Regulatory Impact Assessment How Institutionalized Are Better Regulation Practices in Poland ?

REGULATORY IMPACT ASSESSMENT – HOW INSTITUTIONALIZED ARE BETTER REGULATION PRACTICES IN POLAND ?

Marcin Sakowicz[1]

Abstract

This paper provides an overview of Regulatory Impact Assessment (RIA) practice in Poland. The paper is based on analysis of documents referring to RIA reform in Poland, interviews with key government officials engaged in building the RIA system as well as screening the bills passed by Polish Parliament in 2009 and 2010. Author’s knowledge on RIA was also enlarged by National School of Public Administration (KSAP) students’ reports on RIA experiences- results of their internship in polish and foreign administration.

The paper starts with methodological remarks on evaluation of Regulatory Impact Assessment. Next section briefly describes the evolution of the RIA in Polish administration. Section 3 contains analysis of RIA statements screening and discussion of main problems of Polish RIA practice. Finally, the last section presents conclusions and number of recommendation for improving the Polish RIA model in the years to come. The research clearly confirms Poland’ advancement in having the legal framework for RIA and gradual shift to incorporate it in legislation procedure. However, RIA still it is not commonly perceived as an essential element of the whole system of policy making in Poland and tool for improvement policy design and coherence.

1 Methodological note – how to evaluate Regulatory Impact Assessment?

RIA is part of overall strategy focused on improvement of better regulation in Poland. Regulatory improvement strategies throughout the world are founded on an assumption that if decision-makers are provided with RIA-related information, they will make “better” decisions. The questions in the Polish administration context are:

• Whether rapid spread of RIA contributes to public sector management and better governance?
• Is RIA an effective tool for strengthening evidence-based policy making?
• How RIA modernizes policy making process (confirming, defining the problem or task, identifying options for solving the problem or doing a task, selection of the most preferred option, design, implement and evaluate given policy?)

There has been confusion in the terminology relating to (1) Regulatory Impact Analysis as an analytical discipline, and (2) the document (often called as Regulatory Impact Analysis Statement) that presents the result of that analysis (Milligan2003). Measuring the Quality of Regulatory Impact Assessment usually focuses on analysis (2) RIA memorandums, statements or explanatory notes attached to legislative proposals (Zubek 2007, Renda 2006).

Thus, evaluation of RIA exercise could be taken into consideration only if legislative option was chosen for solving a given problem. But it could happen that RIA leads to non-regulatory policy which means avoiding legislative steps. All that means of evaluation of RIA documents may not reflect the whole process of impact analysis carried out in governments. However, the evaluation of the (1) systematic process of identification and quantification of economic, social and environmental impacts likely to flow from adoption of a proposed regulationor a non-regulatory policy option under considerationis very challenging task and requires a lot of profound analysis.

In Poland according to RIA guidelines “The regulation impact assessment is an instrument permitting to determine the consequences of introducing new regulations. It should be stressed that RIA is done whenever an adopted decision contemplates a state intervention and it is carried out before a draft law is written. It is not only an assessment of the proposed normative acts. In fact, a RIA may indicate that non-legislative measures are the best solution to a particular social and economic problem” (Ministry of Economy 2006).” This definition starts with linking the RIA with law-making process and assessment of the proposed normative acts.

Although the second part of the definition clearly explains that RIA also embraces non-legislative measures, Polish approach still reflects the dominance of RIA procedural and legal dimension. The evidence from civil servants training in 2010 indicates that public officials are aware of RIA requirements but they do not consider it as vital element of analytic process leading to better public interventions (Ministerstwo Gospodarki 2010).Therefore, until now RIA is still seems not to be perceived as an effective tool in enhancing policy process.

This should be not surprising taking into account that Poland belongs to continental European administrations monopolized by lawyers (Pollitt, Thiel, Homburg 2007). Primacy of law and legalistic view of public administration is probably the first obstacle to effectively institutionalize RIA practice. By comparison, countries that successfully introduced a culture of impact assessment, the US, UK, Canada, Australia and New Zeland – all of which share, not surprisingly, common law legal system.

This paper tries to investigate the current state of art in institutionalization RIA in the policy process in Poland. It is based on interviews with representatives of the key institutions: Government Legislation Centre, Chancellery of the Prime Minister, Ministry of Economy, and screening of 69 pieces of legislation passed by Polish Lower Chamber of Parliament – Sejm in the first quarter of 2010. Some supplementary information was extracted from KSAP students’ reports on RIA practice in polish and foreign administrations.

2. Background to current RIA System in Poland

In Poland, the system of the regulatory impact assessment (RIA) was initiated in the end of 2001[2]. Since that time it has been mandatory to carry out impact assessment studies for all governmental legal acts. The system of regulatory impact assessment covers both bills and regulations.

