Public governance

Regulatory policy at the crossroads: towards a new policy agenda

 

Remarks by Angel Gurría, OECD Secretary-General, Regulatory Policy Conference

 

OECD Conference Centre, 28 October 2010

Ladies and gentlemen,
It is a pleasure to be with you on the occasion of this first international regulatory policy conference of the OECD.

The OECD mission is to help governments design “Better Policies for Better Lives”. We act as a "club of best practices", as a hub for global policy dialogue and exchange of experiences. This conference, with over 300 participants coming from 45 countries, is an example of how we accomplish our mission. And it comes at an appropriate time. 

In the current circumstances of weak recovery, high unemployment and constrained room for manoeuvre by macro-economic policies, regulation is more than ever in the spotlight. This is a challenge but also an opportunity. A robust regulatory environment is indeed key to return to a stronger, fairer and sustainable growth path. It is also essential to win back citizens’ and consumers’ confidence and trust in governments. We are here today to discuss how to achieve that.

The OECD has traditionally played a pioneering role in bringing the issue of regulatory reform to the fore. We have carried out regulatory reform reviews of almost all of our members, as well as of China, Brazil and Russia, and soon Indonesia. Last but not least, thanks to a two-year cooperative effort with the European Commission, we now have up to date and comprehensive assessments of regulatory policy trends in half of our members. This work is very highly appreciated by policymakers and leaders. For instance, I recently shared copies of these reports with Chancellor Merkel and President Sarkozy.

The potential benefits of better regulation are increasingly clear. In many of our countries, productivity has increased and living standards improved thanks to new regulatory frameworks fostering competitive markets, lower administrative burdens and higher employment rates. This is the dividend of strenuous efforts to streamline the stock of regulations, to reduce unnecessary costs, and to facilitate market entry and exit. This has also helped reduce informality, and allowed business to focus on what it does best, creating jobs.

Despite all this progress, we should not be complacent. The current crisis exposed massive flaws in regulation, as well as in supervision and enforcement. And these flaws have not yet been fully addressed.

Today, we present a report on "Guiding the road to recovery and growth". It highlights key issues which governments must address. Let me mention four of them.

First, how can regulatory policy contribute more effectively to improved economic and social performance?
Regulatory policy brings a double dividend. First and foremost, it brings economic benefits by fostering innovation and entrepreneurship. Regulations have to be simpler and we have to make the most of Information and Communication Technologies. But effective and efficient regulatory management also contributes to the rule of law, through enforcement, inspection systems, and the down-to-earth assessment of compliance.

But not enough effort is put into regulatory impact assessment. Proper attention must be given to poverty and social conditions for instance. This could be done, for example, by taking into account the social impacts of regulation, whether in terms of income, gender, geographical location or disability.

Regulatory impact assessment can show how regulations contribute to well-being. Our indicators on regulatory management and product market regulation allow countries to benchmark their own performance and to evaluate potential gains from doing more, or differently.

The second issue I would like to highlight is how to strengthen international regulatory co-operation and risk management?
International regulatory cooperation is essential in a globalised economy: when issuing new rules, countries need to pay attention to their neighbours, and to their impacts on global markets. Countries have a major stake in each other’s regulatory settings, and in their capacity to adopt and revise regulations consistent with international good practice. 

The United States, Canada and the European Commission have an ongoing policy dialogue in this field. We are eager to learn from them and to discuss the possibility of broadening this effort to include other countries. 

The OECD has been active in supporting international regulatory co-operation. The first Regional Charter for Quality in Regulation adopted by the MENA countries last November was inspired by OECD principles. We also have a global policy dialogue with APEC, and are now engaged in a review of administrative simplification in Vietnam, which will co-host the first ASEAN-OECD meeting on regulatory reform in Hanoi next month. 

A specific aspect of regulatory co-operation concerns risk management. A globalised world requires proper risk management, at national and international levels. Governments want to know how to prevent, whenever possible, catastrophic events, be them environmental, financial or related to health and safety. They also want to know how they can be better prepared if these events occur. Regulations can help make economies and societies more resilient.

But this requires capacity, preparation and proper assessment, as well as appropriate incentives. In most cases, it also requires international co-operation.

International regulatory co-operation will only advance if we have a better understanding of its mechanisms, across borders and sectors, as well as of its benefits and drawbacks. What we are looking for is not a “one size fits all”, but an improved regulatory framework in order to take advantage of globalization while reducing the associated risks.

The third crucial topic I want to underline is the role of regulation in promoting innovation and green growth.
Both innovation and green growth are high on the policy agenda, and rightly so. They represent new sources of growth and are essential for us to tackle climate change. And both are strategic issues for the OECD. We presented our Innovation Strategy to ministers a few months ago and we will launch a Green Growth Strategy in our next Ministerial Meeting in May 2011.

In both areas, regulatory policy has a key role to play. Good regulation enables innovation. It favours the growth of highly innovative small firms, by cutting red tape and administrative burdens. But what kind of regulations will foster green growth? This is one of the topics for discussion at this conference, where we are bringing together experts from the environmental and regulatory policy communities.

Last but not least, I would like to emphasize the importance of an effective regulatory governance to restore trust. Today, the confidence of citizens in the financial sector, in markets, and in governments is in question. To face this, effective regulatory governance is capital. Indeed, what do citizens want? They want their voices heard, through open consultation and comment. They want to reduce the opportunities for regulatory capture by special interests. They want transparency and easy access, regulation in one click and in clear language. Last but not least, they also want stronger compliance.

Stronger regulatory governance should help close the loop which currently exists between regulatory design and the evaluation of outcomes. This would ideally create a perpetual and virtuous circle of continual feedback.

But for all this to happen, we need collective leadership and political commitment. We also need to act at sub-national levels of governments, states and municipalities, where the problems of fairness, compliance and accountability are often more acutely felt.

Ladies and gentlemen,
Building a better world economy requires finding ways to design, apply and enforce better rules. I invite all of you to work with the OECD Regulatory Policy Committee to address the challenges of the future. Take a fresh look at the policy principles we developed in the past and make them fit for 21st century. This way we will help governments practice better policies for better lives.

Let me finally thank our partners for making this possible: Belgium as the current EU Presidency, the Business Sector, with NNR, the Board of Swedish Industry and Commerce for Better Regulation, the Bertelsmann Foundation and the European Commission.

You have a rich and complete agenda for these two days and I wish you a fruitful discussion.
Thank you.

 

Related Documents

 

OECD Regulatory Policy Conference, 2010

 

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