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Similarly, changes in tax and benefit systems are too often undertaken in isolation to achieve specific ends. These objectives need to be considered in the context of the entire system of taxes and benefits that shapes individual incentives and distributive outcomes, confronting individuals with abrupt changes in, e.g. marginal tax rates, or producing outcomes where individuals with very similar characteristics are treated very differently.
There are a number of dimensions of cross-governmental co-ordination that matter.
The first is horizontal, across policy sectors: at both national and sub-national levels there is often a tendency for public bureaucracies to work in silos, with too little co-ordination of, for example, environmental and transport policies, or between social protection and labour-market policies.
Here, the solutions often depend on or benefit greatly from leadership at the central government level, including the implementation of mechanisms or the creation of institutions that ensure cross-sectoral discussion of cross-cutting policy challenges.
The second concerns horizontal co-ordination across jurisdictions at sub-national levels of government. Here, the evidence increasingly points to the need for leadership from above (OECD, 2013d, 2014): even where state or local governments see the need to co-operate, the barriers to collective action can be hard to overcome without the resources and leadership that a higher level of government can provide. Both institutional and financial incentives may be required. The point is not that such collaboration can be imposed top-down but that a balance of top-down and bottom-up initiative is required.
The third form is vertical co-ordination across levels of government; an important challenge, as almost all domestic policy fields are, at least to some degree, areas of shared responsibility in OECD countries. Multiple levels of government often have a role to play in designing, financing, and/or implementing policies with implications for Inclusive Growth. This points to the need for co-ordinating mechanisms that reflect the legitimate functions and democratic accountability of the various levels involved (OECD, 2013d). The recently adopted OECD Principles for the Effective Governance of Public Investment, for example, reflect this concern.
Checks and balances throughout government A comprehensive approach to inclusive policy making requires checks and balances to be present throughout government. Strengthening justice sector performance, ensuring fiscal performance, and preventing regulatory capture are three such examples.
Improving justice sector performance Rule of law, access to justice and redress are at the core of a fair and socially just society. The effective implementation of the law helps prevent conflict, crime and violence, ensures executive accountability, and fosters private sector growth in compliance with outlined regulatory frameworks. A legitimate and equally accessible judicial system helps to create a level playing field where predictable and independent decisions can be taken. Furthermore, ensuring equal access to justice can support equity in services, including health care and education, and thus contribute to reducing inequality. Yet not all citizens in OECD and BRIC countries are confident the justice system works as it should. Among OECD countries, confidence in the judiciary and the courts is highest in Nordic countries and lowest in Korea, Portugal, and Slovenia (Figure 4.5).
Significant differences exist in levels of confidence in the judiciary across OECD countries
Note: Confidence in the judicial system data refer to percentage of “yes” answers to the question: “In this country, do you have confidence in each of the following, or not? How about judicial system and courts?” Data for Chile, Germany and the United Kingdom are for 2011 rather than 2012.
Source: OECD calculations based on the 2012 Gallup World Poll
Strengthening effectiveness of oversight institutions
The national legislature has a fundamental role in authorising annual budget allocations and in exercising accountability for how these allocations are used. Indeed, the tools available to parliaments to assist them in this task have improved considerably in recent years. Most notably, several national parliaments (e.g. Australia, Canada) have developed parliamentary budget offices designed to address the “asymmetry of information” between the executive branch of government and the legislature on budgetary and fiscal affairs, and to strengthen the role of the legislature in identifying and representing the interests of citizens. Other countries, including Slovenia and Sweden, have established “fiscal councils” or similar bodies to provide an independent, professional perspective on complex issues of fiscal policy management, including assessing compliance with fiscal targets and identifying fiscal sustainability risks. Taken together, these “independent fiscal institutions” can enhance the quality of public discourse and open the way for a more inclusive debate on fiscal policy choices and challenges. The OECD has developed draft Principles for Independent Fiscal Institutions, which set out how such bodies can best be instituted to promote these objectives.
