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Chapter 4

The development of new regulations

Predictable and systematic procedures for making regulations improve the transparency of the regulatory system and the quality of decisions. These include forward planning (the periodic listing of forthcoming regulations), administrative procedures for the management of rule-making, and procedures to secure the legal quality of new regulations (including training and guidance for legal drafting, plain language drafting, and oversight by expert bodies).

Ex ante impact assessment of new regulations is one of the most important regulatory tools available to governments. Its aim is to assist policy makers in adopting the most efficient and effective regulatory options (including the “no regulation” option), using evidence-based techniques to justify the best option and identify the trade-offs involved when pursuing different policy objectives. The costs of regulations should not exceed their benefits, and alternatives should also be examined. However, the deployment of impact assessment is often resisted or poorly applied, for a variety of reasons, ranging from a political concern that it may substitute for policy making (not true- impact assessment is a tool that helps to ensure a policy which has already been identified and agreed is supported by effective regulations, if they are needed), to the demands that it makes on already hard pressed officials. There is no single remedy to these issues. However experience around the OECD shows that a strong and coherent focal point with adequate resourcing helps to ensure that impact assessment finds an appropriate and timely place in the policy and rule making process, and helps to raise the quality of assessments.

Effective consultation needs to be an integral part of impact assessment. Impact assessment processes have- or should have- a close link with general consultation processes for the development of new regulations. There is also an important potential link with the measurement of administrative burdens (use of the Standard Cost Model technique can contribute to the benefit-cost analysis for an effective impact assessment).

The use of a wide range of mechanisms, not just traditional “command and control” regulation, for meeting policy goals helps to ensure that the most efficient and effective approaches are used. Experience shows that governments must lead strongly on this to overcome inbuilt inertia and risk aversion. The first response to a problem is often still to regulate. The range of alternative approaches is broad, from voluntary agreements, standardisation, conformity assessment, to self regulation in sectors such as corporate governance, financial markets and professional services such as accounting. At the same time care must be taken when deciding to use “soft” approaches such as self regulation, to ensure that regulatory quality is maintained.

Assessment and recommendations

Procedures for making new regulations and legal quality

Procedures appear to be generally well established and work smoothly, with the possible exception of forward planning. The process for forward planning of primary legislation is well structured compared with some other European countries. However the OECD peer review team picked some concerns about a tendency for last minute changes, which may need attention. Forward planning of secondary regulations may also need attention. The Prime Minister’s Office said that it was planning to co-ordinate more closely with ministries on these matters.

Sustaining the quality of legal drafting is an issue that appears to need continued attention. There appears to be variability in the performance of ministries and the Justice ministry has difficulty keeping up with the demands made on it as “guarantor” and checker of legal quality. An important part of the objectives for Better Regulation contained in the Government Strategy Document seeks to reinforce the processes for ensuring legal quality. This is clearly necessary.

Ex ante impact assessment of new regulations

Efforts have been made since the 2003 OECD report to strengthen the approach to ex ante impact assessment, and there is now an awareness of the need for action. Significant efforts have been engaged by the Justice ministry to raise consciousness of the importance of this process. With its integrated guidelines issued in 2007, and enhanced training, prepared and organised in co-operation with other ministries, the ministry has succeeded in generating some momentum for a change in attitudes among ministries. There is widespread awareness of the new guidelines, and a generally positive attitude to their use. The training offered has been taken up enthusiastically. This is a good start for building stronger performance.

But there remains room for considerable improvement, and the main recommendations of the 2003 OECD report continue to be relevant. The fundamental approach has not changed. The last OECD report highlighted a range of issues that needed attention including weak institutional capacities for quality assurance and support, undeveloped used of the benefit-cost principle and lack of analytical rigour, and a failure to use public consultation in support of the process. The issue remains of how to give ex ante impact assessment greater rigour, substance and teeth in the Finnish decision making system. Impact assessment largely remains, as one interviewee put it, a “glued on” document at the end of the process, its real value in support of more effective and evidence based policy making being still unclear among many officials (and politicians). Policy making and law drafting tend to be synonymous in the Finnish system, with decisions taken on a legislative text which is well advanced, rather than on a policy proposal where the options are still open (such as no action, or alternatives to regulation). At the same time, however, there is evidence of some change in attitudes. Several interviewees said that they were ready to strengthen their approach, but needed more substantial help to do this than is currently on offer.