The implementation process could be divided into three phases. The first one: initial phase 2001-2005, two stages of reform and improvement: 2006-2008 and current 2009-2012. Most essential data for the whole process of institutionalization RIA system was presented in Table 1.

The first institutionalization period was characterized by low standard of implementation with several pitfalls: limited appreciation of the value of high-quality impact assessments by decision-makers and public servants alike; limited knowledge and skills of public servants in RIA tools and methodologies; limited training opportunities on the processes, methodologies and tools as well as too formalistic approach to RIA templates and forms.

Table 1 Key data for building RIA System in Poland

Own elaboration on the basis of government documents and interviews.

One of the challenges seemed to be access to adequate, appropriate and up to date data which is essential for carrying out proper RIA. This could be delivered by external institutions: universities, experts, think tanks. The latter are still not perceived as the units with high capability and still not developed cooperation with public administration.

A study by Zubek on RIA practice in 2002 – 2003 exposed that out of 125 draft laws 21 had no RIA statements (Zubek 2007). In more comprehensive assessment of 163 explanatory notes attached to bills prepared by ministers in 2002-2004 experts revealed that “information about the costs and benefits of legislation that ministries have at their disposal during law-making was at best limited” (Goetz, Zubek 2005).Explanatory notes rarely presented costs and benefits for parties affected (18% and 21% respectively of the notes analyzed) and contained limited information about regulatory impact on cross-cutting policy objectives.

Therefore, further steps were taken to enhance systemic change in approach to the preparation of RIA in the administration. The Ministry of the Economy prepared new RIA Guidelines which were submitted to the Council of Ministers and adopted in September 2006. A novelty in the RIA system was widening of the scope of regulatory impact assessment to include environmental aspects and a prerogative of Prime Minister’s Chancellery to block the legislative proceedings if RIA for a certain piece of legislation has been made incorrectly.

During this phase new steps were undertaken in setting institutional design for controlling and promoting RIA. Up until July 2006 two institutions were active in monitoring and checking RIA: the Government Legislation Centre (RCL) and Government Centre for Strategic Studies (RCSS). Government Legislation Centre provided opinions concerning the scope of impact assessments undertaken in a ministry. RCSS in turn, performed parallel RIA in order to deliver additional analysis, in particular taking account of important and long term impact of regulation. Both institutions coped with low capacity; moreover the significance of the RCSS RIA was relevantly weak since a ministry has the obligation to refer to the position of the RCSS’s analysis and nothing more.

As result of 2006 regulatory reform the responsibility for the review of RIA was concentrated in the Chancellery of the Prime Minister (KPRM). The Chancellery of the Prime Minister became a central participant in the review of regulatory quality and its scope. At present the Chancellery of the Prime Minister indicates whether the scope of the assessment is adequate and identifies the elements which the ministry should apply to expand the impact assessment and make it as complete as possible. However, the Chancellery seems to have inadequate human resources – 8 officials working within RIA unit is not able to thoroughly analyze the RIA attached to legislative proposals.

RCL still plays an important role in the legislation process. The RCL co-ordinates the government’s legislative activity and it is the RIA ‘watchdog’ checking whether the system is performing well. RCL verifies whether new regulation proposal has a RIA statement with KPRM opinion. Without that no government proposal could be a subject of further work. An important change was introduced in 2009 with the division of formulating policy and drafting a law. From April 2009 it is not the ministry who prepares a draft law but RCL. Ministry is obliged to prepare assumptions for the legislative proposal, based on the RIA carried out and corresponding to the most important socioeconomic problems. This new system is implemented gradually and still there is possibility to proceed according the old scenario.

Ministries present assumptions of the new legal proposal. and submit an initial regulatory impact assessment report for consultations. Assumptions to the draft bill containing preliminary RIA are posted on Public Information Bulletin website of given regulatory body proposing new regulation. Inter – ministerial consultation process is then undertaken to ensure that the views of all other ministers are taken into account. Feedback may be also provided by social partners, such as trade unions or employers organisations, while social consultations last. Chancellery of the Chairman of the Council of Ministers makes its opinion on RIA, especially on its scope and consultation scale.

After consultation the updated version of assumptions to the draft and RIA are reviewed by the Permanent Committee of the Council of Ministers. Assumptions are submitted for discussion of the government. Upon their adoption by the Council of Ministers, the Government Legislation Centre draws up the final version of the draft bill. Chancellery of the Chairman of the Council of Ministers makes its opinion whether RIA is updated and coherent with assumptions. Then, completed draft bill is adopted by the government and submitted to the parliament.

Crucial role in the institutionalization of RIA plays Ministry of Economy, particularly Regulatory Reform Unit in the Department of Economic Regulations. The Ministry undertakes the responsibility for overall regulatory reform including impact assessment, consultations, reduction of administrative burdens and simplification – removal of obsolete or unnecessary regulations.

