ImPact Assessment: State of Play in OECD Countries Nick Malyshev Head of the Regulatory Policy Division OECD

What is good law-making? A sound rationale and clear objectives Targets the main source of a problem Proportionate to scale/risk Avoids undue prescription Complements other laws and regulations Understandable and consistent Can be effectively administered and enforced (and remains ‘fit for purpose’)

OECD work on regulatory reform and regulatory improvement 2012 Recommendation of the Council of the OECD on Regulatory Policy and Governance 2005 OECD Guiding Principles for Regulatory Quality and Performance 2005 APEC-OECD Integrated Checklist on Regulatory Reform 1997 1997 OECD Report to Ministers , which set up a comprehensive plan for action on Regulatory Reform 1995 Recommendation of the Council on Improving the Quality of Government Regulation

The Regulatory Governance Cycle

The Elements of Regulatory Policy and Governance Strategic Approach Institutions Management Tools Governance Policy Statement Oversight Body Regulatory Impact Assessment Whole of Government Political Leadership Ministries Stakeholder Engagement International Regulatory Co-operation Regulators Ex-post Evaluation National/Sub- national interface Risked based approaches

RIA: General Trends While specific systems vary, a well understood approach underpins RIA Problem definition Identification of alternative regulatory options Data collection Identification of the preferred policy option Provisions for monitoring and evaluation The underlying motivation for the introduction of RIA has proven important for the design of the RIA system itself. Efficiency/burden reduction Transparency Accountability Controlling bureaucracies Effectiveness and policy coherence Traditionally RIA covers an individual proposed regulatory measures but increasing system are looking at stock/flow linkages 6 6

RIA: governance is essential Successful RIA critically depends on the level of commitment expressed by political leaders… ... coupled with adequate incentives for public officials. Involving stakeholders is essential, especially through public consultation. RIA must be seen as a key element of a broader “policy cycle”, which includes tools for the ex ante analysis and for the ex post evaluation. Legal, administrative and cultural peculiarities and traditions must be taken into account for RIA to work successfully. Regulatory Oversight Bodies (ROBs) play a key role in coordinating and supervising the effective realisation of the policy cycle. Different roles, mandates and instruments call for different degrees of independence of the ROB. 7 7

RIA: Methodological frameworks Undertaking RIA is a technically challenging exercise Practitioners must have clear and useful methodological guidance and support Relevant practical issues include: the establishment of an appropriate threshold test the identification of impacts both direct and indirect the use of various qualitative and quantitative methods the application of risk assessment tools the emerging use of behavioural insights the next frontier of RIA – how to account innovation, employment, inclusion 8 8

RIA: Adoption across OECD countries

LAC countries are at the early stages in the use of evidence through RIA In most LAC countries, evidence is not yet systematically used through RIA to inform the development of subordinate regulations: Amongst the countries covered in the analysis, only MEX has put in place a RIA system that covers all regulations put forward by the executive Also C-R has established a RIA system but it only applies to regulations that create new administrative procedures and formalities Also in other countries some encouraging initiatives and experiences through pilots or in specific institutions: In BRA, some regulatory agencies have picked up this tool COL has conducted a series of RIA pilots in the recent years (2014-15) and developed guidance with support of OECD In Peru, the Min. of Economy and Finance is starting to conduct RIAs with the guidance of the OECD. Source: OECD Indicators of Regulatory Policy and Governance (iREG) for Latin America 2016. OECD Indicators of Regulatory Policy and Governance (iREG) 2015. www.oecd.org/gov/regulatory-policy/indicators-regulatory-policy-and-governance.htm.

Regulatory Impact Assessment for developing primary laws Note: The results apply exclusively to processes for developing primary laws initiated by the executive. The vertical axis represents the total aggregate score across the four separate categories of the composite indicators. The maximum score for each category is one, and the maximum aggregate score for the composite indicator is four. This figure excludes the United States where all primary laws are initiated by Congress. In the majority of countries, most primary laws are initiated by the executive, except for Mexico and Korea, where a higher share of primary laws are initiated by parliament/congress (respectively 90.6% and 84%).

Challenges of governance and methodology The late timing of impact assessments is an issue. Many countries are pondering issue of proportionality. Most RIA processes are not integrated but fragmented covering a range of issues. The systematic quantification or monetisation of cost and benefits is not widespread. Requirement to consult on RIA is widespread but, in practice, ministries go their own way. Requirements to publish full RIA are rare. The framework of central oversight varies considerably. Overall, challenge function remains weak across OECD

Strategies for long term improvement RIA is a fundamental element of regulatory improvement, but not the only one. For most countries the implementation of RIA remains a work in progress. The integration of RIA into the policy process should be seen as a long term policy goal. All countries experience problems with the quality and timeliness of RIA process. An on-going need to provide support for public officials responsible for RIA and to improve the way that RIA is prepared. Close the policy cycle; do not forget about post implementation evaluation. 13 13

Thank you / Gracias @OECDgov http://www.oecd.org/gov/