Céline Kauffmann, Deputy Head of the OECD’s Regulatory Policy Division argues that regulatory policy is the key ingredient of a healthy democracy
Having good-quality laws and regulations is essential. Regulation is one of the key tools at our disposal to influence behaviour, boost the economy, protect the environment, support consumers’ rights and guarantee citizens’ safety. Yet badly designed laws and regulations can be unduly intrusive, ineffective in reaching their goals and can curb entrepreneurship and well-being.
Through regulatory policy, i.e. the processes and institutions defining “the rule information and communication technologys of rulemaking” across government, countries can significantly improve the design and implementation of laws and regulations, and therefore, regulatory quality. In an era of rapid technological change, unprecedented interconnectedness of economies and fear of “fake news”, regulatory policy provides policymakers with tools to regain citizens’ trust and address today’s challenges. It is a key ingredient for a healthy democracy.
This is why in 2012 OECD countries adopted the OECD Recommendation on Regulatory Policy and Governance, the first-ever internationally recognised principles on regulatory policy. Ever since the OECD has been monitoring country practices in applying regulatory policy, the product key output of this monitoring is the Regulatory Policy Outlook. Published every three years, it provides comparative analysis and insights into emerging trends and challenges based on a unique set of indicators.
The 2018 Outlook shows that OECD countries have made progress in improving the quality of regulation. They have all adopted an explicit policy to promote regulatory quality across government. This is an improvement compared to 20 years ago when only 21 OECD countries had such a policy in place. Despite this progress, there is still much room for improvement. No country can yet boast to have reaped the full benefits of regulatory policy. Despite a strong rationale, regulatory policy continues to lag behind budget or tax policy in terms of attention that it receives from governments.
At the same time, trust in governments is waning. More than ever, policy action needs to address real issues and be driven by evidence. Greater and better stakeholder engagement can offer much-needed inputs to ensure that laws and regulations respond to these needs. It also helps increase the acceptance of regulations, in particular, when stakeholders feel their views have been listened to. Regulators and legislators also have powerful tools with regulatory impact assessment (RIA) and ex-post evaluation to gather relevant evidence on the costs, benefits and impacts of different policy solutions. However, the Outlook finds that both consultation and RIA are often used as bureaucratic “tick-the-box” exercises. Only five out of 36 countries systematically check whether regulations have achieved their goals.
In too many cases, the attention of policymakers is stuck in the design phase of laws and regulations – to show that they are doing something. But obviously, laws and regulations will only be effective if they are enforced and their spirit respected. Too few countries have today a clear policy and sufficient capacities for improving the implementation of regulations. Inspection agencies need to develop cost-efficient ways and risk-approaches to identify compliance problems and target their controls to the areas that are most at risk.
Governments cannot afford to continue regulating in isolation. They must consider their immediate surroundings and the broader international environment when making rules. No one country alone can address the consequences for its own population of the digital revolution, migration, of major environmental and financial hazards.
Almost any policy challenge, be it maintaining a sustainable environment, supporting global value chains, or guaranteeing the safety and privacy of citizens, is transboundary by essence and requires combined international efforts. Nevertheless, only a few OECD countries see the value in a systematic approach to international regulatory co-operation. Its consideration has to be embedded in the DNA of the administration.
Regulating in “normal times” can be a daunting task. With the ever-increasing pace of transformative technological change, governments face growing complexity and uncertainty in many regulated areas. Transformative technologies offer potential economic rewards, higher productivity growth, and improvements to living standards. They can also pose tremendous risks and a range of regulatory challenges, including social, environmental and economic.
Given the distinct potential of significant gains and losses, governments have to balance the adoption of innovative technologies and the management of the risks they pose. This requires, if anything, an even stronger use of regulatory tools, to pause and consider the consequences of their regulatory action. They can also tap into the wealth of opportunities that new technologies offer to consult better, gather more evidence, and ultimately to regulate better.
Reference: OECD (2018), OECD Regulatory Policy Outlook 2018, OECD
Publishing, Paris, https://doi.org/10.1787/9789264303072-en.
Deputy Head of the OECD’s Regulatory Policy Division
Tel: +33 1 4524 8200