70263 REPUBLIC OF BULGARIA THE WORLD BANK Bulgaria’s Policy for Regulatory Reform in the European Union: Converging with Europe’s Best Regulatory Environments June 25, 2007 Document of the World Bank Finance and Private Sector Development Department Europe and Central Asia Region Bulgaria's Policy for Regulatory Reform in the European Union: Converging with Europe's Best Regulatory Environments June 25, 2007 This report has been prepared by Scott Jacobs (international expert on Regulatory Impact Assessment) as part of a joint teclmical assLstance project of the World Bank and thc Ministry of Economy and Energy of Bulgaria. The World Bank core team was led by Marialisa Motta (ECSPF) and comprised Melunet Can Atacik, Evgeny Evgeniev (ECSPF), Scott Jacobs and Marc Reichel (international expert on administrative baniers). The Government core team comprised Dctclina Smilkova (Counselor to the Minister of Economy and Energy) and Gergana Tsareva (Director of registering, licensing and control directorate). Florian Fichtl (Country Manager, World Bank) has provided strategic guidance to the team since inception of this task and has been involved at all stages of design and implementation. Evgcny Evgenicv has provided invaluable help in advancing the work by coordinating closely with the Government counterparts, and representatives of the public and private sector involved with RIA in Bulgaria. Melunet Can Atacik, Emanuel Salinas (ECSPF) and Margo Thomas (FlAS) have provided excellent inputs at different stages of preparation of this teclmical assistance work; Aarre Laakso provided editorial help; and Veselina Stamboliyska and Fatiha Amar precious assistance. Detelina Smilkova and Gcrgana Tsareva provided guidance and detailed inputs at all stages of the work. Anand Seth (Country Director), Fernando Montes- Negret (Sector Direclor) and Gerardo Corrochano (Sector Manager) also provided guidance and supervision. Peer reviewers are Richard Messick (Senior Public Sector Development Specialist, PMRPS, World Bank), Peter Ladergaard (FlAS) and Florian Fichtl. The team would like 10 thank the members of the Bulgarian Council of Economic Growth for their excellent comments at various stages of preparation of this report. 1 Bulgaria's Policy for Regulalory Reform in tbe European Union: Converging with Europe's Best Regulatory Environments Execulive Summary Bulgaria's entry into thc EU Single Market raises new opportunities and new risks for the national economy. As shown in the rest of Europe, a program of regulatory reform offers an effective strategy for managing the risks of more intensc competition while preparing Bulgarian companies to prosper within the largest economy in the world. Bulgaria has already made significant progress in regulatory reform, with an emphasis on developing regulatory impact analysis (RIA) in Bulgaria's public administration. To support these activities, the Council of Ministers agreed in August 2006 to the proposal of the Ministry of Economy and Energy to develop a national plan for better regulation. Goals of Reform : The goal is to progressively achieve a low-cost, low-risk regulatory system that both supports national competitiveness and effectively protects public interests. To achieve its potential. Bulgaria should converge, not with a minimum standard of regulatory reform, but with the best performers in Europe. Recommended Reform Program: This policy papcr identifies nine tasks for setting up a modem regulat.ory system and meeting European obligations. These nine tasks are intended to improve the ability of the central government to promote regulatory reform, to build better regulation practices througb the institutions of governments, and to improve the quality of both the stock and the flow of regulation on a pennanent basis. The Table below summarizes the proposed refonns and next steps for action. Timetableoftlte Reform: This reform will require several months to prepare, and years to implement. Financial resources will be needed for investment in a new central Better Regulation unit, for training in new skills, for outreach to stakeholders, and for IT tools. Yet the Bulgarian public administration already has a solid base of experience and substantial regulatory reform skills, and external assistance from the World Bank, Phare. and the OECD. If the convergence policy is given political support to focus these various efforts, preparation of the implementation plan can be accomplished by the end of 2007 at the latest, and specific projects can begin on a phased basis even before then. 2 I , out th e i i , schedules, and • Develop a medium·ternl (5 year) implementation plan based on Ibis convergence policy H:;:~~'~i:~,0~=~:"'~';"~'~'~df,~0~·;;;;o1~·-p~ro~moting and oven!Cing ordina te tlIc complex regulatory regul atory re, "!:.:;'::,:~:~:~,:~" national publil: Ketor Institl,lttons, and '" refonn strategy. and monitor and governments. repon un OIlICOIneS • Benchmark the unit with ,ood EU prurices tD ensure 1h:r.t it bas adeqUilte resoun:es, eJ\ptrtise and authori!)'