Swedish Better Regulation Council's annual report for 2011

"Regelrådet's third annual report is now available in English. For more information about Regelrådet please visit our new website. We hope the report will be useful to you in the work of tackling unnecessary regulatory burdens for businesses." (from Christina Fors, Director, Swedish Better Regulation Council / Regelrådet.)

Italian Senate votes simplification law

Yesterday the Italian governement presented the content of a new Simplification Decree Law aimed at citizens and business. The new text eliminates stages in procedures for the payment of fines, declaration of a change of residence, renewal of a license; it also streamlines the procedures for entrepreneurs participating in a tender. The government stresses that the content of the measures was selected from proposals made by the public and that though not all suggestions were followed up, they may feed further simplification efforts.

The content of the main simplifications is also posted online.

OECD Council updates principles for smart regulation

The OECD Council endorsed on 22 March the Recommendation on Regulatory Policy and Governance. The text had been prepared by the Secretariat and discussed on several occasions with Member State delegates who shared national experiences acquired over the years, and best practices (see previous post). According to observers, this document updates thinking underlying regulatory policy to post-crisis environment and provides an instrument to direct efforts and monitor results in the improvement of the quality of regulation. See also the background on the "guiding principles" page of the OECD site and the dedicated brochure.

UK news: Quality of RIA improving, focus on enforcement

On 8 March, the independent Regulatory Policy Committee charged by government with assessing the quality of analysis and evidence supporting government departments’ proposals to regulate,published its annual report for 2011 ("Improving Regulation") which demonstrates that Departments achieve year on year improvement of the quality of RIAs, but a quarter of regulatory proposals remain ‘Not fit for purpose.’
Among significant factors that have brought about the improvement, the Government’s "One-in, One-out rule" has according the chairman of the RPC, "undoubtedly put pressure on Departments to strip away regulation" (see also press release.)

Also in the UK this week, the launch of Focus on enforcement campaign, asking the public to help identify where enforcement can be improved, reduced or done differently to improve the business environment and reduce administrative burdens.
Finally, also this week, a Beta version of a new central site for administrative information goes online: GOV.UK The "INSIDE GOVERNMENT section is dedicated to departmental information: policies, consultations, news etc - the type of content that is currently to be found on http://www.bis.gov.uk/.

Can CBA be reconciled with the precautionary principle?

Although commonly thought of as rivals, cost-benefit analysis (CBA) and the precautionary principle (PP) actually can be reconciled, if you are to follow Daniel H. Cole in a RegBlog analysis published earlier this month. Cost-benefit analysis (CBA) is a well-established, if fallible, methodology for ensuring that regulations enhance, rather than detract from, overall social welfare. It acts as a filter, capturing inefficient regulations while allowing efficient regulations to pass through. While many (if not all) of the elements of CBA are inherently subjective and, thus, subject to political manipulation to bias outcomes, the twin formal requirements of transparency of assumptions and replicability of calculations can provide a reasonably robust defense against outright manipulation. On the other hand, the precautionary principle (PP) generally calls for a higher level of regulation or other prevention of risky market activities. The PP and CBA are often treated as alternative, even competing, decision tools. The author argues that CBA is capable of incorporating a PP without sacrificing its own chief virtues of transparency and replicability.

Commission lists gaps in implementation of EU law

Smart regulators know how important it is to ensure proper implementation of regulation if the underlying policy objectives are to be met. This is all the more important when the norm requires specific measures to be taken by different implementing authorities. Such a situation is to be found in the European Union where the directives adopted in Brussels need to be transposed into national law to become effective and citizens and companies from across the Union to reap the benefits of the Internal Market and other European standards. Hence the importance of the issue of "application of EU law" and the procedure to identify and correct failure by Member States(MS) to transpose directives (the "infringement procedure"). The Commission has just published its monthly package of infringement decisions by which it pursues legal action against MS for failing to comply properly with their obligations under EU law. The package consists of 170 decisions, including 37 reasoned opinions and 5 referrals to the European Union's Court of Justice. Individual press releases explain the background and reasons for each Commission decision, which specifies which MS are at fault, in a rare case of an international organisation "naming and shaming" its members.
The infringement procedure begins with a request for information (a "Letter of Formal Notice") to the MS concerned, which must be answered within a specified period, usually two months. If the Commission is not satisfied with the information and concludes that the MS in question is failing to fulfil its obligations under EU law, the Commission may then send a formal request to comply with EU law (a "Reasoned Opinion"), calling on the Member State to inform the Commission of the measures taken to comply within a specified period, usually two months. If a MS fails to ensure compliance with EU law, the Commission may then decide to refer the case to the Court of Justice.
The decision to open infringement proceedings against a Member State is taken by the Commission on the basis of an unbiased legal analysis conducted by the its services on the documents and information submitted by the parties and on any complaints.

