Regulatory Impact Analysis (RIA) in OECD countries: a policy tool to manage the flow of regulation

Building capacity for RIA in South Africa -Presentation to Officials 26 May 2009

Mr Gregory Bounds Administrator & Policy Analyst

Regulatory Policy Division

Directorate for Public Governance and Territorial Development

Regulatory Impact Analysis (RIA) : a policy tool to manage the flow of regulation

Presentation outline

I. The context for RIA: – What is RIA?

– Why is RIA important?

– Constitutive elements of RIA

– How does RIA fit into the policy-making process?

II. Making use of RIA – OECD good practices: – Common challenges

– Making use of RIA – OECD good practices

I. The context for RIA: a. Definition

Why RIA? – A tool to control the quality of regulation

Evidence based policy tool – Is regulation the best available means to address the policy objective?

b. Why is RIA important?

“RIA is a systematic policy tool used to examine and

measure the likely benefits, costs and effects of new or

existing regulation”

Elements of RIA:

• Identifying and defining the problem

• Spelling out the desired objective(s)

• Elaborating the different options, considering alternatives

• Consultation

• Analysing the options (assessment of the likely impacts)

• Recommending the policy option

• Communicating the results

• Monitoring (regulation) and reporting

c. RIA: A process of evidence based decision making

I. The context for RIA: c. Constitutive Elements of RIA

The process of Regulatory Impact Analysis Policy objectives Definition

Identification Regulatory Options

Assessment Costs

Consultation Involving Stakeholders

Design Enforcement, Compliance and monitoring mechanisms

After RIA is prepared: DECISION MAKING

Policy context

Benefits

Selection Best Option

Other impacts

I. The context for RIA: d. How does RIA fit into the policy-making process?

POLICY MAKING PROCESS

Consultation

Analysis

Information

Discussion

Agreement

Policy Implementation

RIA

0

5

10

15

20

25

30

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Adoption of RIA in OECD countries

0 5 10 15 20 25 30

Requirement to demonstrate that benefits of regulation justify the costs

Requirement to identify the benefits of new regulation

Requirement to identify the costs of new regulation

Requirement for draft subordinate regulations

Requirement for draft primary laws

Formal requirement by law

Number of jurisdictions

1998 2005 2008

31

RIA Requirements in OECD Countries

0

5

10

15

20

25

30

Nu

mb

er

of

juri

sd

icti

on

s

Always Only for major regulations In other selected cases

31

Requirement to measure specific impacts

Related to the tool:

• Problem identification

• Consultation and data

• Considering alternatives

• “Proportionate analysis”

• Quantification

• Risk assessment

Common challenges in implementing RIA

Related to the structure/process • Scope of application / selection of proposals • Quality control (oversight) • Presentation / Communication • Integrate RIA up-stream (early in decision-making) • Integrate RIA down-stream (“closing the loop”) • Training • Multi-level context

1. Political commitment and endorsement at the highest levels

• Legal basis for RIA

• Clear ministerial accountability

2. Allocate responsibilities for the RIA programme

• Operational responsibilities with the services

• Inter-service coordination

• Central quality oversight

3. Target and prioritise RIA efforts

• Scope of application / thresholds for when to do RIAs

• Sectoral impacts

Making use of RIA: OECD good practices (I)

4. Develop comprehensive guidelines

• Mandatory

• Both on process and on technical aspects

5. Carry out sound analysis

• Strategies for data collection

• Consistent but flexible methodologies

6. Consultation / Transparency / Communication

7. Training, training, training

8. Apply RIA to both new and existing regulation

Making use of RIA: OECD good practices (II)

Thank you for your attention

Mr. Gregory Bounds Administrator & Policy analyst

Regulatory Policy Division

Directorate for Public Governance and Territorial Development

Gregory.Bounds@oecd.org