Risk and Smart Regulation (EJRR)

The assessment and mitigation of risk is one of the more complex issues faced by smart regulators. Most regulators have devised strategies and developed tools to cope with this dimension: see for instance "Risk and Regulatory Policy: Improving the Governance of Risk" by OECD. The latest issue of the European Journal of Risk Regulation hosts inter alia a special symposium devoted to the operation of the Parliament’s own Science Unit: the Science and Technology Options Assessment (STOA). One of the articles addresses "The changing face of risk governance: Moving from precaution to smarter regulation” (by subscription or purchase.)
The EU definition of the precautionary principle in public decision making is given in another article: it concerns situations "where following an assessment of the available scientific information, there are reasonable grounds for concern for the possibility of adverse effects on the environment or human health, but scientific uncertainty persists. In such cases provisional risk management measures may be adopted, without having to wait until the reality and seriousness of those adverse effects become fully apparent."

Behavioural insights for smarter regulation (EU)

On the LinkedIn Smart Regulation forum, A. Alemanno informs us that DG SANCO has responded - on behalf of the European Commission - to his editorial "Nudging Europe” (see previous blog item) Published in the current issue of European Voice, the response lists a number of instances in which the European Commission (and the co-legislators) would have integrated behavioural insights into its policymaking. In a short analysis of the Commission's response, published on his blog Alberto argues that the Commission's cannot claim to have systematically introduced behavioural insights, though some ad hoc usage has occurred over the last few years in several DGs. Both the response and the new development make most interesting reading.

Regulatory reform can save >10% of GDP (OECD)

Your blogger attended the workshop on new directions for SCM, announced in a previous post, which took place on 11 & 12 June in Berlin, co-hosted by the German Chancellery and OECD. Delegates from 23 countries meeting informally heard presentations on the most advanced techniques to measure regulatory costs and discussed options for further improving the regulatory environment to boost jobs and growth. The rich proceedings will soon be published on the OECD site of the workstream "measuring regulatory performance." The OECD staff will be coordinating new research into methodologies to measure and reduce compliance costs, as a new facet of regulatory policy.
In a key moment of the workshop, OECD Public Governance Director R. Alter presented recent results of an OECD survey on the gains from broad regulatory reforms, published in a working paper last year and available on line. The paper examines the impacts of various regulatory reforms (on Product market regulation, Employment protection legislation reform and benefit, tax and retirement systems.) "Overall, an ambitious reform agenda under which OECD countries and the BRIICS would undertake all the reforms discussed in this paper could have large effects on potential output over the next decade, compared with a no-reform baseline scenario. These gains could reach 5 and close to 11% for the average EU country under relatively quick reform implementation at 5 and 10-year horizons, respectively, and the benefits would be even bigger on average for the larger EU countries (see graphs page 16). The table actually ranks the benefits in terms of percentate of GDP to be obtained by35 countries, ranging from 2% (New Zeakland, where most reforms have already been implemented) to Belgium (18%) where much remains to be done. This table also answer a question often asked by non-specialists: what are the benefits of regulatory reform?

Australian results in deregulation

An AAP despatch dated of today, summarizes the Australian governement's recently released annual update on its deregulation agenda. The report  - "Streamlined, Effective, Productive: an annual update on the Australian government deregulation agenda" - considers the regulatory review and reform measures of 2011 and 2012 that aimed to improve regulations for business, the community, consumers and the environment.The report details the partnership between the Commonwealth and the states and territories under a program involving 27 reforms due for completion by December 2013. Other measures include recent federal regulation for more efficient inspection of meat exports, a proposed new standard definition of a flood for insurance and the development of new pollution standards for light vehicles. The report noted figures from the Productivity Commission which showed 17 of the 27 major Commonwealth-state regulatory reforms could boost the nation's economic output by $6 billion a year.

New reference on regulation and risk (A.Alemanno e. a.)

Our co-experts André Nijsen, Alberto Alemanno and Frank den Butter have just edited a book called "Better Business Regulation in a Risk Society." According to the presentation on Alberto's blog, "the premise of this volume (available at Amazon) is that business regulations are expected to grow in the near future as a consequence of the emergence of a "(world) risk society." Risks related to terrorism, climate change, and financial crises, for example, will penetrate all conditions of life. Increasingly, the decisions and actions of some bring about risks for many in this era of globalization. Controlling these risks implies managing the world through high-quality regulation, with a particular emphasis on businesses and financial institutions. Central to this approach is the argument that a major, if not the primary, aim of regulation is to internalize externalities, or in a broader context, to repair market failure. Such repair can only be accomplished when the costs are smaller than the welfare gains."

