Executive summary

Just as new regulatory proposals need to be assessed to ensure they are fit for purpose and will yield net benefits to society, so, too, do existing regulations, which tend to greatly outnumber new ones and which were often introduced under different circumstances. The OECD 2012 Recommendation on Regulatory Policy and Governance states that member countries should “conduct systematic reviews … to ensure that regulations remain … cost effective and consistent, and deliver the intended policy objectives”.

Despite its importance however, completing the regulatory lifecycle via ex post reviews tends to be the “forgotten child” of regulatory policy, with governments often adopting a “set and forget” approach. It is easy to see why this is the case. Proposed regulations often have uncertain impacts, attract media attention, and require political compromise to secure their passage. By contrast, existing laws do not elicit the same interest or sense of urgency as new laws. More importantly though, governments may be fearful a review finds that a regulation has not helped to solve the problem that it was designed to fix. It is hoped that these principles will remind both political and policy leaders that all regulations are experiments, that some experiments fail, and that some experiments require changes before they are successful.

There are three overarching principles that should apply to systems for the ex post review of regulation:

  • ex post reviews should be an integral and permanent part of the regulatory cycle

  • review processes should be comprehensive, and

  • they should include an evidence-based assessment of the actual outcomes from regulatory action, and contain recommendations to address any deficiencies.

The Best Practice Principles for Reviewing the Stock of Regulation provide advice across the following eight areas within regulatory systems for the ex post review of regulation.

The governance of ex post reviews is key to their effectiveness. Elements of good governance include effective oversight and accountability mechanisms; institutional arrangements that encompass both ex ante and ex post review processes; and advance notice given to stakeholders of relevant forthcoming reviews.

With respect to the governance of individual reviews, the principle of proportionality should be applied to ensure their cost effectiveness. In addition, while many reviews will be (appropriately) undertaken within the departments responsible, this should not be the case in those agencies tasked with enforcing regulations. The more “sensitive” an area of regulation, and the more significant its impacts, the stronger the case for an arm’s length or independent review process. Moreover, the transparency of such reviews is paramount.

A portfolio of approaches will generally be needed to ensure that the type of review undertaken is the most suitable and cost-effective. There are three broad review types:

  • Programmed reviews can include a) reviews for which a requirement is embedded in the legislation itself, especially for more significant and innovative laws; b) sunset requirements for the mass of subordinate regulation; and c) post-implementation reviews conducted within a shorter timeframe as a failsafe mechanism where processes for developing regulation may have been deficient.

  • Ad hoc reviews encompass “stocktakings” of regulations across a sector or economy, including those screened against criteria such as anti-competitive effects, in-depth public reviews of major regulatory regimes, and the benchmarking of certain regulations where like-for-like comparisons can be made.

  • Ongoing stock management includes administrative processes that enable learning-by-doing as regulations are implemented; as well as offset rules for new regulations and burden reduction targets (such as various “red tape reduction” initiatives) as a means of reducing the number and cost of existing regulations.

Essential questions to be answered in conducting ex post reviews are: whether a valid rationale still exists for regulating (appropriateness); whether the regulations achieved their objectives (effectiveness); whether they have given rise to unnecessary costs or other unintended impacts (efficiency), and whether modifications, removal or replacement are called for.

The general methodology for conducting evaluations should be within a cost-benefit framework, in which the various impacts of a regulation are identified and documented and their relative magnitudes assessed. Quantification is to be encouraged where feasible as it brings greater rigour to assessments. Moreover, the observed outcomes from regulatory actions ideally should be compared to what could otherwise have occurred in the absence of regulation.

Consultations need to be undertaken with affected parties, using processes that are as accessible as possible. The coverage and duration of consultations should be proportionate to the significance of the regulation and its impacts, and the degree of public interest or concern.

Prioritisation and sequencing are important to maximise the gains from reforms. Higher priority should be given to reviewing regulations that have a) wide coverage across the economy or society, b) significant impacts on citizens, and for which there is c) prima facie evidence of a “problem”. There are also benefits in reviewing regulations as a group where they are interactive in nature or operate jointly to meet a policy objective.

Acquiring in-house capability in evaluation is essential both for conducting internal reviews and for overseeing work commissioned externally, including the use of consultants. Capacity enhancement within an agency requires training of existing staff as well as specialist recruitment.

Committed leadership is fundamental to effective ex post review systems, both at the political level, to ensure adequate ongoing support for evaluation, and at senior levels of the bureaucracy to ensure that principles are put into practice.

Disclaimer

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

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