Oireachtas Joint and Select Committees
Thursday, 5 September 2013
Joint Oireachtas Committee on Finance, Public Expenditure and Reform
Regulation of Lobbying Bill 2013: Discussion with OECD
No. 7 on the agenda is consideration of the draft heads of the general scheme of the regulation of lobbying Bill 2013 with representatives of the OECD, through the use of video conference facilities. I welcome Mr. János Bertók, the head of the public sector integrity division of the OECD; Mr. Julio Bacio Terracino, a policy analyst with the OECD; and Ms Ulrika Kilnes, a junior policy analyst with the OECD. The format is that Mr. Bertók will make some opening remarks which will be followed by a question and answer session.
By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If they are directed by it to cease giving evidence on a particular matter and continue to do so, they will be entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person, persons or an entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.
I ask Mr. Bertók to make his opening statement.
Mr. János Bertók:
It is a great privilege to be available to provide some insights. We are very happy to share some lessons and experiences from other countries. The OECD covers the 34 most industrialised nations. Very few countries within this group have introduced legislation or government regulations in this area. Less than one third of OECD member countries have experience in this regard. The United States which has been active in this area for more than half a century is one of the few countries with long-lasting experience. Canada has more than 20 years of experience. Some of the countries in Europe have started this process more recently. There has been an acceleration in this respect in the last year or so as many countries - most recently, Austria - have considered and passed laws. I am sure members of the committee are aware that the UK Government has brought a proposal to that country's parliament with regard to introducing legislation on lobbying.
I would like to highlight the political difficulty associated with the subject of lobbying.
I congratulate the joint committee on taking this very brave and forward-looking step because experience shows that countries are generally pushed by certain scandals or circumstances into making legislation. For this reason, if one takes a forward-looking approach, one has a much better chance of providing a proportionate response to address the key concerns. Experience shows that if countries or governments are under pressure, they tend to take an approach that overshoots, as it were, as they seek to re-establish trust. Experience does not show, however, that such legislation has an immediate impact.
Process and results are of equal importance. Experience shows that the implementation of this type of legislation starts with the definition. Consultation and debate are needed to achieve a wider consensus on the definitions and understanding how the legislation will operate in daily circumstances.
I thank the joint committee. I look forward to responding to members' questions or providing further insights and details in respect of certain issues.
On the issue of current standards, some rules and regulations governing lobbying are in place in the European Union. Do these provide the standard to which the Irish Parliament should operate or should we use them as a benchmark on which to build?
Mr. János Bertók:
The Chairman raises a very important point because lobbying is not only a reality but also a global issue. Lobbying takes place at a global, supranational and national level. How does one provide a consistent framework to promote transparency and accountability and create a level playing field? Using existing regulation as a benchmark is very important. We also need to examine what other countries have in place at national level. Some are promoting a much stronger or higher level of transparency, and wider issues are covered by registration. If we examine the experience of other countries, one finds that in responding, one needs to identify the concerns and how one's legislation could provide a proportionate response to these. Second, because lobbying is a global or European issue, one needs also to position oneself and see how one's legislation and system fits into the much wider European or global system.
At a global level, lobbying is also subject to cultural influences in different countries. It is, for example, of a different nature in the United States and Europe. Does Mr. Bertók distinguish between different types of lobbyists or organisations engaged in lobbying? For example, one has national organisations representing trade unions and employers which engage with government or opposition parties. One also has groups representing sectoral interests such as farmers, business sectors or the disabled. Are such groups considered different from what one would describe as organisations that engage in lobbying on a single issue or specific legislation going through parliament? My question relates to the registration processes and the types of records that must be maintained in engaging with different types of groups.
