Implementing regulatory reform [electronic resource] : building the case through results ; proceedings of the meeting of the Group on Regulatory Policy, OECD, Paris, December 2007

2008·5.1 MB·English

by  OECD Public Governance and Territorial Development Directorate. Group on Regulatory Policy. Meeting (2007 : Paris, France)

IMPLEMENTING REGULATORYREFORM:
BUILDINGTHECASETHROUGH RESULTS
PROCEEDINGSOFTHEMEETINGOFTHE
GROUPONREGULATORYPOLICY
OECD,PARIS,DECEMBER2007
m v
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OECD
rV*LcvrUnorganisationforeconomic
co-operationanddevelopment
ImplementingRegulatoryReform:
BuildingtheCaseThroughResults
ProceedingsoftheMeetingofthe
GrouponRegulatoryPolicy
OECD,Paris,December2007
2008
RegulatoryPolicyDivision
DirectorateforPublicGovernanceandTerritorialDevelopment
TABLEOFCONTENTS-3
Tableofcontents
1 TheLessonsofExperience:HighlightsoftheDiscussions 7
Introduction 7
Creatingcommonpublicvaluestosupportreforms 8
Theneedforconsensus 10
Buildingconstituenciesandcoalitionssupportingreformandmaintaining
suppEosrttabtlhirsohuignhgouotwntehresphriopcefsosrreforms 1I2I
SomelessonsfromNorway,theNetherlandsandItaly 12
Ensuringcontinuitythroughseniorofficials 13
Timingandsequencingofreform 15
Recoveringfromfailure 16
Reforminginresponsetoacrisis 16
Maintainingmomentumandasenseofurgencyintheabsenceofcrisis 17
Crisesmayalsoleadtoselectlessappropriatepolicyinstruments 18
Andtheelectoralcycleimposesitsconstraints 18
Successfulstrategiesforreformthroughengagingopenandinclusive
participationofstakeholdersatthepoliticallevel 19
Conclusion 21
2.TheBenefitsandChallengesofImplementingSuccessfulRegulatoryReform 25
Introduction 25
Whataretheeconomicbenefitsofliberalisation? 26
Progresswithliberalisation 26
Howarethebenefitsofregulatoryreformrealised? 28
Thepoliticalchallengesofimplementation 32
Policydrivers,institutionalcapacityandHieimportanceofpoliticalsupport 33
Reachingouttobusinessesandcitizens 34
Sequencingofreformsandbuildingsynergiestowardsconsensus 37
Weighingadjustmentcostsaswellasthecostofinaction 37
Theimportanceofmulti-levelregulatory'coherence 38
Promotingculturalchangewithinadministrationsisadynamicprocess 39
Bibliography 43
Annex2.A1.ProductMarketRegulation1998-2003 45
Annex2.A2.OECDWorkonRegulation,CompetitionandEconomic
Performance 47
IMPLEMENTINGREGULATORYREFORM:BUILDINGTHECASETHROUGHRESULTS-©OECD2008
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4-TABLEOFCONTENTS
3.TheRoleofAdvocacyBodies-BuildingDriversandEnginesforReform:
IntegratingBusinessandCitizensintheRegulatoryQualityProcess 51
Introduction 51
Theroleofadvocacybodiesinpolicymaking 52
Whatisaregulatory'reformadvocacybody? 52
Theimportanceofadvocacybodiesforpromotinghigh-qualityregulations 55
Elementsoftheadvocacyfunction 58
Keyrolesofadvocacybodiesinpromotingregulatorypolicies 58
Centralcomponentsandfeaturesofadvocacybodies 61
Settingtheadvocacymandate 61
Permanentvs.temporary'andadhocmission 64
Mixinggovernmentalornon-governmentalexperiences 65
Selectingthereformadvocates 66
Freedomofoperationandopennessofadvocacybodies 68
Keyelementscontributingtothesuccessofadvocacybodies 69
Flowtoevaluatetheperformanceofadvocacybodies 69
Balancingindependenceandaccountability 70
Strengtheningthecredibility'oftheinstitution 71
