Lack of money, skills and quality control hinder the assessment of the impact of legislation

Toomas Mattson | 11/14/2011 | 4:54 PM

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TALLINN, 14 November 2011 - In its recent audit the National Audit Office came to the conclusion that assessment of the impact of legislation leaves a lot to be desired and those who pass legislation as well as the general public do not have enough reliable information about the possible consequences of legislation.

The National Audit Office assessed whether the explanatory memoranda of legislation submitted by the Government to the Riigikogu make the possible consequences of legislation clear to the members of the Riigikogu and the general public. As a result of the audit, the National Audit Office found that the impact of legislation had not been analysed to the required extent or as thoroughly as expected in any of the audited explanatory memoranda. The situation of the drafts of legislation that transpose European Union law was no better in terms of impact assessment.

An attempt to assess the impact of legislation in money had been made in only a half of all impact assessments. Both revenue and expenditure were assessed in only about 10% of all explanatory memoranda. The expenditure created by the implementation of the legislation for citizens, entrepreneurs and the state may be larger than expected if the financial impact of legislation is not considered.

The analysis of the National Audit Office indicated that the impact on the state budget has not been presented in more than a half of the explanatory memoranda or the memoranda only mentioned that no additional state budget expenditure would be incurred or that the adoption of the act would not create any additional expenditure for the state. A situation like this is very worrying, as most of the state budget funds are spent on the implementation of legislation.

Poor impact analysis becomes a serious problem when the enforcement of legislation is rushed and the necessary implementation activities are not thought through properly. The National Audit Office found that in the case of two-thirds of the reviewed legislative acts, the time allowed for preparations between the publication of the act until its enforcement was less than two months, and even less than one month in one-half of such cases. Rushing the enforcement of legislation is also one of the reasons many of the legislative acts analysed by the National Audit Office did not have the necessary implementation acts on the day they entered into force.
The Ministry of Justice as the agency responsible for the organisation of impact assessment has been aware of a number of problems found in the course of the audit for many years. In the last three years the Ministry of Justice has focussed its attention mainly on the development of the political declaration “Development Trends of Legal Policy until 2018” and it has not dedicated any time to looking for answers to the practical questions that have appeared in analysing legal impact or to the implementation of quality control in impact analysis.

Audit Director of the Performance Audit Department of the National Audit Office Tarmo Olgo insists that analysing the impact of legislation is not just a tedious technical formality that must be dealt with in the course of legislative drafting. “In the course of the audit, the National Audit Office identified draft legislation where no impact assessments had been done at all in certain areas, or the assessments were little more than justifications of the selected manner of regulation,” said Olgo. “Unbalanced, subjective and poor impact assessment leads to problems in the implementation of legislation, unwanted consequences and unpredictable costs. We keep finding these connections in our performance audits.” The Audit Director says it’s positive that the auditees agreed with the majority of the observations and recommendations made by the National Audit Office in its audit. “The Ministry of Justice should take advantage of this consensus in the Government and start implementing the recommendations of the National Audit Office,” he noted.

Impact assessment problems can be reduced by involving all interest groups in the development of legislation in a manner that is well thought through and balanced. The National Audit Office found that all of the interest groups affected by the legislation have not always been involved, and the principles of involvement are not always clear. The problem of involvement has stood out the most in the adoption of European Union law, because it has been impossible for interest groups to acquaint themselves with the relevant information during the stage where the legislation was developed and the state’s standpoints were formed.

The National Audit Office is of the opinion that the impact of legislation is not sufficiently assessed because those who develop legislation do not have the skills to assess its impact in all areas and they often do not have enough time for this. And ministries do not have enough money to order surveys from other parties. Impact is not clarified, as adherence to impact assessment rules is not sufficiently checked.

Auditor General Mihkel Oviir commented on the results of the audit as follows: “There is no one specific reason there are so many problems in the assessment of the impact of legislation and there is also no one specific person who has failed to do their job properly. Legislation is constantly being developed and processed in a rush, and the resulting lack of interest of ministers in assessing their impact has led to the situation where the explanatory memoranda of legislation that regulates the area of economy, for example, says nothing definite about the economic impact of the legislation. Also, members of the Riigikogu should take a look at themselves here. Although the previous Riigikogu unanimously adopted a political declaration in order to achieve better legislative drafting, nothing is being done about insufficient impact assessments when draft acts are discussed. The problem could be solved if the Board of the Riigikogu, the chairmen of committees and the experts of the Office of the Riigikogu thought about how analysing the impact of legislation could be improved. The legislature needs to be aware of the consequences of their decisions.”

Background

The current impact assessment procedure, which was established with the Regulation “Rules of Legislative Drafting” issued by the Government of the Republic, stipulates that the explanatory memoranda of all legislation of general application must describe its impact in at least eight areas: the social sphere, national security, international relations, economy, environment, regional development, organisation of work in state agencies and local government agencies, incl. the training needs relating to the implementation of the act, and all other direct or indirect consequences associated with the act. Impact on the state budget must be separately discussed in the explanatory memoranda.

Every ministry is responsible for impact assessment in their area. Every minister should also assess whether the impact of draft acts on their area is sufficiently and appropriately analysed before they approve them. The Ministry of Justice is responsible for the organisation and development of assessing the impact of legislation in the Government. Every minister is responsible for identifying legislation with insufficient and low quality impact assessment whilst the Minister of Justice has the coordinating role and the State Secretary and director of the Office of the Riigikogu are also responsible for checking the formal requirements.

The 10th Riigikogu adopted 776 acts and a little over 70% of these were initiated by the Government of the Republic. The 11th Riigikogu adopted 556 acts. In the course of the audit the National Audit Office reviewed the explanatory memoranda of 31 legislative acts in the form in which the Government of the Republic had submitted them to the Riigikogu. 25 of them were randomly selected from amongst the single texts of the acts adopted by the 11th Riigikogu from 2007-2010. The National Audit Office also selected the explanatory memoranda of another six legislative acts for an in-depth analysis on the basis of the observations made in its earlier audits.

Toomas Mattson
Head of Communication Service
National Audit Office
+372 640 0777
+372 513 4900
toomas.mattson@riigikontroll.ee

  • Posted: 11/14/2011 4:54 PM
  • Last Update: 11/10/2015 5:44 PM
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