. • Assign s~ific Wks to expert minislries, such as RJA support [1,1 the Ministry of Economy. • i i ass istance of lhe Mini stry of Economy and Energy, the Ministry of Stale Administration and Admir.istrative Reform and the Institute for Publk Ii I regulations., Administntion and for coolinui", maintenance of the registry • .11 governments to "betler regulaliOD~ prlCtiCU • .od stlkeholdcn; government on thei r roles in the RIA system • Create a central RIA oveuighl body by aSiigning a specific entity. probably the cenll'a! unit in the Council of Minis ten; assisted by the Ministry ofE«JlIOmy, with an imtitutioll8l o and power to enf rce !he RIA program • • 00 and mechanisms 10 ensure a European Commission, de~lop and implement systematic means or early Ind eonsultation policy. effective stakeholder cO DSliltalion • Develop eGovemment lools to help implement the policy policy and regulatory , now place markets to of remove them. II" • of review and reform to • 00' of thc centra] 3 Bnlg:uia 's Poliry for Rrglliatory Rffonn in till' Enropfall Uuion : COllVf'rging with thf Top Rfformfrs Mlliu Report Bulgaria's enlly into the EU Single Market l1lise~ new oppommiti e~ and new Ilsh for the national economy, As shown in the rest of Europe, regulatol)' rdollll offers All effective stl1ltegy for managing the Ilsh of more intense competition while preparing Bulgarian companies to prosper within the largest economy in the world. Improvelllems to the regulatolY fmmewol'l: that reduce the ecollomic COSt of poor and excessive regulation will SUpp0l1 Bulgmlatl growth and productivity and ease the ~traill> and ri~h of the economic stnLctum! lIdj u,>tment needed over the next sevel'lll yeari. Bulgaria should aim. over the next few yean, to design and implement the in>litutions, proce'>ses, and capacities needed to con,'erge with good European pJ'llctices in regulatory refonu, To achieve its potential. Bulgaria should cOIl\'erge. not with a minimluu standard of regulatOty rdoml. but with the be'>t perfOmlet... in Europe. In a Europe with wide disparities in economic perfonnonce and regtllatolY quality. this atllbitious perfollllance standard requires that Bulgaria choose carditlly the Member States IIgaimt which it will benchmark its perfonnance, The objective !.hould be 10 achieve -- in a progressiYC. cardully-plamled. and rapid mllJmer -- a low-co,t. low-risk regulatory system that both SUPPOl1S competitivene.\ and effcctively protects public interests. TIli,> ",on\'ergenee plan" ,Cis olll the European context. Bulgarian Since !l~ launch of 1M Lisbotl strategy in 2000, tl~ progress on regulatOLY ref01111 and ",mllal grov.1h nUe for the Euro area a\-eragffi 1.8'% per year, laggmg behiud i!~ main competitors, regulatory impact analysi~ (RIA.) to Hourly productl\1ty rose 1.2% yearly between 1999 date. 3 vision of future regulMory and 20(H and exhibitffi a &dining u=d. The refonu in Bulgmla. and tile ncxt nnploynle'lLl nile rose from 60,6~. 1tI 1999 to 63% steps needed to move forward to in 2004, wlule IU le'IUP\Oymm! dec lul.lel; for olclcr \\'orken a,td for \\'0I1lm modem regulatol)' system. rcmaulffi pMt,cularly low. I. The Im]l o l'tan ~f or Regl!latol'\, Rfrol'ln alld RIA ill EllI'OPf Regulatory refonu became 3 key priority within EIIl'Ope followiug the work of the Mandelkclll Group on bCller regulation and the COllnnission'~ Better Regulation Action Pl3n (2002). which adopted the reconullended DECO Ag enda, EU in~tit\Llions and Member State, haye agreed on the need 10 impro\'e their appl'Oach to regulation to emlu'e that regulation ddend~ public inte"est~ ill a way that SUppOI1S the development of economic activity. TIle "better rcgulation" S1J'ategics adopted at CVCI)' level in Europe are aimed at contributing to gro\\1h and job~. while taking into account social and environmental obj ectivc ~ and beLl e fit~ for citizens and national adLllini~tmtion~ in tenu~ of improved gOHmance. 4 As part of the 2005 renewed Lisbon Strategy, refocused on growth and jobs, the Commission announced its intention to launch a comprehensive initiative to ensure that the regulatory framework in the EU meets the requirements of the 2 1st cenrury. The current initiative has three main strands: • By funher promoting the desigll aJld applicatiOIl of better regUlatioll tools Itt the Eli level, notably in so far as impact assessments and simplification are concerned. • . By workillg m ore closely witll M ember S tates to ellsure that better reg ulation principles are applied consistently throughout the EU by all regulators. • . By reinf orcing tile COllstructive dialogue between all regulators at the EU and national levels and with stakeholders. For itself, the Commission announced a range of important initiatives aimed at pursuing the Better Regulation objective: screening pending legislation, simplification, revised Impact Assessment guidelines, administrative costs and the appointment of a High Level Better Regulation group in the Commission to oversee the regulatory retonns. At the core of the European regulatory refonn strategy is regulatory impact assessment (RIA), The European Commis.sioo's "Better or impact assessment (lA) as it is called by the Regulation for Growth and Jobs" (2005) aimed at "further promoting the des ign European Commission, since it applies to all and application o f better regulation tools policies. not only regulatory policies. The at the EU Icyel, notably... i mpad Commission's Communication on Better tm;ei snlfmts and simplification ...." Regulation of June 2002, which proposed an Action Plan for "simplifying and improving the regulatory environment", centered on a new Impact Assessment system designed to integrate and replace previous single- &ector assessments, which had little effect on the quality of policy-mnkins. The current Impact Assessment system requires the Commission systematically to assess the likely economic, environmental and social implications of its policy proposals and to highlight the potential trade-offs, with the aim of improving the quality and transparency of proposals and identitying balanced solutions consistent with Community policy objectives. Instruments that provide an alternative to legislation, such as self-regulation and co-regulation must be considered when assessing options In June 2005, the Commission issued new Impact Assessment Guidelines, which explained the importance of impact assessment as follows: It ensures early coordination within the Commission. It demonstrates the Commission's openness to input from a wide range of external stakeholders, and shows its commitment to transparency. Further, by providing a careful and comprehensive analysis of likely social, economic and environmental impacts, both direct and indirect, it also contributes to meeting the specific commitments of tbe Lisbon and Sustainable Development Strategies. Also, it improves the quality of policy proposals, by keeping EU intervention as simple as possible. 