Using Regulation-Based Policy Instruments
Leslie Pal (reference below) describes when using regulation-based policy instruments be the appropriate policy response.
Pal writes (p. 144-147):
“Regulation draws on the most fundamental resource a government has: its capacity to command and prohibit. “Regulatory instruments are used to define norms, acceptable behavior, or to limit activities in a given society. … That capacity depends on a blend of legitimacy and effective sanctions for disobedience, with the greatest weight on legitimacy. If governments merely have power without authority, they will have little capacity to command and have citizens obey. It is the legitimacy of their commands as perceived by the majority of citizens that permits them to efficiently use sanctions against the minority that disobey. A great deal of public policy is about achieving outcomes through ensuring certain actions or behaviours. Regulatory instruments rely on rules to prohibit or promote selected actions or behaviours. This technique has an admirable directness to it – “thou shalt” or “thou shalt not” – but we have classified them here under “indirect” instruments since, in most cases, regulation is understood to involve government rules aimed at certain activities undertaken by individuals, organizations, or firms to achieve certain outcomes.”
Regulation as secondary legislation
“Regulation is therefore a distinct type of rule making available to governments. It is termed secondary legislation because, unlike simple rules or codes or guides, it requires a statutory basis. As the 2003 Cabinet Directive on Law-Making makes clear,
Canada’s system of responsible parliamentary government is based on the rule of law. This means that laws must be made in conformity with the Constitution. The Crown retains very few regulatory powers that are not subject to the legislative or lawmaking process. For example, regulations governing the issuance of passports or medals and honors are still made under the royal prerogative. Parliament may delegate regulatory authority to Cabinet (the Governor in Council), a person (such as a Minister of the Crown) or a body (such as the Atomic Energy Control Board). However, this authority remains subject to the will of Parliament and regulations made under this delegated authority are referred to as subordinate legislation. (Privy Council Office, 2003)
Permissions, licences, recognitions, and self-regulation.
“Affirmative/promoting uses of regulation include permissions, licences, recognitions, and self-regulation. Permissions are simply permits or enablements with few if any conditions attached – for example, a hunting permit or a city declaration that bars can stay open later for a special event.
“Licences are more complicated in that they involve a mix of prohibition, permission, and condition – the classic formula of the regulator To regulate, first, generally prohibit some action (e.g., broadcasting TV signals, driving a vehicle, fishing for salmon, doing brain surgery); second, specifically permit that action for individuals or organizations that will respect some predefined criteria or conditions. The licence conditions can be as detailed or as scant as the regulator likes. Of course, a key ingredient is defining sanctions for the unlawful (or unlicensed) practice of the regulated act.”
“Regulation can also entail recognition or defining the bona fide actors in a policy field. The most benign is simply to recognize certain individuals or organizations for some policy-relevant quality that they have or have achieved. Under the Indian Act, for example, the federal Department of Indian Affairs and Northern Development keeps a registry of all Indians so defined for purposes of the legislation (essentially those individuals descended from Indian bands with whom the federal government struck treaties in the 19th and 20th centuries). Appropriately enough, they are known as status Indians, and other Indians are described as non-status or non-treaty Indians. For the purposes of the Indian Act and what it permits, prohibits, and provides, it matters a great deal if one is status or non-status. Another example is the Energuide program from Natural Resources Canada. Appliances, buildings, heating and cooling equipment, new homes and vehicles must, by law, display a label that shows the amount of energy consumed.”
“A species of regulation is government-sanctioned self-regulation, where the state delegates its regulatory power not to a state agency but to a nongovernmental organization or association. The professions (medicine, law, engineering) are the main examples and involve the delegation of government powers to set mandatory standards and discipline infractions. The assumption policymakers have made is that these professions can be trusted not to take the short-term view or operate primarily for economic gain. In other cases, government accredits organizations to conduct official activities and may incorporate the results into legislation, thereby giving those activities the force of law. A good example is the National Standards System, which is managed by the Standards Council of Canada, a Crown corporation. The Council accredits organizations to develop, test, and apply standards. Most standards (and there are thousands, covering almost every conceivable product and many services) are voluntary, though some are incorporated by reference into international law. In another strategy, government can help organizations develop their own voluntary codes of conduct. Voluntary codes also go by other names: codes of conduct, codes of practice, voluntary initiatives, guidelines, and nonregulatory agreements.”
Characteristics of successful self-regulation
“Successful codes are said to have the following characteristics(Industry Canada, 1998, pp. 7–8).:
- buy-in from leaders of the relevant organizations;
- rank and file support
- a clear statement of objectives, obligations, and rules
- transparent development and implementation;
- regular flow of information
- an effective dispute-resolution system;
- meaningful incentives to participate; and
- negative repercussions for failure to join or comply
“The government’s role in voluntary codes is that of a catalyst, facilitator, and sometimes endorser. In those cases where voluntary codes affect business or industrial sectors, government is also interested in the degree to which the codes may impede competition.”
Economic, social, and environmental regulations
“Regulations can broadly be classed as economic, social, or environmental, though each of these will have subsets based on the object (e.g., prices, safety) or targets (e.g., specific industries). Economic regulation typically addresses such factors as pricing, advertising, and labelling, competition, some aspects of production, profits, and disclosure of financial information. The classic rationale for economic regulation is that markets are not working efficiently. Problem cause may be due to monopolies (the historical case for public utility regulation), oligopolies (hence, competition regulation), or the simple occurrence of various forms of behaviour designed to maximize profits at the expense of workers and consumers (e.g., collusion, false advertising, union busting). Social regulation is designed to protect us less as consumers than as persons or citizens. This somewhat vague formulation is fairly clear when it comes to health and safety standards such as fire regulations. Though these frequently apply to products and services, they also affect our use of spaces and buildings as citizens. It is a lot less clear what criteria regulators have in mind as they move into the cultural realm with broadcasting regulations (e.g., Canadian content, nonstereotyping) and social justice regulations such as employment equity or speech codes. Environmental regulation struggles with the standards issue as well, since the science is often not precise enough to determine what the allowable limits of many toxic substances might be. Nor can we easily know the effects of the interaction of hundreds of thousands of substances in the air, land, and water.”
See also: Pal’s Classification of Policy Instruments.
Atlas topic, subject, and course
Leslie Pal (2014), Beyond Policy Analysis – Public Issue Management in Turbulent Times, Fifth Edition, Nelson Education, Toronto. See Beyond Policy Analysis – Book Highlights.
Industry Canada. (1998). Voluntary codes: A guide for their development and use, at https://www.ic.gc.ca/eic/site/oca-bc.nsf/vwapj/volcodes.pdf/$FILE/volcodes.pdf, accessed 1 April 2017.
Privy Council Office (Canada). (2003). Cabinet directive on law-making, at http://www.pco-bcp.gc.ca/index.asp?lang=eng&page=information&sub=publications&doc=legislation/cabdir-dircab-eng.htm, accessed 1 April 2017.
Page created by: Ian Clark, last modified 12 April 2017.
Image: StackStreet, https://stackstreet.com/new-mortgage-compliance-regulations-drive-innovation-mortgage-servicing/, accessed 1 April 2017.