Regulators operate in a complex, high-risk environment at the interface between the
public and the private sectors. They often share some responsibilities for the sectors
and industries they regulate with other public institutions. And yet, if the lights
go out, tap water stop running, trains break down or phones stop working, they are
often held to account. In this challenging environment, the governance of regulators
is critical. The role of the regulator and how it co-ordinates with other public institutions,
the powers it is given and how it is held accountable for exercising these powers
are key elements of a governance architecture that needs to be carefully crafted and
appropriately implemented if the regulator is to succeed in combining effective regulation
with a high level of trust. This report looks at the way in which four regulators
– the Australian Competition and Consumer Commission (ACCC), the Australian Energy
Regulator (AER), Portugal’s Water and Waste Services Regulation Authority (ERSAR)
and the UK Office of Rail and Road (ORR) – have addressed these governance challenges.
The report identifies approaches to implement accountability, transparency and co-ordination
and helps identify some lessons that can help guide how these principles can be translated
Clarity and transparency on what is expected from regulators are crucial. The regulator need to be proactive in identifying the practical steps that will be taken to meet these expectations, including through through publicly available corporate and strategic plans that detail in a clear and intelligible way what operational modalities and resources the regulators will use to meet these expectations (whether expressed in government statements or legislation).
Producing and using performance information is challenging. This information needs to be targeted to the purpose it serves. Information and performance indicators prepared to report on budget expenditures will inevitably tend to focus more on direct outputs and inputs than on wider market outcomes. Simply uploading information onto a website will hardly enhance accountability and transparency. Information needs to be intelligible, clear and user friendly for citizens, to whom all public institutions are ultimately accountable.
Regulators are competent and expert actors in the policy making process, building on their in-depth technical knowledge of the sector they regulate. The contributions of the regulator to the policy-making process should be transparent and respect the respective roles of government and regulators.
Co-ordination needs to build on some boundaries that define the perimeters of action so that each player regulators, ministries and other government agencies is clear on its role or, when grey areas exist, can clarify these grey areas. Formal agreements and co-operation agreements can set the ground rules on how players interact among themselves. They need to be operationalised through live instruments, such as: co-ordination bodies, ad hoc meetings, and tools for regular sharing of information.