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August 21, 2001

Quantity over quality - Falcon tackles deregulation

The Campbell government seems to confuse quality and quantity. Premier Campbell's election platform didn't promise better regulations, it promised fewer. Kevin Falcon has thrown himself into determining how to measure whether that promise is fulfilled.

So just how does anyone measure the regulatory burden? The Minister with the strange title devoted a lot of his cabinet presentation to just that point. After rejecting counting pages because bureaucrats could simply use smaller type faces, he concluded that all ministries should count the number of "regulatory requirements". Unfortunately, Falcon did not define "regulatory requirements".

Is completing a form and signing it, two requirements or one? You have seen forms on the Internet where some fields are mandatory and some are optional. Look for example, at the suggestion form on the Waste Busters website. Detailed instructions say boxes 1-3 are REQUIRED. Does that make up three requirements, or just one for the form? Little things like that will pose a big problem for a policy that replaces serious analysis with silly politics. Without knowing what a regulatory requirement might be, Cabinet adopted a policy that calls for eliminating two regulatory requirements for every new one that is introduced.

Cutting red tape and reducing or streamlining regulations is not new. The NDP had a website devoted to its "streamlining initiative". Ironically, the Internet address that was devoted to the NDP initiative, http://www.streamline.gov.bc.ca/, now has been assigned to Falcon's deregulation gig.

The 30 countries that make up the Organization for Economic Co-operation and Development (OECD) produce two thirds of the world's goods and services. The OECD explains its concept of regulatory reform on its website:

"In OECD's work, regulatory reform refers to changes that improve the quality of regulations, that is, enhance the performance or cost-effectiveness of regulations and related government formalities. The concept of regulatory quality -- combining deregulation, re-regulation and institution-building with efficient social regulation - is the core principle underlying the OECD's work."

Compare the OECD approach (or that described in any of its country specific reviews), with the cabinet submission made by Kevin Falcon. By way of background, Falcon's cabinet submission said:

"The New Era commitment to reduce regulatory burden in British Columbia by 1/3 is consistent with global trends in regulatory reform and management. The regulatory environment plays a key role in competitiveness and economic prosperity. Most Western jurisdictions have implemented regulatory impact analysis requirements and regularly review existing regulation."

While the OECD spoke about enhancing performance or cost-effectiveness of regulations, Falcon spoke about numbers. For Falcon, it would appear that reducing regulations is a goal in itself irrespective of the consequences.

At first blush the details of the policy the BC cabinet adopted on new regulations, may look reasonable. Look at the new policy before we go through each component and ask the questions that no member of cabinet raised during their staged meeting. Actually, one cabinet member did raise a concern. Judith Reid suggested the effort be monitored in one or two ministries. Falcon strongly disagreed, and suggested he knew best.

Cabinet policy on New Regulations:
New regulation should meet the following criteria:
1) cost-benefit analysis should indicate that there are net benefits;
2) competitive analysis;
3) replacement principle - cannot impose a new regulatory requirement without removing two requirements;
4) shift in approach to results-based regulation based on scientific evidence where possible, and the use of market incentives where feasible;
5) plain language;
6) sunset provision;
7) eliminate duplication or overlap with other jurisdictions; · developed in a transparent way so that interested parties have an opportunity to present views;
8) reverse onus - ministries must justify the need for regulation; · timeliness.

1) It doesn't take a high priced Deputy Minister to realize that a regulation should have a net benefit. The OECD emphasis is on cost-effectiveness. There is a big difference between having a net benefit and being the most efficient of those alternatives that realize a net benefit.

2) Competitive analysis probably means looking at other jurisdictions. We can only hope that look involves looking at consequences, e.g. deaths from hazardous substances such as second hand smoke, and not just at compliance costs.

3) The two for one replacement principle is bizarre, and it reinforces the impression that only quantity of regulations matters. Why would something like eliminating the need to sign a form, and get a license be a tradeoff for a pub posting a no smoking sign?

4) The emphasis on results based on scientific evidence is language from those who lobby for changes to the Forest Practices Code. It's a good slogan, but to be a good policy it is necessary to spell out the consequences of negative results. If a company is not financially able to pay for full restoration if a salmon stream is damaged, should it first post a bond to guarantee positive results?

5) We all like plain language. The Campbell government could start by offering a redraft of its New Era document so the public could see in plain language what it is going to do. We still don't know how essential services in education will work. No one knew that lowering the bottom tax brackets meant a $750 million per year cut in the top tax brackets. And we still don't know in plain language what a regulatory requirement is and how the tradeoffs between those eliminated and those added are to be determined.

6) Some regulations, like a requirement to stop at red lights, need never expire. Rather than separating such obvious examples, Minister Falcon said "All new regulations coming forward in this province will have a sunset provision, meaning that after a certain prescribed period of time, those regulations will expire." All is probably going far too far.

7) There is nothing wrong with eliminating duplication, but which jurisdiction should back off? Under Falcon's rule, the province might abandon any field in which the federal government adopts a regulation.

8) Finally, Falcon stressed that the ministries must prove the need for regulations. How does he think it has worked before he came along? Then again, maybe he thinks that regulations get rubber stamped the same way his cabinet submission was treated.

 

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