Australian (new) Business Advisory Forum

The involvement of business in orienting regulatory reform can take many forms. Earlier this month, the Australian Government announced the creation of a Business Advisory Forum to advise on deregulation, according to the official press release. Business leaders of the nation’s biggest companies will join state and territory leaders in a new deregulation dialogue . Senior business figures on this Forum will have two main roles:
• To advise Governments on how best to coordinate and progress the remaining areas of competition and regulatory reform; and
• To nominate new areas of regulatory reform that will help lift productivity and drive investment, therefore growing businesses and creating new jobs.
Small business will also be directly represented on the Forum, given smaller firms often disproportionately feel the impact of regulatory burdens. 
The forum will work alongside the Council of Australian Governments to identify regulations that are hurting economic activity across state boundaries, such as inconsistent standards for tradespeople who move interstate , to unlock a combined $4 billion in productivity gains.

Comments in the press highlight the need for the Governement to make peace with the business world after several key reforms meeting difficulties. The Australian recalls that  "the creation of the forum, after extensive lobbying by business, follows a report last month from the Council of Australian Governments' Reform Council, which warned that 12 key reforms were at risk including harmonised occupational health-and-safety laws, a national trade licensing system, a nationally consistent approach to the imposition of personal criminal liability on company directors, national regulation of the legal profession and energy reforms. " See also Sydney Morning Herald for more comments.

Where to start with regulatory reform (Myanmar)

An interesting article examines the relevance of regulatory reform for emerging economies. The specifics of the Myanmar situation do not obscure for us more general lessons applicable to many other countries. Here are some highlights to make you want to read the article in full:
"The technocratic chicken or egg? Myanmar suffers from the proverbial chicken or the egg problem: the country needs a sound regulatory and economic base to induce, enable and create technocrats to add value to Myanmar's rudimentary and primary industry-focused political and economic system, but Myanmar lacks the technocrats to actually create a friendly environment for technocrats. Since 1988, military leaders have intentionally weakened Burmese education, spreading out university campuses to prevent the agglomeration of students necessary for proper activism and civil disobedience."
The author also draws up a list for priority areas for change, where regulations must be reformed: "Extensive work is required on drafting sophisticated new laws. As of this writing, Myanmar has a seriously outdated foreign investment law (FDI law), outdated food and drug laws, outdated private enterprise and banking laws, no securities laws, no environmental laws, no mergers and acquisitions (M&A) laws, no derivatives and no commodities exchanges. There are no or very weak environmental, competitive, judicial, legislative, financial, labour, securities, banking and corporate regulatory institutions. So even if there were appropriate laws in place, enforcement and oversight would be all but impossible. Bribery and corruption are reported to be widespread in the country."
Action is urgently required, the article pleads for regulatory reform on the basis that it can prevent a new form of colonialism by foreign companies "carving up the country without regard to environmental, labour, displacement, human rights or domestic capacity issues."

One in, two out policy proposed (France)

Quite a few countries are sensitive to the seemingly irresistible upward spiral of "legal production", also called legislative inflation (see for instance the post below about the US.) Several countries have adopted, following the UK example, the rule by which any ministry wishing to introduce a new law or regulation should identify a text for deletion (one-in, one-out).
This blog has on several occasions reported on the French president's commitment to reducing the number of norms, sometimes referring to "deregulation" or "dé-légiférer" (see "France" category.) Last Sunday, the president went one step further, announcing in an interview his determination, if re-elected, to impose a "one-in, two-out rule", to reduce the stock of some 200,000 texts which would be costing the economy some 5% of GDP.
The idea has been floated once before, in New South Wales (Australia) in a proposal of the NSW Business Chamber.

