Innovation featured prominently in the national election manifestos of the three largest political parties, following a parliamentary term in which the so-called fourth Industrial Revolution became a buzzword.
As the sixth parliament prepares to be sworn in, some of the issues on the regulatory agenda include spectrum policy, regulating the sharing economy (thresholds for Airbnb and possible clarification of labour law regarding digital platform workers) and policy direction on the fourth Industrial Revolution (the Electronic Communications Amendment Bill was withdrawn to “assess the policy and regulatory requirements needed to support the fourth Industrial Revolution and digital economy”).
Keeping policy and regulation aligned with fast-moving technological developments is not easy, and there are at least five regulatory process challenges that parliament will have to overcome if it is to regulate successfully for innovation.
1. Matching portfolio committees with member expertise
A significant challenge for political parties is matching member expertise with portfolio committees.
This task is difficult because the ranking of MPs on party lists is an exercise largely divorced from competence in the legislative areas most important to their respective parties.
You might assume, for instance, that a party which identifies economic growth, innovation, education, healthcare and public-sector governance as its five most important areas will ensure its lists include individuals most competent in those fields — in order to drive such a legislative agenda when in parliament. You would be wrong.
Whatever the justifications for not having such a process, and some will be credible, the result is the same — a motley crew that must be assigned to the role of best fit.
2. Educating while regulating
The mismatch between members’ areas of expertise and portfolio committees means that often, when faced with legislation, members are engaged in the exercise of learning about new concepts, issues and sectors while simultaneously developing the rules for them.
Developing committee expertise early should be a top priority. Due to the fact that committees tend to be further away from the public eye than plenaries, they present the appropriate forum for members to develop legislative and policy expertise in a less partisan fashion.
A lack of portfolio knowledge also prohibits members from effectively performing oversight functions. The most recent legacy report of the science & technology portfolio committee reflects that members conceded that they often did not understand what happened during oversight visits owing to their lack of specific scientific knowledge. According to the records of the Parliamentary Monitoring Group, the chair proposed that there should be academic courses in which members could enrol in order to broaden and enhance their knowledge of science and technology.
If lawmakers don’t understand how technology works, they won’t be able to regulate or provide effective oversight of those that make use of it.
3. Two cultures
In the mid 20th century, physicist and novelist CP Snow articulated one of the most important intellectual dilemmas: the difficulty of cooperation between contrasting cultures. The schisms between “men of science” and “men of letters” are sometimes vast — politicians think about five- or 10-year policy documents while technologists are more likely to think in short, iterative cycles.
If you have never heard of Francis Fukuyama, a politician might wonder if you’ve been living under a rock, and the tech-savvy would likely think the same if the name Satoshi Nakamoto means little to you. These are somewhat superficial cracks, but they belie more fundamental cultural and methodological fault lines.
It is important to avoid the extremes — on the one hand an absolute deference to science and technology in matters which require political judgment, and on the other, blind reliance on the popular will as the final authority in what are matters of fact and scientific theory.
4. Differences in the tech and policy assembly line
The way technological products and political products (policy) come to market are different. The engineering design process often involves stages of defining the problem, research, specification, brainstorming, developing a prototype, testing, reviewing whether the solution meets requirements, iterating if it does not (in other words going back to brainstorming and prototyping), and then arriving to a final product. The policy process often goes from prototype (draft) to final without any testing. Evaluation of policy prescriptions often happen years later, if at all, and even then tends to result in minor amendments and not new iterations.
A recent article published by the British Computer Society states: “Now is a critical time where we make decisions that will affect how a revolutionary technology impacts mankind for decades to come.” That reflects how regulators generally operate — with a view to determining policy that will remain relevant for years to come.
The fourth Industrial Revolution is characterised, however, by the fast rate of technological diffusion, at tremendous scale and scope. It will naturally stretch to its limits a regulatory process that is characterised by the polar opposite: the slow-moving development of rules which cover strictly delineated areas.
5. Pacing problem
The pacing problem is not new. Regulators have always been confronted with the challenge of timing legislation. The rate of technological advancement outstrips that of legislative action. And yet regulating nascent technologies too early can stifle progress, while leaving appropriate legislation that protects consumers and/or competition too late can leave the public with little recourse against exploitative practices and can enable first movers to become anticompetitive monopolies.
Countries cannot afford to have regulators with poor proximity to the subject being regulated, who introduce untested laws that are reviewed years after the damage has been done. This does not require an overhaul of democratic institutions, but rather a change in the tools and techniques used by those institutions.
Some of these “new” policy tools are already being used by agile, design-orientated organisations in advanced nations. While these methods are gaining popularity in isolated sectors such as fintech with regards to “regulatory sandboxes”, they are not yet ubiquitous or shaping how we think about national and international policy.
Expanding the sandbox approach beyond fintech is one way that could help regulators understand how a technology works, and how the market and users will respond to legislation.
Ultimately the same urgency demonstrated in regulating innovation and its by-products needs to be shown with regards to innovating the regulatory process. If these challenges are not addressed, the fourth Industrial Revolution will remain a political buzzword with no substantive policy meaning. The bid to create a regulatory environment in which technology and innovation can thrive will be thwarted if regulators take the position that innovation is what happens outside parliament and not within it. — (c) 2019 NewsCentral Media
- Gwen Ngwenya is a public policy expert working on innovating the public policy process for emerging technologies and is founder and CEO of Techpol.