Red tape on death (India)

Google news yields many colorful anecdotes about the excesses of red tape around the world making entertaining, and sometimes useful, reading. Such is the case of the Court judgment in Chennai (India) condemning a city council for refusal to register a death on the grounds that the cause of death was not clear enough.
In a helpful report, the Times Of India article summarizes the legal reasoning upheld by the judge, who criticised the local authority for driving the citizen "from pillar to post". Such ultra vires attitudes are unfortunately far too common, as highlighted by the "I paid a bribe" campaign already reported here.

Smart Regulation for experts

Following the success of « smart regulation in 1200 words », your blogger updated his 2010 article on the subject, to provide an overview of the development and current achievements of the strategy in the European Union, with a critical assessment based on personal experience in the European Commission and other organisations working on the topic. « Smart Regulation in the European Union » (some 24 pages - 12,500 words) will soon be published in a book about SR experiences in Europe, along with a chapter for each major country and some smaller ones. Updates concern the report of the Stoiber Group report on best practices, the UK November report on smart regulation, the conclusions of Council under Danish presidency, the results of the Action Plan on Administrative Burdens, all reported on this blog in previous posts (see « smart regulation » category which numbers 37 items).
A summary is provided by a previous post in October 2010. Better regulation had not yet achieved its full impact: the simplification effort had not yet truly reduced the perceived overgrowth and complexity of European law, in spite of the claim that the number of legal texts had been reduced. In spite of the few major successes (the VAT reform to introduce electronic invoicing for instance) the cutting red tape program which ends with the year 2012 needs to deliver significant additional measures in a greater number of areas of legislation, like statistics, accounting, environment, etc. All in all, in no way can it be said that better regulation had already reached the objectives set for it by its initial promoters: EU law still gives an impression of complexity and bureaucracy, the decision making process has not been made that much more transparent;
In this context the innovations introduced by smart regulation can be welcome if they do not undermine or slow down the sustained delivery of ongoing better regulation results. The two main changes in SR are 1/ the broadening of the ambition of the strategy to “make markets work for people” which is wider than “simplify the regulatory environment for business”; 2/ the new emphasis on the content of policy and legislation, which must become “smart”, i.e. deliver effectively on the full range of public policy objectives, rather than reducing the volume of legislation and its burden on companies.
This new approach will have to avoid running into some well-known pitfalls. By giving more attention on the content of regulation and requiring more evidence to justify reform, it opens the way for additional bureaucratic prerequisites, running the risk of focusing more on the process, and not enough on the outcome. The shift is not exempt from technical challenges, as the evaluation methods will need to be adjusted to accommodate SR goals. By insisting on the technical evaluation of evidence in support of decision making, SR may dilute the political initiative and further insulate the regulators from the pressure of the stakeholders. These will be some of the challenges facing smart regulation and also the criteria against which to assess its future achievements.

Kenya accelerates regulatory reforms

According to an online news article of The Star, one of the leading Kenyan papers, and other sources reporting an statement from the minister in charge, the Kenyan government has formed a Regulatory Reform Working Committee to coordinate all the regulatory reforms required for doing business in Kenya and follow the recommendations of the 2011/12 Doing Business Report. A Business Regulatory Reform Unit has been established in the Ministry of Finance to implement the reforms under the guidance of RRWC.”
To improve the country’s overall investment climate in future, the government has developed an implementation matrix that serves as a strategy document for improving performance in the next ranking. “A system of regulatory impact Assessment has also been developed with clear guidelines and will be launched soon,” the minister said. A Business Regulation Bill is currently under consideration to provide for the establishment of an electronic registry for business, in connection with a National Single Window System intended to integrate and enable the sharing of trade and regulatory data.

