RIA

The RIA deals with the intended positive and negative effects and the costs and benefits of a bill in the drafting process to give all drafting parties a comprehensive view of the possible impacts. Guidelines and assessment instructions are concise and lead to a deep analytical look of the assessment. For example, in the assessment of business impacts, the impacts of regulation and various implementation alternatives must be examined especially with respect to companies’ costs and earnings, competition between companies, the functioning of the market, growth opportunities, company investment and innovation and companies’ international competitiveness.

Regulatory impact assessments are very detailed, according to a prescribed schedule. They have to be made public.

The manual for regulatory impact assessments, authored by the “Better Regulation Executive,” states with respect to needs analysis: “Define your objective clearly so that it sets out the outcome you are aiming for. Make this clear, concise and specific.”

The analytical depth of impact assessment is high, particularly by the non-partisan Congressional Budget Office (CBO) and Government Accountability Office. Even though an Office of Management and Budget (OMB) impact analysis is subject to political strictures reflecting the priorities of the presidential administration, the level of quality required from the agencies is also high. For example, during the debate on health care reform, the CBO developed analytically sound, sophisticated estimates of numerous features of each major proposal in the debate, updating these as significant revisions were made. These include budget costs, effect on the budget deficit, costs of private insurance coverage, employment, and percentage of the population receiving coverage, health care costs, among other aspects–over various time periods. With respect to regulatory analyses, narrowly defined, agencies are required to provide quantitative estimates of costs and benefits. The analysis on the benefit side includes specifying the need for action.

For regulations affecting businesses, Australia was one of the first countries to pioneer Regulation Impact Statements in the 1980s, and since then the procedures have become very formalized. The preparation of a RIS follows a standard procedure which gathers the information that will enable the policymakers to evaluate the extent to which the proposed regulatory changes will result in a net benefit to the community.

The instructions from the PMO and the Ministry of Finance require the RIA to analyze the purpose of and need for regulation. A needs analysis is expected to be part of the initiation of the legislative process. The examples outlined by the Ministry of Finance in its RIA guide are quite clear, concise and specific. So a needs analysis will normally be a part of a RIA. The thoroughness of this analysis depends on the importance and nature of the new regulation.

The appropriate analytical depth of regulatory evaluation has been carefully defined at least since the revision of the policy evaluation system in 2005. According to the Basic Guidelines for Implementing Policy Evaluation (Revised) of March 2007, the necessity, efficiency and effectiveness of measures are to be the central considerations for evaluations; other issues include equity and priority. The structure and content of assessments are further clarified in the Policy Evaluation Implementation Guidelines of 2005 and the Implementation Guidelines for Ex-Ante Evaluation of Regulations of 2007; all of these specifications contain quite demanding tasks that must be performed as a part of the evaluations.

The broad rationale for socioeconomic RIAs is laid down in the government/coalition agreement of the Balkenende IV administration. The Standard Cost Model specifies all the elements that positively or negatively affect administrative costs of government regulations/subsidies for target groups. It also provides a standard against which monetized administrative cost reductions per bill revoked or per new regulation introduced may be expressed. There are overall reduction targets per department, which may have to compensate for the introduction of new legislation/regulation by abolishing the implementation of older ones. ACTAL justifies its existence by pointing out that administrative cost reduction for firms, citizens and professionals means a 1.7% increase in (macroeconomic) labor productivity and a 1.5% gain in GDP. ACTAL guards against the routine call for more and stricter regulation after incidents or calamities; its activities have also reached subnational, local governments.

The Standard Cost Model method was only recently pilot-tested on administrative burdens falling on individual citizens. ACTAL follows a step-by-step target group approach, prioritizing citizens that suffer in particular from high administrative burdens like the chronically ill, the physically challenged, elderly social benefit recipients and volunteer workers. In sum, only particular types of burdens for some social groups are measured, not all. The most conspicuously absent item from ACTAL’s and the government’s ex ante evaluation’s claims regarding comprehensiveness is that burden reduction is just assumed to be beneficial, on average, for the short- and the long-term. Like other forms of cost-benefit analysis, non-economic, less tangible, non-quantifiable costs and benefits are blended out of the consideration. There is no Standard Benefit Model to logically complement the Standard Cost Model.

According to Ministry of the Interior guidelines, RIAs are divided into three components: the prospective proceeding, the attendant proceeding and the retrospective proceeding. The main task of the prospective proceeding is the analysis of the necessity of a regulation. Therefore, the alternatives, including the introduction of no further regulations, are assessed as well. The draft regulation’s proposed achievement must also be justified.

The relevant government agency, COFEMER, contains some 60 officials and is responsible to an interdepartmental committee that ultimately responds to the Ministry of Economy. COFEMER does not have a veto on new proposals, but it must be consulted and can express an opinion. Its position vis-à-vis the ministries was strengthened by an additional presidential order by Calderón in 2007. It can prevent new regulations from coming into force until the consultation process is complete. COFEMER has also been active in negotiating the streamlining of procedures with individual Mexican states. This is significant, as much regulation is generated at subnational levels. After a quiet start, COFEMER has become a significant element in Mexico’s pro-competitiveness policy.

