A regulatory budget : asset or liability? / M. Gawan-Taylor.

Abstract

Federal and State Government regulation has grown piecemeal over the years largely in response to economic and social problems faced at the time. The complexity of our present regulatory frameworks and the nature of our budgetary and regulatory review mechanisms results in only limited control being exercised over regulation. Moreover, few attempts are made to systematically compare the achievements of regulation with the costs. As a result there are many costly and inefficient regulations being paid for by the community. The purpose of this paper is to discuss a Regulatory Budget particularly in the context of a review of the US proposal for such a budget. Although the Regulatory Budget was never implemented because of a change in Government in the USA, the proposal received wide support during 1978. The approach was developed because of growing concern with the costs of regulation and the belief that existing regulatory reform measures were not proving effective in constraining the level of industry compliance costs. The budget was intended as a supplement to these other reform measures. The aim of a Regulatory Budget is to provide Government with a coherent and overall regulatory structure in which existing regulations are reviewed and new regulations considered. With a Regulatory Budget all departments would be set an annual total cost budget for their regulatory activities. Both public and private sector costs would be included in the budget limit. In concept it is similar to the financial budget though its focus is on total regulatory costs. The Regulatory Budget has considerable potential as a vehicle for both countering over-regulation and encouraging more efficient and equitable regulation. Similar to the financial budget, use of a budget limit would require regulatory priorities to be set and would ensure that the total costs of new regulations are included in the decision-making criteria when regulatory proposals are being considered. The disadvantages of the Regulatory Budget are that it has some conceptual limitations and its significant methodological problems would need to be resolved before it could be fully implemented. The more rigorous approach towards the consideration of regulation would also require fairly extensive government machinery and administrative changes. Accordingly susbtantial government and administrative commitment would be necessary to implement such a budget. Apart from its general interest as a system-wide institutional measure, there are certain features of the Regulatory Budget approach which if adopted would lead to regulatory decisionmaking being improved without the need for institutional change or significant additional staff resources. These features are canvassed in the paper. Show more