The institutional framework to support the production of quality impact assessments remains weak. Changing habits and promoting a new culture calls for new organisational arrangements. Will the new expert network chaired by the Justice ministry be enough? This was an issue in the minds of several stakeholders. The Justice ministry can only go so far, given its limited resources and legal orientation. It also lacks authority to act as a gatekeeper. It reviews the legal and procedural aspects but not the policy substance.

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Effective and “joined up” impact analysis - not just collections of different assessments demands a real co-operation between ministries and sharing of skills and competences, making best use of scarce resources, together with a system that can weigh up the substantive aspects of what is presented.

Recommendation 4.1. Arrange an external evaluation of the network approach within the coming year. If it fails, a more effective approach should be developed, drawing inspiration from the institutional framework that supports the management of EU affairs, or returning to the proposal of a central coordinating unit. A further idea that has proved effective in some other European countries is to establish an external watchdog, to add pressure for change (the UK provides a good example).

The methodological approach to developing effective impact assessments needs considerable strengthening. There is a particular need to strengthen the support for more quantitative and economic assessments. Most Finnish officials engaged in impact assessment have a legal background. Guidance and methodology remain too vague. Instructions lack essential detail that would help to put ministries on the right track. A number of stakeholders raised the need for more practical support, saying that they are largely left on their own. Some of what is required is relatively simple to put in place, for example “model” impact assessments, best practice examples and a clear template. Some aspects will need a more substantial approach, aimed at providing officials with no real experience of handling numbers a means by which they can be supported in the quantitative aspects of the work. Many other countries face a similar problem. The UK provides an interesting example of how “generalist” officials are supported by a network of more specialised colleagues.

Recommendation 4.2. Review thoroughly the current support structure for officials carrying out impact assessments, with a view to strengthening it through a range of actions aimed at facilitating the task and raising standards. Consider whether economic research institutes could be used to help fill the gap between the legally dominated civil service culture and the need for a more economic approach.

Public consultation is not yet an automatic part of the process, and guidance on this aspect is weak. Finland has a strong tradition of consensus building, but this is not the same as active consultation on a specific proposal aimed at ascertaining likely impacts and collecting data to this end. A different mindset needs to be vigorously promoted. This is not yet evident. The guidelines define consultation as an essential part of the process but do not go much further than this. There is no detailed guidance on how to consult with stakeholders and the different methodologies that might be used. The importance of consulting early, before it is too late to alter the course of a decision, is not sufficiently emphasised. Several stakeholders noted that impact assessments were made too late in the process to have any real effect on outcomes. Going out to public consultation would also help to reinforce the process – external stakeholders acting as an alternative form of watchdog to encourage quality work and raise the political profile of the process. Some current projects show how it can be done. For example, an Environment ministry project on housing is a good example of a new approach to information gathering and involvement of stakeholders in the preparation of new legislation. Use of the SCM for assessing administrative burdens automatically requires interactive consultation with stakeholders to gather data so this too can be a lever for change.

Recommendation 4.3. Take steps to strengthen the requirement for early and timely public consultation, and ensure that effective guidance and best practice examples are in place on how to do this.

The current system is also weak in making a link with downstream implementation. There are only weak links in the Finnish system between law drafting and downstream compliance and enforcement. Could systematic feedback on issues with the latter help to strengthen the system and even develop demand for more effective impact assessments? A number of stakeholders raised this issue. It seems that Finland could benefit from a closer relationship between drafters and those who will need to enforce regulations (as well as those who will have to comply).

Recommendation 4.4. Require an ex post evaluation of regulations after they have adopted, to check real outcomes.

There is currently no threshold test to focus energy and resources on the more important policy and regulatory issues. So as not to overwhelm the system, and given increasing resource constraints on the Finnish public administration, Finland could benefit from introducing a threshold test. This would allow officials to prioritise efforts on proposals which are likely to have most impacts. Some countries, for example, have introduced a financial threshold to capture the more significant proposals for full analysis.

Recommendation 4.5. Introduce a threshold test aimed at capturing the more important policy and regulatory proposals for a full impact analysis.

Box 4.1. Recommendations from the 2003 OECD report

Recommendations

Integrate RIA requirements and place the responsibility for quality assurance in relation to all aspects of RIA with the central unit.

