Presentation by Gary Banks, Chair of the Regulatory Policy Committee, at the 9th Conference on Measuring Regulatory Performance - Closing the Regulatory Cycle: Effective ex post Evaluation for Improved Policy Outcomes which took place in Lisbon on 20-21 June 2017. Further information is available at www.oecd.org/gov/regulatory-policy/measuring-regulatory-performance.htm.
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Effective ex post Evaluation: Purpose and Challenges
1. Effective ex-post evaluation:
purpose and challenges
Gary Banks
Presentation to OECD’s 9th Expert Meeting on Measuring
Regulatory Performance
June 2017
Lisbon, Portugal
2. OECD Council Recommendation #5
“Conduct systematic reviews of regulation
against policy goals, including costs and
benefits, to ensure that regulations
-- remain up to date, cost effective and
consistent, and
-- deliver intended policy objectives”
2
3. Ex post evaluation: why needed?
• All regulations are ‘experiments’
─ Many will not have been done well
─ Others will have passed their ‘use by date’
• The ‘stock’ of regulation is much greater than
the flow and gains are potentially large
• Evaluations can build trust and help sustain
political support
• Ex post reviews can also provide learnings for
future regulatory actions
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4. 4
There are multiple costs of regulation
Benefits foregone if
regulation is ineffective
other perverse effects
other ‘non -market’
distortions
Fees and charges a
Economic distortions
dead weight losses
lower investment
lower innovation
Substantive compliance
costs
investments in systems
training
higher cost of investment
Administrative costs to
business
paper work time
reporting time
Administration cost to
regulators
Benefitsneededtojustifycosts
Compliance costs ‘Distortion’ costs
Costs to government Costs to business b
Costs to community
Coststocommunity
5. 5
Ex post reviews complete the ‘regulatory cycle’
Stage II–Establishment
Design to include
embedded reviews
Development of regulator
management strategies
Stage IV- Review
Programmed reviews
o Sunsetting
o Embedded
o PIRS
Ad hoc reviews
o In-depth
o Specific benchmarking
o Public stocktakes
Stage I- Decision
RIS triage
o Identify need for
embedded reviews
o Set sunset flags
Stock-flow linkage rules
Stage III - Administration
Regulator management
strategies
Monitoring review
requirements
Lessons from regulators
on what works
Lessons from
expost evaluation
6. What is an effective system?
• Comprehensive coverage over time
− including related instruments
• Targeted and proportionate
− where most potential for net gains
• Timeliness of reviews
• Effective consultation mechanisms
• Independence where appropriate
• Institutionalised oversight
− Monitoring performance of the overall system
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7. 7
Approaches to ex post evaluation
Programmed reviews Ad hoc reviews Ongoing ‘management’
•Sunsetting
•Embedded in statute
•Post implementation
reviews
– process failure
– catch-all
•Public stocktakes
•‘Principles-based’
reviews
•Benchmarking
•‘In-depth’ reviews
•Stock-flow linkages
– Budgets
– ‘In-Out’ / ‘Offsets’
•Red tape reduction
targets
8. Key questions to be answered …
• Appropriate? (Still a valid rationale?)
• Effective? (Achieved the intended outcome?)
• Efficient? (Unnecessary costs or unintended
impacts?)
• A better alternative?
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9. Fewer countries have formal requirements
Source: 2015 Regulatory Policy Outlook
9
28
24
28
ConsultationRIA Ex-post evaluation of
existing regulation
21
24
20
3433
29
35
10. How do OECD countries measure up?
10
10
Source: OECD, Regulatory Policy Outlook 2015
http://www.oecd.org/gov/regulatory-policy/measuring-regulatory-performance.htm
11. Ex post reviews in Australia: a ‘mixed bag’?
According to a Productivity Commission review,
improvements were needed in the following areas:
• embedding evaluations in regulatory design
• proportionality/depth of reviews
• prioritisation and monitoring
• timeliness (PC 2011)
11
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12. Some obstacles to better practice
• ‘Technical’
−(Highly) skilled people are scarce
−Data are often poor
• ‘Political’
−Greater focus on the new than the old
−Perceived risks from a poor ‘score’
−Beneficiaries may oppose scrutiny
−Administrative ‘inertia’ is ever present!
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13. Ways forward? Insights from Australia
• Building ex post evaluation into a regulatory
regime from the outset has advantages
• ‘Automatic’ triggers can be useful
• Attention to timing can make a big difference
• Skill development is fundamental
• Need avoid administrative ‘overload’
• Creating oversight arrangements helps
13
14. Effective ex-post evaluation:
purpose and challenges
Gary Banks
Presentation to OECD’s 9th Expert Meeting on Measuring
Regulatory Performance
June 2017
Lisbon, Portugal