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Regulatory Impact Regulatory Impact Assessment: Assessment: Methodology and Best Methodology and Best Practices Practices
David ShortallDavid Shortall
INMETRO International Workshop on Conformity INMETRO International Workshop on Conformity Assessment Assessment
Rio de Janeiro, Brazil Rio de Janeiro, Brazil
December 11-12, 2006December 11-12, 2006
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Impact of RegulationsImpact of Regulations
At their bestAt their best::– Achieve social and environmental goalsAchieve social and environmental goals
– Provide consumer protectionProvide consumer protection
– Improve economic performance by Improve economic performance by promoting competitionpromoting competition
At their worstAt their worst::– Create unintended and often unavoidable Create unintended and often unavoidable
barriers to tradebarriers to trade
– Present unnecessary burdens to businessPresent unnecessary burdens to business
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What is Regulatory What is Regulatory Impact AssessmentImpact Assessment Examines and measures the likely Examines and measures the likely
benefits, costs and effects of new benefits, costs and effects of new and changed regulation and changed regulation
– A key decision making tool for A key decision making tool for governmentsgovernments
– Underpins regulatory reform Underpins regulatory reform
– Used in most OECD countriesUsed in most OECD countries
– No single model fits all situationNo single model fits all situation
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Purpose of Regulatory Purpose of Regulatory Impact Assessment Impact Assessment
Systematically and consistently Systematically and consistently examine selected potential impacts examine selected potential impacts arising from proposed government arising from proposed government regulationsregulations
Promote balanced decisions that Promote balanced decisions that trade off problems against wider trade off problems against wider economic and social goals economic and social goals
Communicate the information to Communicate the information to decision makersdecision makers
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Benefits of RIA (1)Benefits of RIA (1)
Furnishes empirical data to make Furnishes empirical data to make appropriate regulatory decisionsappropriate regulatory decisions
Exposes impacts and linkages among Exposes impacts and linkages among policies and gives decision makers a policies and gives decision makers a capacity to weigh trade offscapacity to weigh trade offs
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Benefits of RIAS (2)Benefits of RIAS (2)
Provides a public accounting of Provides a public accounting of each regulationeach regulation
Provides a clear explanation of the Provides a clear explanation of the regulation, its purpose, the regulation, its purpose, the analysis substantiating it and analysis substantiating it and expected impacts expected impacts
Enables policy makers to Enables policy makers to understand and take personal understand and take personal responsibility for regulatory responsibility for regulatory decisionsdecisions
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RIA in CanadaRIA in Canada
Regulatory impact assessment Regulatory impact assessment statement introduced in 1999statement introduced in 1999
RIAS Writers GuideRIAS Writers Guide, , Guide to the Guide to the Regulatory ProcessRegulatory Process
Independent oversightIndependent oversight
Regular audits for compliance Regular audits for compliance
Systematic reduction of Systematic reduction of regulatory burden experiencedregulatory burden experienced
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Written at the Written at the endend of the policy of the policy analysis and development process and analysis and development process and is a summary of the analysis doneis a summary of the analysis done
Pre-published in the Pre-published in the Canada Gazette,Canada Gazette, Part I Part I
Where relevant notified to WTO for Where relevant notified to WTO for comment by trading partnerscomment by trading partners
Pre-publication and notification offers Pre-publication and notification offers a further opportunity for public a further opportunity for public comment and inputcomment and input
Regulatory Impact Regulatory Impact Analysis Statement Analysis Statement (RIAS)(RIAS)
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Components of the Components of the RIASRIAS 1.1. DescriptionDescription: : outlines the outlines the
regulations, defines the problem regulations, defines the problem and shows why action is and shows why action is necessarynecessary
2.2. AlternativesAlternatives: : lists options lists options beside regulation and other types beside regulation and other types of regulationof regulation
3.3. Benefits & CostsBenefits & Costs: : quantifies the quantifies the impactimpact
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4.4. ConsultationConsultation: : shows who shows who was conferred with and the was conferred with and the resultsresults
5.5. Compliance and Compliance and enforcementenforcement: : explains the explains the policy on conformity to the policy on conformity to the regulations and tools to regulations and tools to ensure it is respectedensure it is respected
Components of the Components of the RIASRIAS
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1. Description1. Description
Outlines the regulation, defines the Outlines the regulation, defines the problem and shows why action is problem and shows why action is necessarynecessary– All problems detected are defined and All problems detected are defined and
describeddescribed
– Each fully analyzed to understand nature Each fully analyzed to understand nature and implicationsand implications
– Analysis of health, safety, environmental Analysis of health, safety, environmental risksrisks
– Justification of government interventionJustification of government intervention
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2. Alternatives2. Alternatives
Considers alternatives Considers alternatives (regulatory, non-regulatory (regulatory, non-regulatory and status quo)and status quo)– Demonstrate that new or revised Demonstrate that new or revised
regulations will help solve the problemregulations will help solve the problem
– Consider solutions based on Consider solutions based on performance requirements as performance requirements as alternative to prescriptive standards alternative to prescriptive standards
– Use equivalent means where possible to Use equivalent means where possible to achieve regulatory objectiveachieve regulatory objective
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3. Benefits and Costs3. Benefits and Costs
Quantifies the impact of different options Quantifies the impact of different options – Address direct and indirect benefits and costs Address direct and indirect benefits and costs
and impacts on environment, government, and impacts on environment, government, business, workers, consumers, etc.business, workers, consumers, etc.