Ensuringthepotencyofthe“voice” 72
Buildingapoliticalconstituencyforreform 73
Resourcesandworkingmethods 76
Mainlessons 77
Bibliography 83
Annex3.AT ReportsoftireBRTF-BRC.1998-2006 85
Annex3.A2. UnitedStatesThinkTanksAdvocatingRegulatoryReform 87
Annex3.A3. OSevleercvtieedwOoEfCKDeyCoFuenattruireessofAdvocacyBodiesAcross 89
4.SupportingaStrategyforReform:theRoleforCompetitionPolicyand
ConsumerAdvocacy 97
Competitionpolicyaspectsofreformstrategies 97
Competitionadvocacyandenforcementinsupportofreform 99
Competitionadvocacyandconsumerinterests 104
Advocacyaseffectivepolicyentrepreneurship:lessonsforreformstrategy 107
Bibliography 109
5.InterlinkingMarketOpennessPoliciesinaFriendlyReformEnvironment:
LessonsfromTradeandStructuralAdjustment 11
Introduction Ill
Makingthecaseformarketopeningregulatoryreforms Ill
Tradeaspartoftheanswer:marketopeningregulatoryrefonns
toaddresscrises 112
Internationalnegotiationsasameanstoharnesspoliticalsupport 112
Transparencyanddialoguewithconstituenciescontributetobetter
understandingoftheissues 114
IMPLEMENTINGREGULATORYREFORM:BUILDINGTHECASETHROUGHRESULTS-©OECD2008
TABLEOFCONTENTS-5
Managingandsustainingmarketopeningreforms 115
Planningformarketopeningregulator)reforms 115
Effectiveinstitutionsandopendomesticregulator)'environments
contributetobetterplanningandimplementation 116
Facilitatingacceptanceofchange:strategicbundling 117
Gainingpublicsupportbycreatingwinners:encouragingexportresponse 118
Governmentsmayneedtocompensatelosers:specifictimelinesand
cautioninsettingprecedents 120
Importanceofcredibilitytoinduceadjustment 124
Internationalisingdomesticprocessesofreform:lockingoutregulator)'
uncertaintyandanchoringbestpractices 124
Conclusionsandthewayforward 125
Bibliography 129
APPENDIX1.AReggeunldaatoorfytRheefTohremma-tiAcPSoelsitsiicoanl:EIcmoplneommeyntPienrgspeScutcicveessful 131
APPENDIX2.ContributiononBuildingDriversandCapacityforReform 135
APPENDIX3.ContributionontheEvolvingRoleoftheUSOfficeof
ManagementandBudgetinRegulator)'Policy 145
APPENDIX4.ContributiononReachingOuttoCitizensandBusinesses 155
APPENDIX5.ListofParticipants 159
Tables
Table3.1.Selectedadvocacybodiesataglance 53
Table3.2.Someresultsfromadvocacybodies 59
Table4.1.Recentstudiesbycompetitionagenciesofmarketconditions
andimpactofreforms 106
Figures
FFiigguurree22..21.. APdrmoidnuicsttmraatrikveetarnedguelactoinoonmiincOrEegCulDatcioounnst,ri1e9s98and2003 2276
Figure2.3. Potentialincreaseofannualbusinesssectorproductivity
inthepresenceofpro-competitionregulation 30
Figure2.4. ProductmarketregulationandthediffusionofICT 31
Figure2.5. Mainmotivesforreform 33
Figure2.6. Driversforrefonn 33
Figure2.7. Institutionalsettingtopromoteregulatorypolicy 34
Figure2.8. Reductionandcontrolofadministrativeburdensin2005 35
Figure2.9. Dynamicprocessofevaluationandupdateofregulations
in2005 36
Figure2.A1.1.Regulationin1998and2003 45
Boxes
Box1.1. Thepositiveeffectsoflearningfromfailure 17
Box3.1. Theroleofthinktanksinadvocatingregulatoryreform 54
Box3.2. Advisingvs.advocacyreforms:thecaseofActal 57
IMPLEMENTINGREGULATORYREFORM:BUILDINGTHECASETHROUGHRESULTS-©OECD2008
6-TABLEOFCONTENTS
Box3.3. Mandatesoftemporaryadvisorybodies 63
Box3.4. Theseparationofadvicefromtheconsultationprocess
intheNetherlands 74
Box4.1. Pro-competitiveeffectsofproductmarketreform 98
