The Jean Monnet Program



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b) Budgetary evaluation


Executive oversight is an overall monitoring process, which includes budgetary evaluation aspects. However, the budgets of the agencies deserve particular attention. As we have seen, regulatory activity generates indirect costs, which are much higher than the direct expense of running regulatory bodies. The costs of applying the regulations cannot be taken into account within ordinary budget procedures and require particular budgetary discipline.
Consequently, the real budgetary cost of the agencies is not represented by their operational expenditures, but primarily by the costs of the public and private sectors' and consumers' applying the regulations enacted. It is difficult to estimate these costs, but there are now very sophisticated and sufficiently reliable methods (Compliance Cost Assessment) of doing so.197
In this context, the Commission should prepare the Regulatory Budget (RB) separately from the budgetary procedure, essentially on the basis of the RIA; it should establish total costs per agency and propose a maximum ceiling on European regulatory expenditure, adopting an operational budget for each agency on the basis of these two factors.198 The final decision would of course be taken by the budgetary authority (Parliament and Council) in accordance with the ordinary budget procedure. The RB may prove to be a very useful tool for controlling and improving agency activity, since, by placing a ceiling on the indirect costs of regulatory activity and setting the operational budget in accordance with that ceiling, it will encourage the agencies to allocate resources in the most efficient manner for achieving their objectives.
This task could also be entrusted to a “regulatory clearing house” within the central audit service in cooperation with the Budget Directorate‑General. This way of working could and should eventually lead to the creation of a real Community OMB.199
This method of estimating total Community regulatory expenditures and fixing the operational budgets of the agencies could also indirectly ease the budgetary process. All are familiar with the animosity that develops each year between Parliament and the Council over budgetary choices, reflecting their different policy orientations, and with the Commission's frustration at increasingly finding itself in the awkward position of having to implement policies without sufficient funds. The method proposed here involves objective data, in figures, being used for estimating regulatory expenditure, which should allow that part of the budget to be agreed with less conflict. It also provides a more realistic estimate, which should reduce the instances of frustration in the Commission and in the agencies themselves in their capacity as budget implementation bodies. In this context, it is not excluded that the Member States could directly finance a part of the overall European regulatory expenditure, in cases of lack of sufficient amounts inscribed in the annual budget under the ceiling of the financial perspectives.




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