EU 2020: country specific recommendations

On 30 May 2012 the Commission published its country specific recommendations to assist Member States in the pursuit of the common objectives of the Europe 2020 strategy (COM(2012) 299 final.) This is a mine of information about current public policies conducted to promote jobs and growth in the European Union.
The Europe 2020 strategy is about delivering growth that is: smart, through more effective investments in education, research and innovation; sustainable, thanks to a decisive move towards a low-carbon economy; and inclusive, with a strong emphasis on job creation and poverty reduction. The strategy is focused on five ambitious goals in the areas of employment, innovation, education, poverty reduction and climate/energy.
In COM(20120299 the objectives concerning the improvement of the business environment are defined as follows: “The country specific recommendations focus on improving the business environment, including by reducing administrative burden, and opening up the network industries such as energy, railways and telecoms to competition to deliver better services at better prices for business and citizens. In some cases they recommend greater independence for the regulators. They address the implementation of the Services Directive through removing unjustified or disproportionate restrictions on providing services, including discrimination based on nationality or residence. They also deal with ongoing restrictions in the retail sector.
Other recommendations deal with strengthening research and innovation, improving resource efficiency, and linking education more closely to the requirements of the labour market. »

Transparency Portal (EC)

Yesterday, the European Commission opened a new central portal providing a access to a great variety of documents, most of which were already available but through separate portals. The initiative gives further substance to Article 255 of the treaty establishing the European Community, implemented through Regulation 1049/2001 of 30 May 2001, which grants a very general right of access to European Union institution documents. It is well worth visiting and including in your favorites as it gives a common entry point for EU law and other documents, RIAs, comitology groups, consultations, EU funds and even ethics, all in the name of the principle of Transparency, one of the basic tenets of smart regulation.

New 30% reduction target for red tape (Belgium)

The Belgian Federal Government has published its third governement-wide Action Plan for administrative simplification 2012-2015. In a new stage of the 10 year old policy, the plan purports to further streamline the full range of administrative procedures for citizens and business with a view to reduce administrative burdens on business by 30% by 2014, to comply with the 25% reduction target recommendend by the European Small Business Act. It consolidates and coordinates various official policies, among which the programmes managed by ASA, the federal simplification agency. Most interesting features for business are the "only once " principle, the "e-Depot" scheme, the simplification of official tenders and electronic billing. Citizens will receive an electronic ID card. The well-known Kafka test in operation since 2004 will be revamped by 1 October 2012. An evaluation of the programme is scheduled for November 2012.

EU Council calls for improved internal market governance

At its 31 May meeting, the Competitiveness Council adopted conclusions on the "on the governance of the Single Market and the Digital Single Market". The conclusions stress that "strengthening the governance of the Single Market, including improved implementation and enforcement, the completion of a Digital Single Market and the swift adoption of the measures contained in the Single Market Act, could take the internal market to a new phase and create economic growth and jobs, as called for by the European Council on 1-2 March 2012." The conclusions take into account the evaluation made by the Commission of the Single Market governance check-up 2011.

Among the measures called for:

• reaching the transposition deficit target of 1% on Single Market Directives while the aim remains to have no transposition deficit;
• exchange of best practices to ensure the quality of transposition and enforcement;
• speadier infringement procedures;
• easier access to information for citizens and businesses on Single Market rights at EU level and how those rights are implemented at national and local level;
• better quality and consistency of legislation for achieving a more integrated Single Market;

"Doing Business in the Arab world 2012"

On May 29, the World Bank published Doing Business in the Arab World 2012, the fourth in a series of annual reports benchmarking the regulations that enhance business activity and those that constrain it in 20 economies in the Arab world. Governments in 13 of 20 Arab economies implemented some 20 regulatory reforms in the year ending May 2011, aimed at improving the business environment for local entrepreneurs. Morocco was the most active in encouraging entrepreneurship through regulatory reform.
Also interesting on the same site: "Business Reforms in Middle East & North Africa," a compendium of findings of recent DB reports.

New directions for SCM (compliance costs)

OECD has announced an important workshop, which will be held on 11-12 June in Berlin, hosted by the German Federal Chancellery and the National Regulatory Control Council. The event aims to share approaches and techniques for measuring compliance costs and to identify strategies for cutting regulatory costs that contribute to re-boosting growth and to delivering improved welfare outcomes. The workshop will enable the exchange of experience and good practices and focus both on the technical challenges in measuring compliance costs and benefits of regulations, and on the political challenges in reducing costs to stimulate growth and maximise welfare outcomes. This workshop is part of the programme on Measuring Regulatory Performance.
On the workshop page are posted a number of interesting documents, some not published elsewhere on the net, starting with the key paper from Germany: Guidelines on the Identification and Presentation of Compliance Costs in Legislative Proposals by the Federal Government.
As background to the techniques which will be discussed in Berlin, see a joint presentation between Germany, the Netherlands and Sweden at a similar event last year in Poland.