Mr. János Bertók:
Exactly. The Chairman is focusing on the most sensitive and, at the same time, most important question. On the one hand, one has countries that use a more or less similar approach to define lobbying. This is very important. It is the key and first precondition for defining an appropriate response. On the other hand, the scope of application in terms of registration and reporting, for example, the frequency and extent of reporting, depends on the concerns. Countries generally share the view that those who are paid or have a certain vested or commercial interest and are, in some cases, very powerful and can organise very substantial resources are the first target of registration and reporting systems. From this perspective, it is very important to strike a balance as regards how, on the one hand, one defines the types of lobbyists which are the most important for transparency reasons and to create a level playing field, and, on the other hand, how to define the exceptions. The latter are related to the culture or economic or social circumstances. The Chairman asked questions about charitable or church bodies and other not-for-profit organisations. It is true that many countries provide exemptions from the reporting process.
To give an example, as I indicated, we have major organisations involved in the areas of trade union activity, business, agriculture, sport, the charitable sector and so forth. On record keeping and how politicians and the public service engage with such organisations, if I am asked by an organisation when the budget will be introduced and whether the joint committee intends to engage with groups as part of the pre-budget process, I will, in responding, be disclosing information as opposed to engaging with the organisation in question about, for example, a particular aspect of a Bill. In terms of administration and record keeping, how would one avoid a scenario where one would be writing in a ledger details of one's activities every morning and every night given that much of this information is given in passing and is not specific or would not be considered mainstream lobbying?
Mr. János Bertók:
This is a very important issue. The experience of countries with lobbying legislation shows that lobbying legislation is linked to other transparency measures, consultations and inclusion in policymaking. At the same time, it is important to understand how existing mechanisms such as parliamentary or public hearings and consultation processes work. Social partnerships are in place in many countries. One must understand how these mechanisms are linked to lobbying. Experience shows that when there are existing mechanisms which provide sufficient information, that is, where transparency and the level of information are sufficient, for example, social partnership meetings and public hearings are announced and documents are available, such activity does not fall within the scope of the lobbying legislation.
On the issue of what type of information is provided, it is important to understand in the definition of lobbying that it is contact between lobbyists and public officials with a view to influencing public decisions, policies or administration. If a request is made to a public official, the contact, by its nature, is similar to consultation. In such circumstances, many countries do not consider this lobbying because it relates to the provision of factual information by a public official.
That answers the next question I intended to ask, which was to define the difference between the disclosure of factual information and engagement on what direction particular legislation is taking. I now invite members of the joint committee to put questions to Mr. Bertók.
Thank you. The Chairman has dealt with some of the important issues, but I wish to raise a few further points. The first point relates to law firms, and perhaps accountancy firms, and the possibility of invoking professional privilege. Is that an issue that arises? The second point refers to what might be called intra-government lobbying, such as lobbying by a local authority of central government. I am aware there is a huge industry in the United States of such lobbying. Has that come up in countries of a similar size to Ireland? We are not a federal country, but local authorities may want certain things for their areas as opposed to other areas.
Mr. János Bertók:
These are very pertinent questions and there is experience of this specific to the European context or the low administration countries. In a sense there may appear to be a difference between some of the overseas countries such as Canada, the United States or Australia, but there is no real difference. It is a level playing field, no matter whether lobbying is done formally by a lawyer or somebody of a different profession. However, in the European context - this came out at super national level - there are some other considerations. In many countries the response is divided.
At a sub-national level, a few countries have a different regime and for federal governments, such as in the Canadian provinces, it may also be different. The Senator mentioned the United States and there and in Mexico there are different systems, with different levels of transparency and procedures and sometimes different types of institutional frameworks to support and monitor this. In Europe, countries use a single system covering both central and local government. However, in some countries, such as Italy, there is currently no central system and for this reason there are fragmented responses at provincial level and in certain central administration areas, for example in the agriculture sector. We can guess why this is the case. This is also the case in Germany. There, two landers or states introduced a monetary system. However, at federal level there is nothing similar.
