Regulatory Impact Analysis: Experience in Norway

1. Regulatory Impact Analysis: Experience in Norway Presentation at Third Regional Meeting of the Working GroupIV 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

2. 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 Assessment • Management by objectives and results (Regulations on fiscal appropriations, established by the Parliament in 1984)

3. ”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

4. Legislative processrelating to primary laws and major reforms Draft law Official study (ad-hoc committee) Government Proposition / bill White paper Parliament Legislative decision Parliamentary recommendation

5. Public consultation Draft law Official study (ad-hoc committee) Submitted for comments Proposition / bill White paper Comments Comments Hearings in Standing Committees Legislative decision Parliamentary recommendation

6. RIA included in reports Draft law Official study Submitted for comments Proposition White paper Comments Comments Legislative decision Parliamentary recommendation

7. 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)

8. Capacity for RIA (1) Data on regulation: • Official statistics (Statistics Norway) www.ssb.nonot many data directly on regulation • National Register Centre (Brønnøysund), www.brreg.nointer 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 )

9. 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)

10. 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 institutions Examples 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 )

11. Reporting obligations of business Change in number of form variants

12. Reporting obligations of enterprises Change in administrative burdens Estimated full-time equivalent employees

13. 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