“A corrupt state is one that is governed by too many laws”, said the Roman writer and political figure Publius Cornelius Tacitus. “In the law we value simplicity rather than complexity”, echoed Justinian, the most famous Byzantine emperor. They saw purpose, clarity, proportionality and systematicity as the fundamental lawmaking principles which are able to ensure the quality of the law and the most effective solution to problems in society.
Ancient Roman law was the basis for the development and refinement of various legal instruments, which, when applied properly, guaranteed the quality of legislation. One of these instruments is the impact assessment of proposed legislation.
It dates back to the 1960s, when the Great Society public programs were launched in the USA under President Lyndon B. Johnson. Their aim was to eliminate social and racial injustice. To measure progress, a governance infrastructure and public performance measurement practices have been developed.
The success of these practices of evaluating public performance has led to the fact that regulatory impact assessment is now considered to be an attribute of any modern state that respects the rule of law. This should come as no surprise.
A high-quality impact assessment adds transparency and openness to lawmaking, and allows the public and the legislator to debate the need for, the effectiveness of, and possible alternatives to, legal regulation.
In short, an impact assessment answers the questions of why the legislation was decided to be adopted, what its purpose is, what problems it seeks to address and what its likely consequences are.
Answering these questions is of course not easy. The legislator, like any other human being, has only a limited capacity to gather all the necessary information, to predict future consequences and to answer all the questions that would allow an assessment of the quality of the proposed regulation, the need for it, the future costs and the possible alternatives.
In addition, the impact assessor is inevitably confronted with a variety of internal and external factors: lack of competence, the desire to please the electorate and to be re-elected. The latter factor often leads to a willingness to quickly and recklessly adopt legislation that is popular but not of good quality. These factors dictate the simplest and most common answer in Lithuania: “No negative consequences foreseen”.
The latter practice cannot be tolerated. According to the Organization for Economic Cooperation and Development and the European Commission, impact assessments should be the rule, not the exception. In other words, impact assessment should not be a right but a binding habit of the legislator.
However, the current regulation of the legislative process hinders the formation of this habit. The Law on Legislative Framework of the Republic of Lithuania lacks concreteness and is full of vague notions that allow avoiding an impact assessment: an impact assessment is necessary when there is a “substantial change in the legal regulation”; its “comprehensiveness must be proportionate to the possible consequences of the envisaged legal regulation”.
What constitutes a “substantial change in the legal framework”, what is “proportionate to the possible consequences of the envisaged legal regulation” – we lack concrete answers to these questions.
Another problem is that alternatives to the proposed legislation are very rarely considered in Lithuania. Legal regulation is not and cannot be considered the only source of regulation of social relations. The law, according to the eminent philosopher and economist Friedrich von Hayek, should merely help to form and maintain the abstract order that is perfectly capable of functioning without the aid of legislation.
Unwarranted interventions in this order by legal regulation can have a myriad of unintended consequences and negative impacts on citizens, businesses and society as a whole. This is a point consistently stressed by both the OECD and the EC, which points out that interventions are subject to the following risks: trying to achieve the wrong objectives or correct objectives are being achieved by disproportionate cost, creating unintended consequences such as barriers to entry the market or undue favoritism to some market participants, etc.
Accordingly, when considering new legislation, it is necessary to assess the following alternatives: no change at all, improvement or simplification of existing regulation, alternatives that do not lead to additional regulation (e.g. self-regulation), etc.
Nevertheless, this is very rarely done in Lithuania. Having analyzed 57 impact assessment reports prepared last year, we can conclude that alternatives to regulation were analyzed in only one of them. The conclusion is obvious: unfortunately, legislation is still seen by the legislator as the only instrument capable of solving society’s problems.
The article was published in the IQ journal and is part of the Lithuanian Free Market Institute‘s (LFMI) project Better Laws For Better Lives aimed to advance and inform a law-making quality reform