Mr. Julio Bacio Terracino:
Going back to the issue of the lawyers, we understand the Senator's concern and where he is coming from on this. In some countries what happens is that confidentiality between the lawyer and the client obstructs disclosure, in terms of lobbying. As Mr. Bertók mentioned, in some countries lawyers are exempted from disclosing information. For example, this is the case in Austria. However, we recently conducted a survey among lobbyists and legislators and found that this issue is still a concern. Therefore, although this may be excluded, the lobbyists in that particular country feel there is not a level playing field and there is unfair treatment towards them because lawyers often conduct lobbying practices but are excluded from having to make disclosures, etc. In the survey we conducted recently, more than half of the respondents interviewed considered lawyers as lobbyists. Therefore, the issue is not settled. As Mr. Bertók said, some countries include lawyers, but others do not. Even once it is settled in regulation for example that lawyers are excluded, the issue remains because of the concerns of the other players in lobbying practices.
Does Mr. Bertók see it as important to distinguish between commercial lobbying and lobbying for charities or charitable purposes, where people may be lobbying on a voluntary basis? Commercial activity is very different. How does he think this should be dealt with in the legislation?
Mr. János Bertók:
I see this from two perspectives. One perspective concerns the function and the survey we conducted. The survey is ongoing and it shows that lobbyists consider a level playing field very important. Whether the lobbyists are churches, charitable organisations or lawyers, if they are contacting or influencing public officials or policy and if they want to participate in that sense and shape the public debate, they are the other stakeholders or competitors. They feel the situation is disadvantageous for them. The second aspect concerns the reality. The reality is that many countries faced the issue of feasibility or how to make the lobby system manageable, in terms of registration and reporting. There could be overload, for example, if they want to make it comprehensive and cover everyone. Experience in Australia in the mid-1980s showed that doing this became unmanageable. The level of compliance was very low and for that reason, the system was not really functioning and was abandoned.
It is important to focus and choose the right scope. This is essential in order to address the problems and what one considers the main concern. This is the common denominator. Some countries consider the paid lobbyists as the entry point and the most important. After they strike that balance, they define their remaining concerns and include these. One of the conclusions of the June lobbying forum was that experience shows it is better to take an incremental approach - not to cover everything immediately and overload the whole system - with registration and reporting. Instead, the signal should be given that these lobbyists are there and that other actors are also important. However, the level of their activities, which is their incentive to participate, does not require specific registration. For example, some countries use a threshold, such as a certain amount of money, while others by definition exclude groups as an exception, so that they do not cover churches for example. There are pros and cons to some of these examples.
I take it from what Mr. Bertók has said that he does not favour exemptions, at least not initially. He mentioned inclusion on an incremental basis. However, if somebody is lobbying a government or department in regard to a charitable organisation or charity and if the lobbyist is lobbying on a voluntary, non-paid basis, would he not agree that these lobbyists should be excluded?
Mr. János Bertók:
Lobbying is a very complex issue and the reality is very complex. This issue was discussed at the June lobbying forum and we saw there that lobbying techniques and forces are evolving. Many of the major sectors - the pharmaceutical sector was mentioned here - are major actors in this area and they are using certain techniques. They are financing think tanks or research laboratories. Of course, they are using non-profit organisations. More and more, even in Europe, grassroots lobbying is taking place. The method in the United States is very fundamental. From our perspective, this is a dynamic process. This means we must examine whether we would like to focus on the key signal that lobbyists exist and that other actors can also be used.
If this is happening and continues to happen, it can be grown, modified or extended based on experience and it could redefine the scope of the legislation and the reporting process.
Mr. Bertók, we seem to have a slight technical difficulty. We can hear you, but we only have a freeze-frame photograph. Despite your many skills and qualifications, I doubt you are a ventriloquist or that you can talk to us from a frozen position. As we may have a technical difficulty, I propose that we suspend for one or two minutes in order that we can connect a proper live visual feed that coincides with the audio feed.
Mr. Bertók mentioned in his presentation that the regulation of lobbyists was associated with other transparency issues. We have had a long debate and some controversy on the whole issue of freedom of information in this state. One of the core issues that has arisen in respect of that legislation is that of an exception based on commercial sensitivity. Sometimes the concern is that the exemption or rationale would be used as a catch-all and that effectively it would allow almost a haemorrhaging that was not really envisaged. How does Mr. Bertók account for this? How would he guard against it in respect of lobbying and lobbyists?
