Roinn an Taoisigh
Department of the Taoiseach
Appendix 1
Action Programme for Better Regulation
Appendices
Regulatory Impact Analysis
What is Regulatory Impact Analysis?
Regulatory Impact Analysis (RIA) is a policy tool designed to identify and quantify, where possible, the impact of new regulations. It can also be used in the review of existing regulations. In essence, RIA attempts to clarify the relevant factors for decision-making through the comprehensive and systematic compilation of information. It encourages policy-makers to make balanced decisions when considering legislative action that trade off possible solutions to a problem, against the wider economic and distributional goals.
Best practice models of RIA often include the following key elements:
- Identification and quantification (where possible) of impacts
Any model of RIA must be designed to ensure that all relevant potential impacts are examined, without creating an overly burdensome assessment process. The OECD has noted a trend for overly extensive and unclear tests incorporated within the RIA model. - Structured consideration of alternatives to regulation and of different regulatory approaches
State regulation is not always the best option and alternatives to regulation, or different regulatory approaches, need to be examined. Efficient and effective policy action is only possible if all options are considered. This includes the use of available instruments, whether singly or in combination, or the possibility of the State taking no action where the problem can be solved by other means. - Built-in comprehensive, consultation processes
Ireland has a long tradition of consultation with affected parties. Until now, however, there haven't been formal measures in place to formalise public consultation processes or to ensure consistency of the process - such as who should be consulted or how to actively engage consumer groups' interest. As well as providing information on the acceptability of a proposal, consultation can be a vital support for evidence-based decision-making, by acting firstly as a source of data and then as a means of ensuring that the assumptions upon which recommendations are made are correct. - Formal consideration of compliance issues (including enforcement aspects, plain language drafting, red tape issues etc.)
Consideration should be given, as early in the process as possible, to the issue of compliance. Will there be compliance costs, and if so, who will pay? How can these costs be minimised? Will effective compliance mechanisms be in place when the regulation comes into effect? What criteria for success will be put in place? And will it be obvious that compliance will be taking place?
RIA is designed to encourage evidence-based policy-making by requiring that each element is reported upon and by imposing accountability through the requirement to make the report public. It is intended to establish a standard for rigorous policy work, building on our current procedures. This will ensure that all elements are undertaken and a structured reporting format to provide users with consistent, complete and accessible information is implemented. RIA formalises and provides evidence of the steps that should be taken in policy formulation. It also provides consistency in the presentation of this information in summary form.
Why introduce RIA?
One important way to achieve the goals of Better Regulation is the use of Regulatory Impact Analysis.This promotes evidence-based policy-making, based on a detailed consideration of the impacts of decisions along with structured participation of stakeholders and citizens. Evidence-based policy is about making better use of research and analysis, in both policy making and practice. RIA by itself is not a substitute for decision-making. Instead, RIA is best used as a guide to improve the quality of political and administrative decision-making, while also serving the important values of openness, public involvement and accountability.
The introduction of Regulatory Impact Analysis is not just a matter of improving the quality of legislation. It must be seen in the wider context of enhancing the capacity of the public service to provide high quality timely analysis to inform policy-making. A structured, rigorous process of impact analysis will ensure the strengthening of analytical competencies in the public service, and facilitate the wider acquisition of such competencies across management grades.
The enhanced capacity required to operate RIA will support all forms of impact analysis, proofing and evidence-based policy-making - whether or not legislation is involved. RIA will, therefore, help to address the recommendation of PA Consulting in their Evaluation of the Progress of the Strategic Management Initiative for 'measures to improve policy development on a service-wide and Departmental basis.'
RIA could also be usefully used when reviewing existing legislation. Extending RIA to local authorities, sectoral regulators and so on, could be considered at a later point. It must be acknowledged, however, that the sectoral regulators already undertake structured public consultation in relation to proposals being developed.
In developing the model, it is crucially important to ensure that RIA does not become an overly bureaucratic exercise, with costs outweighing the advantages. Practical use must take precedence over superficial compliance. The level of analysis required in any instance must be proportionate to the likely impact of the proposal.
Further context for the application of RIA in Ireland
It is recognised that, in practice, many of the steps in the RIA process are already undertaken when a regulation is being prepared in Ireland. Introduction of a formalised system of RIA will increase the consistency with which these steps are taken and assist in the application of best practice.
Most OECD countries already use some form of RIA when taking regulatory decisions. By 1996, more than half had adopted RIA programmes, up from one or two in 1980. In April 2001, the Government acted on the findings of the OECD Report which strongly recommended introduction of a diagnostic tool, namely Regulatory Impact Analysis (RIA).
The introduction of RIA at national and EU levels was also recommended by the Report of the EU High Level Consultative Group on Regulatory Quality (Mandelkern Group). On 5 June 2002, the European Commission published a package of measures on Better Regulation. This package includes the Commission's plans for the introduction of Impact Assessment, on a phased basis, for all major Commission initiatives from 2003. The system would be fully operational by 2004/2005. It also requires Member States to carry out an Impact Assessment in certain circumstances.
From 1 July 2002, new proposals for Oireachtas scrutiny of EU business require that a paper on the nature and purpose of EU legislative proposals and an initial indication of possible implications for Ireland be sent to the Joint Committee on European Affairs. RIA might serve as an initial assessment of the implications of a proposal for Ireland for this purpose.
RIA is an aid to decision-making, and does not substitute for, but rather seeks to contribute to, the making of political judgements.
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