ARCHIVED - Mid-Term Evaluation of the Implementation of the Cabinet Directive on Streamlining Regulation

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Executive Summary

This report presents the findings of the mid-term evaluation of the implementation of the Cabinet Directive on Streamlining Regulation (CDSR). The evaluation examines early implementation and progress toward immediate outcomes for the two-and-a-half-year period from the coming into force of the CDSR in April 2007 to fall 2009. As such, the scope is limited to Treasury Board of Canada Secretariat activities. The audience for this report is primarily senior management of the Secretariat.

Background to the Cabinet Directive on Streamlining Regulation

The External Advisory Committee on Smart Regulation was created in 2003 to provide the Government of Canada with external perspective and expert advice on how to redesign Canada's regulatory approach for the twenty-first century. On April 1, 2007, in response to the Committee's recommendations, the CDSR was brought into force, replacing the Government of Canada Regulatory Policy(1999).

The CDSR introduced several key improvements, including a more comprehensive management approach with specific requirements for the development, implementation, evaluation and review of regulations. This new approach was intended to support the government's commitment to protect and advance the public interest in health, safety and security, the quality of the environment, and the social and economic well-being of Canadians through a more effective, efficient and accountable regulatory system.

Conclusions

Relevance

In establishing the External Advisory Committee on Smart Regulation, and by implementing the CDSR to respond to its recommendations, the Government of Canada recognized the importance of regulations to the social and economic well-being of Canadians. The objectives of the CDSR continue to be aligned with federal government priorities and to address an identified need. These government regulatory priorities are identified in documents such as Budget Speeches, which call for regulatory approaches in specific areas, and are focused on achieving their intended objectives efficiently.

Performance—Effectiveness

A moderate level of success has been achieved to date. With a few exceptions (notably service standards), outputs such as training courses, advice, and tools to support departments and agencies have been produced as planned. The need for improvements in the areas of partnerships and communications has been identified. In addition, there has been a moderate increase in the capacity of departments and agencies to meet CDSR requirements in the areas of interdepartmental and interjurisdictional cooperation, reduction of administrative burden, use of service standards, cost-benefit analysis, and performance measurement and evaluation. This increased capacity has resulted in levels of compliance with CDSR requirements of over 90% in most of these areas.

The level of success achieved to date is the result of the collaboration between the Regulatory Affairs Sector of the Treasury Board of Canada Secretariat (TBS-RAS) and departments and agencies. Making further progress on desired outcomes within the next two and a half years, including intermediate outcomes felt by regulated industries, will depend on whether departments and TBS-RAS can recruit and retain qualified personnel with the appropriate skills set or can access this expertise when needed, and on whether TBS-RAS has the required resources. A significant barrier to evaluating the extent to which these intermediate outcomes are achieved is the lack of performance measurement information. Performance Measurement and Evaluation Plans are required for high-impact regulations only, and this just since July 2009.

Performance—Efficiency and Economy

TBS-RAS was able to achieve the outputs and outcomes described above with limited resources and at a lower cost than originally expected, thus demonstrating both efficiency and economy. The current model, in which TBS-RAS acts as a central oversight body, is consistent with best practices of countries of the Organisation for Economic Co-operation and Development. No alternatives were identified.

Recommendations

The recommendations for TBS-RAS can be grouped into three main areas:

• Ensuring that departments and agencies have adequate support going forward
• Increasing and improving communications
• Ensuring that reporting requirements are met

Support for Departments and Agencies

Despite limited resources, TBS-RAS has developed products that have allowed departments and agencies to increase their capacity to meet CDSR requirements. Additional increases in capacity can be achieved with more targeted support.

Recommendation 1: Address the remaining gaps in outputs, such as guidance on service standards.

Recommendation 2: Continue the current efforts to create pools of qualified cost-benefit analysts and regulatory experts to help ensure that departments and agencies have access to individuals with the appropriate skills set.

Communications

Products and services can help achieve increases in capacity only if they are known and used. TBS-RAS needs to focus on communicating more effectively with departments and agencies, as a number of them were unfamiliar with its products and services.