Box4.2. Interestgroupsandreformstrategies 99
Box4.3. Typesofadvocacyactivities 101
Box4.4. Italy’sBersanireforms:thelong-termpayofffromadvocacy 102
Box4.5. Ireland’sGroceriesOrder:demonstratingtheconsumerbenefits 105
Box5.1. Uninterruptedstructuraladjustment:therateofchangehas
notincreased 113
Box5.2. Internationalagreementsfacilitatinggradualstructuraladjustment-
BBooxx55..34.. ETTrhUae’dseOsEahnCidpDbsuteirflufdciitcnuigreaniltnarddeujgsuutlsrayttmaienonndt:pJraripenaccnio’pmslmeceshnfedomaritcmiaaolrnksientfdouorsptgeronyondespsractice 111111846
Box5.5. Strategicbundling-SouthAfricanautosandChile’sflattax 119
Box5.6. Telecommunicationsservicesandexportopportunitiesfor
developingcountries 120
Box5.7. Tradeandtradepolicies:helpingadjustment(III) 121
Box5.8. Targetedlabourmarketprogrammesinvolvingboththeprivate
andpublicsector 122
Box5.9. Targetednation-widelabourmarketprogrammes 122
Box5.10. Assistingadjustment:Australianshipbuilding 123
Box5.11. Theinformationtechnologyagreementandbasictelecom
negotiations 125
Box5.12. Bilateralandregionalregulatoryco-operation:Mexico-USavocados 126
IMPLEMENTINGREGULATORYREFORM:BUILDINGTHECASETHROUGHRESULTS-©OECD2008
THELESSONSOFEXPERIENCE:HIGHLIGHTSOFTHEDISCUSSIONS-7
1.TheLessonsofExperience:HighlightsoftheDiscussions
Introduction
Thisintroduction1presentstheresultsofdiscussionsonImplementingRegulatory
Reform:BuildingtheCaseforResultsheldbytheGrouponRegulatoryPolicyin
December2007.Focusingonhowtoestablishpositiveconditionstofacilitatethe
wiimlpllecmoennttraibtuitoentoofrtheefordmess,igtnhisofcheafpfteectrivoeffesrtsruactupraallettreefoofrmappporloiacciehse.sOtoErCeDforwmorwkhicohn
regulatoryreformcallsfordevelopingawhole-of-govemmentapproachforreform,
reachingouttostakeholders,citizensandbusinesses.
Theparticipants,drawingonpreviousexperienceingovernment,discussedthe
implementationofsuccessfulregulatory'reformsfromapoliticaleconomyperspective.
Theemphasiswasputonthenecessitytoadoptamultidisciplinaryapproach,aswellas
theneedtoencouragetheparticipationofdifferentministries,socialpartnersand
bi.ue.sirneefsosrmciarcnldesheinreo-redleecrtetdo.hTehlepemxecmhabnegresstdarteesw'ognovOeErnCmDenwtosrktolaryeifnogrmoutantdhepbeernfeofritms,
ofliberalisationbyregulatoryreformanddetailingthemostprominentchallengesinthis
field,asw'ellasthebeststrategiestoaddressthemfromamulti-disciplinarypointofview.
ThediscussionsoftheGrouponRegulatoryPolicyarewell-suitedtodiscussthe
politicaldimensionofstructuralmarket-orientedrefonns.TheGrouponRegulatory
Policy,withitshighlevelparticipationandmultidisciplinarymembership,including
expertsinregulatory'reform,competitionpolicy,tradeandbroadereconomicpolicies,is
wc'oenltlrisbuuitteesdtfoorananemaeprpgrionagchOEfoCcuDsitnogolkniottoonnltyheopnolwithiactalsehcooulndombyeodfonree,fobrumt,htoows.upTphoirst
andfacilitatereformsthatwillincreasecompetitiononproductmarketsandreducered
tape,facilitatingtheenvironmentforgrowthandinnovation.Promotinggoodgovernance
throughaccountabilityandpublicparticipationisnotonlynecessarytoenhancesocial
capital,butisaninvestmenttofacilitatefuturereformsinaclimateoftrustand
understanding.
Thediscussionscoveredabroadrangeofquestions:
• How canpoliticalsupportandconsensusbuildasuccessfulstrategy for
implementingregulatory'reform?