Efforts to improve public sector performance and strengthen citizens’ participation can extend to the activities of autonomous bodies. Innovative approaches in developing countries and emerging market economies involve citizens in social audits (Philippines), complaint mechanisms, and taking part in the selection of the Auditor General (Ecuador and Colombia) (Figure 4.6). Many Supreme Audit Institutions (SAIs) have started involving citizens in their work, although many of these engagement practices have tended towards the one-way dissemination of information. Overall, it is important that accountability bodies develop risk mitigation strategies when engaging citizens in their work in order to ensure their involvement is sustainable and fits within the current political and enabling environment (OECD, forthcoming, a).
The range of participatory practices employed by Supreme Audit Institutions varies across countries Note: The indicator measures the number of distinct practices that have been implemented as of Dec. 2013, not the number, or frequency, of instances. A practice is counted just as long as it has been applied (tools exist/has been put into practice) after its creation and it has not been discontinued. Practices are counted regardless of whether or not they were instantiated in 2013.
Source: OECD (forthcoming, a), “Citizen Engagement and Supreme Audit Institutions: A Stocktake
Protecting regulators against capture
Regulatory capture by industry or government can undermine policy making for Inclusive Growth. Regulators are increasingly responsible for the delivery of a variety of policy objectives that can be conflicting or difficult to manage, such as environmental protection while encouraging investments or ensuring reliability and security of services, and minimising the costs to citizens and operators. In addition, as more regulators become independent from central government, their funding increasingly comes from elsewhere including from industry. In such a climate, there can be political pressures to influence regulatory actions and decisions by the regulators. Regulators with conflicting objectives can manage the delivery of those objectives to the extent that they have correct institutional systems and mechanisms of accountability, transparency, engagement and leadership that protect regulatory decisions and actions from undue influence and ensure trust in the regulator. The OECD Best Practice Principles for the Governance of Regulators identifies the seven principles that combine to protect regulators from capture and also promote accountability (Box 4.10).
Box 4.10. OECD Best Practice Principles for the Governance of Regulators
1. Role clarity: For a regulator to understand and fulfil its role effectively it is essential that its objectives and functions are clearly specified in the establishing legislation. The regulator should not be assigned objectives that are conflicting or be provided with a resolution mechanism in case of conflict.
2. Preventing undue influence and maintaining trust: Independence from the government and from the industry that is regulated can improve the regulatory outcomes by allowing the regulator to make decisions that are fair and impartial. Formally protecting the independence of a regulator is an important element of achieving independence, even though it is not sufficient since a strong culture of independence and appropriate working relationships with the government and other stakeholders must also be in place.
3. Decision-making and governing body structure for independent regulators: The governing body structure of the regulator (e.g. a single head or a board of directors) should be determined by the nature of the regulated activities and their motivation.
4. Accountability and transparency: A regulator operates in accordance with the powers conferred to it by the legislature. Accountability and transparency can therefore be considered as the other side of the coin of independence. Regulators should regularly report on the fulfilment of their objectives, including through meaningful performance indicators. Key operational policies and other guidance material, covering matters such as compliance, enforcement and decision review should be publicly available.
5. Engagement: Regulators should regularly and purposefully engage with regulated entities and other stakeholders to enhance public and stakeholder confidence in the regulator and to improve regulatory outcomes.
6. Funding: Funding levels should be adequate and funding processes should be transparent, efficient and simple.
7. Performance evaluation: The regulatory decisions, actions and interventions of the regulator should be evaluated with the help of performance indicators. This creates awareness and understanding of the impact of the regulator’s own actions and helps to communicate and demonstrate to stakeholders the added value of the regulator.
Source: OECD (2014), “OECD Best Practice Principles on Governance of Regulators”; Thatcher, Mark (2005), “The Third Force?
Independent Regulatory Agencies and Elected Politicians in Europe”, Governance, 18(3), pp. 347-373, July; Gilardi, Fabrizio and Martino Maggetti (2010), “The independence of regulatory authorities” in David Levi-Faur (ed), Handbook on the politics of regulation, Edward Elgar Publishing, Cheltenham, United Kingdom.