The quality of RIAs in parliamentary bills show great variation, but is generally good. At a minimum, parliamentary bills describe the financial and administrative (government) consequences of a proposal. Other costs are typically not quantified systematically or regularly when preparing bills. The RIA system is strong in terms of consultation, transparency and creating a broad political consensus around decisions. It is weaker in terms of technical quality.

The Swiss political system does not have a formal institution or body responsible for performing needs analyses. However, the extraparliamentary committees and the consultation procedure are functional equivalents, and constitute part of a systematic process of needs analysis.

RIA analysis includes assessing each legislative proposal in terms of its necessity and how suited it is to the current situation. RIA analysis also entails exploring alternative methods for achieving the pursued objective. The preface of every government bill includes a brief discussion of the relevant problem as well as the goals of the bill. Although requirements mandating an assessment of regulatory purpose and need are relatively new, these assessments have evolved significantly in recent years.

RIAs in Canada lack deep analysis, mentioning the purpose of and need for regulations, but without going into specifics.

RIAs mention the purpose and need for regulation, but focus on cost-benefit analysis of the proposal.

The only evidence available on the usage and impact of RIA in Sweden suggests that these assessments have yielded only modest results. In addition to RIA, the Department of Enterprise, Energy and Communications has for several years worked with a project called “Simplex.” This project aims at identifying private business regulation which obstructs the creation of new businesses or which place an excessive administrative burden on private businesses.

According to the official RIA guidelines, the first step of analysis is to identify whether regulation is necessary at all. In practice, however, RIA studies do not have a separate section on the need for regulation. Instead, the need or absence of need for regulation is established as a general result of the studies.

Many of the recent examples of RIA fail to address major issues or areas in an analytical manner. Even when they follow the standard guidelines, assessments are not always sufficiently analytical to be given a high score under this heading.

Given the informal and non-institutionalized character of the instruments applied for regulatory impact assessment, reports tend not to specify the purpose of or need for proposed regulations.

According to the rules adopted, RIAs should be characterized by a high level of analytical depth concerning proposed regulations’ purpose and governing need. However, these lofty intentions are often undermined by sporadic implementation.

The 2006 RIA guidelines call for an analysis of the need for a regulation. In practice, however, assessments focus on the impact of new measures and do not deal in detail with the arguments for regulation.

Under the terms of a Council of Ministers resolution (Resolução do Conselho de Ministros No. 198/2008), legislative proposals are required to incorporate an analysis of needs and purpose. Thus, Article 17, No. 1 indicates that ministers making proposals to the Council of Ministers must submit an assessment that specifies both the need for and the impact of their proposal. Article 18 stipulates that concise impact-analysis conclusions must be submitted, and that these must make clear the need for the policy proposal. Indeed, a written explanation of the need must be submitted with any policy proposal (Article 29). However, it is unclear how effectively this has been implemented, as the ministries have relatively minimal research capacities, and no evaluation of the measure’s impact has been made.

A formal requirement for a need analysis does not exist in France. Objections over the need for legislation might come from the Prime Minister’s Office or from the Council of State (objections coming from the opposition, the media or pressure groups are not considered here). Once the decision to go ahead is taken by the government nothing - except a political decision - might stop the process and challenge the usefulness of the proposed reform. It is quite common that bills are passed under emergency procedures to address public demands triggered by sudden events, strong emotions or public protest. The legislation is often useless and implementation decrees never adopted. Its only objective is to send a message to the media and inform public opinion. In many instances, the most objective analysis about the purpose and need of certain legislation is made ex-post by the Council of State or the Court of Accounts (Cour des Comptes) to deplore the useless character or the emptiness of some regulations.

Draft bills normally say a few words on the purpose of and the need for a regulation. However, RIA largely focus on the direct budgetary impact of draft bills or other measures. A comprehensive analysis of the need for a regulation is rare.

The RIA guidelines call for a detailed analysis of the purpose of and need for a regulation. In practice, however, most assessments do little more than claiming a rationale for a regulation.

RIA has just been introduced in Spain, and it is not yet possible to assess how effectively this activity deals with needs analysis.

RIA has only recently been introduced to Turkish public administration. Due to the heavy cost in money and time of preparing RIAs, there are few examples available. Therefore, it is hard to say whether they are performed fully, partially or poorly. The cited work is prepared according to the requirements, but cannot be generalized.
It seems that when RIA is applied in Turkey, it defines the purposes of and the need for regulation in a clear, concise and specific manner. The framework for RIA was hammered out in close consultation with the European Union, with a review of best practices in a large number of European countries carried out by the State Planning Organization.

RIAs are very underdeveloped in Greece, and thus have little analytical depth. The resources and capabilities needed to undertake such analyses have simply not been in place. The prime minister’s office has asked ministers to explain the purpose and need for any new legislation by drafting a concise statement to that effect and attaching the statement to the draft regulation. In the first months of 2010, under Papandreou, some ministers did in fact prepare and submit such statements, but it is too early to say whether such a practice will take root.

Does not apply, as there are no formal regulatory impact assessments.

Since there is no tradition of RIA in Iceland, needs analysis is not a habitual practice.

Does not apply.