Finland should address the current fragmentation of RIA requirements by providing that all RIA should be carried out in an integrated fashion and published in a single document. Careful consideration should be given as to whether particular kinds of impact should be specifically required to be addressed. A requirement to address all substantial impacts within a benefit/cost framework would lead to more coherent analyses with better understanding of policy trade-offs resulting.

Adopt explicit and measurable government-wide criteria for making decisions as to whether and how to regulate through stronger implementation of the benefit-cost principle.

Finland has adopted all major elements of the 1995 OECD Recommendation including the benefit/cost principle. Non-existence of proper assessments, and deficiencies and weaknesses when they exist invalidate the object of the latter principle. Adopting precise criteria and detailed methodologies for benefit/cost analysis, together with a mechanism to target efforts, will provide an objective basis for policy decision-making, including a basis for comparing a range of policy alternatives. Gradually increasing the analytical rigour required in the analysis of important regulations and expanding the scope of RIA to substantive lower level rules would progressively increase the benefits from the adoption of this principle as expertise increases and resources permit. The accountability and transparency of regulation would be increased, as would the efficiency of public consultation, if it were to be integrated with RIA.

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Alternatives to regulations

Continued efforts appear to be needed in order for alternatives to be taken seriously. There does not appear to be much change on the ground since the 2003 OECD report, which recommended that requirements to consider alternatives should be effectively enforced. It is not automatic to consider alternatives in a culture which carries the presumption that laws are the automatic solution to fixing a policy issue. This is frustrating for some external stakeholders who would like to see greater use made of alternatives. The Better Regulation strategy emphasises alternatives. But the GSD as a whole implies that regulation is the way to give effect to policy objectives. There is a need to move beyond statements of principle and to take practical actions to embed the idea of considering alternatives.

Recommendation 4.6. Establish and implement an action plan to promote the use of alternatives. Some of the recommendations of the 2003 OECD report remain valid in this context, such as documentation of examples, special training and progress reports. Reinforce the requirement to consider alternatives (including no action) at an early stage in the impact assessment process.

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Background

General context

The structure of regulations in Finland

This is relatively straightforward (Box 4.3). The parliament has an independent right to submit legislative proposals, but in practice, most enacted legislation is based on government proposals. Regulatory agencies and other sub-ordinate bodies have regulatory powers, mainly of a technical nature, which gives rise to a fairly substantial body of regulations (see Figure 4.1 below). There is also provision for the issue of codes, standards and guidance, which are forms of soft law.

issued without permission stipulated in parliamentary acts, but in relation to private agents and municipalities they are not judiciable. In the database for regulations (Finlex), some agencies are publishing texts which technically are not regulations according to the Finnish Constitution – for example, recommendations, non-binding instructions, or administrative regulations that have no effect on citizens or businesses.

Trends in the production of new regulations

Table 4.1 and Figure 4.1 set out the volume of regulations produced in Finland during the period 2001–08. This indicates that there is a downward trend in the production of regulations, as well as in their length, in this timeframe. Figure 4.1 shows the flow of regulations issued by regulatory agencies. The picture here, by contrast, is of an increase. The 2003 OECD report had noted that Finland appears to be successful in controlling the growth rate of new regulations. This still seems to be the case, at least as regards the production of government regulations.

While laws are clear and precise, Finland continues to amend them regularly (and without counting the significant effort of putting many laws and regulations in conformity with the new Constitution). This may, in part, be a result of the tradition of adopting highly specific and detailed laws, which necessarily have limited adaptability to changing circumstances. Rapid amendment to legislation is problematic from the point of view of transparency and effective communication of the law, since those required to comply will have less certainty of being aware of the current state of the law and will be required to undertake greater effort in order to know the law.

Table 4.1. Volume of regulations introduced 2001-08

Year Laws Subordinate regulations Pages
2001 590 978 4376
2002 546 825 5634
2003 589 805 4622
2004 619 818 4139
2005 521 766 5523
2006 528 932 4467
2007 656 854 5789
2008 428 727 3604

Source: Finnish Ministry of Justice.

The number of subordinate regulations in Table 4.1 and Figure 4.1contains decrees

issued by the president, the government and the ministries. The regulations issued by the

regulatory agencies are not included.

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Figure 4.1. Number of of regulations introduced each year from 2001-08

1200 1000 800 600

Laws Subordinate Regulationns 400

200

0 2001 2002 2003 20004 2005 2006 2007 2008

Source: Ministry of Justice, Finland.

