OPINION: Government’s ‘malicious compliance’ with socio-economic impact assessments
DAILY MAVERICK / 02 AUGUST 2018 - 11.59 / IVO VEGTER
By law, and according to its own guidelines, government is supposed to conduct and publish a socio-economic impact assessment whenever it proposes a significant new policy, law, legal amendment, or regulation. This is rarely done, and if it is, it serves only to motivate the proposal.
Since 1 October 2015, the Cabinet of South Africa has required socio-economic impact assessments (SEIAs) to be conducted whenever Cabinet approval is required for draft policies, bills or regulations.
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However, according to Martin van Staden, legal researcher with the Rule of Law Project at the Free Market Foundation, most bills and regulations published after 2015 came without a published SEIA, if one was conducted at all. This includes changes to law that could have potentially devastating consequences for society and the economy.
He cites examples including the Electronic Communications Amendment Bill of 2017, the Prevention and Combating of Hate Crimes and Hate Speech Bill of 2016 and its amended 2018 draft, the Basic Education Laws Amendment Bill of 2017, the Regulation of Agricultural Land Holdings Bill, 2017, the Communal Land Tenure Bill, 2017, and the Long- and Short-Term Insurance Demarcation Regulations.
It also does not appear, Van Staden says, that an SEIA is being conducted on the parliamentary motion to amend the Constitution to enable expropriation without compensation.
When SEIAs are published, they appear to be mere afterthoughts, intended merely to justify the proposed policy, law or regulation. For example, an SEIA was published by the Department of Telecommunications and Postal Services (DTPS) for its National Integrated Information and Communication Technologies (ICT) White Paper of October 2016, but only after the policy was declared to be final.
Worse, this SEIA was written by two officials responsible for ICT strategy in the DTPS itself, that is, by people who agreed with the objectives of the policy. A reading of the SEIA makes this clear.
Benefits are merely declared and assumed. Major policy proposals are never questioned. Alternative policies are neither proposed nor evaluated. The few risks that are noted are entirely superficial and administrative, such as regulatory capture, industry resistance, and implementation delays. The assessment is entirely uncritical of the policy, and uninformative about actual socio-economic impacts.
The same happened with the Control of Tobacco Products and Electronic Delivery Systems Bill of 2018, for which an SEIA was written by a senior health department official. The author takes sides throughout, advocating in favour of policies instead of critically evaluating them. Regulations are proposed without even a motivation, and with the explicit admission that no research exists to support them. Many assumptions are stated, unsupported by citations. The assessment is rife with vague and obviously biased speculation. Of several policy options, only one is evaluated, and it is declared to be “preferred”, though it is unclear who prefers it and why. Benefits are assumed with neither evidence nor any further critique. Arguments about costs are rebutted, as befits a motivation rather than an assessment. It lists behaviours that must be changed, without stating why they must be changed.
Stakeholder consultation was limited to only 13 hand-picked invitees, of which 11 responded. Other than industry participants, all respondents favoured the proposed policies a priori. Groups that might have challenged the policies, such as the Free Market Foundation, the Institute for Race Relations, the Centre for Development and Enterprise, or AfriSake, were not contacted for comment. Many directly affected groups, such as small retailers, were also not contacted. Some – such as consumers themselves – were ignored completely.
“In both [these SEIAs],” writes Van Staden, “the authors go to great lengths to highlight the moral appropriateness of the intervention and list, very generously, the supposed benefits of the intervention. In contrast, when the disadvantages of the interventions are to be analysed, the authors merely mentioned them in passing and dismissed them off-hand. The public is without exception listed as a beneficiary of the intervention, and never as a victim, regardless of whether evidence exists that the intervention will have a detrimental effect on the public.”
SEIAs have their basis in the constitutional demands of good governance. In particular, they address requirements to “provide effective, transparent, accountable and coherent government”, and to provide the public with “timely, accessible and accurate information”.
The aim of an SEIA, according to official government guidelines, is “to minimise unintended consequences from policy initiatives, regulations and legislation, including unnecessary costs from implementation and compliance as well as from unanticipated outcomes”, and “to anticipate implementation risks and encourage measures to mitigate them”.