5 As part of the 2005 initiative. the Commission requires Member States '·to demonstrate their clear commitm ent to better regulation principles through their National Lisbon [Action] Programmes". Toe Co mmission has statoo, "These arc the key tool to d rive implementation o f the Lisbon strategy: they offer a c hecklist of national commitments and benchmarks to monitor progress in the months and years ahcad.,,1 The first set of national action plans were evaluated in January 2006 and thc second set in December 2006. They showed many initiatives on regulatory refonn throughout Europe. The Commission estimated that reforms in the ease of entry for new firms had boosted GDP in the EU15 by 2 percent since 1995. Notably: • Many Member States (Austria, Belgium , Cyprus, Czech Republic, Denmark, Estonia, Lithuania, Luxembourg, the Netherlands, Portugal, Slovenia, the UK) are carrying out (or intend to carry out) analyses of a subset of regulatory costs -- the administrative costs imposed by legislation. The standard cost model initially developed in the Netherlands and adapted for the European Commission has inspired key aspects o f these refo rms. Five countries (Czech Republic, Derunark, the Netherlands, Sweden and the UK) have also set quantitative targets fo r reducing administrative costs (ranging in reductions from 20 to 2S percent) by 2010. However, the reports from European countries reveal a general lack of stralegy for regulatory reform. The Commission fo und in December 2006 that. " Better regulation is crucial to creating a more competitive business environment and removing obstacles to innovation and change .... Nearly all Member States address parts o f \.his agenda, but in many cases. a more integrated approach is necessary." In Poland, fo r examp1c, the Commission found that "Improvements in the impact assessment system 0 are also set out bul the approach \0 B etter Regulation needs 1 be further developed." The Commission concluded that ind ividual Member states should move forward faster: Member States ore increasingly excllOllgillg experiences alld good ideas. However, while all J/Q ~'e mOl'edfonvard, there remaill big differences betweell Member States ill the depth alld speed of reform .. . The Commission charged Member states with two speci fi c regulatory refo nns: • EU leaders are invited to set a joint 25 percent target for reducing administrative burdens to be achieved jointly by the EO and Member States by 2012. This target was formali zed by the Commission in 2007. • In addition, the Commission intends to conduct a systematic analysis of key goods and services markets to identi fy specific obstacles to competition and make proposals for removing them. The Report invites Member States to do the same. I European Commission, Communication from !he Commission 10 the spring European Council 2006 'T ime to move up II gear: Tho: new partnership for growth and jobs," Brussels, p. 9. 6 The goal of the European Commission is clear: "Establishing a fully fledged and integrated Better Regulation system should be the medium to long-term objective of all Member States." 2 The 2007 report to the European Conunission provides an opportunity for Bulgaria to showcase its efforts to adopt an integrated approach to regulatory refoon. Bulgaria's progress report on compliance with lhe Lisbon Agenda to the European Commission should report an integrated, broad, and concrete program to reform its domestic regulatory structure in line with the regulatory reform practices recommended in Europe. 2. Regulatory Reform in Bulgaria Bulgaria bas already made significant progress in regulatory refonD. in particular through adoption of the body of EU law known as the acquis communaula;re, implementation of the 2003 Act 011 Restricting Administrative, R egulation Reasons for Regulatory Refo>rm in Butgaria and Control on Business Activities and Bulgaria entered the: EU in 2007 with a per capita continuing development of the eight income level of aoou t 35 percent of the avc:rnge "Measures for implementatioll of the for EU25, the 10"'<'st among the new member states. In addition, employment illld participation better regulation principles" proposed rates, although improving, are among the lowest by the Council for Economic Growth in the EU. and approved by the Council of D~ Rosa, Mamone Fay, Stella As cited in Donato Ministers on August 3, 2006. These lIieva (2006) Product Market Regulation in regulatory reforms implement key Bulgaria: A comparison with OECD c ountries, components of the Political Priorities World Bank. of the Government 0/ EU/'opeal/ Illtegration. Ecollomic Growlh and Social Responsibility of 28 September 2005. These measures are in line with commitments made by the European Commission and Member States to improve European competitiveness. Bulgaria's regulatory reforms over the past few years focused on legal convergence with Europe through adoption of the acquis comrmmitaire. That massive reform required a thorough review and overhaul of Bulgarian legislation and regulation, and helped reduce barriers 10 entry into Bulgarian markets that will increase competition and productivity through the whole of the domestic economy. As part of these refonns. regulation in infrastructure sectors improved considerably as market-oriented regimes were adopted and new regulators were created. Other components of a national regulatory reform program have developed slowly over several years. In 1998, the Strategy/or establishment ofa modern administrative system took the first step towards introducing meaningful regulatory refoon, outlining a vision of the modcm role of the state, distribution of government powers and the organization of the administrative system. 