The number of regulations issued by the sixteen central government boddies with significant powers to impose g general rules containing requirements on enterpri prises and citizens (regulatory agencies) is s s set out in Figure 4.2.

Figure 4.2. Flow of reg gulations issued by regulatory agencies in Finland

Regulatory Agency 2007 2008
Agency for Rural Affairs 11 44
Criminal Sanctions Agency 3 5
Energy Market Authority 2 0
Finnish Civil Aviation Authority 19 15
Finnish Communications Regulattory 13 9
Agency
Finnish Financial Supervision 14 19
Authority
Finnish Food Safety Authority 4 0
Finnish Maritime Administrationn 1 6
Finnish National Board of Educattion 34 30
Finnish Rail Agency 9 10
National Agency for Medicines 8 2
National Board of Customs 9 7
National Board of Patents and 4 0
Registration
National Board of Taxation 0 0
National Land Survey of Finland 0 3
State Treasury 15 14
TOTAL 146 164
Source: Ministry of Justice, Finland.

Procedures for making new regulations

The law making process

Box 4.4 outlines the law-making process in Finland. An important feature of the Finnish system is that there are two official languages, Finnish and Swedish. All regulations are drafted, adopted and published in these two languages. As such, all regulatory proposals drafted for submission to Cabinet and to the parliament must be translated and available in both languages. This can place significant costs on the administration, particularly where drafts are constantly being amended as they proceed through the legislative process.1

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5 187 hearings altogether which means an average of 8,6 hearings per committee report or statement.

The parliament’s Constitutional Law Committee (CLC) formulates its constitutional opinions in written statements to other Committees which review the bills for plenary sessions. Thus, the stage for the CLC’s opinions is the normal committee preparation stage of the bills. A statement of the CLC includes an assessment of the bill by constitutional standards. If the CLC finds discrepancy between the Constitution and the bill, the CLC mentions the remedy for the constitutional problem or states under which conditions the bill can be passed, i.e. how it should be changed or amended. Reviewing committees, by tradition, always accept the remarks of the CLC.

A simple majority of votes is required to approve or reject ordinary laws. A majority of one vote is sufficient. After passing an act, the Parliament sends it to the government. The proponent minister presents the Act to the President of the Republic. If the President does not confirm the Act, it is returned for the consideration of the parliament. If the parliament readopts the Act without material alterations, it enters into force without confirmation and is published in the national gazette. If the Parliament does not readopt the Act, it is deemed to have lapsed.

Forward planning

The Government Programme (GP), adopted at the beginning of a government’s term of office, is the starting point. It announces the government’s main objectives and planned measures. The GP is given practical effect in the Government Strategy Document (GSD), which contains a list of major legislative projects for the government’s term. At the start of Parliament’s spring and autumn sessions, the Prime Minister gives it a list of the bills which the government proposes to present to the parliament twice a year, at the start of the parliament’s spring and autumn sessions. The list is published on the government’s website. 55-60 % of the bills in the list are usually presented (the remainder may be delayed, or dropped). There is no shared system for forward planning of secondary legislation. This is left to the individual ministries.

The OECD peer review team heard that forward planning was not always smooth and could run into delays. New studies may be commissioned, political priorities change, and delays may also arise from EU developments. The PMO told the OECD peer review team that it intended to step up its co-operation with ministries on forward planning. This issue will feature regularly on the agenda of meetings of ministry permanent secretaries.

Administrative procedures

Finland has a number of well established administrative procedures for the development of legislation, some of which have recently been updated. These mainly apply to bills, and are also usually applied to subordinate regulations.

Box 4.5. Guidelines and instructions for drafting regulations

The most important instructions and guidelines for officials drafting regulations are as follows:

  • Bill Drafting Instructions – HELO (2004).

  • Guidelines on Impact Assessment in Legislative Drafting (2007).

  • Law Drafter’s Manual (1996).

  • Law Drafter’s Guide to the Constitution (2006).

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  • Manual for Presenting Officials in government (2004).

  • Law Drafter’s Guide to the European Union (2004).

  • Treaty Manual (2003).

  • Instructions for the drafting and enforcement of EU conventions and agreements (2008).

The Better Regulation website provides access to these guidelines and instructions as well as to additional information and useful links.

