, "regulatory cooperation is an important tool to helping dismantle existing regulatory barriers and prevent new ones from emerging. Since the development of the EU-US Guidelines for Regulatory Cooperation and Transparency, Regulatory authorities on both sides aim at achieving greater convergence of technical rules through a number of sectoral and methodological regulatory dialogues. Since its inception in 2005, the High Level Regulatory Cooperation Forum has met regularly to focus on key regulatory issues of common interest and to facilitate the exchange of best regulatory practice across sectors." See previous post on EU-US regulatory dialogue
Following a similar initiative from the Commission, the UK Finance Minister George Osborne wrote to B. Bernanke (Federal Reserve) on 23 January to ask for regulatory dialogue "aimed at minimising any unintended consequences of regulatory reforms on either side of the Atlantic."
A good presentation of the US point of view can be found in a 2010 speech by the U.S.Securities and Exchange Commissionner who explored the history, the forms, the advantages and the limits of IRC in promoting efficient capital markets.
Another particularly necessary area for IRC is the cooperation about collective investment schemes (CIS), but it seems to be fraught with difficulties, as explained in an article of the International Financial Risk Institute (IFRI)"To date, a uniform and consistent approach to the global regulation of CIS has not been pursued by regulatory authorities. It is therefore important in this climate for regulators to develop strategies to deal with this increased global activity in order to improve their collective oversight of the markets. If regulatory authorities chose to ignore the current trend that cross-border activity is increasing, they run the risk of failing to effectively regulate their markets and decreasing investor protection. Alternatively, if regulators accept that globalisation is a permanent feature of the managed funds industry, they should consider ways of improving their oversight of the markets. The incentive for pursuing this approach is that a co-ordinated harmonised approach to international regulatory co-operation should promote and strengthen the securities markets globally, increase investor confidence, attract investment, as well as assist the mutual flow of business."
The issue of IRC was raised at the OECD conference in October 2010on the future of regulatory policy, and a break-out session was devoted to the rationale for IRC (see summary of discussion). The theme was recently incorporated in the Recommendationsfor Regulatory Policy and Governance of OECD as part of quality regulation: "In an increasingly globalised economy, international regulatory co-operation must become integral to systemic risk management and long-term policy planning. Governments should take into account relevant international regulatory settings when formulating regulatory proposals to foster global coherence" (draft under discussion). OECD will be further exploring how to share national best practice in this new workstream of regulatory governance.

Anti-fixer campaign (Philippines)

In Manila, the Civil Service Commission (CSC) has designed new “Anti-Fixer Campaign” posters to underscore the need to campaign against any act of fixing. These posters are to be posted in conspicuous places in government agencies to inform the public about their rights. This policy builds on the impetus provided by the Anti-Red Tape Act (ARTA) of 2007, which imposes stiff penalty on fixers. In parallel, agencies receiving the public are being asked to provide all-day service, and the "no-noon break" policy is also widely advertised.
See previous post (December 2011). Because this is such a powerful idea to inform the public and combat corruption, this item is filed in our Best Practices category.

01 February 2012

Council commits anew to growth and jobs

European leaders agreed yesterday on immediate actions to help promote growth and create jobs in Europe, without compromising the fiscal consolidation required to ensure financial stability. At an informal meeting of the members of the European Council in Brussels, the leaders discussed employment and economic policies. Agreeing that efforts should focus on areas with the most growth potential, and without compromising the fiscal consolidation required to ensure financial stability (see new Treaty), the leaders set out 12 measures, listed under three immediate priorities: 1/ Stimulating employment, especially for young people 2/ boosting the financing of the economy, in particular SMEs, and 3/ completing the Single Market. Smart Regulation initiatives are not expressly identified in this short list, but two currently under discussion items will interest us: 1/ the reduction of unjustified administrative and regulatory burdens on SMEs (under priority 2) and the simplification of accounting requirements and public procurement rules (priority 3).

Best practice in communicating RR: ERRADA

Providing access to relevant items of legislation, informing the public about regulatory policy initiatives, offering tools to policy-makers, these are some of the reasons for which maintaining a lively website is part of the basic functions of regulatory reform, and most agencies devote significant resources to communication, which at least we experts like to use and compare.
Among the good examples of such RR websites, the one managed by ERRADA, the Egyptian Regulatory Reform and Development Activity, stands out as particularly well devised and kept up-to-date. There is plenty of news about current activities of the agency teams, updates about on-going projects, and expert resources, all pages in both languages Arabic and English. I only noted one weakness: the glossary only covers RIA, and not the other aspects of RR.
For these reasons, the ERRADA website can be listed among the "Best Practices" category that this blog will now be offering, to provide colleagues around the world with a shortcut to significantly successfull examples promoting the concepts and tools of regulatory reform and smart regulation.

Online RegRef course offered by Mexico

Experts around the world have been receiving an invitation to participate in a new, online, training on regulatory reform offered by COFEMER, the Mexican Federal agency for regulatory reform, with the Latin American RR network. During the 60 hour course designed for policy-makers, the concepts and tools of better regulation will be presented. Four sessions will be dedicated respectively to 1/ theory of regulation and regulatory governance; 2/ Ecomic regulation; 3/Social regulation and 4/ RIA. The course, in Spanish, is free. Infomation and registrations on : www.cofemer.gob.mx/diplomados. Successful course members will receive a diploma ! The deadline for registration is 10 February.

Colombia moves on regulatory reform

Encouraged by progress in the IFC Doing Business report, where it rose from 47 to 42nd rank in 2012, closing the gap with Chile (39) and Perú (41), the Colombian government is preparing an anti-red tape decreto-ley (executive order) to be approved by March. Several administrative procedures, which slowed the country's competitiveness are going to be ditched. This is expected to strengthen legal security for investors, and promote electronic exchanges of information, especially for accounting, and consolidate good recent economic results (7% growth last term, record FDI). The IFC also noted that Colombia had set up a regulatory reform committee accountable to the president. (from online business newspaper Portafolio 16 January). Other recent reforms include a December decree on royalties which ushers in a new distribution of appropriations and perhaps a new deal between the capital and local authorities (see article "the mother of all reforms" on Dinero.com)