– Address impacts on sustainable development and Address impacts on sustainable development and balance societal and economic goalsbalance societal and economic goals
– Analysis of regulatory burden required on all Analysis of regulatory burden required on all alternativesalternatives
– Specific effects on small business required Specific effects on small business required through the business impact testthrough the business impact test
– Recommended solutions must impose least Recommended solutions must impose least costly information and administration burden costly information and administration burden
– Verification system ensures that all elements Verification system ensures that all elements have been fully consideredhave been fully considered
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4. 4. Compliance and Compliance and EnforcementEnforcement Explains the policy on conformity Explains the policy on conformity
to the regulations and tools to to the regulations and tools to ensure it is respectedensure it is respected– Designed to minimize government liability Designed to minimize government liability
– Identifies and informs those responsible Identifies and informs those responsible for regulatory actions for regulatory actions
– Compliance objectives reflected in Compliance objectives reflected in operational plans and budgets operational plans and budgets
– Redress mechanisms established Redress mechanisms established
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5. Consultation5. Consultation
SShows the results of consultation hows the results of consultation
– Regulatory proposals require timely Regulatory proposals require timely and thorough consultations with and thorough consultations with interested parties interested parties
– Authorities must set out process Authorities must set out process used to obtain input and identify used to obtain input and identify stakeholders consulted stakeholders consulted
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6. Other Elements6. Other Elements
A regulation must be reviewed to A regulation must be reviewed to determine any impact on determine any impact on obligations under an international obligations under an international agreement or treaty, including agreement or treaty, including WTO TBT Agreement WTO TBT Agreement
Environmental Assessment – Environmental Assessment – required where relevant required where relevant
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OECD Best PracticesOECD Best Practices
1.1. Maximize political commitment Maximize political commitment to RIAto RIA
– Support needed from highest level of Support needed from highest level of government (laws, decrees)government (laws, decrees)
– Integrate RIA into the policy process Integrate RIA into the policy process Attach RIA to legislationAttach RIA to legislation
Ensure quality controlEnsure quality control
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OECD Best PracticesOECD Best Practices
2.2. Allocate responsibility for Allocate responsibility for RIA programs carefullyRIA programs carefully
– Elements should be shared Elements should be shared between ministries and central between ministries and central control bodycontrol body
– Tool to improve skillsTool to improve skills
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OECD Best PracticesOECD Best Practices
3.3. Train the regulatorsTrain the regulators
– Need to start when RIA Need to start when RIA introducedintroduced
– Training manuals/writers guides Training manuals/writers guides very useful very useful
– Use simple concrete examples Use simple concrete examples and case studies and practical and case studies and practical guidance on data collection and guidance on data collection and methodologiesmethodologies
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OECD Best PracticesOECD Best Practices
4.4. Use consistent but flexible Use consistent but flexible analytical methods analytical methods
– Quantitative cost/benefit analysis Quantitative cost/benefit analysis (socio/economic impact, business impact, (socio/economic impact, business impact, cost- effective analysis) cost- effective analysis)
– Other methods including qualitative Other methods including qualitative assessments (efficiency, fairness)assessments (efficiency, fairness)
– Need for flexibility in selecting among Need for flexibility in selecting among analytical methods analytical methods
– Apply standardized guidelines for each Apply standardized guidelines for each method method
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OECD Best PracticesOECD Best Practices
5.5. Develop and Implement Data Develop and Implement Data Collection StrategiesCollection Strategies
– Quality of data used to evaluate a Quality of data used to evaluate a proposal determines usefulness of proposal determines usefulness of RIA RIA
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OECD Best PracticesOECD Best Practices
6.6. Target RIA effortsTarget RIA efforts
– Target efforts at proposals which Target efforts at proposals which have largest impact on society and have largest impact on society and ensure that all such proposals are ensure that all such proposals are subject to RIA scrutiny subject to RIA scrutiny
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OECD Best PracticesOECD Best Practices
7.7. Integrate RIA with the policy-Integrate RIA with the policy-making process (beginning making process (beginning as early as possible) as early as possible)
– If undertaken early in decision-If undertaken early in decision-making process, RIA does not slow making process, RIA does not slow process downprocess down
– Integration is long term process Integration is long term process which leads to cultural change which leads to cultural change among regulators and legislators among regulators and legislators
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OECD Best PracticesOECD Best Practices
8.8. Communicate the results Communicate the results
– Test assumptions and data used in Test assumptions and data used in RIAS through public disclosureRIAS through public disclosure
– Means to improve the quality of the Means to improve the quality of the data and therefore the regulations data and therefore the regulations themselvesthemselves
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OECD Best PracticesOECD Best Practices
9.9. Involve the public Involve the public extensivelyextensively
– Consultation can yield important Consultation can yield important information on the feasibility of information on the feasibility of proposals, range of alternatives proposals, range of alternatives and likelihood affected parties are and likelihood affected parties are to accept proposed regulation to accept proposed regulation
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OECD Best PracticesOECD Best Practices
10.10. Apply RIA to existing as well Apply RIA to existing as well as new regulationas new regulation
– Involves fewer data problems so Involves fewer data problems so quality of resulting analysis is quality of resulting analysis is usually higherusually higher
– Local government regulations as Local government regulations as well as actions of independent well as actions of independent regulators should also be subject to regulators should also be subject to RIARIA
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ConclusionConclusion
For more information: For more information:
Canada’s RIAS:Canada’s RIAS:
http://www.pco-bcp.gc.ca/raoics-srdchttp://www.pco-bcp.gc.ca/raoics-srdc
OECD Best Practices:OECD Best Practices:
OECD 1997: OECD 1997: Regulatory Impact Regulatory Impact Analysis: Best Practices in OECD Analysis: Best Practices in OECD CountriesCountries, Paris, Paris