We need a White Paper on Regulation, mainly because of the impact which regulation has on national competitiveness. We also need it because regulation affects the quality of everyday life. This includes the quality of our food and water, the safety of our workplaces as well as the range of products and services available to us and the price we pay for them. Despite this level of influence, we have rarely paused to consider in a systematic way questions relating to the quality of regulation. Questions such as: why we regulate, how we make regulations, what kind of regulation we want or what constitutes good regulation? This White Paper attempts to address some of these questions by setting down core principles of good regulation.

What are the principles of Better Regulation?

The principles of Better Regulation that the Government wishes to promote are:

NECESSITY - is the regulation necessary? Can we reduce red tape in this area? Are the rules and the structures that govern this area still valid?
EFFECTIVENESS - is the regulation properly targeted? Is it going to be properly complied with and enforced?
PROPORTIONALITY - are we satisfied that the advantages outweigh the disadvantages of the regulation? Is there a smarter way of achieving the same goal?
TRANSPARENCY - have we consulted with stakeholders prior to regulating? Is the regulation in this area clear and accessible to all? Is there good back-up explanatory material?
ACCOUNTABILITY - is it clear under the regulation precisely who is responsible to whom and for what? Is there an effective appeals process?
CONSITENCY - will the regulation give rise to anomalies and inconsistencies, given the other regulations that are already in place in this area? Are we applying best practice developed in one area when regulating other areas?

What do we mean by "regulation"?

We generally mean primary and secondary legislation. Primary legislation means Acts passed by the Oireachtas and earlier Parliaments. Secondary legislation means legislation for which responsibility has been delegated by the Oireachtas to some other party. In practice, it is usually Government Ministers to whom responsibility has been delegated and secondary legislation usually takes the form of Statutory Instruments. Of course, much of our national regulation is derived from our membership of the European Union, through EU Directives and regulations.

However, at some points in the White Paper we also talk about "regulation" in a wider sense. For example, we may talk about regulation of an economic sector like telecommunications. In such discussions, "regulation" is normally used to describe the entire regime which governs that particular sector or activity. Regulation in this sense includes all of the primary and secondary legislation but also extends to the various authorities which operate in those areas. For example, "regulation of telecommunications" would be taken to include ComReg (the Commission for Communications Regulation), the Department of Communications, Marine and Natural Resources and the body of regulation that governs telecommunications.

How will these principles improve competitiveness?

Competitiveness is a relative concept and Ireland must constantly seek to improve its position vis-à-vis other economies. Inappropriate regulation can adversely affect the competitiveness of the economy. For example, our public services must not become snarled up in red tape. Our businesses must not be made to carry the dead weight of unnecessary or unduly restrictive regulation. We must not stifle competition or innovation through regulation that promotes or protects inefficiencies in the economy.

The actions that we will take arising from our application of the principles that we identify in this White Paper will tackle both the "stock" of existing regulation and the "flow" of new regulation. We will scrutinise regulations to ensure that they do not unintentionally damage competitiveness. As far as possible, we will try to ensure that they enhance Ireland's competitive position.

We will pay particular attention to the interaction of competition and regulation. Vigorous competition can frequently deliver great benefits to consumers in terms of the quality and range of products and services as well as lower prices. By ensuring that regulation is supporting competition, we can bring benefits to consumers and enhance the competitiveness of the economy as a whole.

How will these principles improve our everyday lives?

In addition to benefits as consumers, applying these principles to new and existing regulations will improve the quality of our everyday lives. Red tape is at best frustrating and, at worst, it alienates people by placing barriers between the Government on the one hand, and citizens and communities on the other. Sometimes this is because of the quality of the regulations themselves - they might be drafted more with a focus on the administrator than on those whom they are designed to assist or protect. Sometimes it can be because there is confusion as to the structures and processes that are in place for dealing with particular issues. There may be overlap or duplication between regulatory authorities. There might be a lack of clarity on appeals procedures and who is responsible for what. The new principles that we are proposing will mean that we will systematically review and take account of these issues. The goal is to achieve a more coherent regulatory framework and to improve the quality of our everyday lives.

Are we against regulation?

The Government is not against regulation. Rather, it is in favour of Better Regulation. Regulation is an integral part of the process of governing and it will continue to be so. Legislation and subsidiary regulations have a critical role to play in key areas of economic and social life, including:

To protect and enhance the rights and liberty of citizens;
To promote an equitable, safe and peaceful society;
To safeguard health and safety or protect citizens;
To protect consumers, employees and vulnerable groups;
To promote the efficient working of markets;
To protect the environment and promote sustainable development; and
To collect revenue and ensure that it is spent in accordance with policy objectives.

This White Paper recognises that, in certain cases, less regulation may be appropriate while, in other cases, more regulation might be required to achieve particular outcomes. In all cases, however, there should be better quality regulation.