US red tape "rising" (Heritage Foundation)

We have been watching the apparently intense pace of regulatory reform in the US, since the January 2011 presidential order and Congress initiatives (18 posts since 1.1.2011, see "US/CND" category). But is this reform zeal reaching its objective of simplifying the business environment and creating growth and jobs?
A recent research published by the Heritage Foundation, a conservative think tank, has studied the "regulatory production" and highlights that the Democratic Administration has produced far more rules than its Bush predecessor, though both Congress and the White House are accountable. The following conclusions are taken from the "talking points":
"1 The regulatory burden on Americans continued to increase throughout 2011, with 32 new major regulations that increase regulatory burdens imposed at a cost of almost $10 billion annually. This regulatory excess is evident in lackluster job creation and anemic economic growth.
2 During its first three years in office, the Obama Administration unleashed 106 new major regulations that increased regulatory burdens by more than $46 billion annually, five times the amount imposed by the George W. Bush Administration during its first three years.

3 Hundreds more costly new regulations are in the pipeline, many of which stem from the Dodd–Frank financial regulation statute and Obama’s health care legislation.
4 President Obama’s “retrospective review” initiative, intended to rein in unnecessary rules, has yielded few meaningful results (...)"
The United States is by no means the only country where there is such a distance between political announcements and reforms made in good faith, and results on the ground. It is precisely part of the "smart regulation" approach to reduce such a gap.

New red tape reduction commission (France)

On 19 March, the minister for SMEs, F. Lefebvre, launched the "red tape reduction commission" composed of entrepreneurs, stakeholder organisations and governement officials (for details see previous post). The commission's job is to suggest options to reduce administrative burdens on companies and to monitor proposals made at the Assizes and in the recent simplification law.
At the launch of the new commission, the minister gave an update on two major projects: the simplification of the payslip (by harmonising the basis of social contributions by 2015) and the "electonic safe" for companies. This scheme seeks to avoid asking companies several times for the same information by storing data online under their control, with a first phase over the next 12 months covering 35 forms from 10 ministries.
For more, see official press release. This announcement was the last of several steps taken to reduce regulatory costs for business, and specially SMEs.
A more detailed update on simplification had been given by the minister of budget on 16 March: the 5th and last batch of 30 simplification measures widens the list of electronic services provided by public administrations, among which declaring a change of address, or registering on the electoral roll.
On 14 March, a new unit was created by Governement decision to support the simplification policy and the reduction of administrative burdens, in the prestigious Economic and Financial General Control (ministry of finance). The unit will also monitor international developments in Better Regulation and verify the quality of impact assessments.
Finally, on 12 March, the minister for SMEs announced 28 measures to reduce burdens on micro-enterprises (crafts) under the principle "no activity, no charges" announced by President Sarkozy.

MENA and African officials support administrative reform

Photo: Ph. Ricard

Yesterday your blogger attended a high-level conference in Paris at the invitation of the ministry of finance's technical assistance agency, ADETEF. The theme, prompted by developments in the MENA region in the last 12 months, was "developing together the responsibility of the administration" to support democratic governance. Some 10 MENA and African countries discussed with experts from the US, France, Ukraine, Albania and multilateral agencies (EU, World Bank, OECD) how the new governance, with its emphasis on participation, transparency and accountability, could improve the quality and efficiency of public service delivery, and contribute to growth and more cohesive and inclusive civil society. Along the way several myths or apparent contradictions were dispelled: transparency need not limit efficiency of administrative processes, concern for sustainable growth did not necessarily thwart potential economic growth. Administrations must adapt to the new governance context: "it is the people who make the government, not the government that makes the people" said Minister Dr Asraf Abdel Wahad (Egypt) in his keynote address. Stakeholders, especially from the civil society, needed to engage fully, which required a well developed public service in the right mindset and effective leadership: "You must avoid capture of the political forces by economic interests" said Mr H. Larbi Head of MENA department, World Bank.
Several practicioners had been invited to illlustrate by practical success stories the validity of the new approaches, such as a regional director from Algeria who showed how tourism could be developed without jeopardising the environment and social cohesion. The impact of the regional dimension was highlighted by director Mrs H. Allal from the Mediteranean Energy Observatory.
Participants agreed that in many countries a focus on grass-root implementation through communication and training, for a better understanding of the requirements of democratic governance, was now the priority. Mr Cissé director of Customs of Sénégal concluded: "the necessary legal framework had been set up, what is now needed is implementation."
Overall, an inspiring and useful event to meet the concerns expressed by the "Arab spring" and support the forces of change within the administrations of the region. See also official press release.

OECD report on State reform in France

The OECD has just published a new report on "France : Une perspective internationale sur la révision générale des politiques publiques" a study carried out at the request of the French administration into the major component of the "reform of the state" programme, i.e. the general review of public policies. The study examines the strengths and weaknesses of the French approach in the light of experiences in other OECD countries, and makes recommendations to further improve public management.
Our better regulation issues are only indirectly mentioned, but the report contains developments on administrative simplification and electronic public services, where significant results have been achieved. This publication supplements the "Better Regulation in Europe: France" of the EU 15 Project which in 2010 specifically examined the French approach to quality regulation (see previous post).