Recommendation 3:Establish an overall communications strategy for the CDSR. In particular, departments and agencies need to be made aware of TBS-RAS products and services, partnering efforts, and research and information-sharing initiatives.

Reporting

Reporting on production of outputs, use of financial resources, and achievement of outcomes is important for identifying:

• progress made with resources used, for accountability purposes; and
• gaps in performance, in order to guide future plans.

Improvements are required so that reporting can be used as intended. Specifically, there are gaps in reporting, both on the use of funds allocated for CDSR implementation and on leveraged resources. In addition, departments and agencies need feedback from TBS-RAS on their progress in implementing the CDSR.

Recommendation 4: Ensure that reporting requirements are met and that departments and agencies include the level of additional resources (if any) expended to meet CDSR requirements. Full reporting will provide a government-wide picture of CDSR resource needs.

Recommendation 5: Complete departments' performance reports and communicate the results to ensure that departments and agencies receive the feedback needed.

Recommendation 6: Begin planning for the five-year evaluation within the next six months to ensure that a performance measurement strategy is in place and that appropriate data are captured in an ongoing, systematic and user-friendly manner.

1. Introduction

This report presents the findings of the mid-term evaluation of the Cabinet Directive on Streamlining Regulation (CDSR), a policy managed by the Treasury Board of Canada Secretariat's Regulatory Affairs Sector (TBS-RAS). The evaluation was conducted by Government Consulting Services of Public Works and Government Services Canada, and covers the two-and-a-half-year period from the implementation of the CDSR in April 2007 to fall 2009.

This evaluation was a Treasury Board commitment and examines early implementation and progress toward immediate outcomes. As such, the scope is limited to Treasury Board of Canada Secretariat activities. The audience for this report is primarily senior management of the Secretariat.

To meet the requirements of the Treasury Board Policy on Evaluation, the Secretariat's Internal Audit and Evaluation Bureau provided a stewardship role for the conduct of this evaluation. In addition, the Secretariat's Departmental Evaluation Committee reviewed this report and recommended it for approval by the Secretary of the Treasury Board.

The evaluation report is organized as follows:

• Section 1 provides an introduction to the CDSR and its implementation.
• Section 2 describes the evaluation issues and the methodology of the evaluation.
• Section 3 presents conclusions and supporting findings for each evaluation issue and question.
• Section 4 presents a summary and recommendations.

1.1 Background to the Cabinet Directive on Streamlining Regulation

The External Advisory Committee on Smart Regulation was established in 2003 to provide the Government of Canada with external perspective and expert advice on how to redesign its regulatory approach for the twenty-first century.

The establishment of the Committee underscored the importance of regulation as a key mechanism to protect the social and economic well-being of Canadians and Canada's environment, as well as its impact on Canadian citizens and industries. It also recognized that Canada's regulatory approach needed to be reviewed in light of:

• the speed of modern society, with its global flow of commerce, instant access to information, rapid innovation to meet changing consumer needs, and greater competitiveness;
• the increasing complexity of policies, including those that are cross-disciplinary (e.g., bioproducts) or in new areas (e.g., sustainable development); and
• the rising expectations of Canadians for greater accountability and transparency.

In its 2004 report, Smart Regulation: A Regulatory Strategy for Canada, the Committee noted that Canada had a sound regulatory foundation but that major shifts in perspective and practice were needed to respond to the trends described above. Its recommendations addressed the need for:

• increased regulatory cooperation at the international, federal, provincial and territorial levels and within the federal government itself;
• greater use of risk management in regulatory approaches;
• a framework to guide the mix of policy instruments and the associated compliance and enforcement strategies;
• the adoption of a regulatory process that is more effective, cost-efficient, timely, transparent, accountable, and focused on results; and
• an increase in government capacity relating to regulation.

The Committee also made a number of recommendations relating to specific industries and sectors.

The CDSR was the mechanism through which the government addressed a number of the Committee's recommendations. The CDSR, announced in Budget 2007 as a replacement for the Government of Canada Regulatory Policy(1999), was the product of two years of collaboration between the Treasury Board of Canada Secretariat and federal regulatory departments and agencies, as well as consultations with a wide cross-section of stakeholders, including environmental and consumer groups, industry and small business, and provinces and territories.