3 In 2000. an Inter-ministerial Working I European Commission (l4.11.2(06) COMMUNlCA nON FROM TIfE COMMISSION. Economic refonns and competitiveness: key messages from the European Competitiveness Repon 2006 COM(2006) 697 fmaL Brussels. l In 1998, the Institute for Market Ewnomic (IME), a loca! think tank, began working with a parliamentary comminee on " RIA Law. The Law did not prosper, but it generated interest on RIA from the p ress and business associations. In 2000 and again in 2001, a coalition of think tanks and technical assistance programs drafted bills to implement RIA iD Bulgaria. but failed to gain sufficient suppon for adoption. Tbis demonslnlles how the private sector has actively promoted RIA efforts in 7 Group for the Optimization of Regulatory Regimes (which revised licenses, permits and regulation requirements) recommended a program for refonning administrative procedures that started w ith removal or simplification of several dozen requiremenls.4 T hese refonns were aimed at changing or removing regulations impeding firms' activity. The World Bank. concluded in 2006 that, through these reforms, the Bulgarian government had in fact successfully streamlined regulatory regimes to reduce private sector transaction costs. The Inter-ministerial Working Group bad reviewed 360 centrally-managed regulatory regimes and approved elimination of 71 and modification of 121 regimes. S These efforts were followed by attempts by the Ministry of State Administration and Administrative Reform to create an electronic registry of administrative formalities affecting businesses, but the registry is not yet in place. As in other pans of Europe, much of the focus of regulatory reform in Bulgaria has been on regulatory impact analysis (RIA). Substantial political support for fonnal RIA emerged in 2002, with the creation of the influential Council for Economic Gwwt h (CEG), a public-private advisory body under the Council of Ministers. In 2003, the Act 0 11 Restricting Admillis trative, Regulation and COlltrol 011 Business A ctivities took a major step forward by defining the legal framework for RIA in Bulgaria. T he Act: • Required regulation at all levels of government to be justified by a defined need (in terms o f national security, environmental protection or personal and materi al rights o f citizens), limiting the discretion of the regulator; • Imposed a cost-effectiveness (lowest cost) standard by forbidding regulations to impose restrictions unnecessary to the stated purposes of the regulation; • Mandated identification and measurement of costs and benefits for new regulations with respect to businesses; and • Mandated stakeholder consultation in the development process, elaborating the requirements in the Law on Normative Acts (1973. amended 1995 and 2003). The 2003 Act requires the Government to notify companies of future regulation and provide them with at least one month to file objections. Yet implementation of the Act has been inconsistent. Since 2003, loca1 think tanks, the private sector and some Government agencies have attempted to introduce RIA in Bulgaria by conducting overall assessments of thc status of RIA, as well as by conducting RlAs on specifi c pieces of legislation. The Directorate for Strategic Planning and Management in the administration of the Council of Ministers carried out valuable work by producing a Guide on hnpact Assessment in Bulgaria (with PHARE assistance). The MoE has recently emerged as a leader on RIA initiatives, chairing an inter-m inisterial Working Group on Better Regulation that attempts to create a coordinated position on regulatory refonn issues and working closely with the Council of Economic Growth (CEG) and the Council of Ministers. Bulgaria, in contrast to the experience in other ECA tountri es, including Poland and Hungary, where the public seclor WOlS Ihe main pr<.HYlQter Qf RIA. 4 Stanka Delcheva (2003) The Sll1ltegma Age nc:y in Bulgaria, published in RGI SEE Seminar: Reducing Administrative Barriers, December, Bucharest. ~ World Bank (2006) Imple mentation Completion R eP,ket dlslonioo,; lin,it;"g tbe role of the statc, bu t Promol. inncwotion through "unk"t In« nll_« about fe·defining Ihe capacities ."d go.l. b.,ed • ~proocJ",.; and Ihc role or Ihe state to meet cvolving needs . This me~nS that regulatory quality management .., Be do.,. $;rrvl •. and practicol for Y'."; Be consi'tonl \V;O, otl«, re~ul 'l i oru .n~ polioi .., Be oompatible ., for .. possible with must be¢Ome as much a pan of ..,mp .- ~'''''Y ~""~ .Do6Jol' :0 _ . " " " , , " ' . . . ..,;00 .,.=. ,. > E_'~.ory InwtCiOl".. S One.tooo!1.., '''legy :0 -, CNr:bIorWTO .,. O"" OI OECDISIGMA (2007). 2 1 OECDISIGMA (2007). 21 BUILDING TilE INSTITUTIONAL INFRASTRUCTURE OF A "BEST PRACI'ICE" REGULATORY SYSTEM Task 3: Train reglllators to build skills in "better reglllatioll " tools by lamIe/illig a phased training program focused tnt implementing ti,e natiollal convergence policy Regulators across the public sector - those who develop and adopt new regulations and those who implement and monitor existing regulations -- should be more skilled in the principles and methods of the better regulation plan. Bulgaria's Council of Ministers in 2006 agreed to the need for more support and training for the officials of the central and local administrations. Such trairung should be canied out with the assistance of the Ministry of Economy and Energy and the participation of the Institute for Public Administration and European Integration. In general, governments across Europe invest far too little in training of civil servants in better regulation to rules and principles. Indeed, the DECD found in 2002 that "The lack of skills reflects the fundamental disregard, found in almost all country reviews to date, for