Regulatory Impact Analysis: Experience in Norway

Presentation at Third Regional Meeting of the Working Group IV on Public Service Delivery, Public-Private

Partnerships and Regulatory Reform, Good Governance for Development in Arab Countries Initiative, Tunis, 16 February 2007

by Aarne Røvik, Senior Adviser, Ministry of Finance, Norway

Background of RIA in Norway

Government shall submit all information to the Parliament “that may have an important bearing on the matter”

Official studies, incl. draft legislation (Ad-hoc preparatory committees)

Environmental Impact AssessmentManagement by objectives and results

(Regulations on fiscal appropriations, established by the Parliament in 1984)

”Instructions for Official Studies and Reports”

Analysis of all significant effects Always financial and administrative consequences Other significant effects, in many cases environment,

business, regions, health, gender alignment, human rights, and simplification ( = distribution analysis)

Quantified as far as possible, socio-economic analysis to the extent necessary

Sensitivity analysis if appreciable uncertainty ( = risk assessment)

Assessment of alternative instruments, e.g. economic instruments

Legislative processrelating to primary laws and major reforms

Official study (ad-hoc committee)

Draft law

White paperProposition / bill

Parliamentary recommendation

Legislative decision

Government

Parliament

Public consultation

Official study (ad-hoc committee)

Draft law

White paperProposition / bill

Parliamentary recommendation

Legislative decision

Submitted for comments

Hearings in Standing

Committees

Comments Comments

RIA included in reports

Official study Draft law

White paperProposition

Parliamentary recommendation

Legislative decision

Submitted for comments

Comments Comments

What is a RIA?

Fiscal consequences (= budget appropriations) and effects on government administration

Social costs and benefits identified, systematized and described in qualitative terms

Business impacts estimated (administrative costs and implementation/compliance costs)

Benefit-cost analysis (valuation of all social effects, present and future, at fixed prices)

Econometrical models (include price effects, often aggregate, only quantity/price regulation)

Risk assessment (sensitivity analysis) Distributional analysis Analysis of alternative instruments (=cost-effectiveness)

Capacity for RIA (1)

Data on regulation: Official statistics (Statistics Norway) www.ssb.no

not many data directly on regulation National Register Centre (Brønnøysund),

www.brreg.no inter alia Reg. of Enterprises, Register of Company Accounts, Central Coordinating Register for Legal Entities, Register of Reporting Obligations of Enterprises

Sector regulators/agencies (e.g. Public Roads Administration www.vegvesen.no , Pollution Control Authority www.sft.no , Petroleum Safety Authority www.ptil.no )

Capacity for RIA (2)

Technical knowledge: Employees in ministries/agencies educated (and

trained) in socio-economic analysis Ministry of Finance guidelines on socio-economic

analyses, from various ministries concerning assessment of impacts on environment, regions, business and gender alignment

Business Impact Unit (in Ministry of Trade and Industry) Inter-ministerial panel on economic impact assessments

(advisory, chaired by Ministry of Government Administration and Reform)

Capacity for RIA (3)

Expertise in sector/policy area: Statistics Norway has extensive research and analysis activities (as

one of very few offices of statistics) Interaction sector ministry/agency (possibly regulator) and

academic/research institutionsExamples of results: Environment (air pollutants) and energy substitution included in

macro-economic models (developed by Statistics Norway) National transport plans based on BCA by cooperation Public

Roads Administration /Institute of Transport Economics (www.toi.no )

General equilibrium model on regulation in agriculture, fisheries and processing from Institute for Research in Economics and Business Administration (www.snf.no ) and University of Life Sciences (www.umb.no )

Reporting obligations of business Change in number of form variants

-40

-20

0

20

40

60

80

1998 1999 2000 2001 2002 2003 2004 2005

New forms Measures Net effect

Reporting obligations of enterprises Change in administrative burdens

-700

-600

-500

-400

-300

-200

-100

0

100

1998 1999 2000 2001 2002 2003 2004 2005

-700

-600

-500

-400

-300

-200

-100

0

100

New forms Measures Net effect

Estimated full-time equivalent employees

RIA is a tool in a political process

“I will caution against founding political decisions on spending appropriations only on technical calculations. If we knew the method was perfect, we could have done this, but in that case, there would have been no need of politicians. However, we are politicians, representatives of the inhabitants in this nation, and we shall speak on behalf of the needs we find around in the country. Therefore, I see the social discount rate and the methodology of socio-economic analyses as only one element of the decision-making process.”

Former Minister of Transport and Communication in parliamentary debate on national transport plan