Legal quality

Whilst the proponent ministry is initially responsible for legal quality as part of the drafting process, the Ministry of Justice plays an important checking role. Government bills and draft decrees are submitted to the Ministry for inspection of legal techniques, unless the urgency of the matter dictates otherwise. Draft decrees need not be submitted for inspection if the matter is of minor importance. The work is carried out by the ministry’s Bureau of Legislative Inspection, which checks the legal basis of the proposal and its consistency with other legislation, as well as compliance with the ministry’s own statements in previous consultation procedures on the proposal. The ministry’s role is advisory. It cannot veto the submission of draft regulations to Cabinet. However its voice is taken seriously.

The Ministry of Justice also provides support to officials for the preparation of major legislative projects listed in the GSD, including special training sessions, for example in impact assessment and clear language; linguistic assistance in selected projects; a helpdesk for language problems; a helpdesk for legal techniques; and a helpdesk for translation aspects (for definitions and wording).

The 2003 OECD report recorded that the technical legal quality of government bills introduced to the parliament had improved over time, thanks to the efforts of the Justice ministry’s Bureau of Legislative Drafting, backed up by training and guidance on law drafting techniques. However this may no longer be the case. The OECD peer review team heard that the technical quality of legislation was now suffering, due to the growing urgency with which proposals needed to be put forward, combined with the fact that generations of experienced drafters have been retiring, and a new generation, not yet experienced enough, has taken over. There is variability between ministries, depending on the extent to which effective regulatory management is given priority by the senior hierarchy of the ministry (it does not always rate very highly). The Justice ministry cannot always keep up with the flow of new regulations. The proportion of laws and decrees inspected by its Bureau of Legislative Inspection has however risen since 2004.2

The Chancellor of justice has voiced his concern on the quality of the legislative proposals coming from the ministries to the Government plenary sessions. An important area of concern has been the impact assessments, which are sometimes made in the late stages of law drafting – in those cases they do not serve their purpose of guiding the decisions within the legislative process.

The role of parliament

The Finnish parliament plays a significant role (see Box 4.4). Before the government’s plenary session to consider a draft bill, there are two days for review by political parties represented in the government. When a bill is tabled before the parliament, it is subject to three levels of discussion and analysis. The parliament’s Constitutional Law Committee formulates its constitutional opinions in written statements.

Ex ante impact assessment of new regulations

Policy on impact assessment

Ex ante impact assessment has been a feature of the Finnish law drafting process for a number of years, as in most other EU countries. The earliest steps were taken in the 1970s. Early editions of the HELO Instructions (1975 and 1980) required economic impacts (on both the public and private sector), impacts on organisations and personnel, as well as impacts on the position of different groups in society to be assessed. Environmental impacts were added in 1992.

As in many other countries, the process was found to have significant weaknesses and was not effectively used by ministries. The government took a significant step forward in 2007 with the consolidation of previously fragmented guidance for ministries into new (and very readable) integrated Guidelines on Impact Assessment in Legislative Drafting, a project led by the Justice ministry, in co-operation with other relevant ministries. These steer the law drafter through the various impact assessments that need to be done (economic, administrative, environmental and societal).

Beyond the integrated guidance the fundamentals have not, however, changed. Impact assessment (IA) is required for all national regulations – government bills, decrees and regulations made by the agencies. They may also be prepared on draft EU legislation, although this is not obligatory. The stated purpose of impact assessment is to deliver information to the legislative drafters, decision-makers and stakeholders on the effects of regulatory options, the relevance of the impacts and the opportunities to reduce possible negative effects. The HELO Bill Drafting Instructions have also been amended to include a summary of IA requirements.

Box 4.6. Impact assessments and the integrated Guidelines

The Guidelines were prepared by a Working Party chaired by the Ministry of Justice. All the ministries which had previously prepared sectoral impact assessment guidelines, and the PMO, were members and participated actively in this work. The secretaries of the Working Party were from the Ministry of Justice and the former Ministry of Trade and Industry. The Guidelines were issued by a government decision in 2007.

The new Guidelines bring together and supersede previous guidance material on ex ante impact assessment. They replace earlier government resolutions on economic impact assessment (1998), environmental impact assessment (1998), business impact assessment (1999) and regional development impact assessment (2003). They describe, sector by sector, what kinds of impact may be involved, how the impact may be assessed, and what methods and information sources are available for this purpose. Contact information on guidance and support for impact assessment has been aggregated and is available on the Better Regulation website.

