Strengthening the Regulatory Impact Assessment Process in Ireland

The Organisation for Economic Cooperation and Development (OECD) provides its member governments with much advice over a range of policy areas. As a member of the Paris-based Club, Ireland also benefits from such OECD advice. A recent example relates to the Regulatory Impact Assessment (RIA) Process. The advice appears in a report entitled “Strengthening Policy Development in the Irish Public Sector in Ireland” 6724d155-en.pdf (oecd-ilibrary.org)

This blog looks at what the OECD has to say.

Putting RIAs in context

Before presenting the OECD advice, it is useful to put the current Regulatory Impact Assessments (RIA) Process in context. The process is now in operation for eighteen years in Ireland. In June 2005, the then Government decided that the RIA process should be introduced to evaluate all new regulations in all Government departments and offices. Regulations include any laws (or other official rules) that affect people and businesses. In short, RIA is a technique used to help produce better regulations or to identify if there are better, cheaper, or more constructive ways of solving a problem.

RIA assessments are needed to underpin the laws and regulations that help to protect citizens’ rights, promote a safer society, and ensure more confidence in goods and services. But before legal drafting takes place, there is need to establish what the best course of action might be.  This requires an assessment of 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 plays an important role in facilitating the continuing development of a competitive economy. Of course, regulation may not always be the best option. Departments are expected to see if they actually need specific laws or regulations, or whether there are alternative ways of achieving their objectives.

What are the OECD’s Views?

The OECD Report argues that there are several areas where regulatory oversight could be improved in Ireland for policy proposals requiring legislative expression (through primary legislation, changes to the regulatory framework, significant statutory instruments, and proposals for European Union regulations and directives). It points out that since the Better Regulation Unit (BRU) in the Department of the Taoiseach was abolished a decade ago, and the different aspects of regulatory policy were split between different departments – “… the Irish civil service lacks a strong centre-of government body to co-ordinate the regulatory process. In addition, there are few quality control mechanisms for RIAs, stakeholder consultations or ex post reviews – other than the traditional clearance processes within departments – to report on whether departments are actually following the various requirements and check on the quality of the RIAs”.

The OECD report also points out that whereas training and guidance used to be co-ordinated by the BRU, including training courses for RIA, it is not apparent that such training is available or systematically taking place at present. The RIA system is also missing a reporting function, whereby reports are compiled on the annual performance on the RIA system, setting out data on compliance rates per department and on the quality of the RIAs produced.

Importance of Regulatory Oversight

The OECD places particular emphasis on the importance of having a robust regulatory oversight function in place. Back in 2012, the OECD called on its Member States to “…establish mechanisms and institutions to actively provide oversight of regulatory policy procedures and goals, support and implement regulatory policy and thereby foster regulatory quality”. https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0390.

The components of a regulatory oversight function are reproduced in Box A.

Box A: Core Functions of Regulatory Oversight,

according to the OECD

• • Co-ordination of regulatory policy: Promoting a whole-of-government approach to regulatory quality and ensuring internal co-ordination across departments in the application of regulatory management tools.
  • Quality control: Monitoring compliance with guidelines for RIAs, stakeholder consultations and ex post reviews. Reviewing the quality of those regulatory management tools.
  • Guidance, advice and support (capacity-building in the administration): Issuing guidelines, offering guidance and providing training.
  • Systematic improvement of regulatory policy (scrutiny of the system): Monitoring and reporting, including reporting progress to parliament/government to help track the success of the implementation of regulatory policy.

Source: Reproduced in OECD Report, “Strengthening Policy Development in the Irish Public Sector in Ireland”

6724d155-en.pdf (oecd-ilibrary.org) .

What might Ireland’s response be?

There is sufficient evidence provided in the OECD report to support the recommendation that Ireland should consider strengthening the regulatory oversight function to carry out core oversight roles, such as co-ordination and quality control of ex-ante RIA, stakeholder management and ex post reviews. If a regulatory oversight function were in place, it could publish opinions on whether due process and the core steps of the RIA process (including consultation and ex-post reviews) are being undertaken. The regulatory oversight function could also produce publicly available advice on the quality of the RIA documents. Indeed, the OECD report suggests that – “… annual reports could be published on compliance rates and the quality of RIAs by department to gently incentivise the enhancement of RIAs. Departments could potentially be prevented from taking a draft legislative proposal to cabinet if an RIA is deemed to be of poor quality or if the department has failed to publish an RIA for stakeholder consultation”. Furthermore, the OECD report suggests that the body responsible for the regulatory oversight function could co-ordinate RIA training across government departments and agencies, ensuring a regular programme of RIA training for new and existing civil servants.

The OECD went further with its advice and suggested four different ways in which a body, responsible for the regulatory oversight function, could be established. These alternatives are set out in Box B.

Box B: Different Ways to Establish Ireland’s Regulatory Oversight Function

Re-establishing the Better Regulation Unit: The Unit would again be in the Department of the Taoiseach with the same functions as before – although potentially with an additional power than previously, to prevent RIAs deemed low quality from going to cabinet.

Give oversight functions such as quality control to an arms-length body: That body would be given a degree of operational independence, to verify and publish publicly available opinions on the quality of the RIA/consultation/ex post review process for draft regulations.

The Law Reform Commission of Ireland: This Commission has previously made a recommendation for the government to establish a Regulatory Guidance Office with membership drawn from government departments and regulators, to be established with a remit to provide guidance and information on regulatory matters, including national and international best practices in economic regulation, the content of RIAs (or comparable documents) and lessons learned from relevant case law.

Other key public institutions could play a role: These institutions include the Office of the Comptroller and Auditor General, which could carry regular evaluations of the RIA process, for example. The Law Reform Commission, an independent body which was set up to examine specific areas of the law as directed by the government and to make practical proposals for its reform, carries out necessary underlying work (including statute law restatement) to ensure that the Irish Statute book is effectively reformed.

Source: Reproduced in OECD Report, “Strengthening Policy Development in the Irish Public Sector in Ireland”

6724d155-en.pdf (oecd-ilibrary.org)

Some Conclusions

There is no doubt that the OECD’s recommendations, if implemented, would go a long way towards enhancing the RIA Process in Ireland. But achieving maximum benefit requires a commitment from the government departments and agencies who undertake the RIAs. And these bodies must ensure that they have the capacity to undertake their own RIAs. In this regard, it is important that their analytical capacity is enhanced, so they do indeed provide better support to Government in its policy and law-making choices. It is also important that existing regulations are periodically reviewed to evaluate the extent to which they are achieving their objectives and intended benefits. There is much to be learned from regulations that have already been implemented. Lessons learned can help to ensure that decisions on new regulations are based on proposals that have been fully evaluated. In the final analysis, new laws and regulations should only be given the ‘green light’ where it can be demonstrated that the benefits of regulation clearly justify their costs.