Principles of Good Law, a report by the Good Law Project chaired by Prof. Mervyn King, describes SEIAs as a means to establish whether law is “good law”, beyond mere jurisprudential considerations. It says that SEIAs are multifaceted analyses and quantification of the purposes of laws, their desired consequences, their estimated secondary and unintended effects, including impacts on the economy or society in general, their feasibility, efficacy and enforcement prospects, their costs and benefits, the extent to which other departments are implicated, and the advance provision for all budgetary, staffing, training and related needs in the context of available resources and the impact on administrative capacity.
Government’s guidelines explain that unintended consequences can arise “through inefficient implementation mechanisms, where stakeholders face an excessive cost from complying with the regulation, by over- or underestimating the benefits associated with the new rule’s aims, and/or by underestimating the risks involved – in other words, by overestimating the likelihood of success in achieving the anticipated benefits”.
The SEIAs available to the public do nothing to alleviate these concerns, because they are overtly biased in favour of the proposed policies or legislative amendments, uncritically accept claimed benefits without evidence, systematically minimise the costs and risks, and do not touch on the possibility of unintended consequences.
Assessments are conducted under the auspices of a SEIAs Unit established in the Department of Planning, Monitoring and Evaluation (DPME), of which the President is the head. This unit is meant to ensure the implementation, quality control and capacity support for SEIAs across government, but not to conduct the SEIAs itself.
This points to a key problem with the guidelines, namely that SEIAs are to be conducted by the agency or department that sponsors a policy, bill or regulation. Of course, those who propose legislation, policies or regulations have a clear vested interest in conducting assessments that are favourable to their objectives. Even if they are not deliberately fudged in favour of the proposed change, those who conduct them may be selected for their sympathetic views and may easily fall victim to confirmation bias. Far from ensuring good law, therefore, those who conduct SEIAs end up merely motivating and rubber-stamping the executive’s proposals.
Van Staden says it is the FMF’s view “that SEIAs must be conducted by independent third parties with no ties to the sponsoring departments and which do not themselves exhibit some bias relevant to the matter to be investigated”.
When SEIAs are not published, this is wilful non-compliance and exposes government to obvious legal challenges. But even when they are published, SEIAs appear to be little more than “malicious compliance”. They make it appear that government is following the rules, but the SEIA authors are motivated to arrive at a predetermined conclusion. Government merely ticks the legal boxes with the full knowledge and expectation that the exercise will not have the intended result of assuring benefits, minimising risks and costs, and avoiding unintended consequences. This sort of “malicious compliance”, too, should be challengeable in court.
SEIAs, much like Environmental Impact Assessments, add red tape to government decisions. This is not a drawback. This is a benefit. The supreme power of the state ought to be wielded only with clear and elaborate justification and with full knowledge of the likely consequences to all members of society.
Detailed assessment requirements also prevent a government from making too many arbitrary new policies, laws or regulations. Prof. King writes, “in most advanced countries there is a tendency towards legal minimalism”.
“This takes different forms, ranging from the view that laws need to be drafted in brief and simple (‘plain’) language, to more substantive liberalisation and deregulation,” he adds. “These trends are seen to be part of, or a concomitant to, good law. … Laws should provide only for that which is truly needed and can be enforced effectively.”
Law that does not achieve its objectives can cost society or the economy a great deal. Regulations that favour certain individuals, groups, companies or industries can pose a serious risk to others. Policy with good intentions can have grave unintended consequences. Even laws that appear to be effective can come at too high a cost of compliance, or unduly disadvantage certain socio-economic groupings.
Not only should South Africans insist on SEIAs to accompany every major new bill, policy or regulation, but they should also insist that those SEIAs are conducted by independent agencies. To have them written by those who propose or support a given position undermines their very purpose.
The next time a government department or agency proposes a new policy, law, amendment, rule or regulation, citizens ought to demand to see a properly conducted, independent SEIA. Without it, it is impossible to judge the merits of a proposal, and any such unsupported proposal ought to be rejected out of hand.
Full disclosure: Although it accords perfectly with his views, the Free Market Foundation commissioned this article from Ivo Vegter.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER