OECD Regulatory Policy Outlook 2015

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28 Oct 2015
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Regulations are the rules that govern the everyday life of businesses and citizens. They are an essential instrument in the hands of government to promote economic growth, social welfare and environmental protection. However, regulations can also be costly and ineffective in achieving their objectives. The Regulatory Policy Outlook is the first evidence-based analysis of the progress made by countries to improve the way they regulate. Based on a unique survey filled by all OECD countries and the European Commission, the Outlook assesses progress in establishing the conditions for good regulation. It provides unique insights into the organisation and institutional settings in countries to design, enforce and revise regulations. It uncovers the areas of the regulatory cycle that receive too limited attention from policy makers, and identifies actors who have an important part to play to improve the way regulations are developed, implemented and evaluated. It reviews the use of three critical tools of regulatory policy (Regulatory Impact Assessment, stakeholder engagement and ex post evaluation) and proposes options to use them in a more strategic manner to inform the development and delivery of regulations.

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  • Preface

    There is nothing more important to the progress of our economies and societies than good regulation. By good regulation, is meant the sort that attains legitimate ends for public policy in cost-effective ways; regulation that serves to enhance the wellbeing of the community at large.

  • Foreword

    The lingering economic malaise across most of the OECD – along with societal concerns such as climate change, social exclusion and insecurity – has pointed to the need for regulatory systems that are more effective in averting serious crises, promoting growth and protecting citizens. Moreover, in the fiscal environment that many countries now face, regulatory improvements and reforms are increasingly seen as an attractive alternative to fiscal and taxation measures. Reforms to improve the quality of regulation provide a real opportunity to stimulate economic activity at domestic level. Internationally, they can facilitate trade and investment by removing unnecessary non-tariff barriers and, more broadly, lay the foundations for better rules of globalisation.

  • Acronyms and abbreviations
  • Executive summary

    Laws and regulations govern the everyday life of businesses and citizens. They are essential instruments, together with taxes and spending, in attaining policy objectives such as economic growth, social welfare, environmental protection and globalisation. But, when poorly conceived, they can be ineffective in achieving their objectives while imposing unnecessary costs on citizens and businesses. In the current context of slow growth, high unemployment and fiscal stringency in many countries, governments have limited scope for further spending and tax reduction. Reforms aimed at improving the quality of laws and regulations remain a potent means of stimulating economic activity and promoting well-being.

  • Reader's guide

    Most of the data presented in this Outlook, including the composite indicators, are the results of the 2014 Regulatory Indicators Survey. This survey gathers information as of 31 December 2014 from all 34 OECD member countries and the European Commission and focuses on their regulatory policy practices as described in the 2012 OECDRecommendation of the Council on Regulatory Policy and Governance. It investigates in detail three principles of the 2012 Recommendation: stakeholder engagement, Regulatory Impact Assessment (RIA) and ex post evaluation. For each of these areas, the survey has collected information on formal requirements and has gathered evidence on their implementation. The methodology of the survey and the composite indicators are described in detail in . This Reader’s guide aims to help readers understand the scope of the data provided in the Outlook and some of the limitations related to the use of indicators.

  • Global trends in regulatory policy: Evidence from new OECD survey data

    According to the Regulatory Indicators Survey, a unique survey completed by all OECD members, most OECD countries have established the conditions for regulatory quality. They have generally committed at the highest political level to an explicit whole-of-government policy for regulatory quality. In most countries, conducting Regulatory Impact Assessment and stakeholder engagement has become a formal requirement in the development of new regulatory proposals by the executive. However, situations continue to differ significantly across countries. This chapter documents the adoption across OECD members of a whole-of-government approach to regulatory policy, the uptake in the use of regulatory policy tools and the important diversity in the institutional setting for regulatory policy.

  • A forward-looking agenda for regulatory policy

    Despite the progress made in adopting the principles and practices of regulatory policy, OECD countries continue to face challenges in establishing the conditions for and in delivering on their regulatory quality agenda. This chapter identifies the challenges faced by countries in embedding regulatory policy in law and practices. It also identifies an ambitious agenda for countries on how to overcome the challenges and use regulatory policy to promote growth and well-being. It focuses in particular on four areas that constitute the frontiers of regulatory policy: i) regulatory implementation and enforcement; ii) the untapped potential of the non-traditional actors of regulatory governance; iii) strengthening the evidence on impacts of regulatory policy; and iv) addressing regulatory impacts beyond the border.

  • Stakeholder engagement and regulatory policy

    Stakeholder engagement is a fundamental pillar of regulatory policy. OECD countries are clearly paying increasing attention to various ways to engage stakeholders in making, implementing and reviewing regulations. Virtually all governments have embraced the principles of open government and better participation in policy making. There are numerous attempts to involve stakeholders both in the process of developing new laws and regulations and in the process of reviewing the regulatory stock. However, there is still some way to go to change the culture and many obstacles to overcome on the way to effective stakeholder engagement. This chapter documents the uptake across OECD members in stakeholder engagement, the challenges faced and areas for further action.

  • Evidence-based policy making through Regulatory Impact Assessment

    Regulatory Impact Assessment (RIA) supports the process of policy making by contributing a rational decision framework that examines the implications of potential regulatory options. The use of RIA has expanded over the past 30 years to become universal across OECD countries. Despite significant progress in its adoption across OECD countries, challenges remain to make it an essential policy tool for regulatory quality. For instance, there is untapped potential to enhance the contribution of RIA through cost-benefit analysis. Also, the RIA system can be improved by pursuing stronger oversight and more systematic stakeholder engagement. This chapter documents the uptake across OECD members in the use of RIA, the challenges faced and areas for further action.

  • Closing the regulatory governance cycle through systematic ex post evaluation

    Policy evaluation has become an institutionalised practice in the twentieth century and regulatory policy is no exception. However, evaluation of regulations is mainly carried out ex ante through the Regulatory Impact Assessment (RIA) process while ex post evaluation remains the least developed of the regulatory tools. Country practices remain sporadic in this area. Important lessons can nevertheless be learnt from the application of ex post evaluation in a number of jurisdictions and provide promising opportunities to improve regulatory quality. This chapter defines the rationale for ex post evaluation, describes the possible approaches and their use in practice.

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    • Australia

      In September 2013 the Australian government launched an extensive regulatory reform agenda to reduce regulatory burdens and boost productivity. The government has made commitments to reduce the regulatory burden for individuals, community organisations and business by a net minimum of AUD 1 billion each year. In line with this agenda, Australia has changed its RIA process to place a greater focus on regulatory costings, including the regulatory impact on individuals, and introduced a net benefit test for regulation. The Australian Government Guide to Regulation places significant emphasis on consultation in RIA.

    • Austria

      Austria has recently introduced major regulatory reforms. Since 2013, all new primary laws and subordinate regulations have to undergo a RIA, as well as an ex post review five years after adoption. As of April 2015, thresholds based on various impact dimensions have been introduced to improve proportionality in the RIA framework. If these thresholds are not exceeded, a simplified RIA may be conducted.

    • Belgium

      Belgium has made progress towards strengthening policies and institutions aimed at improving regulation at the federal level. Formal consultations are often conducted with social partners, and the RIA, which is mandatory for all primary and subordinate legislation submitted to the Cabinet of Ministers at the federal level, is usually shared with social partners as a basis for consultation. Parliament and social partners have welcomed the RIA as a useful tool to facilitate policy coherence. Periodic ex post review of legislation is mandatory for some legislation and sun-setting clauses are sometimes used. In 2013 and 2014, a comprehensive review of economic legislation led to the development of a new code of economic law. Ex post review of legislation is facilitated through a parliamentary committee that can initiate reviews also at the request of citizens. Within the executive, since 2013 the Agency for Administrative Simplification (ASA) within the Prime Minister’s Office, which was responsible for assessing administrative burdens, is also responsible for the whole better regulation policy. The ASA co-ordinates the RIA in partnership with four other ministries (economy, equality of women and men, sustainable development and development co-operation). An Impact Assessment Committee can provide advice on the RIA at the request of the responsible ministry.

    • Canada

      In Canada the processes and requirements for developing primary laws (Acts) and subordinate regulations (regulations) differ significantly. Subordinate regulations typically elaborate on the general principles set in Acts and set out detailed requirements for regulated parties to meet. As such, the number of regulations made in a given year vastly outnumbers the number of Acts. The process for developing primary laws is outlined in the Cabinet Directive on Law-Making. The requirements for subordinate regulations are laid out in the Cabinet Directive on Regulatory Management (CDRM 2012). The Treasury Board of Canada Secretariat is responsible for providing oversight for subordinate regulations, playing a key role in helping to assure regulatory quality. For primary laws, Cabinet, supported by the Privy Council Office, is responsible for providing oversight in the areas of consultation and ex post analysis, and the quality of impact assessments are reviewed by the Privy Council Office.

    • Chile

      Key national regulations provide the general framework for administrative procedures and an efficient state administration. However, the lack of a comprehensive regulatory reform programme has reduced the possibilities to achieve better economic outcomes and unleash resources to boost productivity. There is evidence that the Chilean regulatory stock is complex, with a constant yearly production of laws. As there is no RIA system in place, most regulators prepare norms without clear evidence that this is the best way to intervene, and good practices in rule-making procedures are rather limited. The government of Chile has launched the National Agenda for Productivity, Innovation and Growth, which constitutes a good framework to use regulatory reform as a driver to foster these goals. Measure 33 of this agenda, for example, states that a regulatory oversight body should be established.

    • Czech Republic

      The Czech Republic has made a significant progress in ensuring regulatory quality, especially by strengthening its Regulatory Impact Assessment process and its quality oversight through establishing an independent watchdog (see the Spotlight box). While a dedicated unit exists in the Government Office for RIA, there is no single body responsible for a whole-of-government regulatory policy.

    • Denmark

      Regulatory reform has been on the agenda of the Danish government for over two decades. Initial policies for regulatory quality and simplification were established in the early 1980s as part of a comprehensive deregulation programme to modernise the economy. They aimed mainly at removing regulations harmful to the competitiveness of the business sector. Over the years the focus moved from deregulation to regulatory quality.

    • Estonia

      Estonia recently implemented significant reforms to improve its regulatory system. In 2012, it adopted The guidelines for development of legislative policy until 2018 which form the basis for an explicit whole-of-government policy for regulatory quality. The document defines an activity plan for improving the quality of regulatory activity. It sets down common principles of legislative policy and long term principles that the public sector has to consider upon planning its activities. The aims and obligations deriving from the guidelines are given a precise content in different acts, most importantly in The rules of legislative drafting. A formal methodology of impact assessment which also covers ex post evaluation and regulatory oversight was endorsed by the government in December 2012.

    • European Commission

      The European Union is based on a common political and legal foundation, mainly the Treaties and European legislation. The European Commission, as the executive of the Union, proposes new initiatives and legislation, which are adopted by the European Parliament and the Council, and monitors the application of Union law in the 28 Member States. The Member States are responsible for the effective implementation and enforcement of European law.

    • Finland

      Finland’s policies for Better Regulation have been continuously developed over the last 40 years. The basis for the current system is the 2006 Better Regulation Strategy which laid out key policy measures for improving the quality of legislation including: measures to improve transparency, stakeholder engagement and analysis of impacts. This strategy was adopted as part of the 2007 Government Programme and commitment to the programme was reiterated as part of the 2011 Government Platform.

    • France

      France has made significant efforts to place the quality of its regulatory policy system at the forefront of its priorities. Since 2009, impact assessment has been a constitutional requirement for all draft laws prepared by the executive. In 2013, the government introduced a simplification movement that involved the creation of a Business Simplification Council (January 2014) and the appointment of a Minister of State for State Reform and Simplification attached to the Prime Minister (June 2014). A first package of 124 business simplification measures was announced in July 2013 and 50 new business simplification measures have been announced every six months since April 2014. Measures include the Tell us once programme designed to reduce the provision of redundant information requested from businesses and the silence means consent principle for first 1 200 procedures.

    • Germany

      Germany has made significant improvements to its regulatory policy system over the last years. In 2013, the government introduced systematic ex post evaluation of regulations that create over EUR 1 million compliance costs p.a.; and in 2011, it improved its cost assessments for ex ante impact assessments which are conducted for all regulations and are subject to quality control by the independent National Regulatory Control Council with the involvement of the National Statistical Office. The Minister of State to the Federal Chancellor for Better Regulation is responsible for promoting government-wide progress on better regulation and a dedicated unit in the Chancellery co-ordinates and monitors the programme on the reduction of bureaucracy and better regulations. The Ministries of the Interior and of Justice and Consumer Protection examine whether the envisaged regulation is consistent with the existing legal system and other regulations.

    • Greece

      The law on Better Regulation, Regulatory Governance: Principles, Procedures and Tools of Better Law Making adopted in 2012 sets an obligation for all ministries to apply the principles of Better Regulation to all legislative developments. Major challenges, however, still persist with its implementation.

    • Hungary

      Hungary has taken action to strengthen regulatory policy. A RIA decree was introduced in 2011, and RIA is mandatory for all primary and subordinate legislation, assessing alternative options and identifying impacts on the national budget, competition, the environment, social goals and sustainable development. Some RIAs also identify a timeline for ex post reviews, helping establish a feedback loop between ex ante and ex post assessment. This approach is expected to help meet a requirement introduced in 2011 for a periodic ex post evaluation of all primary and subordinate legislation.

    • Iceland

      Regulatory policy in Iceland is a central government initiative. The Department of Legislative Affairs is situated within the Prime Minister’s Office and the Prime Minister is responsible for the enforcement of rules and regulations regarding the preparation of government bills.

    • Ireland

      Over the past decade Ireland has introduced new directives and guidelines for improving the regulatory process. This includes the 2004 "Regulating Better" paper which lays out an action plan for the widespread implementation of updated practices for RIA, consultation, reviewing pre-1922 legislation to identify and repeal moribund legislation, and capacity building for evidence-based policy making.

    • Israel

      Israel has made progress in improving its regulatory policy since it joined the OECD in 2010. No comprehensive whole-of-government regulatory policy exists; however, Government Resolution No. 2118 of 22 October 2014 provides a solid basis for such policy. Its focus is still mostly on reducing regulatory burdens, both ex ante through more rigorous Regulatory Impact Assessment and ex post through multi-year programmes on reviewing existing regulations. In general, the Prime Minister’s Office is responsible for co-ordinating regulatory policy but there is no dedicated body or a unit.

    • Italy

      A number of reforms have been introduced since 2008 to improve regulation. For example, RIA is required for all legislation initiated by the executive, with the legislative department of the Prime Minister’s Office (DAGL) providing oversight and guidance. Ex ante and ex post assessment are linked through a requirement to identify ex ante progress indicators to be assessed two years after the entry into force. An extensive measurement of administrative burdens and the repeal of redundant laws were undertaken between 2008 and 2012 by the public administration department of the Prime Minister’s Office (DFP), and in 2014 a new burden reduction programme was adopted. Consultation is required for all primary and subordinate legislation initiated by the executive, and some consultations have taken place through the use of new media. A reform of the existing legislation on regulatory policy tools, including RIAs, ex post evaluation and stakeholder consultation, is planned for 2015.

    • Japan

      In January 2013, Japan established the Council for Regulatory Reform within the Cabinet Office to discuss regulatory reforms that can support economic and social structural reform. In June 2013 Japan, based on input from the Council, launched the Implementation Plan for Regulatory Reform to contribute to the revitalisation of the Japanese economy. The Council monitors progress through an annual Report on Regulatory Reform.

    • Korea

      In 1998 Korea established the Regulatory Reform Committee which is composed of members from the private sector and government ministers including the Prime Minister of Korea. The Regulatory Reform Committee is the highest decision maker on regulatory reform within the executive branch. The Regulatory Reform Committee is responsible for setting regulatory policy, evaluating new and existing regulations and monitoring the actual regulatory reform progress at each administrative level. It is important that sufficient resources are made available to support improvements in regulatory quality.

    • Luxembourg

      Luxembourg’s 2009-2014 government programme stresses the government’s commitment to improving regulatory quality. The Minister for Civil Service and Administrative Reform is accountable for promoting regulatory reform, and his ministry is in charge of co-ordinating RIA and administrative simplification. Luxembourg’s regulatory reform strategy, as summarised in the 2013 guidelines Transparency and administration simplification of State procedures and formalities focuses mainly on administrative burden reduction and simplification.

    • Mexico

      Mexico’s regulatory policy is formally established in the Federal Law of Administrative Procedure (LFPA). Mexico’s efforts on regulatory policy date from the mid 80’s. In 2000, reforms to LFPA were introduced to give birth to the main current institutional arrangements of regulatory policy in Mexico. The LFPA defines the main elements of this policy which include the establishment of the Federal Commission for Regulatory Improvement (COFEMER) as the oversight body, the responsibilities of line ministries and regulators as part of the better regulation policy, as well as the establishment of tools for regulatory improvement, such as Regulatory Impact Assessment (RIA), administrative simplification, and consultation. COFEMER is also in charge of co-ordinating the forward planning regulatory agenda; it provides advice to sub-national governments, reviews the stock of regulation, and can suggest reforms to the President.

    • Netherlands

      The Netherlands was one of Europe’s early starters in the development of Better Regulation policies, with a strong momentum in the 1990s to improve the regulatory and structural environment for more open markets and, starting in the late 1990s, a strong focus on reducing administrative burdens for business which was subsequently extended to citizens. In 2000 ACTAL, the Dutch Advisory Board on Regulatory Burden, was established as an independent advisory body that advises government and parliament on how to minimise regulatory burdens for business, citizens, and professional workers in healthcare, education, safety and welfare. The Netherlands has also created regulatory burden units in the Ministry of Economic Affairs for business and in the Ministry of the Interior for citizens to lead programmes for reducing burdens across the government. The 2011 Integraal Afwegingskader (IAK) directive brings together the available guidance and instructions for impact assessment tools in an integrated fashion. The Unit for the Quality of Regulatory Policy located at the Ministry of Justice provides independent oversight on the quality of impact assessments.

    • New Zealand

      RIA and public consultation are embedded within New Zealand’s policy-making processes and provides information for Cabinet discussions. This is supported by Treasury guidance and templates for RIA, with the Treasury also providing quality assurance of significant regulatory proposals. Cabinet and committee papers that contain policy proposals must contain a section entitled RIA. This includes a statement explaining whether RIA has been conducted and is attached to the Cabinet paper. In addition, it includes an opinion on the quality of the analysis in the RIA.

    • Norway

      Norway has a well-developed standard procedure for developing regulations based on the 2005 Instructions for Official Studies and Reports. This procedure includes preliminary assessments of the consequences of the proposed new regulation and internal consultations with affected ministries on the mandate of the RIA prior to a full impact assessment being drafted. The Ministry of Local Government and Modernisation is responsible for the interpretation of the 2005 Instructions and is in the process of revising them in co-operation with the Ministry of Finance. Full impact assessments are however only conducted for some primary laws and subordinate regulations. These completed RIAs are circulated for general review to the general public and private institutions and organisations affected. The process of developing RIAs could potentially be made more transparent by publishing all RIAs on-line and, in the cases where a full impact assessment is not conducted, making this decision and reasoning behind it open to the public.

    • Poland

      Poland has substantially improved its regulatory policy system over the last years. The government introduced a central online system to provide access to the general public to RIA and other documents sent for consultation to selected groups such as trade unions and business. Public consultation is conducted for some proposals over the internet in a pilot project allowing users to comment on draft legislation and RIAs and to view comments provided by others. New guidelines for RIA, consultation and ex post evaluation have been prepared for adoption in 2015, providing more detailed guidance and stronger emphasis on public consultation.

    • Portugal

      The development of Better Regulation policies in Portugal is relatively recent compared with other OECD countries. Portugal has made significant efforts to bring down administrative burdens and to modernise its public administration. More recently, the Simplificar programme further extends the modernisation and simplification efforts (see box below) and also aims at promoting more systematic and comprehensive ex ante and ex post evaluation of regulations. Political responsibility for administrative modernisation is vested with the State Secretary for Administrative Modernisation located within the Presidency of the Council of Ministers at the centre of government. The State Secretary oversees the Agency for Administrative Modernisation which is in charge of the execution of the simplification programmes.

    • Slovak Republic

      The Slovak Republic lacks an actual overarching, whole-of-government regulatory policy. The institutional responsibility for regulatory quality is not clearly set, with a very limited role of the Centre of Government. Four ministries (Ministry of Economy as a co-ordinator, Ministry of Finance, Ministry of Labour and Social Affairs and Ministry of Environment) share competencies for overseeing the quality of Regulatory Impact Assessments which makes the integrated approach to RIA difficult.

    • Slovenia

      Slovenia adopted a comprehensive, whole-of-government regulatory policy as part of the Single framework to enable better regulation and business environment and increase competitiveness in 2013, which focuses, in the form of action plans and prioritisation, on the systematic implementation of measures aimed at raising the quality of the regulatory environment. The issue of regulatory quality is also included in other strategic documents of the government such as Slovenia's Development Strategy 2015-2020. Better Regulation, Administrative Processes and the Quality Service Department of the Ministry of Public Administration serves as a co-ordinating body promoting regulatory policy.

    • Spain

      Spain is a relatively late comer to the Better Regulation agenda, starting in the late 1990s with programmes for administrative simplification. Since then, momentum has grown and a broader range of issues has gradually been tackled, including that of impact assessment. The different levels of government are now aware of the principles for Better Regulation and have started to integrate a broader agenda.

    • Sweden

      Sweden has long placed regulatory simplification, and with it stakeholder engagement, at the centre of its Regulatory Reform agenda. Public consultation is a routine part of developing regulations. The principle of public access in Sweden entitles the general public to access official documents with a few exceptions, e.g. documents that are subject to secrecy. Draft regulations are often first analysed and evaluated by a committee of inquiry, whose final report is then referred to relevant stakeholders for consideration, before the joint draft procedure continues within the Government Offices. The Council on Legislation provides a check of conformity with existing legislation before a bill is submitted to the Parliament.

    • Switzerland

      In Switzerland, RIA has to be conducted for all regulations. The requirements for public consultations on all primary laws and major subordinate regulations, and the evaluation of policies are enshrined in the Constitution. There is a strong evaluation culture in Switzerland. In recent years, various ad hoc reviews of the stock of regulation have been conducted. Among others, regulations have been screened for administrative burdens, compliance costs, and compliance with international standards, and public stocktakes of regulation have been conducted.

    • Turkey

      Turkey started its better regulation agenda in the early 2000s. The By-Law on Principles and Procedures of Drafting Legislation decree issued 17 February 2006 by the Council of Ministers (referred to as the By-Law), is the foundational framework for improving and maintaining legal and regulatory quality in Turkey.

    • United Kingdom

      The United Kingdom places great emphasis on evidence-based policy making. Before introducing new regulations, a preliminary RIA is carried out that outlines the problem under consideration and evaluates possible regulatory and non-regulatory solutions. Stakeholders are invited to comment on the evidence and assumptions supporting the analysis. A final stage RIA is then developed providing detailed cost-benefit analysis for the preferred option(s). Deregulatory measures and low-cost measures are eligible for a Fast Track Regulatory Triage Assessment, where an early stage RIA is not compulsory. The Private Members’ Bills (initiated by parliament) which receive government support would normally go through the same processes as similar government bills initiated by the executive.

    • United States

      The Administrative Procedure Act governs the rule-making process in the United States, requiring agencies to provide public notice and seek comment prior to issuing new regulations or revising existing ones. Specifically, agencies are required to publish a regulatory proposal that provides sufficient information – including the evidence on which the proposal is based and the regulatory text with which the public would need to comply – to apprise stakeholders of the issues involved so that they may present responsive data or arguments. Agencies must then explain how they addressed significant issues raised by commenters. Together with the proposal and supporting analyses, the comments form the public record that serves as the rational basis for each final regulation. The APA also allows for judicial review of the final rule to ensure compliance with this process.

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  • Expand / Collapse Hide / Show all Abstracts Annexes

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    • Country information on shares of national laws
    • The 2014 OECD Regulatory Indicators Survey and the composite indicators

      The 2014 Regulatory Indicators Survey is structured around the areas of good practices described in the 2012 OECD Recommendation of the Council on Regulatory Policy and Governance (OECD, 2012). It supported the collection of data on the content of regulatory policies, as well as on the requirements and practices of countries in the areas of: stakeholder engagement, Regulatory Impact Assessment and ex post evaluation (see details of the Survey structure in ).

    • Glossary

      Administration and enforcement costs: Costs incurred by government in administering and enforcing the regulatory requirements. These costs include the costs of publicising the existence of the new regulations, developing and implementing new licensing or registration systems, assessing and approving applications and processing renewals. They will also include devising and implementing inspection and/or auditing systems and developing and implementing systems of regulatory sanctions to respond to non-compliance.

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