What about EU regulation?

While precise measurement is difficult, many EU Member States have estimated that about half of their regulation derives from membership of the EU and Ireland would be no different in this respect. The actions that we are adopting in this White Paper will not stem the flow of regulation at European level. However, many of the measures that we are proposing - such as impact assessment and simplification of regulation - are being adopted at EU level by the Commission and other institutions. Other Member States are also at various stages of implementing similar reforms to their regulatory processes. There is a growing recognition within the EU that Better Regulation can help to achieve the goals that were established by the European Council at Lisbon in 2000, which were designed to make the EU the most competitive economic bloc in the world in ten years.

While the flow of EU regulations (and other international regulations, e.g. United Nations, International Labour Organisation) will continue, Ireland, as a Member State, can influence their quality and content. In addition, just because a regulation originates in the EU and must be implemented at national level does not mean that we should not try to assess its likely impact at the earliest possible stage. The European Union (Scrutiny) Act 2002 requires the engagement of the Oireachtas in early assessment of EU legislative proposals.

Will this White Paper change who has responsibility for regulation?

The fundamentals of the legislative process and the role of the Oireachtas are established in the Constitution and there is nothing in this White Paper which proposes any change in this regard. Nevertheless, some changes have been taking place in recent times to our regulatory "architecture". Like many OECD countries, the role of the Irish Government has changed in some areas, from being service provider to service regulator. Many regulatory decision-making functions have transferred to specific sectoral regulators, in a bid to open competition and promote innovation. These new independent regulators have been established in areas such as communications - both telecommunications and postal services - as well as energy, aviation and financial services. Further developments are expected in the transport sector. The new regulatory bodies do not necessarily have the same structure or powers.

The main regulatory "actors" - those currently designing and implementing regulation in Ireland - are: the Oireachtas (as primary regulator); Government Departments and Offices; agencies at arms-length from Government which have regulatory enforcement functions; local authorities; independent sectoral regulators; and - in certain cases - professional bodies. There is a need to avoid overly elaborate regulatory structures. The challenge is, therefore, to implement regulatory reform while managing the ongoing development and effectiveness of existing regulatory institutions. The principles and actions contained in this White Paper will help to guide future choices about our regulatory system.

What practical difference will this White Paper make?

The White Paper establishes principles and also outlines steps for their implementation. These steps include changes to existing regulatory practices and introduction of some new measures. The net result will be that:

Regulations will be prepared in a more transparent way;
Public participation in their formulation will be enhanced;
Regulations will be clearer in their language and their focus;
Regulations will more effectively identify and achieve Government objectives;
Regulations will be designed so as to minimise the burden of compliance;
Regulations are likely to be better enforced;
Unintended effects of regulations will be minimised; and
Regulations will be regularly reviewed for their effectiveness and their continued relevance.

Regulation and Competitiveness

The Global Competitiveness Report 2003, published by the World Economic Forum (www.weforum.org), provides an assessment of the comparative strengths and weaknesses of 102 countries in relation to their economic competitiveness and growth. In the report, the five most competitive economies - Finland, USA, Sweden, Denmark and Taiwan - all identified tackling inefficient bureaucracy /red tape as a competitiveness issue. In general, respondents - both OECD and developing/transition countries - singled out red tape as one of the two major factors constraining their business operations.

Regulation in our everyday lives

In an average day, a person will, perhaps without even being aware of it, come into contact with a number of services that are subject to regulation. The radio stations available when one wakes up in the morning, for example, are regulated by the Broadcasting Commission of Ireland. Transportation - on buses, trains, taxis and road usage - is also regulated. If children are left in a crèche during working hours, health, safety and welfare standards in those crèches are subject to regulation under the Child Care Act, 1991. Health, safety and other standards are also enforced in restaurants, cafes, bars, and supermarkets. In other words, our everyday lives are subject to regulation in a number of ways. Providing clarity and transparency in how we make and implement regulations is important, therefore, so that services do not get tied up by excessive red tape and people are clear about how regulation affects them directly.

Cost of regulation in the EU

The European Commission's internal market scoreboard shows that the burden of 'red tape' on business - not including citizens or administrations - is estimated to be between 4% and 6% of Gross Domestic Product (GDP) and that 15% of this burden is avoidable. National studies within the EU have variously estimated the burden on business at levels ranging from 2.2% of GDP (Netherlands) to 4.4% of GDP (Germany).

Taking 3% of GDP as a guideline estimate of the overall administrative burden, and assuming the EU estimate that 15% of this burden was avoidable, then unnecessary regulation could have cost Irish business about €582 million in 2002.

The cost to the European Union as a whole is somewhere in the region of 0.45% of European GDP or nearly 40 billion euro.

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