The economic crisis has sparked loud calls to improve governance both in private sector boardroom practices and public sector management. It has also drawn attention to lobbying, as governments consider reforms that will affect business practices, taxation and more. Lobbying lies at the interface between governments, businesses, non-profit organisations and the population at large.
Lobbying is a channel that civil society uses for influencing public decisionmaking. Businesses, labour and nongovernmental organisations all exploit it to varying degrees. Some 15,000 lobbyists are registered in Washington DC, and 5,000 in Ottawa. Nearly 3,000 lobbyists are registered with the European Commission in Brussels and over 4,500 in the European Parliament. Lobbying mobilises significant resources too: $3.5 billion was disclosed for lobbying the US federal government in 2009. This figure is $180 million higher than in 2008, indicating that lobbyists do not hold back during recessions, but work harder to influence reforms.
Interest groups will always seek to influence government decision-making and are a reality in modern democracies. Indeed, lobbying can yield valuable information and data for more informed decision-making. But as lobbying happens on the sidelines, if not shadows, of the democratic process, it also brings risks of distorting policy and undermining wider public interests. Deals struck behind closed doors between lobbyists and public officials worry voters, in particular when the public picks up the bill. This behaviour fuels scepticism in democracy.
An IMF paper published in December 2009 links intensive lobbying and high-risk lending practices. The paper concludes that “the prevention of future crises might require weakening political influence of the financial industry or closer monitoring of lobbying activities to understand the incentives behind better”.
Little wonder that lobbying causes concern around the world, particularly if there are no clear standards for expected conduct of public officials and lobbyists.
The financial and economic crisis has reinforced these concerns. Governments had been rapidly reshaping regulations in the face of cries against business-as-usual and for changes to stop the crisis from happening again. True, governments saved the day by acting swiftly to take over failing financial institutions and bail out firms through a quick and massive infusion of funds. But as many of these institutions are again making large profits while welfare remains threatened, people understandably wonder how far reforms will really go. Have lobbyists slowed the process down? Can lobbying be made to operate more fairly?
Developing or updating regulations and setting standards for enhancing transparency in lobbying are no easy matters. Policymakers and legislators must determine an appropriate, fair and enforceable response. Good judgement is needed to establish best practices.
The OECD, with its wealth of policy experience, has been leading a factbased policy debate on how to enhance transparency and accountability in lobbying. We have reviewed lessons learned from legislation, government regulations and also self-regulations by lobbyists. And to be sure, OECD countries are taking action.
Some are implementing legislation and government regulations, notably in Australia, Canada, France, Hungary, Poland, the UK and the US. Recently, both houses of the French parliament issued codes of conduct for lobbyists and launched registers. The European Commission also recently strengthened its regulations on lobbying. Israel, an OECD accession candidate country, recently amended its legislation too, while Slovenia is debating changes.
Several OECD countries are at bill stage or are taking action in parliament, including the Czech Republic, Korea, Italy, Mexico, Norway and the Slovak Republic.
Self-regulation by lobbyists themselves is also on the rise: lobbying brings benefits, so best not to abuse it and lose it, seems to be the view. In other words, transparency is in everyone’s interests.
An OECD survey of lobbyists shows that 76% agreed that transparency would help alleviate the negative perception of inappropriate influence-peddling. Moreover, 61% of surveyed lobbyists would welcome mandatory disclosure of their activities.
To help address these concerns, OECD members have recently adopted a recommendation based on a set of 10 principles as guidance to decision-makers on how to promote good governance in lobbying. Particularly in the context of the current crisis and for countries that are rewriting regulations for entire sectors, these principles will help rebuild trust, promote a level playing field for business and avoid potential hijacking by vocal interest groups.
The principles support transparency, for instance. This means decision-makers should know who the lobbyists are, and be prepared to disclose their names, objectives, clients and funding sources by keeping an up-to-date register. The US and Canada have long kept registers of lobbyists and encourage regular disclosure of lobbying activities both at the federal and subnational levels. Other countries have acted more recently, such as Hungary, where the 2006 Act of Lobbying Activities now requires lobbyists to register with the justice authorities and to submit quarterly reports on their activities. In the same year, Poland also passed a lobbying law to promote registration and transparency.
Policymakers should use the principles to foster integrity by providing guidelines on expected standards of behaviour of public officials and lobbyists. They should take action to prevent conflicts of interest, protect confidential information and prevent the revolving-door phenomenon, whereby public officials work in client firms and then return to the public sector again, bringing not so much expertise as insider information. France adopted rules of transparency and ethics for interest representatives in its lower house of parliament in July 2009, which includes a code that lobbyists must comply with. The French senate adopted a similar code in October 2009.
The OECD principles also encourage use of innovative technologies to assure compliance, transparency and enforcement. Canada and the US now use data systems for online search, transparency and disclosure.
To be fair, lobbyists do not always have to rely on government to oversee their trade. Compliance with codes of conduct can be achieved through self-regulation and with disciplinary procedures for violations. In Sweden and Ireland, for example, sanctions range from reprimand to expulsion from the professional associations.
The principles offer a menu of policy and regulatory options for decision-makers, ranging from legislation and government regulations to self-regulation. Each country can adopt the policies or regulations most suited to its needs.
The OECD principles on lobbying provide guidance to decision-makers at all levels of government and at both national and sub-national levels. They support the involvement of the private sector and civil society too. This underlines one of the essential thrusts of the new OECD principles, which is to encourage policymakers to level the playing field by dealing fairly and even-handedly with all interested stakeholders, and not just those with finance, in the democratic law-making process.
The new lobbying principles are now attracting attention in high-level global policy fora, and have been promoted in the OECD competition forums, the NATO assembly, and others. Our experts are actively involved in discussions on how to establish and review rules, policies and practices to foster transparency and integrity in all member and partner countries. We are also reviewing how lobby regulations function in particular contexts, while continuing to compile the global evidence and data needed to reinforce good decisionmaking.
Remember that the new OECD principles are not an anti-lobbying tool. Indeed, several countries that have improved transparency have not visibly reduced lobbying. Rather, the aim is to improve lobbying practices as part of the drive to foster open governance and restore public trust in markets and democracy. The OECD principles are a vital component in this effort to make the world economy stronger, cleaner and fairer.
OECD (2009), Lobbyists, Government and Public Trust, Volume 1: Enhancing Transparency through Legislation, Paris
OECD (2010) Lobbyists, Government and Public Trust, Volume 2: Promoting Integrity through Self-Regulation, Paris (forthcoming).
©OECD Observer No 279 May 2010