The changes introduced by the CDSR were intended to support a sound and effective regulatory system providing consistency, fairness and transparency and supporting innovation, productivity and competition. The most important changes were:

• a process to address the full regulatory life cycle, with specific requirements for the development, implementation, evaluation and review of regulations;
• better coordination across governments and jurisdictions to address overlap and duplication;
• enhanced guidance where gaps were identified (e.g., cost-benefit analysis and performance measurement) to enhance the transparency, quality, analytic rigour and utility of regulations for decision making;
• early assessment in order to focus resources on regulatory proposals having the highest impact; and
• service standards and reporting on results.

1.2 Overview of the Regulatory Affairs Sector

In 1998, the Regulatory Affairs and Orders in Council Secretariat was established in the Privy Council Office to provide increased coordination and support to ministers on regulatory matters. In 2006, it was transferred to the Treasury Board of Canada Secretariat, and renamed the Regulatory Affairs Sector.

TBS-RAS supports the Treasury Board Committee in its role as the Queen's Privy Council for Canada by providing advice to the Governor General, and management and oversight of the government's regulatory function. It also provides policy leadership on the CDSR, the federal regulatory policy. As such, TBS-RAS is engaged in two key functions: supporting government priorities through continuous improvement of the CDSR and advising Treasury Board Ministers on Governor-in-Council submissions.

The implementation of the CDSR was carried out jointly by TBS-RAS's three divisions:

• Policy Division provides leadershipwithin the Treasury Board of Canada Secretariat, federally, nationally and internationally, to implement the CDSR and to maintain the relevance and integrity of federal regulatory policy by:
  • interpreting the CDSR and developing guidance to explain its requirements;
  • co-chairing the Federal-Provincial-Territorial Committee on Regulatory Governance and Reform; and
  • undertaking intelligence gathering and sharing best practices with the Organisation for Economic Co-operation and Development, the United States, and the European Commission to improve regulatory analysis and management.
• Cabinet Committee Operations carries out a challenge and oversight function for Governor-in-Council regulations and Orders in Council, to provide the highest-quality analysis to support Treasury Board (Part B) decision making.
• Centre of Regulatory Expertise supports the regulatory community by engaging experts to assist departments directly with addressing gaps in their capacity to conduct cost-benefit analysis and risk assessment and to prepare Performance Measurement and Evaluation Plans and Regulatory Impact Analysis Statements. The Centre of Regulatory Expertise works with the Canada School of Public Service and the Community of Federal Regulators to design and deliver training.

The base budget for TBS-RAS is approximately $5 million and includes funds provided through the CDSR Treasury Board submission for the following^[1]:

• Strengthening the central agency function ($9.9 million over five years)
• Establishing the Centre of Regulatory Expertise ($6.4 million over five years)
• Providing financial assistance ($2.26 million over two years) for departments and agencies to coordinate the implementation of the CDSR

1.3 Expected Outcomes of the Cabinet Directive on Streamlining Regulation

As illustrated in Figure 1, the immediate focus of the funding for departments and agencies is to

increase departmental capacity to meet the requirements of the CDSR. Departments and agencies, through a risk-based approach, should demonstrate an increased capacity to:

• coordinate and cooperate with each other and across jurisdictions;
• use and communicate regulatory service standards and assess administrative requirements;
• carry out cost-benefit analysis of regulations; and
• design and implement Performance Measurement and Evaluation Plans.

A risk-based approach means that analytical requirements for departments and agencies and the level of review conducted by TBS-RAS are commensurate with the impact of the proposal. For example, high-impact proposals require quantitative cost-benefit analysis, whereas low-impact proposals may require only a qualitative description of the costs and benefits.

Once organizations have the capacity to meet the requirements of the CDSR, the following outcomes are expected:

• Parties are regulated more consistently across jurisdictions (provincial and international).
• Regulated parties have a better understanding of the federal regulatory process and a reduced administrative burden.
• The rationale for regulations is clearer, providing a stronger basis for regulator accountability.
• Regulations increasingly meet the intended objectives.

In the long term, the regulatory system will be well managed to protect and advance the public interest while promoting a fair and competitive market economy.

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