My second question relates to exemptions on the basis of the lobbying body being voluntary, community-based or regionally based. On the one hand, I understand the logic of the position Mr. Bertók has set out. He has cited the position in Australia and said he is not in favour of a system that is so cumbersome that it fails. I understand and we appreciate the point he made about cultural difference and context. However, at the same time I have a concern relating to lobbyists not being paid or occupying a certain cultural position in society. I have in mind specifically the churches. In many societies, our own included, somehow there is an exemption for them. We should bear in mind that not all lobbying relates to commercial transactions. Some can be on core social issues relating to civil liberties and all of the stuff that makes up political life. How do we calibrate and balance this to take account of the need not to have a cumbersome system, to have a system that is culturally appropriate but that does not give an out to powerful strands of society which have considerable clout and actively lobby?
Mr. János Bertók:
There are two important aspects. The first relates to the information that can go public or be made available for the public or competitors. In that sense there is no difference between what is commercially sensitive information and what is done in private that is covered by freedom of information law. Certain information remains under the scope of freedom of information law and, therefore, there is no additional legitimacy in another Act to bring it out. In concrete terms, this means that in the legislation or the reporting lobbyists are not required to provide commercially sensitive information. They can highlight an issue - for example, what the aim is - or they can report who the client is but without providing information on the actual contractual details or other details, in other words, what is commercially sensitive. This allows for the provision of more general information, even in the case of negotiations or pushing certain positions in a defence contract. It allows generally for highlighting the subject but not providing detailed commercially sensitive information. That is one aspect.
The second aspect relates to how one strikes a balance. In the legislation in some countries they have taken out exemptions because they do not consider many types of lobbying to be a source of concern or very important. I understand that in Ireland people consider the level playing field to be more important. In other countries the approach is to have certain thresholds for reporting. This can depend on time spent or certain expenses involved. Some countries do not require all small interactions with public officials to be reported or even for those involved to be registered. However, if interactions occur more frequently and go above the threshold, the people involved are automatically subject to registration and reporting.
Another aspect is keeping the burden low. The OECD survey showed that a considerable number of lobbyists showed a willingness. If the legislation specifies a period of less than half an hour, they consider this sufficient and not burdensome. The attitude was similar if the reporting did not take too much time because of its simplicity. Again, this stems from a regulatory impact analysis and a simplification process. If the process is considered not to be burdensome, it can provide sufficient incentives such that even those who are not frequently involved such as charitable organisations or churches can be subject to the legislation and reporting.
Unfortunately, the picture has frozen again and I can only hear Mr. Bertók. I have a couple of short questions, some of which Mr. Bertók has already answered or touched on.
The entry level for those required to be registered is something that concerns me greatly. One of the points my colleague raised a few minutes ago related to when a pressure group was formed. It could be something as simple as a group of residents having regard to certain items that they wish to discuss with their local public representative, whether a Member of Parliament or otherwise. Are these individuals required to be registered as lobbyists in the view of the OECD and based on the examples Mr. Bertók has, no doubt, gone through as part of his job?
I am interested in the point to which Mr. Bertók referred regarding the level of detail required by way of a report to be issued by the individuals concerned. As a public representative I would be greatly concerned as to whether individuals who come to me presenting information, as they do on a regular basis, attempting to have me influence those around the Cabinet table in this Parliament, would be subject to any lobbying laws that we introduce.
Mr. Bertók touched on one of the most important points concerning charities. My colleague, Senator Coghlan, mentioned it earlier. From my experience in the United States, such organisations use big firms, such as law firms, on a regular basis to engage in the lobbying process for them. In that regard the lobbyist is clearly registered and adhering to the law of the land but not necessarily the spirit of the legislation, which is that the individual who hired them should be the one who is registered so that those in the public domain such as public representatives or interested parties are aware of whom they are talking to when they speak to the public face of a lobbying firm. Mr. Bertók addressed some of the issues already but I would welcome his response.
