Latest annual report from the chair
Many of the OECD’s member countries, and all our Northern European neighbours, have come to the same conclusion, and have established regulatory oversight bodies. This is because unnecessary costs related to regulations are a major challenge in most countries. Such costs are reducing value creation, affecting profitability and tax revenues directly, and have a negative effect on competitiveness. Restructures and innovation become more cumbersome, and it becomes relatively more demanding to be a small company. With too little awareness of the design of regulations, we might get a situation where large companies easily handle extensive regulations internally, while small companies face major challenges. It is therefore crucial to consider the small business perspective.
The Norwegian Better Regulation Council in full operation
In 2020, the Norwegian Better Regulation Council concluded its fourth full year of operation since its establishment in the summer of 2016. It was also the first year with full staffing for the entire year. The Council’s procedures and systems function well, and we enhance our professional competence and capacity through training initiatives and adaptable employees. All the original members of the Norwegian Better Regulation Council are still present. Stability has proved important in an entirely new area in Norwegian public administration. This also demonstrates that the task of oversight is considered both meaningful and important by us who work with it.
The Norwegian Better Regulation Council is a small agency, but an important voice in the Norwegian public administration. We follow ministries and agencies with several thousand employees, who are directly or indirectly involved in drafting new laws and regulations. Every year, the central government submits more than 300 proposals for new or amended rules that affect the business community. Many of them involve increased costs for companies.
In 2020, the Covid-19 pandemic has significantly affected our operations, and the work related to our mandate to provide guidance has changed in nature. Although we have had fewer external assignments, we have conducted a high number of dialogue meetings and used our website more actively to present professional views. The Norwegian Better Regulation Council has maintained a high level of activity and has reviewed nearly 370 cases. About 50 of these are proposals on Covid-19 related regulations.
Of the 370 reviewed cases, the Norwegian Better Regulation Council issued full statements on 38 cases last year. The cases for which the Norwegian Better Regulation Council has stated an opinion are all thoroughly reviewed. The process may seem extensive, but it is necessary to understand and scrutinize the various cases in a way that inspires confidence. Feedback from agencies receiving statements from the Council indicates that our statements are viewed as useful and thorough, and that they address important considerations.
Poorly designed regulations often result in costs that reduce value creation, weaken competitiveness and hinder restructuring and innovation. In addition, the smallest companies are disproportionately affected.
From the Council’s inception in 2016 to the end of 2020, we have reviewed 1,400 consultation cases. We have been registering all cases in a separate database since 2018. Many proposals are minor and simple, but there are also several proposals that have a strong impact on costs and time spending for companies. The database shows, among other things, that the quality of regulatory impact assessments is still generally inadequate. However, relatively simple steps can significantly improve the basis for decision-making. This annual report carefully reviews the findings from our studies. Some of the figures are worrying, and show that the Norwegian Better Regulation Council will continue to have an important function in the future. For example, there are often no descriptions of affected industries, nor are there any discussions of whether the rules are suitable for small businesses. It is also quite rare to see specific assessments of the time spending and costs incurred by companies in meeting the requirements. We have often noted deviations from the Norwegian Instructions for Official Studies of Central Government Measures. This even applies to important and cost-driving regulatory proposals.
Our review of the Covid-19 related proposals has detected several interesting aspects of Norwegian regulations. Firstly, the majority of Covid-19 related cases proposed temporary rules. Some of these were later sent for a new round of consultations where it was proposed they should be made permanent regulation. Perhaps most interestingly, there does not appear to be significant differences in the quality of the regulatory impact assessments between the Covid-19 related proposals and the ordinary regulatory proposals. There seems to be a greater focus on digitalisation and simplification for the business community in the Covid-19 related proposals than we observe in the ordinary regulatory proposals. It has been positive to observe that, despite extremely short consultation deadlines, there have been many good consultation responses. These cases illustrate that Norwegian public administration has the knowledge and resources to do good regulatory impact assessments and to use the institution of consultative hearings in a positive manner.
Input to public administration on EEA regulations
About 40 per cent of all the regulations we review are linked to the EEA agreement. The Norwegian Better Regulation Council has provided input to the government’s efforts to review and improve the process of implementing new EU regulations into Norwegian law, based on our experiences. Among other things, the Norwegian Better Regulation Council has pointed out various methods of improving the consultation process, which includes involving affected Norwegian industries. We have observed that some agencies work closely with the EU on new regulations and are well informed on what is to come, while others do not seem to prioritise EEA matters well enough. In our area, exchanging knowledge with the EU Regulatory Scrutiny Board is key. Through RegWatchEurope, a network of independent external advisory bodies, we have access to other countries’ assessments of developments in Europe.
In 2020, the Norwegian Better Regulation Council has further developed what we believe should be the basis for good statements. We have continued our work on guidance and dialogue with ministries and directorates, building on our good relationships with businesses and organisations. International cooperation is a high priority for us, as it lets us learn from what others are doing in the field of scrutiny and better regulation. Many countries have had regulatory oversight bodies for a long time and have important experiences to share with us. We have found that there is a strong focus on good and coordinated regulatory development internationally, but perhaps surprisingly little debate in this area in Norway. Good regulatory policy is recognised as providing an important competitive advantage, and good regulatory co-operation between countries facilitates trade and the flow of capital and investments across national borders.
Good regulations are a major issue internationally
Both the EU and the OECD emphasise that independent quality control of regulatory development is important for achieving good results. As early as 2012, the OECD published an official recommendation on regulatory policy and governance. Item 3 of the recommendation emphasises that all countries should have an institution that is responsible for actively monitoring the development of new regulations and providing guidance to those in public administration who are responsible for drafting regulations. The majority of OECD member countries follow this recommendation, including Norway, which established the Norwegian Better Regulation Council in 2016.
The discussion on simplification of regulations is ongoing in a number of countries and at a central level in the EU. The idea of not introducing a new rule until an old one has been phased out (“one in, one out”) is still alive and will have practical implications in Europe when the European Commission’s proposal on the issue is published in 2021. An important question is whether it is the cost of the regulations or the “number of rules” that should form the basis for such an approach. Other countries have changed their focus from “fewer regulations” to “Better Regulation”. Good regulations must, among other things, be cost-effective, coordinated with other countries, technology-neutral and promote innovation and new thinking. For example, the United Kingdom has established a separate unit in central government administration, the Better Regulation Executive, with clear objectives in these areas.
Climate challenges, technological development and more cross-border markets are forcing new thinking and a greater need for international cooperation. This topic is referred to as “International Regulatory Cooperation (IRC)” and is receiving increasing attention. International regulatory cooperation will probably be able to supplement and further strengthen the positive effects of the more traditional trade agreements between countries and groups of countries. In 2021, the Norwegian Better Regulation Council will take over the chair of the European cooperation network RegWatchEurope. We aim to use our position as chair actively both here at home and abroad in Europe, and to be more active in the European cooperation, in addition to strengthening our own work.
Sandra Riise, Chair of the Norwegian Better Regulation Council
Three simple system measures to raise the quality of regulatory impact assessments, reports and consultation processes when the business community is affected:
Create a common template for consultation papers on regulatory proposals with a structure that helps those responsible for conducting the impact assessment to follow the norwegian instructions for official studies of central government measures.
Revise the ministry of justice and public security’s guidance on legislative and regulatory work “lovteknikk og lovforberedelse” (legislative and regulatory technique and preparation), so that it harmonises with the requirements in the norwegian instructions for official studies of central government measures.
Establish a unified practice where the agency responsible for a consultation process publishes its assessments of received consultation inputs.