4.3. Making inclusive institutions happen The contribution of technology to participatory governance Information and communications technologies (ICTs) are enabling new forms of collaborative and participatory governance that act as a driver for Inclusive Growth. The steady integration of new technologies (e.g. social media, mobile technology) into the everyday lives of businesses, governments and citizens is giving rise to new forms of public engagement and relationships that overlap across public, private and social spheres in a new digital governance environment (Figure 4.7). The shift from a citizencentric to a citizen-driven model of digital government is also opening up governments, driving a move from “networked governance” (internal co-ordination and collaboration) to “collaborative and participatory governance” (more open forms to engage institutional and non-institutional stakeholders in public value creation).
Note: Data unavailable for Japan, Korea, Mexico, Turkey and United States. Data for Australia, Canada, New Zealand, Israel and Switzerland refer only to obtaining information, not general interaction. In these countries the age group “25-34 years old" refers to individuals between 25 and 44 years of age. Data for Chile refer to the 25-64 years age group. Data for Israel cover citizens aged 20 and above and cover both obtaining information and filling in forms online. Data for Canada, Israel and Switzerland refer to 2010.
Information on data for Israel: http://dx.doi.org/10.1787/888932315602.
Source: OECD (2013), Government at a Glance 2013, OECD Publishing: Paris.
In order to truly engage constituents, government institutions will have to devise ways of better using social media. Web 2.0 applications (i.e. Facebook, Twitter, YouTube, and Wikipedia), also called the participative web, have the potential to fundamentally alter the policy-making process. At present, however, government institutions perceive social media largely as a public communications tool. An OECD survey shows that out of eleven national governments that formulate explicit objectives for social media use, nine expect them to improve public communications (Figure 4.8 and OECD, forthcoming).
Similarly, a survey of US public authorities at different levels of government shows that 85% of those using social media do it to “distribute information”. Only a small percentage viewed social media differently: 31% indicated they use social media to have conversations [with constituents], 21% to receive feedback, 15% to inform about policies and only 9% to drive innovation. (GovLoop, 2013) Along similar lines, a 2012 survey of local government authorities in the United Kingdom found that nearly all local councils use social media for external communications. Only around half aim to use social media for community building or to directly interact with the population, e.g. for handling enquiries (BDO, 2012).
Note: Based on the response of 11 countries that indicated having specific objectives or expectations for government social media use; maximum three answer choices allowed.
Source: OECD survey on government use of social media, 2013 (preliminary results) Governments are thus faced with the opportunity and challenge of moving beyond the use of ICTs merely for distributing or collecting information. New technologies with open data can help governments actively engage with stakeholders. They have the potential to enable public participation and social engagement in designing responses to public needs (e.g. co-development and co-production of services through newly developed apps) and to allow the sourcing information and knowledge from more diverse sources (e.g. crowd sourcing).63 New forms of collaboration with non-institutional stakeholders can help deliver services which better respond to specific needs and in more inclusive ways. Indeed, “Fix My Street” in the United Kingdom and Chicago’s “311” Internet portal illustrate the intersection of mobile government and open government data. One is built by citizens, the other by government (Ubaldi, 2013).
“Crowdsourcing” holds substantial potential for governments but is not necessarily easy to undertake successfully. Successful crowdsourcing depends on a sufficient scale and representativeness of participation to achieve valuable results.64 To date, only a limited number of national governments have embarked down this path and even fewer local and regional ones where the benefits are likely to be the greatest. U.S. cities and the U.S. Federal Government, the United Kingdom, Australia and France, as well as a handful of others, have been leading the way in this respect. Companies and SMEs in some countries are exploiting this approach to expand business and create jobs, whilst a few governments are using crowdsourcing encourage co-creation events (e.g. innovation camps, “hackathons”, code sprints and apps challenges) to create apps, services and enable various stakeholders to contribute to policy making, public value creation and social innovation (Ubaldi, 2013).