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Regulatory and Policy Tools in a Multi-Level Context

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Practice Advice in Regulatory Policy and Management

Regulatory and Policy Tools in a Multi-Level Context  (OECD)

Summary Advice: The OECD advises that regulatory and policy tools for high quality regulation are of diverse nature. While there are  some tools that help to improve regulatory design, such as consultation and the use of impact assessment,  there are others that improve the implementation of regulations, such as compliance and enforcement  mechanisms. In a multi-level context, some of these tools are fundamental for achieving regulatory goals, but evidence shows that there is further scope to explore their better use.

Main Points:

Better consultation and communication mechanisms as a way to improve transparency at different levels of government

Public consultation and communication are two key elements to improve regulatory transparency  at different levels of government. Transparency refers to the organisation of the way the state projects its  regulatory powers to the society and the market, and it is fundamental in the regulatory process, from the  initiation of the regulation, its formulation and drafting, to its implementation and review. The way all levels of government include participation from the public in the regulatory process and communicate the  benefits of reform and the content of regulations is fundamental to the smooth functioning of the regulatory system as a whole. Transparency can address many of the causes of regulatory failures, such as regulatory capture and bias toward concentrated benefits, inadequate information in the public sector, rigidity, market uncertainty and inability to understand policy risk, and lack of accountability. In lower levels of government, these problems tend to be more acute as the interaction with more actors and the diversity of roles and responsibilities increase the complexity of the system. In a multi-level context, there is an increased need to make more information available to the public, to listen to a wider range of interests and to be more responsive to what is heard. Transparency can therefore improve the choice of regulatory policy options and avoid arbitrary decisions in regulatory implementation.

The introduction and use of Regulatory Impact Analysis (RIA) at sub-national levels of government

Regulatory Impact Analysis (RIA) is a systematic decision tool used to examine and measure the  likely benefits, costs and effects of new or existing regulation. In OECD countries its use at the central level of government has expanded in the last few decades. In those countries where sub-national levels of government have the prerogative to produce regulation, mostly federal countries, RIA could contribute to the policy and decision making by providing valuable empirical data about the consequences of regulation.

Reducing administrative burdens at lower levels of government

Cutting red tape is one of the most commonly used tools to improve the quality of the regulations. A recurrent complaint from business and citizens in OECD countries is the number and complexity of government formalities and paperwork. This reflects the fact that registration formalities and also procedures related to land use and construction permits are among the most visible regulatory burdens imposed on business by governments. In a multi-level context, these burdens can be more evident, especially if lower levels of government also have the power to impose formalities and lack quality control mechanisms in place that can avoid unnecessary costs to comply with them. Administrative burdens can impede innovation and job creation as well as create barriers to trade, competition, investment and economic efficiency, discouraging entrepreneurship.

The use of alternatives to regulation

Alternatives to regulation are not always explored in depth by regulators. The choice of policy instrument tends to be based more on habit and institutional culture than on a rational analysis of the suitability of different tools to address the identified policy problem. Consequently, a crucial challenge for regulatory policy is to encourage cultural changes within regulatory bodies that will ensure that a comparative approach is taken systematically to the question of how best to achieve policy objectives. Efficient and effective policy action is only possible if all available instruments are considered as a means of achieving the identified objective. The instruments to be considered include a wide range of nonregulatory instruments, as well as a number of distinctly different forms of regulation.

Tools to improve implementation of regulations

To be effective in achieving policy objectives, regulation must also be adequately applied and enforced. Understanding this final link in the regulatory policy chain involves consideration of the related issues of the practical application of the regulations, including the rights of redress accorded to the regulated, and of regulatory compliance and enforcement. All these issues involve the set of relationships between the regulators and the regulated: regulators must apply and enforce regulations systematically and fairly, and regulated groups must have access to administrative and judicial review of those actions of the regulator.

Source: OECD (2009) "Mind the Gaps: Managing Mutual Dependence in Relations among Levels of Government" OECD Working Papers on Public Governance, No. 14, Charbit, C. and M. Michalun at (accessed 01 August 2013).

Page Created By: Matthew Seddon on 01 August 2013. The content presented on this page is drawn directly from the source(s) cited above, and consists of direct quotations or close paraphrases. This material does not necessarily reflect the official view of the publishing organization.

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