A very broad range of impacts is covered, with the emphasis on four main aspects: economic impacts, public administration impacts, environmental impacts and social impacts. These are disaggregated into more detailed aspects such as impacts on business, households, public finances, public authorities, the state and future of the environment, fundamental rights, democratic participation, health, equality, regional development, crime prevention and the information society.

Business and gender impact assessments have been the subject of special attention. The business impacts of regulation and various implementation alternatives must be examined especially with respect

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to the costs and earnings of companies; competition and the functioning of the market; small to medium-sized enterprises, entrepreneurship and the growth opportunities of companies; the investments and innovation operations of companies; and the international competitiveness of companies. Administrative costs are now covered specifically, as part of the recently launched programme to reduce administrative burdens on business, based on the Standard Cost Model. There is no general requirement for considering EU internal market effects.

In the Guidelines the gender impact assessment is dealt with as a subtheme in social impact assessment. However, successive governments have given special attention to gender impact assessment and the requirement for gender impact assessment in law drafting has been reinforced in the government programmes. Since 2003, the Ministry of Social Affairs and Health has offered training in gender impact assessment to ministry officials as part of gender equality policy. The extent and quality of gender impact assessments carried out by ministries has been monitored since year 2005. It seems that the assessments or analyses carried out are still few (about 10% of all government bills given in a year), but the trend has been upward.

Institutional framework

As is generally the case in European countries, the ministry responsible for drafting the legislation is responsible for the related impact assessment and its content. The ministry also monitors the progress of the bill through the parliament. If necessary, impact assessment materials must be sent as background information to the parliamentary committee reviewing the Bill. If the Committee proposes material changes to the Bill, the ministry must draw the attention of the Committee to the need to assess the impact of the proposed changes.

The Ministry of Justice Law Drafting Department plays an important central role in encouraging ministries to apply ex ante impact assessment. It was responsible for the development of the integrated Guidelines. The Department’s Revision Bureau monitors compliance with the Guidelines in the development of Bills. If it finds shortcomings, it will draw these to the attention of the responsible official/ministry. However, there is no obligation on the ministry to amend the IA, and the MOJ does not have the authority to turn down a draft Bill pending submission of a satisfactory IA. The Bureau told the OECD peer review team that its checks are in practice largely confined to the legal aspects of legislative drafts, because of resource and capacity constraints. Other stakeholders pointed to weaknesses in the support provided to ministries for impact assessment, and suggested that a network approach without a strong central support and challenge function might not prove enough.

In October 2008, the Ministry set up an expert group (a sub-group of the Law Drafting Development Group-SÄKE III) aimed at supporting impact assessment procedures in ministries, promoting the new guidelines and to co-ordinate training sessions for officials (see also Chapter 2). The members of the group are drawn from ministries and research institutes, and are experts in assessing impacts on different areas. The Ministry, in cooperation with other ministries, also provides in-service training in applying the new guidelines. The number of participants was 210 in 2009. It is too soon to tell whether this network- a substitute for the earlier attempts to set up a dedicated Better Regulation central unit-, will be able to play an effective role in monitoring and challenging impact assessments, going beyond the legal checks which are already carried out. The expert group has so far been an initiative to strengthen collaboration among the ministries. The Justice Ministry completed in 2009 a follow-up survey on impact assessments in government Bills of 2008. The main attention in the impact assessments seemed to be paid in public finances and administration. The survey will be continued in 2010. The OECD peer review team heard that ministries were largely left on their own, and that there is a need for more practical support for impact assessment.

The MEE is another key actor. In 2004-07, as part of Government’s Entrepreneurship Policy Programme the former Ministry of Trade and Industry had a specific project, the SÄVY Project, for the government-wide development of and support for business impact assessment. It included an evaluation of compliance with business impact assessment by ministries, and showed some improvements over time. The Government Programme confirms the continuation of the SÄVY Project, which has now been integrated into the operations of the MEE as part of the ministry’s Better Regulation Unit.3 The MEE provides support for ministries for business impact assessments, as well as regional impact assessments, and monitors these. In May 2009, the MEE set up a working party (which includes representatives of the Ministry of Justice, business stakeholders and the National Research Institute of Legal Policy) to monitor the quality of business impact assessments attached to government bills.