• Howcanpolicymakersconvincecitizensandconstituenciesoftheneedfor
reforms?Howcanbusinessessupportthereformprocess?
• Whatistheroleforindependentadvisorybodiesinthepolicydebate?Howcan
priorityareasbeidentifiedforreforms?
• Howcandriversandenginesforreformbemobilised,fosteringcompetitionand
growth?Whataretheimplicationsofthechoiceofpolicyinstruments?
• Whatarethecapacityissuesthatneedtobeaddressedtoensuresuccessfulreform
implementation?
IMPLEMENTINGREGULATORYREFORM:BUILDINGTHECASETHROUGHRESULTS-©OECD2008
8-THELESSONSOFEXPERIENCE:HIGHLIGHTSOFTHEDISCUSSIONS
• WHhoawtciasnthseucciemspsafcutlorfefoelremcstorbaelicmycplleesmeinntetderwmisthoifnrtehfeortmimeimpcloensmternatianttsiono?f
politicalaction?
• Howcantherisksassociatedwithawidereformagendaintermsofproduct
markets,competitionandqualityregulationbereduced?
Thethrustofthediscussionsispresentedaccordingtofourcross-cuttingissues:
• creatingcommonpublicvaluestosupportreforms;
• buildingconstituenciesandcoalitionssupportingreformandmaintainingsupport
throughouttheprocess;
• choosingthemoment:timingandsequencingofrefonn;
• successfulstrategiesforreformthroughengagingopenandinclusiveparticipation
ofstakeholdersatthepoliticallevel.
OECEDacchousnetcrtiieosn’weixllperreifelneccteoanndthleeadrinsicnugssfiroonmsewxhiislteinpgrobevsitdipnrgacktiecyese.lementsdrawingon
Creatingcommonpublicvaluestosupportreforms
Creatingconsensusisafirststepinthereformprocess.Thepoliticaldimensionof
reformrequirespayingattentiontopolitical,institutionalandothernon-economicfactors
astheyinfluencethedesignandimplementationofreforms.Thoughtheneedsfor
reformsmaybeeasilyidentified,translatingthemintoactionoftenprovokesstrong
rteesrimstaanncde.t2heTyheapbpeenaerfimtsoroefruenfcoerrtmaimnaytobtehewigdeenleyradlispturbilbiuct,edwhaenrdearsealtihseedcoosvtesratrheeolfotnegn
shorttermandclearlyidentifiable.Thebeneficiariesofrefonnmaynoteasilyconsider
themselvesassuch,whereasthepotential"losers”fromreformsarelikelytoknowwho
theyareandorganisethemselvesaccordingly.
TheOECDsupportsthereformeffortsofitsmembersinahighlycompetitiveand
globalisedeconomy.AsunderlinedbyDeputySecretary'GeneralAartdeGeus.the
OECDisoftencalledtoestablishbestpracticesbasedoncross-countrycomparisons.
WThheirleefotrheestehearOeEuCseDfulmutsotdbeefifnreanpkatahbsofuotrtrheefcoorsmts,ofthdeeylaayrse-intshueffciocsitenotftnooni-ncaictteioanct-iona.s
wellasprovideconcretesuggestionsforcountriestofacilitatethereformprocess.
Reformsarenotaneasytaskastheyalwaysinvolvesocialgroupswhomightlose.When
reformshavecostsforcertainstakeholders,theyhavetobecompensated,forequityas
wellasefficiencyreasons:thisrepresentsacrucialfactortoconsolidatepublictrustand
reducetheoppositionoflosersinordertowidentheconstituencyandallowreformto
proceed.Thegroupswhobearthefinancialburdenofthereformsdifferfromthosewho
arclikelytobenefit.Forexample,reformsintheeducationsectormayrequirethatlocal
authoritiesandteachersbearthefinancialcosts,whilefuturegenerationswillbenefit.
Pensionsrepresentanotherexamplewhereoutsiderswillbenefitfromreforms,while
insidersoftenrepresentconservativepowersopposedtorefonns.astheyarelikelyto
lose.Asaresult,buildingasuccessfulstrategy'forrefonnrequiresbroadsupportfrom
variousstakeholderswithaclearunderstandingofthebenefits.