the need for large scale, sustained and detailed training to be provided by co-ordinating bodies." n Jacobs (2006) found the same situation four years later. Those governments that do training seem to use a combination of external training to develop a high level of skills for a core group, combined with in-house or on-site training fo r a far broader group of civil servants who need to know the principles and tools of better regulation, without the detailed knowledge ofa RIA analyst. The better organized governments have begun to integrate training on better regulation into the civil service institutions responsibLe for continuous training. Suggested performance standards There are no agreed perfonnance standards for "Better Regulation" training in Europe. Suggested standards could include: • Training should be given as early as possible in a professionaJ career. • All regulators should have basic training in the principles and tools of good regulation, as contained in the national regulatory policy. The percentage of those trained should rise progressively, reaching 100 percent by year three. • All regulatory bodies should have a core group trained in RIA by year two. This group should be able to design and carry out basic RIA for their ministries. • All managers at the level of Director should have at least 8 hours training in the national regulatory policy, rising to 100 percent by year 2. • Once reaching 100 percent, the govenUllent should maintain that standard of a fully trained civil service. 12 OECD (2002). 22 Good practices ill Europe In the Czech Republic, training is delivered to civil servants by the Institute of State Administration. Special courses are o rganized on EU issues as well as on Belter Regulation issues. In particular. a 3 day course was set up to train civil servants on the EU methodology on Regulatory Impact Assessment and on how to conduct RIA. 50 civil servants were trained by the end of2oo6. l l In Hungary. Mo initiatives to provide training for officials in modem administration. including Better Regulation, were introduced in 2004. The first is in Budapest; the second in Perch University, which started a Belter Regulation curriculum for local authority lawyers. Training aims to give officials the capacity to undertake and manage an impact assessment project.14 Bosllia. Serbia. and Moldova have sent officials to the College of EuropelJacobs and Associates RIA Training Course o ffered twice a year in Bruges. This five.. (2006) Cutting Red Tape; National Stnltl!gil!s for Administrative Simplification, Paris, pp. 77- 78. 27 Despite legal obligations to perform RlA in Bulgaria, RIA is not being carried out in a meaningful way on new laws and regulations. The Bulgarian Government has not yet developed a general strategy for RIA that is integrated with other reform efforts and that is in line with the country's development needs. RIAs on specific legislation are of varying-and often poor-quality . ... Most ministries and public agencies lack institutional capacity to support the implementation o f RIA. While all regulating ministries should produce RIAs to improve the quality of their regulations, there has been little training to build RIA capacities within those ministries. Basic operating requirements (such as stratcgies for data collection for impact evaluation, peer review groups, RIA advisory bodies, and RIA networks in the ministries) are still missing. In order to move beyond the current pilot stage into a systemic What RIA methods s hould Bulgaria consider? application of RIA, it is necessary Intematiomd RIA methods are moving today toward to create a central RIA oversight more int egrated methods of ass.essmenl, converging to body by assigning a specific entity a method called sofi benefit-cost analysis (8CA) by with an institutional mandate, Scott Jacobs. In soft BeA, qua"titalive and qualita/ive memcs are combined and presented systemat ically in resources and power to enforcc the an integrated framework to dea l with the comple xity RIA program. Ideally, this task of modem p ublic pol icy. would be assigned to the central Source: Jacobs, Scnn (2006) '"Current Troods in Regulatory Bettcr Regulation unit. The 2003 Impact Analysis: Mainstreaming RIA Into Po lky-Making, ~ Act on Restricting Administrative, J uob!; Ind Assoc:i31es Rt ports. Regulation and Control on Business Activities does not assign responsibility for the RIA to any single institutIon. This has created confusion between the Ministry of Economy and Energy (MoE) and the Ministry for Stale Administration (MSA) regarding the mandate for leadership on RIA" Based on best practices at the GEeD and in Europe, Bulgaria should develop a new slratcgy and content for its RIA system, in consultation with appropriate groups such as the CEG and stakeholders inside the govemment. The strategy should consider the fo llowing components of setting up an effective RIA system: Je Based on assessme nts conoducted by the OECD, DFID and the European Conunission, and on interviews held during the mission with stakebol ders involved with RIA. ) 1 TIte Ministry of State AdminislIaliOli aDd Mministrative Reform focuses on government procedures, a usefUl b ut limi ted perspective. 28 Tasks Recommended to Implement a Fuotllonln g RIA System in Bulgaria (Sourte: World Bank (Detember 2006) Implementioe RIA in Bulgaria: Summary Note, Scott Jacobs, Sofia) Political and Le islath'e' Maudatesfor,RIA """'," , ' ,' ". .~ .:< , .. Develop a legal ITIiIIld.:ile to require control of RIA by a central regulatory refonn wlll; to ~rea le other checks on the RIA compliance; to require the central uni t to develop mandatory RIA guidance and consultation prou~s; CQDYCrf!;eDCt mategy ,,'" " mandlte the central unit " ovenu implem~nlation of tbe entire JUveio .....sU ortin' materlali and . S" central Belt~r Re Idati on unit with nM rocedures trliliLill .. .. '. . Develop RIA guidaDcc, including choice of method, d~cision criteria, impacts to be included, ~tandard :munmtk lIS, and data collection methods Hold government wid~ training in introducwry principles of good regulation 100 compliance with the RIA I t/.u idancc (or around. 