Public consultation

 

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10.4. What public consultation mechanisms and procedures, including prior notification, have been established to improve regulatory quality, thereby enhancing the investment environment? Are the consultation mechanisms open to all concerned stakeholders?


Rationale for the question

Laws and regulations should be developed in an open and transparent fashion, with appropriate parliamentary control and procedures for effective and timely inputs from interested national and foreign parties. This should include potential domestic and foreign investors as well as affected business, trade unions, other civil society, wider interest groups and other levels of government. Public consultation helps to identify a problem, assess the need for government action and select the best option available. It enhances regulatory quality, and indirectly, improves the investment environment by i) bringing into the discussion the expertise, perspectives and ideas of those directly affected; ii) helping regulators to balance opposing interests; iii) identifying unintended effects and practical problems; iv) providing a quality check on the administration’s assessment of costs and benefits; and v) identifying interactions between regulations from various parts of government.

On the one hand, consultation helps to ensure that the affected parties understand the nature of regulation, why it is needed and what is expected from them. On the other hand, it also offers the possibility to the public to affect the regulatory process. Both elements make consultation a tool to enhance voluntary compliance and reduce reliance on enforcement and sanctions. Regulatory stability and rationality help create accessible markets for investors.

Certain challenges in public consultation must be addressed in order to avoid failures: i) the quality of information must be carefully managed and assessed, ii) to build legitimacy, consultation needs open and accessible procedures, which would imply increasing transparency when deciding who and when to consult, and ensuring access to outsiders and less organised stakeholders, especially in rapidly evolving societies with changing interests; iii) consultation capture by powerful interests must be avoided. In addition, the way comments are dealt with by government determines the credibility of the process, and low levels of credibility, certainty and regulatory quality usually scare away investors.

Related PFI questions:
 Question 2.6 on consultations with investors
 Question 3.2 on consultations on planned changes to trade policies

 

Related PFI questions:

Question 2.1 on an investment climate strategy
Question 6.1 on a regulatory framework for corporate governance


 

Key considerations

Best practices in public consultation are highly contextual, selecting different forms of consultation depends on the concerned regulation and the stakeholders affected. The main forms and tools available for public consultation should be used in the right combination successfully to improve regulatory quality:
Types of public consultation:

  • Notification: Communicating information on regulatory decisions to the public is a key building block of the rule of law. It is a one-way process of communication in which the public is treated as a passive consumer of government information. Notification does not, by itself, constitute consultation but can be a first step. Prior notification allows stakeholders the time to prepare themselves for upcoming regulatory measures and to be able better to comply with existing regulation.

  • Consultation involves actively seeking the opinions of interested and affected groups. It is a two-way flow of information, which may occur at any stage of regulatory development, from problem identification to evaluation of existing regulation.

  • Participation is the active involvement of interest groups in the formulation of regulatory objectives, policies and approaches or in the drafting of regulatory texts. Participation usually facilitates implementation and improves compliance, consensus and political support. Governments are likely to offer stakeholders a role in regulatory development, implementation or enforcement in circumstances in which they wish to increase the sense of “ownership” of, or commitment to, the regulations beyond what is likely to be achieved via a purely consultative approach.

Tools for public consultation. ICT has multiplied their potential and reach.

  • Informal consultation includes all forms of discretionary, ad hoc and unstandardised contacts between regulators and interest groups. It takes many forms, from phone-calls to letters to informal meetings, and occurs at all stages of the regulatory process. The key purpose is to collect information from interested parties, but informal consultation can also involve tacit agreements on the content of proposed regulations.

  • Circulation of regulatory proposals for public comment is a relatively inexpensive way to solicit views from selected stakeholders and is likely to induce affected parties to provide information. Furthermore, it is fairly flexible in terms of timing, scope and form of responses and hence is among the most widely used forms of consultation. This procedure is generally more systematic and structured than informal consultation. The negative side of this procedure is that not all affected stakeholders are necessarily included, especially the less organised ones.

  • Public notice-and-comment is more open and inclusive and usually more structured and formal. As there is public notice, all interested parties have the opportunity to become aware of the regulatory proposal and are thus able to comment. There is usually a standard set of background information, including a draft of the regulatory proposal, discussion of policy objectives and the problem being addressed, often an impact assessment of the proposal and, possibly, of alternative solutions. This information can greatly increase the ability of the general public to participate effectively in the process. Participation might be minimal except for a few controversial proposals. The right communication channels should be adapted to reach potentially concerned groups.

  • Hearings are public meetings on particular regulatory proposals at which interested parties and groups can comment in person. Regulatory policy makers may also ask interest groups to submit written information and data at the meeting. A hearing is an infrequent and independent procedure, usually supplementing other consultation procedures. Public meetings provide face-to-face contact in which dialogue can take place between regulators and affected parties and among interest groups themselves. Key disadvantages are time and place constraints and the risk of unfocused discussions.

  • Advisory bodies usually offer technical advice or bring about general consensus on regulatory proposals (see Question 10.2).

Policy practices to scrutinise

The PFI user might use the following elements to assess how public consultation is actually improving regulatory quality, thereby enhancing the investment environment:

  • The fundamental assessment should analyse all public consultation types and mechanisms available and applied by regulatory authorities. Which are the key elements they consider when choosing one or the other? To have a good idea of their application, detailed accountability of public consultation processes should be gathered, including notification, consultation and participation. These figures should include a reference to the percentage of existing and new regulations consulted. Effective means of communication should be defined, including open websites, official gazettes and other publications, and any communication channel open to citizens.

  • Quality consultation mechanisms should facilitate the inclusion of all interested stakeholders in order to obtain better grounded policy. Policy debate should be encouraged as part of the regulatory making process. The PFI user should assess the openness of used consultation mechanisms: Are there any evaluation mechanisms for the effectiveness of public consultation? Are all parties consulted? Are consultations restricted in terms of time, space and content? If so, why?

 

Resources

  • The OECD has worked extensively on public participation in policy making. A key reference on how to develop public consultation is the publication Citizens as Partners: OECD Handbook on information, consultation and public participation in policy-making. The Handbook is a practitioner’s guide designed for use by government officials and offers a practical road map for building robust frameworks for informing, consulting and engaging citizens during policy-making. It recognises the great diversity of country contexts, objectives and measures in strengthening government-citizen relations and hence offers no prescriptions or ready-made solutions. Rather, it seeks to clarify the key issues and decisions faced by government officials when designing and implementing measures to ensure access to information, opportunities for consultation and public participation in policy-making.

  • A good starting reference to public consultation is the European Commission website on its relations with civil society (http://ec.europa.eu/civil_society).
     

 

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