Mr. János Bertók:
I would like to deal with the questions in the reverse order. It is very important to understand the aim of registration and reporting. On the one hand it can support a level playing field so that everyone can understand what is happening and the different positions of people who are providing input into the debate. On the other hand it also supports public representatives, the decision makers. One surprising result of the opening forum is that public officials do not benefit from this system. They rarely check the background. It is better for the person seeking a meeting to be registered and for the clients to be known or what type of interest they have been representing. One needs to see that this system could be beneficial for public representatives. It would allow them to see the background of individuals, the professionals, the various clients being represented, the issues concerned and who they lobbied. For that reason and the sake of transparency it is important to provide information not only about the name of the firm or the professional lobbyist but also the background; who is the client and what interests they are representing or promoting or the interests they represented in the past. That is the response to the last question.
Checking the register is a very valuable source of information for public officials. To respond to the second question, similarly, in the background document the Deputy asked quite a lot of questions about public officials and how they are considered as a lobbyist. As a main trend, those who are public officeholders who are officially representing the public interest are considered to be lobbyists in very few countries. However, if they have dual mandates, for example, if a locally-elected official or member of parliament who at the same time also represents a commercial company is promoting the interests of the commercial company, he or she is considered a lobbyist. They are wearing two hats. If they are acting as an MP, a representative of the people, to promote in the executive branch or other parts of the public sector they are not considered as a lobbyist. However, the general rule is that if they are changing the hat they are a part of the lobby business.
Mr. Janos Bertok:
This is a very important issue, not necessarily relating to policing but lobbying. It takes two to lobby. I mentioned the role of the other side, which means the public officials and their role and responsibility, for example checking whether the person is registered. In this case, if the conversation goes beyond the norm between an MP and a public official and is of a different nature that should immediately be signalled and the person should be asked whether the conversation is now about lobbying. Automatically, that should be part of the registration and reporting. I do not call it policing but in some countries, such as Canada, there is an obligation on senior public officeholders to report such contact.
I thank Mr. Bertók. I cannot see him at the moment but I will try to talk to his disembodied voice. I am new and trying to navigate my way around the parameters of the debate on the issue. It might be useful for us to see some contrasts between how various countries deal with some of the issues of how one balances different competing imperatives. Broadly speaking, I am in favour of the fullest possible transparency when it comes to influencing decision making of Government, local authorities, State bodies and in particular commercial interests. One has that imperative, but at a grassroots level, following on from the previous speaker, at a local constituency level if we were to register every time constituents engaged with public officials in order to influence them it would be so burdensome that no constituent would ever do it and no public representative would do anything else other than fill out forms. I understand the distinction Mr. Bertók made between a public representative who is representing a specific commercial interest and one who is just representing constituents. There are many grey areas.
To take one issue as an example, many small businesses are in serious trouble in this country and a lot of local representatives might say, on foot of representations, that we need to do something about parking charges, rates and rents, not because they are acting in the interest of a specific business but because they are looking for solutions for what is a macro-economic problem. However, they might be spurred on to do that because of particular representations by local small business. There is a great deal of difference between that and a multinational corporation sidling up to a Minister and saying, "Put this into legislation for us" or sidling up to an MP or a TD, as they are here, and saying, "Vote for this particular piece of legislation". What would Mr. Bertók have to say about those difficulties and could he comment on the way different countries have taken contrasting approaches to getting that balance right?
Mr. János Bertók:
We are closer to the reality now and this is to consider the impact of any legislation. To start with the wider picture, lobbying is not considered as a positive activity. In the wider society registration - declaring someone who is doing lobbying - is not necessarily considered to be a positive activity, although there is a high recognition that lobbying could provide invaluable information and support and inform decisions. However, the lobbying profession is struggling with the perception that it is using undue influence to capture certain interests and promote against the public interest. In the United Kingdom, for example, we heard that reputable people do not want to be registered. They do not want to be part of this because they do not want to be seen to be part of a so-called dubious business. That shows again that there is a psychological dimension in that the impact of the registration not only could be impacting the process in terms of certain costs, time, etc., but that the social cost could be a very considerable factor in terms of whether to be part of the system.