300 oolk.vofficials Hold more eialized trainin for the staff of central unit on how 10 review RIA Devclo new consu llation rocedures and comull them with stakeholder , • 1m lementRlA .; , , ,.-.- :,- '. " .. . -', " -' >.; " Ministries and agencies bel in using new RIA guidance.. Central unit begins to revi ew and control the I Quality of the RIA. New f)ublication checks adopted. Stakeholders rovide in ut throu the RIA-based consultation roccS$ Build RIA-skills Intbe "Parliament '-''",C''- . . . . . Begin di.sclWiolU with th<: lA.lgal Department oflbe Parliamtnt on how 10 use RIA in legislative actions by Parl iament Reach agreement on how RIA can be: structured in the Parliame nt 10 make best use of expanded mc:mon.nda on linin laws Hold. trainin to build skills in !he Le 1 (of the Parliament on RIA Stir! RIA for al drafts and. eban u in Parliament ~ iD i1ot· ro ms iD 'miDistries aDd r - onal overnm ents , . . Selec t 2 iJot local ovem mcnts to roll out the RIA m roc , Hol d RIA trainin Launch I ilot loeal ovemmenlS BOIS in local ovemme nl~ Assess c); eriencc of RIA in local ovemmc:nts and dcsi full lo~al ovemmenl-wide RIA Suggested performance standards There is extensive guidance on good RIA systems. The most influential and the most often c ited standards are still the 1997 QECD's ten practices for good RlA,32 1bese practices could be used in Bulgaria as perfonnance slandards for the design and operation of the RIA system. Performance criteria for a RIA system: • Systematic. RIA must be part of a larger system that s upports core analytical requirements and ensures that the analysis is able to influence policy decisions . • Empirical. RIA musl make maximum use, wit hin cosl coD straints, of quantitative data and rigorous empiri cal methods. This will maximise objectivity and comparability, II DECO (1997), Regu latory implct Analysis: Best Practice in OECD CountriCJ, Paris. 29 • Consistent but flexib le. Analytical approaches must be broadly consistent to optimize overall res ults. However, analysts must retain sufficient flexibility to target scarce resources at thc most important regulatory issues and fit the analysis to the issue at hand. • Broad ly applicable. RIA should be applied to as wide a range of policy instruments as possible. It should not be possible to avoid RIA by using a different instnunenL • Transparent and consultative. Extensive consultation should inform RIA. The results of RIA should, in tum, be widely available and the basis of dccisions made clear. • Timely. RIA should be commenced early in pl)licy development and its results madc available in time to infl uence decisions before they are made. • Responsive. Effectivencss depends ultimately on how well decision-m akers apply the insights of RIA. This requires that RIA address issues that are practical and connected to the current policy debate. • Practical. RIA systems must not require infeasible resource commihnenls and must not impose unacceptabLe delays on decision-making. Good practices in Europe Thc OECD/SIGMA recently noted that all new Member States, except Malta and Cyprus. have laws requiring RIA as part of new regulatory policy development. Thls suggests that there should be no lack of good practices for Bulgaria to examine. Howevcr, the practice of RIA is disappointing right across the region. OEeD/SIGMA concludes that "inadequate institutional arrangements. particularly as regards the quality review of assessments, lack of clear methodologies and training meant that the process became an empty formula and RIA existed in name and not in substance.',33 Some countries are actually moving backward. Hungary, for example. abolished its Department of Impact Analysis, Deregulation and Registration of Law in July 2006, and has not replaced it. In Pola/ld. RIA is still quite new, but the RIA system and its supporting institutions are emerging as one afthe best in the eastern region: • Ministers are responsible for RIA and public consultations. but nC\v institutional arrangements for RIA were implemented in 2006 to strengthen the RIA system, including placing responsibility for tbe review of RIA in the Chancellery of the Prime Minister instead of tile Govenunent Legislation Centre where it was until J uly 2006. • To increase the effectiveness of the RIA process, the Ministry of the Economy prepared new RIA Guidelines which were adopted in October 2006 by the Council of Ministers. The new guidelines clarify the kcy analytical steps to be taken in the undertaking of a RIA. The Guidelines constitute a set of logical steps which structure the preparation of policy proposal from identifying the problem, choosing objectives and main poLicy options, through comparing the possible options. assessing cost and benefits of each option to fma lly recommending the best solution. It is planned, after operating the new guidelines fo r 12 months. to evaluate their effectiveness. II OECDiSIGMA (20(H). 