It promotes the culture of RIA and is the main driver of changes within RIA system. It is not only the author of RIA guidelines but the Ministry was the first to introduce RIA methodology in the internal procedure of regulatory powers. Moreover, by the end of 2007 among the government officials it conducted training on the use of impact assessment tools. Training included 600 selected administrative staff involved in the legislative process for the preparation of RIA and analytical departments of employees who support the development of substance-depth analysis of costs and benefits of proposed regulations. This year, the training of next 3000 officials has started embracing not only administrative staff but also the level of deputy ministers.

The latter is the example of number of new initiatives aiming at strengthening the RIA system envisages by Regulatory Reform Program “Better Law” 2010 -2011. It includes the development of an electronic database on RIAs prepared by the administration, and making the database available to the public. The database will have a double role – firstly it will be a useful instrument in the process of preparing a RIA; secondly, by promoting RIA it will strengthen the role and importance of this instrument within the administration and foster public debate on the quality of regulation in Poland.

The next initiative is the audit of the RIA system prepared jointly by Ministry of Finance, The Chancellery and Ministry of Economy. The new system must be subject to periodic revision as to its guiding ideas and until now there was no comprehensive assessment of the functioning and effectiveness of RIA system. The audit will result in the publication of reports to evaluate the functioning of the new system and to review the quality of RIAs based on it.

The Better Law Programme entails also creation of pilot system of on-line consultations within the process of policy making within the Ministry of Economy.

The last but not least intention is introducing an Ex-post Regulatory Impact Assessment. It will involve the development of the principles of an Ex-post Regulatory Impact Assessment. The aim of the ex-post evaluation will be to the verify actual costs of and benefits resulting from the legislation adopted and to verify whether the ex-ante evaluation was correct. And again the Ministry of Economy start to incorporate ex post internal RIA in which the Ministry of Economy shall periodically, systematically and comprehensively review of existing regulations in the area of ministry.

3. RIA practice –the current state of art

According to the Ordinance No. 49 of the Council of Ministers, dated March 19, 2002 – Rules of Procedures of Council of Ministers a summary of RIA results must be attached as a separate section to the explanatory notes. The minimal RIA statement should identify parties affected by the regulation, present the results of public consultations, identify impacts that the regulation will have on public finances including central and local budgets, labour market, internal and external competitiveness and indicate sources of funding, in particular where proposed legislation imposes costs on central and local budgets. The structure of RIA final report according to the Guidelines prepared by Ministry of Economy should comprise the following items:

The results of the analysis should be presented in a report comprising the following components:

• Problem analysis with brief description of the issue
• Aim, effects, and circumstance containing the purpose of the proposed regulation and background information on existing legal framework and justification of the change along with risk assessment
• Options withbrief description of the available intervention options including a resignation from public intervention and intervention other than legislative.
• Consultation with brief description how consultation was planned and carried out and the way in which consultation results were used in the assessment of regulation impact.
• Cost and benefit

-Identify subjects to be affected by the regulation,

-Provide a detailed analysis of the costs and benefits resulting from options mentioned in section 3 and presented in a table of costs and benefits for the subjects and areas:

• Implementation, enforcement, monitoring
• Recommendationwith comparison of the total cost and benefit of various options mentioned in section and justification of the recommended option.
• Implementation plan

The aim of the screening was to verify to what extent bills passed by parliament have RIA statements formally responding to the Rules of Procedures of Council of Ministers and Guidelines for the regulation impact assessment (2006). The brief characteristics of documents analyzed is summarized in Table 2.

Table 2 Characteristic of bills passed by Sejm in the first quarter of 2010.

Own elaboration on the basis of 69 pieces of legislation

As general remark, the problems highlighted by Radoslaw Zubek in his study seem to have been solved only partially. As of today, the impact assessment procedure only involves government proposals, not parliamentary ones. Thus, it is impossible to have government initiated law without RIA statement. However, since the obligation of RIA is not covering the parliament proposals, it is still possible to initiate law without RIA. As shown in Table 2 out of 24 proposals initiated by Members of Parliament only 3 have sort of RIA memorandum apart from regular justification. In contrast, all government initiated legislative acts have RIA statements.

The results of screening are worrying in number of respects. First, as shown in Table 3, apart from two new legislative initiatives originating from Ministry of Economy none of RIA has description of the problem. Less than half of the analyzed RIAs highlight purpose of the proposed regulation. Option analysis is almost never presented and alternatives are seldom compared. Only in two cases RIA contains discussion of the different options for solving the problem. Moreover, rrefraining from regulation, self- and co-regulation strategies are rarely included in alternative options. RIA statements usually identifies parties affected by new proposal (89% of cases) and present consultations mechanisms presented in 84%. The latter is still controversial issue and subject of many critical opinions.