As I mentioned, countries are moving in an incremental way. Few countries have a very wide scope because of the burdens and the costs. For that reason they tend to focus on identifying the highest risk for possible capture. For example, in terms of where the big money is involved it is the multinational corporations. These are the professional lobbyists. This is the most common answer to cover these actors. However, in some cases there are also other considerations. I have never heard small and medium enterprises, SMEs, as a consideration. They might be a consideration in some countries but I have never heard about certain advocacy groups, whether environmental or social, being a consideration because they are considered as promoting the wider public interest.
I can give the committee the other perspective. Professional lobbyists, whether in the industry or professional as an independent, have a point when they explain that some of the major civil society organisations have much more money and resources to shape the public debate than a multinational organisation. That comes back to the point about the level playing field. However, it is in the members' hands to understand the risks and the concerns, whether economic, commercial or societal, and strike that balance. They should keep in mind that it is not over-burdened by the process or by the verified scope of the system because experience shows that it has a consequence.
I thank Mr. Bertók for that. In a way he is throwing the ball back to us to work out these complexities, which is fair enough, but I thank him for setting out the parameters. What I understand him to say is to proceed incrementally and start with the high risk. That seems to be the general approach, and not to be too burdensome. Mr. Bertók mentioned, and my limited knowledge tells me this would be the case in the United States, that some of what we might consider the high risk groups, namely, big, well-resourced commercial interests potentially can side-step lobbying regulation by using not-for-profit fronts. Is that something that is recognised in lobbying legislation? Is it something different states have attempted to deal with by trying to bring those groups that pretend to be not-for-profit but are actually acting in the interests of particular commercial interests into the scope of the legislation?
Mr. János Bertók:
This is an emerging issue because existing regulations or legislation focus on what we call the professional lobbyists in the traditional sense. However, there is more recognition now, particularly in the US or in the Americas, that using the strong organisation, particularly the grassroots lobbying, has a much higher impact. Similarly, in terms of tracking the source, if there is money involved, for example through funding research, operations or mass public events including marches, etc., we are talking about providing information on the source and connecting this to the client. For example, at the federal level in the US the existing systems have limited experience with the new forms of lobbying, the grassroots lobbying.
Mr. Julio Bacio Terracino:
If I can add something that could be covered, unfortunately, this goes back to what Mr. Bertók said earlier about the concerns in certain countries and what they did to balance the different interests to which the Deputy made reference earlier. Everybody wants to have, at least in the beginning, comprehensive coverage to ensure nothing escapes from the regulation but because of some of the issues we are discussing here at times, that is impossible. One way of avoiding that, and this is the case in the United States, for example, and also at the state level, is to have a very broad definition which sends a signal that everybody is considered a lobbyist. It sends out a first signal in terms of who is a lobbyist, and no one is left out of this definition. However, for the purpose of disclosure and registration, because of administrative burdens or any other issue, they have thresholds to which Mr. Bertók made reference earlier. In the case of the United States if lobbying is more than 20% of a person's or an organisation's activities that person must register.
If lobbying activities are smaller than 20% of the activities of a person or organisation, then this person or organisation needs to register. However, that does not mean that the person, in principle, is not a lobbyist, but that it accounts for less than 20% of his or her activities. In the case of California, for example, at the state level, it is related to the amount spent and if it is more than $2,000 that is spent. This provides one of the solutions in order to give the signal that one has a comprehensive view of the issue but also that one has a practical or feasible approach.
Going back to the grassroots or to these other ways that might escape from the regulation, some countries, due to the concerns, regulate them or they are not accepted. For example, in Canada, charities, churches and all these type of organisations need to comply and register.
I welcome Mr. Bertók. I hope everybody is having a good time in the château. I have happy memories of that.