30 • The Government Centre for Strategic Studies prepares major RlAs, taldng into account the major and long term impacts of regulations. Task 7: Create a formal consultation policy and m echanisms to ellsure a systematic m eallS of early alld effective stakeholder cOllsultatioll durillg policy alld regulatory development. Early and meaningful consultation before a regulatory decision is taken is one of the most important assurances to businesses of a supportive, low-risk legal environment. Public consultation with stakeholders such as businesses has been widely recognized as key to the quality of new laws and other regulations. Bulgari a does not have a government-wide consultation policy and has not established standard methods of consultation. An important development for business environment refonns occurred in March 2002 with creation of the Council for Economic Growth (CEG) as a consultative body under the Council o f Ministers. The 2003 Act on Restricting Administrative Regulation and Control on Business Activities requires the government to notify companies of future regulation and provide them with at least one month to file any obj ections, elaborating the requirements in the Law on Normative Acts (1973. amended 1995 and 2003). A more systematic approach is now needed across the government, based on e- Government solutions to reduce the cost o f consultation. The government of Bulgaria should develop and implement a mandatory consultation policy. based on international practice and e-Govenunent tools, that lays out goals, standard methods, and an implementation plan. S uch a policy will require investment in new procedures and staff training in how to consult and how to use information from consultations. The policy should consider the following options: COllsultatiOn Polley • Adopt a ministerial consultation policy that establishes a minimum standard of consultation ministry-wide • Create a standardized fonnal for consultation documents, such as a sununary of policy goals, main issues and options. to permit easier access by stakeholders • Make consultation accessible to all businesses and stakeholders in Bulgaria MeJllod ofCOl/ sulfation • Build a unique website for publication and consultation on draft regulations and decisions. Publish open public consultations that are alUlounced at a 'single access point'. • Create a Business Advisory body as a permanent consultation channel for decisions. • D evelop business focu s groups and test panels to discuss draft decisions and regulations. Timing and respolJse to con sultations • Require consultation early in policy development, before drafting is done , to improve the quality of documents submitted to Ministers. 31 • Provide sufficient time for response. Staff should allow at least eight weeks for responses to written public consultations. • Receipt of contributions should be acknowledged. • Results of open public consultation should be displayed on wcbsitcs linked to a single access point on the internet. .. Ministerial reactions to stakeholder comments should be summarized in the fi nal policy decision. Suggested performance standards The general principles and minimum consultation standards adopted by the European Commission (2002) seem to be a reasonable benchmark for Bulgaria. These are as follows: General Principles PARTICIP ATION .. Consult as widely as possible on major policy initiatives. OPENNESS Al"ID ACCOUNTABILITY .. Consultation processes must be transparent, both 10 those who are directly involved and to the general public. It must be clear: • what issues are being developed • what mechanisms are being used 10 consult .. who is being consulted and why .. what has infl uenced decisions in the fonnulation of policy. .. Openness and accountability arc important principles for the conduct of organisations when they are seeking to contribute to policy development. It must be apparent: • which interests they represent • how inclusive that representation is. EFFECTfVENESS .. Consultation must start as early as possible. Interested parties should be involved in the development ora policy at a stage where they can still have an impact on thc fonnulation of the main aims, methods of delivery, perfonnance indicators and, where appropriate, the initial outlines of that policy. .. Consultation at more than one stage may be required. • The method and exlent of the consultation perfonned must always be proportionate to the impact ofthe proposal subject to consultation and must take into account the specific constraints linked to the proposal. COHERENCE • There must be consistency and transparency in the way that ministries operate their consultation processes. • Include in consultation processes mechanisms for feedback, evaluation and review. 32 Minimum Standards A. CLEAR CONTENT OF THE CONSULTATION PROCESS • All communications relating to consultation should be clear and concise. and should include all necessary infonnation to facilitate responses, • The information in consultation documents should include: • A summary of the context, scope and objectives of consultation, including a description of the spccific issues open for discussion or questions with particular importance • Details of any hearings, meetings or conferences, where relevant • Contact details and deadlines • Explanation of processes for dealing with comributions, what feed-back to expect, and details of the next stages involved in the development of the policy • Ifnot enclosed, reference to related documentation. B. CONSULTATION TARGET GROUPS • When defining the target group(s) in a consultation process, ensure that relevant parties have an opportunity to express their opinions. • Forconsullation to be equitable. ensure adequate coverage oflhe following parties in a consultation process: • those affected by the policy • those who will be involved in implementation of the policy, • bodies that have stated objectives giving them a direct interest in the policy. • In detcnnining the relevant panies for consultalion, take into account the following elements as well: • the wider impact of the policy on other policy areas, for example, environmental interests or consumer policy • the need for speci fic experience, expertise or te<:hnical knowledge, where applicable • the need to involve nOll-organized interests, where appropriate • the track record of participants in previous consultations • the need for a proper balance, where relevant, between the representatives of social and economic bodies, large and small organizations or companies, widcr constituencies (for example, churches and religious communities) and specific target groups (for example, women, the elderly, the unemployed, or ethnic minorities), organizations in the European Union and those in non-member countries. • Where a ronnal or structured consultation body exists, the Commission should take steps to ensure that its composition properly reflects the sector it represents. 