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Tom Ferris is a Consultant Economist specialising in Better Regulation. He lectures on a number of PAI courses and contributes blogs regularly to PAI. He was formerly the Department of Transport’s Senior Economist.

In January, President Trump introduced an Executive order that will focus on “Reducing Regulation and Controlling Regulatory Costs”. The order states specifically that,

“…it is important that for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process”.[i]

Trump’s Two-for-one Policy

President Trump has decided that for every one new regulation, two old regulations must be eliminated. While there could be some merit in the policy, it could also be counterproductive, if applied without exception right across the US economy, and if no forward date is set for a review of the policy. The proposal has been influenced by policies in Canada and the UK, but those regulatory policies are applied with exceptions. In the case of Canada, the Red Tape Reduction Act 2014 introduced a “One-for-One Rule” to control any administrative burdens that regulations might impose on business. There are, however, areas of regulatory activity that are not subject to the limit in Canada. Moreover, the Act has to be reviewed after five years in operation.[ii] In the case of the UK, a “One-In, One-Out” rule was introduced in January 2011. This has since been strengthened to a “One-In, Three-Out” rule. It should be noted that in the UK guidelines some areas of regulatory activity are also exempt from the application of the rule.[iii] 

Why this Policy?

A “two-for-one” policy can be defended generally in terms of reducing the overall number of regulations, while instructing individual Government Departments and Agencies to review whether their existing regulations are fit for purpose. This, in turn, has the potential for generating debate on the real costs and benefits of existing regulations. However, if the policy is applied across the board, there are individual policy areas that could experience negative impacts. Each area of regulation must be judged on its merits. If a new regulation is justified, it should be introduced.  If an existing regulation is outdated or no longer relevant, it should be amended or revoked. In short, the overall concern should not be a count of the number of regulations in place, but the quality of the individual regulations.

One critic of the new policy is Robert Weissman, President of Public Citizen in the USA. He concluded that,

“This executive order … will result in immediate and lasting damage to our government’s ability to save lives, protect our environment, police Wall Street, keep consumers safe and fight discrimination. It will fundamentally change our government’s role from one of protecting the public to protecting corporate profits, and will lead to a dangerous new era of deregulation and corporate ‘self-regulation’.”[iv]

 

Ken Kimmell, President of the Union of Concerned Scientists, gives two clear examples of areas where the “two-for-one” policy would have negative consequences:

“if the Environmental Protection Agency (EPA) wants to issue a new rule to protect kids from mercury pollution from power plants, it would need to cut two existing rules, such as reducing lead in drinking water or requiring school buses to cut smog-causing emissions. Or if the Consumer Product Safety Commission wants to protect families from dangerous car seats for children, the Commission would need to drop rules such as requiring better labeling of age appropriate toys, or reducing toxic substances in baby products”.[v]

 

Relevance to Ireland

Ireland’s Statute Law Revision Programme contains some of the characteristics of a “two-for-one” policy. But where a “two-for-one” policy is somewhat arbitrary in its application, Ireland’s law revision programme is implemented only following very specific examination of individual pieces of regulation. The purpose of the Programme is to modernise and simplify the Ireland’s Statute book by removing spent and obsolete pieces of legislation, thereby reducing its size and thus making it more understandable and accessible to those who use it. However, the removal of individual pieces of obsolete legislation is not linked directly to the introduction of new pieces of regulation or legislation. The Minister for Public Expenditure and Reform, Paschal Donohoe TD, in reply to a Parliamentary Question on 15 November 2016 pointed out that:

“To date, over 60,000 pieces of legislation have been either expressly or implicitly repealed under the programme. Collectively this is the most extensive set of repealing measures in the history of the State and the most extensive set of statute law revision measures ever enacted anywhere in the world”.

However, rather surprisingly, the Minister went on to announce that he had decided

“… in view of the progress made, to pause the Statute Law Revision Programme at this time in order that my Department can progress other priorities”. [vi]

This “pause”, in the overall work being overseen by the Department of Public Expenditure and Reform, provides an ideal opportunity for Government to instruct the other Departments and Agencies to commence reviews of their laws and regulations, with the objective of updating their portfolio of regulations.

 

Conclusion

President Trump’s regulatory policy has been lauded by Ireland’s Michael Healy-Rea TD, who told RTÉ that although there are many things he disagrees with Donald Trump about, he admires the US President’s approach to deregulation.[vii]

There is a danger that good regulations might be removed if the “two-for-one” policy is applied rigorously. It is important that good regulations are not lost sight-of. After all, it is good regulations that create the standards and rules that govern the way markets operate, that provide customers with reassurance as regards the quality of the products and services they buy, and that make sure that government works well at a central and local level.

The way to ensure that new regulatory proposals are sound is to have Regulatory Impact Assessments (RIAs) undertaken, before implementation is even contemplated. Such RIAs are needed to underpin good laws and regulations to help to protect citizens’ rights, promote a safer society and ensure more confidence in goods and services. That means evaluating alternative solutions, measuring the costs and benefits of different options, undertaking consultation with interested parties, and recommending a “best option”. Taken together, these elements provide a best practice approach to regulation. If well-applied, the RIA process has an important role to play in facilitating the continuing development of a competitive economy. In addition to the introduction of new laws and regulations, it is important that Departments and Agencies review their regulatory portfolio regularly to ensure that their laws and regulations are fit for purpose.

Notes


[i] Presidential Executive Order, available here.

[ii] Source can be found here.

[iii] UK government One-in, Three-out rule, available here.

[iv] Public Citizen, Press release, available here.

[v] UCS USA Blog, available here.

[vi] Written Answers, Tuesday, 29 November 2016, available here.

[vii] Article in thejournal.ie, available here.

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