Regulatory reform favours status quo

Business Opinion: Last week the Department of the Taoiseach published, in a surprisingly low-key way, a consultation paper on the issue of regulatory appeals.

There are a couple of possible reasons for the absence of any fanfare for what is one of the centrepieces of the Government's plan to improve regulation. Not least is that regulatory reform is pretty dry stuff and it would have constituted cruel and unusual punishment to inflict a press conference on the media given the good weather of last week.

Equally, the topic is probably of interest to a relatively small group of people, who would have been aware of the consultation paper's publication anyway.

The third, and more intriguing, potential explanation is that that the consultation process is just a fig leaf for a decision already taken. And that decision is to do nothing.

But first some background. The Consultation Paper on Regulatory reform has been produced by something called the Better Regulation Group (BRG).

The BRG was established in 2004 to oversee implementation of the action plan that arose from the 2004 Government white paper "Regulating Better". This included a commitment to look at how decisions made by regulators in areas such as energy and communications can be appealed more efficiently.

The BRG decided to set up another group of 13 civil and public servants to look at this issue. This sub-group is to provide recommendations to the BRG on how the appeal process can be approved.

In order to do this, the sub-group is now seeking submissions , which will be analysed and summarised in a "synthesis document" which will "assist the group in preparing proposals to guide the development of a future approach to regulatory appeals".

A truly Byzantine bureaucratic machine has been created to address the problem. As it slowly grinds to a resolution via group, sub-group, synthesis document and recommendation, business continues to try and function in an environment of multiple regulators, most of whose decisions can ultimately only be challenged by way of lengthy judicial reviews.

It would be comical if the issue was not so serious. This is what the Organisation of Economic Cooperation and Development had to say in 2001 about judicial reviews, as quoted in the consultation paper.

"Through judicial reviews and appeals, judges increasingly make key regulatory decisions. This has raised concerns about judicial trespass into the field of the legislature . . . this complex issue requires continuing attention to the selection, appointment and training of judges.

"Application to a court of competent jurisdiction is regarded by business as slow, complex and expensive. Ireland has been slow to develop private arbitration and other dispute resolution mechanisms.

"Challenges to regulations must be done by judicial review, a costly and time-consuming process. Judicial review cannot be regarded as an effective quality control mechanism in view of the 500-600 regulations made each year.

"A single judge sitting in a particular court can become a de facto regulator with little accountability constraints. Judges performing this task lack technical expertise or experience in solving such problems. In addition, since review by the courts increases uncertainty and delay in regulatory policies, it may undermine the responsiveness and transparency of the regulatory system."

But what does this have to do with fig leaves? Well, the heart of the consultation paper is pages 30 and 31 where the pros and cons of alternative appeal systems are lined up against the current judge-led general court system. It lists only three advantages for what seems to be the obvious solution - expert appeal panels - five for the current general court systems, and six for hybrid court models such as specialist courts.

On the con front, the paper lists nine disadvantages for the expert appeals panel approach and only one con each for the court and hybrid court alternatives.

The advantages and disadvantages of the various approaches hinge on the fact that, under Irish law, only judges can make enforceable orders and thus regulators can only act via the courts, which means any challenged decision will end up in court. It is monstrously inefficient, but one suspects that the judges on balance prefer it that way - particularly if the alternative was to be something they might see as an erosion of individuals' right of access to the courts.

As a result you would want to be very optimistic to see the BRG's efforts resulting in anything other than a continuation of the current system where the judges are the regulators of business and economjc activity.

It is, of course, a classic example of regulatory capture, which is defined by the better regulation white paper as when regulators "adopted objectives very close to those of the entities it is supposed to regulate".

By looking to reform the appeals process, the BRG has, in effect, set out to regulate the judges. But reading between the lines of the consultation paper it now appears to favour the status quo.