33 C. PUBLICATION • Ensure adequate awareness-raising publicity and adapt communication channels to meet the needs of all target audiences. Without excluding otber communication tools, open public consultations should be published on the Internet and announced at the "single access point". • For addressing the broader public, a single access point for consultation will be established where interested parties should fi nd information and relevant documentation. • At the same time it m ight be useful to maintain more traditional alternatives • to the Internet (for example, press releases, mailings). Where appropriate and feasib le, prO\'ide consultation documents in alternative fonnals so as to make them more accessible to the disabled. D. TIME LIMITS FOR PARTICIPATION • Provide sufficient time for planning and responses to invitations and written contributions. Strive to allow at least 8 weeks for reception of responses to written public consultations and 20 working days notice for meetings. E. ACKNOWLEDGEMENT AND FEEDBACK • Receipt of contributions should be acknowledged. Results of open public consultation should be d isplayed on websites linked to the single access point on the Internet. • Depending on the number of comments received and the resources available, acknowledgement can take the form of: • an individual response (bye-mail or acknowledgement slip), or • a collective respo nse (bye-mail or on the single access point for consultation on the Internet). • Contributions will be analyzed carefully to see whether, and to what extent, the views expressed can be accommodated in the policy proposals. • Provide adequate feedback to responding parties and to the public at large. The results of consultations carried out in the Impact Assessment process will be summarized in the related reports. Good practices ill Europe In E sto1lia, an eGovernment tool to facilitate consultation, called Web 'Talk along' ,34 has been developed. It pennits the involvement of citizens in the formulation of policy and the drafting of legislation.» In Latl'ia, consultation within the govenunent and with the public is all part o f a seamless IT system. The inter-ministerial consultation process is organized by the electronic circulation of documents using a government web page. From the moment of the "announcement" of a draft in the Meeting o f State Secretaries, each draft and annotations of B ills and other legal instruments is also made available for public 34 Cen and tr3.ilSl>arent, and provide impetus for the rapid development of e-govenuncnt. All ministries are preparing work plans for the 2007-2008 period to reduce administrative burdens. 41 Government o f UK, Department for Transport (June 2006) Administrative Burdens Measurement E;>;ercise; Final report, Londolt, p. S. 38 The Cuc" Republic adopted an Action Plan of Reducing Administrative Burden on Businesses in April 2005, and a Methodology of Measurement of Administrative Burden, based on the Dutch Standard Cost Model. According to the plan, the Head of thc Office of the Govenunent is responsible for drawing up an initial report (Analysis of Administrative Burden all Businesses) based on results of measurements undertaken by panicular ministries and central state administration authorities. 39 Annex 1: " Measures for implementation of tbe better regulation principles" proposed by the Council for Economic Growtb and approved by tbe Council of Ministers on August 3, 2006. I . Drafting of TOR for an expert study of the "Most 15 August 2006 working group bus iness troubling regu lation regimes", including an with CEG ana lysis of the cWTent situation, an outline of the specific regulatory and practical obstacles for application of thc regimes creating troubles for businesses, analysis and summary of the proposals of all stakeholders: local governance bodies and central authorities, businesses, NODs and industrial associations citizens 2. Th, opinion of th' National Association of sranding The body Municipalities ;0 tho Republic of Bulgaria will bo submitting the required on drafts of secondary legislation, esrablishing draft legislation obligations for the local authorities. 3. CEO members shall consider the operational and September 2006 CEG members legislative schedule of the Council of Ministers and select the secondary legislation (regulations) to subjec t of the impact assessment to bc assigncd. 4. Preliminary analysis of the need for an impact '" sranding MEE assessment to be undertaken shall be prepared for al1 draft regu lations to be submitted to the CoM. In case such an assessment is needed, the minislJy submitting the regulation shall assign its perfonnanee. 5. The impact assessments shall be adopted at a CEG standing MEE meetmg and further submItted to the CoM by the chau I person of lhe CEG 6. MSAAR shall make the required amcndmenlS and 30 August 2006 MSAAR shall elaborate the new Administrative Register with reference 10 regulatory regimes 7. In view of the need for methodological support and August 2006 MSAAR "d training of central ond local adminislration staff, MEE MSAAR assisted by MEE sball propose a plan for methodological suppon and training relevant to the introduction and enforcement of the principles of better regul ation and preparation of impact assessments of regulations, to be considered by the CEG 8. Mechanism 10 control how the central and local 15 September Business administrations implement their commitments 2006 organizations 40