The issue of better regulation is certainly one of the most important topics on the agenda of the European Union at the present time, and it is also a topic to which Malta attaches a high level of priority.

This month I launched Malta’s National Reform Programme (NRP) 2005-2008, which outlines Malta’s response towards securing its competitiveness, economic growth and job creation in terms of the EU’s Lisbon Agenda. Malta’s NRP identifies priorities for action, and proposes policy- initiatives and measures to achieve these goals.

These are in fact broadly based on the 24 guidelines that had been prepared by the European Commission to guide member states in preparing their respective National Reform Programme. Our programme addresses five strategic themes. These are: sustainability of public finances; competitiveness; employment; education and training; and environment.

Although better regulation is a cross-cutting issue that affects all the above five strategic themes, today I would like to deal with two aspects. Firstly, the effect of better regulation on competitiveness and secondly, I’ll outline the government’s commitments to strengthen Malta’s regulatory framework.

It is widely accepted that, as well as providing predictability and certainty in the business world, better regulation contributes to establishing and maintaining individual freedom and social cohesion, through articulation and protection of citizens’ and consumers’ rights. On the other hand, bad or cumbersome regulation not only creates barriers to efficient markets, thereby discouraging competition and innovation, but it also alienates citizens from their civil administration and can contribute to unfair wealth distribution.

The rationale behind the promotion of better regulation is that it helps enhance a country’s competitiveness. The Global Competitiveness Report 2004-2005, published by the World Economic Forum, provides an assessment of the comparative strengths and weaknesses of over 100 countries in relation to their economic competitiveness and growth.

In the report, tackling inefficient bureaucracy and red tape is considered as a competitiveness issue. In general, respondents – both OECD and developing/transition countries – singled out red tape as one of the major factors constraining their business operations. The reason is rather clear. At best, red tape can be frustrating, and at worst it can represent a barrier to entry for business, as well as with an obstacle to entrepreneurship in general. This can be brought about by the poor quality of the regulations themselves. Otherwise, if there is confusion as to the structures and processes that are in place for dealing with particular issues, problems could result as well.

This is particularly true in the case of small and medium-sized enterprises, which make up over 90 per cent of Malta’s businesses. Small firms have limited resources, which makes it more difficult for them to comply with unnecessary regulatory complexities. Burdensome regulation can hamper business, channelling resources away from more efficient uses and acting as a constraint on innovation, productivity and growth.

Better regulation is not to be conceived as a single ad hoc exercise, but as a constant and continuous way of legislating. I believe that in order to be effective, the concept of better regulation should be understood across the whole public sector, and it should become part of the policy-making practice. The government also believes that the actions to be taken arising from an application of the principles of better regulation should tackle both existing and newly proposed regulation.

During the past year, the government paid particular attention to ensure that new regulations are not cumbersome and expensive to apply. In the budget speech for next year, the government committed itself to visit existing regulations to ensure that unnecessary burdensome procedures are removed.

We are committed to provide the high-level and cross-governmental political support needed for the better regulation process to be successful. We will address the whole life cycle of policy (inception, design, legislation, implementation and review) across all fields of public policy. A piecemeal or ad hoc approach risks being ineffective – an overall strategic approach is essential.

Better regulation is a drive to improve the policy-making process through the integrated use of effective tools, not an attempt to impose further bureaucratic burdens on it. Its effective use will deliver gains far in excess of costs of regulating in such an efficient way. Better regulation is about making regulation that is meaningful – on the basis of several principles of good practice.

Enhanced competitiveness is a key part of the government’s strategy to achieve social progress, better living standards and a better quality of life, the latter being the theme for next year’s budget presented last week. Reflecting the importance of regulation, as a key factor that affects business competitiveness, growth and employment performance, the NRP and the 2006 budget contain commitments to enhance Malta’s regulatory framework. This is manifested in the setting up of a Better Regulation Unit.

The unit being established within the office of the principal permanent secretary, has been entrusted with monitoring regulatory developments and reducing unnecessary bureaucracy. It will:

– scrutinise regulatory initiatives proposed by the European Commission;

– ensure that investments in IT systems result in effective bureaucratic changes;

– monitor bureaucratic procedures and carry out regular reports on how they can be simplified, amalgamated, and made more efficient;

– review all fees raised by the government; and

– draw up standard procedures for the introduction of new regulations.

Given the economic implications inherent in improving regulation, my ministry will be providing input to the Better Regulation Unit as necessary.

Permanent secretaries across the civil service have already been directed to initiate an exercise whereby they start to identify those processes which need to be reviewed in order to minimise the regulatory burden on the business community.

This is being done with the aim of ensuring that regulations are applied more equitably and to achieve the full benefit they are intended to produce for the government and businesses.

This will have a positive effect on the final consumer.

Censu Galea is Competitiveness and Communications Minister