Ministerial Committee approves proposal for reduced regulatory burden

Peretz says government plan would be disastrous for environment

Wide view of the Knesset (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Wide view of the Knesset
Members of the Ministerial Committee for Social and Economic Affairs approved on Sunday a proposal aiming to disencumber the country’s regulatory arrangements – with a sole objection coming from Environmental Protection Minister Amir Peretz.
Following a government decision on August 25, 2013, the Prime Minister’s Office was tasked with bringing for approval a plan to improve the country’s regulatory process and reduce the bureaucracy associated with it. The proposal on the subject, approved during Sunday’s meeting, stressed the need to both reduce the regulatory burden within existing regulations, as well as formulate assessments regarding the expected effects of new ones.
Elements of the proposal were based largely upon the OECD’s 2012 Recommendation of the Council on Regulatory Policy and Governance, according to the proposal.
In the proposal, the authors stipulate that when determining a new regulation, each regulator would need to follow a new regulatory impact assessment (RIA) methodology. First and foremost, the regulator must clearly define the purpose of regulation, the need for regulatory intervention to achieve that purpose and the expected benefits of the regulation. In relevant situations, the regulator would need to reduce the need to apply for permits ahead of time, by establishing binding and clear rules, subject to enforcement, oversight, deterrence and economic efficiency.
The proposal also calls upon the regulator to calculate the expected burden caused by a regulation, as well as reduce overlaps and inconsistencies between the new regulation and others. Calling upon regulators to reduce harm to the public interest, the proposal also requires consistency, transparency of information and dialogue with the relevant parties.
Prior to enacting a regulation, the regulator would need to prepare a document, known as the RIA report. The reports would need to be published starting from January 1, 2016, alongside publications of bill memorandums, as well as alongside secondary legislation, prior to the approval of the relevant minister or Knesset committee.
The proposal stipulates, however, that the minister supervising the regulation in question will have the ability to exempt his or her ministry from the RIA procedure, if the effect of the regulation on those being supervised or on the public interest is negligible.
In 2015, the RIA rules would apply to two regulations initiated by each ministry throughout that year – one piece of primary legislation and one piece of secondary legislation, according to the proposal.
Peretz was the only minister to vote against the proposal, citing numerous problems associated with the plans in a letter written to Prime Minister Binyamin Netanyahu prior to the Sunday meeting.
“I believe that the proposal, if it is advanced, would cause considerable harm to the existing government regulatory system and the ability to advance necessary regulatory reforms, and particularly items related to environmental regulation,” Peretz wrote.
While the RIA calls for the requirement of an assessment of regulations prior to the implementation of legislation, Peretz pointed out that any minister supervising specific regulation would be able to waive the need for a regulatory impact analysis.
Based on studying the implementation of the specific regulatory impact analysis methodology in other countries, ministry officials found that the structure has largely proved too flexible, making the results of the analyses too easy to manipulate, he said.
Meanwhile, although the proposal would require estimates of direct costs from any new regulation, it would not demand an examination of indirect impacts or benefits, according to the minister.
“The proposed methodology is based only on one part of the regulatory assessment equation,” he wrote.
Peretz also voiced particular concerns about the harm that might be caused to the country’s environment, a sector that still is not up to par with many OECD demands. Implementation of the proposal could bring about delays in the passage of necessary environmental regulation, Peretz argued.
“The Environmental Protection Ministry is acting to meet the standards of existing environmental arrangements in the world and reduce these gaps,” he said. “The requirement to conduct an RIA prior to the advancement of environmental legislation will damage the ability of the ministry to advance environmental regulation, due to the absence of organized and clear methodology.”
Another issue that Peretz criticized was the failure to include an environmental cost and benefits analysis under the framework of RIA within the proposal.
Experts across the world have stressed how crucial it is to include environmental cost and benefits within an RIA framework, and the OECD emphasizes that each of its member countries must do so, he explained.
Nonetheless, such costs and benefits have not been included in Israeli governmental drafts for RIA implementation methodology, Peretz said.
In each ministry, the proposal chooses select departments that will be responsible for reducing their regulatory burden in 2015.
Looking at his office in particular, Peretz criticized the fact that the two branches chosen by the government within his ministry would be the noise and radiation department and the pesticides department. Both the pesticides and radiation sectors require new legislation, and must not be subject to the proposal to reduce the regulatory burden, Peretz said.
With regards to this issue, the Ministerial Committee members agreed on Sunday to grant the Environmental Protection Ministry the right to choose its pilot departments.
While emphasizing his objections to the RIA proposal, Peretz stressed that he is in principle in favor of reducing regulatory burdens – simply not according to this scheme. Within his own ministry, he has taken steps to alleviate bureaucratic hurdles, particularly in the green business- licensing sector, he added.
“I believe that the goal of reducing the regulatory burden and bettering regulation is correct,” Peretz said. “Nevertheless, the suggested method in the proposal is destructive and will lead to a freezing of reforms and endanger the ability of the government to legislate for the benefit and welfare of the public.”