Regulatory Impact Analysis RIA in Canada

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Regulatory Impact Analysis (RIA) in Canada
Regulatory Modernization Conference October 21,
2009
Mohan Denetto Director , Regulatory Policy,
Regulatory Affairs SectorTreasury Board of
Canada Secretariat, Ottawa, Canada
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Context The Regulatory Reform Imperative
There is a growing consensus that the quality of
business regulation, and the institutions that
enforce it are a major determinant of prosperity
World Bank

• Regulation has a major impact on economic and
  social well-being, but it is not treated as
  strategically as other instruments, like
  government spending.
• Recognizing the growing importance of a sound
  regulatory framework, the Canadian Government
  announced in its 2007 Budget a change in how it
  regulates through the new Cabinet Directive on
  Streamlining Regulation.

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Context RIA as an international regulatory best
practice

• According to the OECD, RIA represents an
  essential core tool for ensuring the quality of
  new regulations through a rigorous,
  evidence-based process for decision making.
• In 1998, 15 out of 27 OECD member countries
  surveyed had instituted a requirement to conduct
  regulatory impact analysis in some form. Now,
  all OECD member countries have some RIA
  requirement.
• The scope of regulatory impact analysis is also
  becoming more comprehensive. Requirements for an
  assessment of the impact on competition, market
  openness, budget, the public sector, specific
  social groups and small businesses are now nearly
  universal across OECD.

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An overview of Regulatory Impact Analysis in the
CDSR
The Cabinet Directive on Streamlining Regulation
supports a performance-based regulatory system
Canadians will benefit from new regulations that
offer high levels of protection while being
easier to comply with, aligned with key trading
partners, and supported by timely and transparent
approval processes.
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CDSR and the lifecycle approach to regulating
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Cost-Benefit Analysis and the CDSR

• The CDSR emphasizes quantitative cost-benefit
  analysis
• Wherever possible, but especially for high-impact
  regulations
• When recommending the option that maximizes net
  benefits
• Limit burden and cost to society, consider small
  business
• Proposal should be competitively neutral
• Particular attention to unintended environmental
  effects
• Analysis includes social, environmental and
  economic costs and benefits
• Holistic approach is aligned with sustainable
  development principles
• Distributional analysis encompasses regions,
  gender, and other groups

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Assessing Market Impacts

• Quantified assessment of the impact of regulation
  on commerce is a growing trend in regulatory
  management
• As part of its efforts to promote better CBA
  during regulatory development, TBS is proposing
  to develop a tool to assess market impacts.
• The tool could produce analysis that would help
  departments and agencies understand
• Costs imposed on individuals, SMEs and large
  enterprises
• One-off (i.e. for initial compliance) and
  recurring costs,
• The benefits of regulatory streamlining and
  administrative simplification, or other positive
  impacts of a regulation.

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Performance Measurement and Evaluation under the
CDSR

• Regulatory organizations are now responsible for
  developing Performance Measurement and Evaluation
  plans (PMEP) for all high-impact regulatory
  proposals.
• PMEPs help ensure that regulatory results will be
  measurable, monitored, and evaluated, and will
  help make sure these results are achieved.
• A summary of the PMEP is included in the
  Regulatory Impact Analysis Statement seen by the
  public. Key elements include
• How the regulatory activities connect the inputs
  and activities to the outputs, target groups and
  expected outcomes
• Indicators which will measure changes in outputs
  and outcomes
• How and when the performance information will be
  summarized, reported and used
• How (i.e. methodology) and when the regulatory
  activities will be evaluated

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Reporting RIA to the public The Regulatory
Impact Analysis Statement (RIAS)

• All proposed regulations are accompanied by a
  public Regulatory Impact Analysis Statement
  (RIAS), which summarizes and explains the RIA
  behind the regulation.
• The RIAS enhances transparency, and public
  understanding of the reason for regulating
• Expresses the issue or problem, the objective of
  the regulation, and demonstrates analysis of
  costs, benefits, risks, impacts on regulators and
  regulated parties, and how regulation provides a
  good solution
• RIA provides opportunities for shared solutions
• Increases understanding of issue/problem
• Increases responsiveness of regulator
• Increases compliance by regulated parties

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