OECDcountryreviews,eitheraspartofeconomicsurveysorregulatoryreform
rTehvrioeuwgshacnodunmtornyitroerviinegw,s,retphreesOenEtCaDfibrsrtinsgtsepcaosmdmroivnerfsacftosrarnedfoarmsshairnedmaunnydercosutnatnrdiiens.g
IMPLEMENTINGREGULATORYREFORM:BUILDINGTHECASETHROUGHRESULTS-©OECD2008
THELESSONSOFEXPERIENCE:HIGHLIGHTSOFTHEDISCUSSIONS-9
tthhaeitrhdeolpmsesmteicmbaeurdiecnocuen.triAesdceoepmmuunndiecrastteanodinngtheofnetheedcaonndtetxhteabnedneftihtesmoofmreenfotrummsffoorr
reformisrequiredineverycountry.Thiscallsforgreaterattentiontowardtheissuesof
constituency-buildingandadvocacy,aswellasconsultationpractices,tomakethe
OECD'sworkmoreusefulandresponsivetotheneedsofpolicymakers.
socieCtoiems,moasnlepaudbelriscrveallyuoesnpaurbeliaccsriutpipcoalrtdetotegremtinealenctteodfasnudccteossreimnaimnodienronffidceem.oAcragtoiacl
ofunderstandingthepoliticaleconomyofreformcouldbetodeviseawayto"toreform
andgetre-elected"or"howtoreformandperform".Gettingre-electedisnotagoalin
iutnsseulfs;taiitnarbelfelecetcsontohmeicpriavnadtesoicnitaelrepsotlicoifes.poTlirtyiicnigantsoarnedformmayintlheeadritgohtswhaoryt-alnidveldosainndg
thenextelectionmaybeequallydamaging,sincethereformeffortsmaybelost,and
momentumforfurtherchangescouldbebluntedbythepoliticalclimateofacountryfor
someyears;insomecaseshoweveropponentsmightthentakecreditforthesuccessof
reformstheypreviouslyobjectedto.
Thechallengeistoidentifytherighttypeofreformandtohelpcountriesimplement
istc.iTehnicsereoqfuisrceasrcceombriesnoiunrgcepso.litPiacrstasofthethaertsoofltuhteiopnosmsiabyle,lwieithinecaonogrmeiactse,rtfheocduissmoanl
implementationstrategiesoncethebroadgoalforreformshasbeenidentified.
Thediscussionshighlightedthefollowing:
• Regulatoryreformcallsforabroad-based"nonpartisan”andmultidisciplinary'
approach,whichrequiresapoliticalperspective.Asunderlinedbyformerminister
VictorNorman"sofarreformshavebeenthebabyofeconomistsandnot
politicians[...]andmaybethereisnow'aneedforachangeatthisstage.'’
• Politicalleadershipisessentialwhenitcomestodesigncoherentanddynamic
reforms.Theroleofpoliticiansisthereforecritical;theyarcthedecisionmakers.
Thereisaneedtofindopensolutionsthatleaveroomforpolitics.Theexampleof
Norwayisverytelling:reformsinderegulationandre-regulationincompetition,
transportationandhealth/safety,gavetheCabinettherighttointerfereatany
stage,whichhadpositiveresultsintheend,eventhoughitinvolvedfights
betweenthedifferentministries.
• Becausepoliticiansandadministrationsareconcernedaboutselfinterests(votes,
re-election,pow'er),thereforeforpoliticalleadershiptoexist,thereisaneedto
drawattentiontotheprivatevaluesofreforms.Thisinstitutionalapproachdocs
notconsidertheidealisticnotionofthestateasanimpersonalentity'necessarily
orientedtowardstheprotectionofthegeneralinterest,butasacollectionof
privatelyinterestedpoliticiansandcivilservants,withbroad,butalsoshort-tenn
andbiasedpolicygoals.Whilethisisthenatureofpolicymaking,itisessential
forcountriestoensurethatpoliticiansandpublicadministrationsatlargearenot
beingbiasedbythesearchofshort-termobjectives.
Movingforwardrequiresanactivecommunicationpolicy.Thestakeholdersandthe
publicoftenhaveadifficulttimeunderstandingthebenefitsofrefonns.Therefore,itis
importanttoreachout,toexplainhowreformscanbetransformedfromabstract,
technocraticmeasurestoactualchangesthatwillbebeneficialforthepeopleandhelp
buildasocietyforthefuture.Thisrequirescommunicationandadvocacy.Politicians.
