OECD suggests Ireland should establish an Oversight Body to monitor Regulatory Performance

The COVID-19 pandemic highlights the crucial role that regulation plays in managing the economy and society. In its latest report, the OECD discusses how regulatory practices can be further improved having learned from the experience of the past two years. The report is entitled 2021 Regulatory Policy Outlook and can be accessed from the OECD website https://www.oecd.org/publications/oecd-regulatory-policy-outlook-2021-38b0fdb1-en.htm   Regulatory advice is given to each of the Member States of the OECD in the report. This blog focuses exclusively on the advice that the OECD provides for Ireland.

OECD Comments on Consultation

The OECD places great emphasis on having a good consultation process. It argues that people are more likely to view regulations as fair, if they are engaged in the deliberative process and if the outcomes of consultations are clearly explained. One of the lessons of the COVID-19 pandemic is that when people feel their voice is heard, they are more likely to comply with and less likely to complain about any resulting regulation. As regards Ireland, the OECD acknowledges the role that the single central government website for consultation is playing. Following the Open Government Partnership National Action Plan 2014-2016 and 2016-2018, Ireland had committed to improving consultation by public bodies with citizens, civil society and others. However, the OECD notes that – “Despite this recent improvement, Ireland’s consultation practices do not yet operate on a systematic basis across government departments. As Ireland develops the tools to conduct more transparent and open stakeholder engagement, public consultation could be applied more systematically to a broader range of draft regulations, particularly for subordinate regulations.”

 OECD Comments on Regulatory Effectiveness

The OECD comments on how responsibility for the operation of the regulatory process in Ireland is spread over a number of Government Departments. It does not criticise the spread of responsibility; it merely describes it.

• Department of the Taoiseach: The Department of the Taoiseach is responsible for the effectiveness of regulators and, together with the Office of the Attorney General, for ensuring the transparency and quality of legislation. It is also responsible for setting the overall government multi-sectoral policy in Ireland. The Department of the Taoiseach aims to reduce regulatory burdens, promote regulatory quality, encourage a business-friendly regulatory environment, and ensure inter-departmental coordination in regulatory development.
• Department of Public Expenditure and Reform: The Department of Public Expenditure and Reform is responsible for RIA guidance and the provision of training on RIA ex-post evaluation, and stakeholder engagement.

• Other Government Departments: The implementation of regulatory management tools and oversight of sectoral economic regulators remains the responsibility of the relevant departments.

The role of Parliament in the process is duly acknowledged. This refers to the fact that Standing Orders of Dáil Éireann state that Minister responsible for implementing laws must provide an assessment of their functioning within a year. The web link to post-enactment reports is on page 101 of the Standing Orders – see here:  https://data.oireachtas.ie/ie/oireachtas/parliamentaryBusiness/standingOrders/dail/2021/2021-01-27_consolidated-dail-eireann-standing-orders-january-2021_en.pdf

OECD Measures of Ireland’s Regulatory Performance

The OECD report includes a number of statistics that measure on how well Ireland performs in a number of areas of regulation. For this blog, only one measure is examined and that is for Ireland’s performance of in the area of Regulatory Impact Assessment (RIA) in the years 2014 and 2017 (the latest year for which data is provided). The performance is measured under four headings and awarded an overall score.

1. Methodology: how good or bad is the methodology used for RIAs?
2. Oversight: If there is an oversight body, how effective is it?
3. Adoption: How consistently are RIAs undertaken?
4. Transparency: To what extent are the results of RIAs made publicly available?
5. Overall Score: This adds up the individual scores from the four sub-headings.

The maximum score for each component is one and the maximum score for the total is four. A perfect country could score twelve points i.e. three times four. No such score has ever been recorded by any Member State. The table sets out the scores for Ireland. They have been extracted from the OECD’s Indicators of Regulatory Policy and Governance Surveys 2017 and 2021, http://oe.cd/ireg

The overall results show Ireland achieving a “good pass”, but not an “honours” result in both years. It is interesting to note that where Ireland achieved an aggregate result of 2.09 (or 52%) in 2017, the European. Union achieved an aggregate result of 3.28 (or 82%). Put differently, Ireland only achieved 64 per cent of the EU result in 2017.

As regards the sub-headings, the performance is mixed.

• ‘Methodology’ and ‘Adoption of RIAs’ both show moderately good performance, with scores of between 72% and 80%, in the years 2014 and 2017.
• ‘Transparency’ of RIAs gets a low score of 41%, in the years 2014 and 2017.
• ‘Oversight Arrangements’ is very low; falling from 19% in 2014 to 15% in 2017.

Scope for improvements

There is certainly scope for Ireland to improve its regulatory performance, particularly in the provision of oversight facilities. As the OECD puts it – “Irish policy makers could…be more systematically required to conduct ex-post evaluations of existing regulations, to assess whether they actually function in practice. Ireland conducts mandatory RIA for major primary laws and subordinate regulations. In order to more effectively monitor and assess the quality of RIA implementation, Ireland should consider establishing a central oversight body to perform core oversight functions, such as reviewing the quality of RIA and of other regulatory management tools”. https://www.oecd.org/publications/oecd-regulatory-policy-outlook-2021-38b0fdb1-en.htm

It is clear that in addition to enhanced oversight of the regulatory process should be accompanied by increased efforts by all Government Departments to ensure that their regulatory proposals are based on the best available evidence and widely available.

Tom Ferris, Consultant Economist.

^{Tom Ferris is a Consultant Economist specialising in Better Regulation. He lectures on a number of PAI courses and blogs regularly for PAI. He was formerly the Senior Economist at the Department of Transport, Ireland.}