Lobbying is a symptom of a deeper illness in public policy and we should dig down into the symptoms. Typically, I suppose these are merely the guys who get caught. We have a culture of regulatory capture, rent seeking, insider or outsider model of government and clientelism, and when one adds all those up, most countries are effectively bankrupt because if one gives in to all the pleas made, one must go into borrowing, etc.
We have a particular problem in banking, construction, agriculture and transport, and I wonder whether Mr. Bertók has any sectoral thoughts on it. Those are really huge. We also have a problem of a weak Parliament and a very strong Executive. Has Mr. Bertók suggestions on how Parliament could strengthen its grip on these persons? Government has moved away so much from elected representatives to officials and we have got a very powerful ministerial system.
How does one keep lobbying open? Should we have the right of access for other Members of Parliament for when pressure groups meet Ministers? Should the meetings in Parliament be open to members of all parties - Opposition, Independents, whatever - when somebody is in here lobbying for something?
I have a particular concern about the success of tax lawyers and accountants. The OECD is submitting to the G20 today some material on massive tax avoidance, which is a perverse form of lobbying which causes all sorts of problems for exchequers, and I commend the OECD on that initiative. We have got to a stage where robbing Peter to pay Paul usually will have the support of Paul, Paul's lobbyists and his accountants, but it leads to bankrupt countries. I hope Mr. Bertók will address the lobbying as a symptom of a much deeper malaise in public policy.
I am delighted with the initiative and I thank Mr. Bertók for his reports. We spent three days interviewing bankers here and that very much determines how we feel at this point. I thank Mr. Bertók for the initiative.
In summary, how do we achieve more openness and transparency and how do we strengthen Parliament against bureaucrats and the Executive? It seems that the power has devolved to the bureaucrats and the Executive and they use it to spend more money than a country can afford. Most OECD countries, not only this one, have dramatically increased their debt-to-GDP ratio. Can stricter control of all of this save countries from going broke?
Mr. János Bertók:
Senator Barrett raised a very important aspect. This is also part of the reality. If we go back over history and look at the United States, there is documented evidence of how the very intensive lobbying was one of the causes of the financial crisis there. This is well documented. It shows that a system is a single system and there is no different lobbying registration and reporting system for certain sectors. Senator Barrett mentioned the financial or banking sector. This single system should also handle these concerns of which Senator Barrett spoke. We are talking about one single system which includes or addresses these kinds of concerns but also the SMEs, social groups, charities and civil society organisations of which we spoke in the previous couple of minutes. The lobby registration legislation is not the only tool for this. On transparency and accountability mechanisms such as consultation, part of it is also how public officials or the members in the parliament balance the views and invite other alternative views in order to get additional information.
This also links to other what we call safeguards for the integrity of the decision-making process. In the list of questions, the committee highlighted some of the questions related to cooling-off periods or revolving doors. I can also refer to some countries, in fact, a neighbouring country but also the United States, on the revolving door practice. For example, between 60% and 70% of the Congress, for example, in the Senate, go to lobby firms to become lobbyists. They are lobbying previous colleagues. It is documented that if they have the same colour or group in power in Washington DC, the former US Senators receive on average between 60% and 70% higher recognition. I refer to income. It shows that lobbying is not only representing. Lobbying is also access.
How one balances this access is not only about provisions of the lobbying legislation but is a much wider question of transparency and, as I mentioned, inclusion in the policymaking. It is similarly important to consider the linkages of the Oireachtas legislation on lobbying to open government, inclusive policymaking, consultation processes and revolving door issues, such as cooling-off periods, representations, etc.
I thank Mr. Bertók so much. I wish the projects well and I hope we meet again, perhaps not electronically. Should there be compulsory regulatory impact analysis in order that the Minister will publish what lobbyists on both sides stated but then the expert view of the consequence for a macroeconomy if the Government goes ahead with this proposal or Bill?