The Ministry of Finance, the Ministry of Social Affairs and Health and the Finnish Environment Institute provide support for impact assessment in their areas of expertise.

Methodology and process

The guidelines include a diagram (Figure 4.3) that outlines in broad terms the stages that should be followed in the development of an IA.

Source: Ministry of Justice, Finland.

Officials are not required to use a particular format: there is no template or prescribed model. There is no threshold test, to identify those proposals which merit a fuller impact assessment, and those which do not. The benefit-cost principle is included in the new guidelines. Data and graphics may be used as support information, but this is not a

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requirement. Proposals must take into account the legislation in force. Some stakeholders noted that economic impact assessments remained weak and needed to be stronger. Many impact assessments were of poor quality because the drafters were lawyers, with no access to broader support.

The summary results of the impact assessments must be set out in the Section of Reasons attached to government bills and the Statement of Reasons attached to decrees when they are presented to the Cabinet for approval, and later when the proposal is presented to the parliament. The Section and Statement of Reasons should contain the following information:

  • the main findings of the impact assessment;

  • the method of assessment;

  • the information sources used in the assessment;

  • the hearings held with experts or stakeholders regarding the proposal and likely impacts; and

  • the assumptions underlying the assessment.

Separate assessments are not annexed to the presentation materials, but they are referenced. Ministries must stand ready to provide the more detailed supporting information if requested. More detailed impact assessment reports and publications can be brought to the attention of ministers e.g. in government roundtables or evening classes (informal evening meetings).

Public consultation and communication

Public consultation on impact assessments is not a mandatory requirement, although it should be noted that openness is a central goal in Finnish legislative drafting, and consultation is an established part of ministries' legislative drafting process, even if full information is often only made available late in the process (see Chapter 3). The reports of commissions and working groups which have done work on impact assessment are published. Whilst summaries are prepared for attachment to the government Bills presented to the parliament, references to any fuller assessments that have been carried out will also be given. Several stakeholders noted that impact assessments only came late in the decision making process.

Alternatives to regulation

Increased assessment of alternatives is one of the government’s Better Regulation policy measures in the GSD. In the evaluation of the GSD ministries are requested to report the measures they have taken to consider alternatives. There are requirements to consider alternatives to regulation and alternative regulatory approaches in the HELO Bill Drafting Instructions and the 2007 Impact Assessment Guidelines (in very general terms).

There have been efforts to evaluate the uptake of alternatives. In 2007, the SÄVY project of the former Ministry of Trade and Industry commissioned a report by the National Research Institute for Legal Policy on the use of alternatives especially in legislative drafting with an impact on businesses. The aim was to promote the use of alternatives by increasing information about them, and to encourage drafters to consider various operating alternatives more actively and systematically. The report deals with various alternatives concerning the strategy of regulation (such as self-regulation, co-regulation, replacing steering by the authorities on the market) and the alternatives concerning the selection of regulation methods (such as the general nature vs. differentiation of regulation, implementation alternatives, sanctions and their alternatives) In the report, different examples of the use of alternatives in Finland are described. The Inspection Unit in the Ministry of Justice is responsible for further work in this area. The Ministry monitors the presentation of alternatives in government bills, and its first report will be completed in 2009.

Despite these initiatives, it seems that the use of alternatives to command and control regulation is not yet prominent on officials’ “radar screen”. There is a general presumption that laws are the automatic solution to fixing a policy issue. The GSD carries a strong presumption that there will be regulations to give effect to the priority areas. A range of interviews with the OECD peer review team also left the strong impression that consideration of alternatives is limited. One stakeholder said that there was “too little time” to consider alternatives. The business community expressed some frustration at this, drawing attention to alternatives which they had promoted (e.g. code of good corporate governance).

Notes

  1. Ireland also is required to make legislation available in both English and in Irish: proposals can be drafted in either language, but the requirement to translate them into the other only applies when the law or subordinate regulation has been finalised. This helps to minimise costs and speed up the legislative process.

  2. It was rather low in 2004 (63.5% of Acts and 38.2% of decrees). In 2005 the respective numbers were 79.7 and 44.2. In 2006 they were 86.0 and 46.3 and in 2007 they were 85.4 and 47.6.

  3. www.tem.fi/index.phtml?l=en&s=2089.