IMPLEMENTINGREGULATORYREFORM:BUILDINGTHECASETHROUGHRESULTS-©OECD2008
10THELESSONSOFEXPERIENCE:HIGHLIGHTSOFTHEDISCUSSIONS
citizensandcommunitiesmayneedtounderstandthat,iftheyarereadytopayapriceand
makeithappen,reformswhichnowrepresentapoliticalcostcanbecomeaninvestment
andanassetforthefuture.
Choosingtherighteconomicpolicyandachievingpublicacceptanceofreforms
dependsonabalanceofmarketsandpolitics.Keypoliticaleconomyconstraintshaveto
bdpeeorstipanekfcletunievniecntemoaoayncechoeaulnnpottthoseiirndcewenhtieifnnsytiittthuectsoieomnceso,snspttoorlaisitnhitcasapliansegnwverielgrluolanasmteotrhnyet'aarvneadifloatrbhmlese.epcAoolinccorymosirsce-scpsooyunsnstteersym.
Furthermore,thepoliticaldimensionofreformsmayhavebudgetaryimplicationsforthe
overalleconomicpolicystrategy,sincecompensationandadjustmentmeasuresarean
importantelementinovercomingoppositionandresistance.Asbudgetbalancesarc
affectedbyeconomiccycles,thiscaninvolvesequencingandtimingissues(seeSectionsII
andIII).Further,mechanismsforpublicdialoguesuchasadvocacy/advisorygroupshave
alsobeensetuptosupportreforms(seeSectionII).
Theneedforconsensus
Allan Fels,DeanoftheAustraliaandNewZealandSchoolofGovernment
(ANZSOG), Australia, andformerChairmanoftheAustralian Competition and
ConsumerCommission,identifiedfourdimensionsforanalysingthepoliticaldimension
ofreform:i)valuetothepublic;ii)politicalviabilityandsustainability;in)manageability
attheoperationallevel;andiv)co-operationofstakeholdersaffectedbyreforms.This
essentiallyconcernsthemanytilingsthatpolicymakerscandoandprepareinadvanceto
laythefoundationformarket-openingreformsandfavourliberalisationvis-a-vis
domesticeconomies.
Asfarasthevaluetothepublicisconcerned,itisimportanttoshowhowreformsadd
valuetotirecommunity.First,reformshavetodelivergoodoutcomesandoutputs.
Second,astheprocessofeconomicreforminvolvestheuseofthecoercivepowerof
governmenttobringchange,thequalityofreformsdependsonpublicperceptionsofhow
governmentpowerisusedtoimplementit.Thereshouldnotbeanexcessiveuseofpower
butratherafairprocessineconomicregulation.Thefairnessquestionarisesindifferent
waysandfieldsofeconomicreform,includinglabourmarkets,socialissuesor
competitionandmarketregulation.Generally,areformisconsideredunfairifitlargely
benefitsonegroupattheexpenseofthecommunity,orifitcreatessomeeconomic
dislocationunlessaccompaniedbycompensatingfactors.
Regardingpoliticalviabilityandsustainability,economicreformsarenotjust
technicalmatters.Theyaffectproperty'rightsandinterests,thedistributionofwealthand
incomeacrosssocialgroupsandovertime.Theyinvolvepoliticalchoicesandtrade-offs
betweenalternatives.Manyeconomicreformscanonlyoccurwhenthereislegitimacy
andpositivevaluejudgmenttosupportthem.Allthisisexpressedthroughthe
"authorisingenvironment”,whichbasicallydescribesthesourceofthelaws,regulations,
governmentactionsanddecisions,thebudgetallocationsandthevaluesthatshapepublic
value.Itisaboutw'hatmaybedoneandwhatisallowedtobedonepolitically.Someof
thedriversoftheauthorisingenvironmentareoutputs,namelylaws,regulations,resource
allocationandbudget;butalsopolicyneeds,politicalparties,socialactorsandsoon.
IMPLEMENTINGREGULATORYREFORM:BUILDINGTHECASETHROUGHRESULTS-©OECD2008