Mr. János Bertók:
First, the entry point is to provide information about the sources of input in the development of the draft policy. That is like a footprint which is increasingly used, not only at the European level but also in countries. For example, in Germany or Austria, both continental European countries, this is an important transparency tool. What level of information in addition is provided, which is not only who participated and what were the sources of the information but how these were considered and how these were built, is also part of the policy debate. This is how the legislature can require from the executive branch what type of information he or she needs to make an informed an decision, for example, what is the ex ante assessment of the potential impact.
I will give one more perspective because Senator Barrett mentioned regulatory impact assessment.
Not many countries use ex-anteregulatory impact analysis for lobbying legislation. One of the reasons I mention it is the question of urgency. A scandal may arise and the government or the parliament needs to commence the process with urgency. Last year legislation was passed in Austria on lobbying and transparency and a regulatory impact analysis was used. Canada is using a kind of sunshine specific process, whereby every five years it requires an assessment of the impact and function of legislation, including legislation on lobbying. The most recent assessment was conducted this year. It has assessed not only implementation but also the impact of lobbying legislation and regulation.
I thank Mr. Bertók for sharing his experience and insights in this area. It is the equivalent in the modern context of what people referred to years ago as the unfamiliarity of the jungle. One needs a guide. Businesses that seek to develop goods and services want to ensure they can be produced and distributed in as certain a territory as they can arrange. Politicians and the public servants who support them are the agents for bringing about that certainty. We get to the core of the problem when we say that we should do whatever we can to shed more light on the activities of business people and those who do things that impact on public well-being such as not-for-profit organisations in order that they have clarity for their activities and conversations with people who have power.
As Senator Barrett noted, we have to be extra careful in this country because the Government is tight knit and powerful. It is not easy for parliamentarians to insist on debate or define the scope of such debate. We must be mindful of this when setting out a playing field or territory. The phrase "playing field" suggests it is a game, but these issues concern territory in which people live, work, learn and look after each other. We must be sensible and relevant in the rules and parameters of that territory. Mr. Bertók has seen a wide universe in this regard. In the context of a powerful and tight Executive that only changes every five years, where does he think we should concentrate? We will not get all of the answers to our questions, but it would be useful to learn where we should focus our efforts.
Mr. János Bertók:
It is difficult to respond to the Deputy's question because it is closely linked with the context in Ireland. However, there are similarities with other countries where executives work closely with the private sector and individuals roam from one to the other. On the one hand, this is highly beneficial in bringing inside experience and information, but, on the other, it raises certain concerns. It is not entirely linked with the issue of lobbying in that it also relates to the functioning of the Executive branch and the policy making process. One remedy is, of course, transparency.
On the wider question of why transparency is important, we see in OECD member states, particularly in Europe, a decline in trust in government and political parties. This decline is reaching a dangerous level where civil society begins to question the ability of the policy making machinery to promote the public interest. The major concerns are linked with fairness in decision making. In other words, who benefits? The United States has the longest experience of providing information on regulations and documenting the link between money, lobbying and voting. Unfortunately, lobbyists enjoy a high rate of return. This is a lucrative business. Obviously, the question that arises for other economic actors is how to level the playing field and bring balance back to decision making. Registration of lobbyists provides a meaningful tool to shed light on what is happening and better understand the actors involved, what they are promoting and who their clients are. At the same time, it offers a counterbalance by mobilising other views. When one considers the frequency of reporting, it is also important to know who is lobbying whom and for what purpose. This information is important for competitors and society, as well as for politicians in understanding what is happening in the wider policy making arena.
On behalf of the joint committee, I express my appreciation to the OECD for facilitating this meeting which is the second engagement we have had with the organisation. At the start of the summer we had an engagement with Mr. Pascal Saint-Amans on global taxation and he gave us great assistance on the issue. Mr. Bertók and his colleagues have been generous with their time. We appreciate the extensive range of experience on which they were able to draw in assisting us with our examination of this issue. I thank Mr. Bertók and his colleagues, Mr. Terracino and Ms Kilnes, for facilitating us. Members will be travelling to Paris later this year to meet the OECD, at which stage we may have an opportunity to meet them again.