In support of RIA (the Viet Nam practice)

RIA is of course applied in many countries as a matter of course, but a recent discussion on the LinkedIn Smart Regulation discussion page shows that there is still some discussion about its relevance and impact. Scott Jacobs started a discussion under the heading "in support of RIA" which attracted 28 technical contributions. One of the countries quoted was Viet Nam, for which a 2008 study showed that each full RIA was estimated to cost approximately US$500, but the introduction of RIA is expected to save the private sector 100, 000 times that amount through a reduced or more efficient regulatory regime. Today, Viet Nam News publishes an interview of Dr Phan, director of the Administrative Procedures Control Agency (APCA) about the role of impact assessments in the regulatory reform process. Here is an interesting quote: "Impact assessment can be understood simply as a process of subjecting a draft regulation to over 50 specific questions in a standard form, grouped in four criteria groups: necessity, reasonableness, legality and effectiveness. This assessment needs to take place before the draft is circulated for comment. In other words, a regulation must prove its necessity, reasonableness, legality and effectiveness rather than be based only on subjective factors and experiences of officials. This is a scientific approach and will prove effective if civil servants perform their duties with a sense of fairness and responsibility. Heads of administrative agencies must care about the quality of the regulation rather than the issuance process."

French Nat. Assembly has the last word

As reported before on this blog, the French National Assembly adopted on 29 February a law on legal simplilfication and red tape reduction, the fourth of the type supported by Mr Warsmann, chairman of the legal committee and the 6th since 2003. This 4th "omnibus" was supposed to be directed principally at business, but ends up, along 134 articles, with a wider scope including local authorities and other victims of red tape
Online analysts summarize for their readers the complex text, for instance, Net Iris for business, or Localtis for the local governments' point of view.
A quick perusal of the content of the law shows a real desire to abolish, merge, update legal regimes, but the sheer number and intricacy of some of the schemes shows that the simplification work remains very complex. The main surprise of this exercise now successfully concluded was the opposition of the senior parliamentary chamber (Senate) on the grounds of loss of control for the legislator, and excessive complexity (see previous posts.)

"Over-regulated America" (The Economist)

This blog has recently been trying to keep up with the fast pace of regulatory reform discussions in the US. But how effective is all this activity? In its Feb 18-24 number, The Economist takes a critical view, concluding that "the home of laissez-faire is being suffocated by excessive and badly written regulation" a trend aggravated by recent reforms, in spite of the White House's regulatory policy.
A recent article entitled "Over-regulated America" takes a dispassionate view of this flurry of regulatory reform zeal, with picturesque examples of laughable excesses, like the Dodd-Franck law of 2010 on financial services reform (848 pages, without counting implementation schemes), part of the Wall Street Reform. The Obama health care reform (2010) also backfires: every hour spent treating a patient in the US may be creating at least 30 minutes of paperwork, often more.
The newspaper recommends that the CBA be done by an independent watchdog, that sunset clauses be used systematically, and most important, that the drafting highlight broad principles, instead of trying to cater for all possible situations.
In the same issue, there is an article on the recent drift of cost-benefit analysis, where the benefits of new legislation are systematically over-stated ("the rule of more"), an indictment of the RIA system in operation.
See also an equallly critical and inspiring previous article in the same newspaper, reported on this blog on 16 May 2011.

"New frontier" for smart regulation

Apologies to readers, having been on leave for a week, I missed reporting in time on the EU Council's views on the "new frontier" of smart regulation, a new reference official document that all experts should consult (and meditate?).
At the Competitiveness Council meeting on 20 February, ministers adopted conclusions on a future smart regulation agenda with a strong end-user focus, following repeated invitations by the European Council in 2011 "to further concentrate efforts to reduce the overall regulatory burden".
Some new language can be noted: alongside economic growth, legal certainty and predictability are added to the objectives of smart regulation. Again regulation is approached from the angle of its economic impact, and improvemens must seek an overall reduction of regulatory burdens (not only administrative burdens). Also the conclusions flesh out how evaluation is to be used in pursuit of smart regulation goals.



The confirmation of the importance of smart regulation for the growth and competitiveness agenda, with a focus on "end users," owes a lot to the convincing case made by the Danish presidency.