Agencies are created and assigned specific tasks by the legislature. They carry out the tasks making decisions of various sorts and supervising the procedure by which the decisions are carried out. There are many reasons why administrative agencies might be needed. Almost every governmental agency has been created because of a recognized problem in society, and from the belief that an agency may be able to help in solving the problems. The following are the main reasons for the creation of the administrative agencies.
A. Providing Specificity
The legislative branch of government cannot legislate in sufficient detail to cover all aspects of many problems. The house of the people‘s representatives cannot possibly legislate in minute detail and, as a consequence, it uses more and more general language in stating its regulatory aims and purposes. For instance, the house of people‘s representatives cannot enact a tax law that covers every possible issue that might arise. Therefore, it delegates to the council of ministers and ministry of revenue the power to make rules and regulations to fill in the gaps, and create the necessary detail to make tax laws workable. In many areas, the agency has to develop detailed rules and regulations to carryout the legislative policy.
It is also true that courts could not handle all disputes and controversies that may arise. They simply do not have the time or the personnel to handle the multitude of cases. For instance, the labour relations board entertains and resolves so many number of collective labour disputes between employees and employers. Similarly, the tax appeal commission and the welfare (pension) appeal tribunal adjudicate and decide vast number of administrative litigations within their jurisdiction. The creation of such adjudicatory agencies (usually known as quasi- administrative agencies) is necessary, because of the fact that they have, specialized knowledge and expertise to deal effectively with the detailed, specific and technical matters, which are normally beyond the competency of judges of ordinary courts.
B. Providing Protection
Many government agencies exist to protect the public, especially from the business community. Business has often failed to regulate itself, and the lack of self- regulation has often been contrary to the public interest. For instance, the Environmental Protection Agency is created to regulate environmental pollution. In the absence of such agency, business could not voluntarily refrain from polluting the environment. The same can be said with respect to quality of private higher education and unjustified and unreasonable increase in the price of essential goods. The Ministry of Education and Ministry of Trade and Industry, regulate respectively both of these cases to protect consumers and the public at large.
C. Providing Services
Many agencies are created simply out of necessity. If we are to have roads, the Nepal Roads Authority is necessary. Welfare programs require government personnel to administer them. Social security programs necessitate that there should be a federal agency to determine eligibility and pay benefits. The Nepal Social Security Authority is established to process pension payment and to determine entitlement to such benefit. The mere existence of most government programs automatically creates new agencies or expands the function of the existing ones.
The following may be summarized as purposes of the administrative agencies.
One of the key reasons for regulating economic activities by the government is the inability of business to regulate itself. When the government decides to regulate a certain sector, it entrusts the task to the administrative agencies. Agencies offer several advantages over regulation through the legislature and courts in the management of complex and technical regulatory problems. Because they are specialized bodies, they can consider technical details more effectively than the legislature.
When the government regulates business its aim is to minimize the negative impacts of a free economy. In the absence of regulation, business does not respond to concerns over the environment and consumers. Some of the justifications for regulation include:
To control monopoly power
Agencies are often created to replace competition with regulation. In this case the agency may determine rate (e.g. transportation, or electricity). Sometimes the difference in bargaining power may be a ground for regulation, avoiding monopoly power of one party. Such instances include regulation of banking, insurance and labour relations.
To control excess profit
The agency regulates business to ensure that business is not collecting excess profit, which may endanger the laws of free market and also may pose a danger to consumers.
To compensate for externalities
―Externalities‖ occasionally referred to as ―spillovers‖, that occur when the cost of producing something does not reflect the true cost to society for producing the goods. One example is manufacturing process that creates air pollution for which society pays the clean up costs. A business organization, unless otherwise it becomes sure that there is also corresponding participation by other companies, will not install costly pollution control equipment. Doing so will drive up that company‘s costs which makes it unable to compete with other companies in producing the same product without equipment and selling their products at a lower price. So, some entity i.e. a government agency must require all companies to make those investments (installing equipments) in order to spread the costs of pollution control over the entire industry..
To compensate for inadequate information
Compensating for inadequate information is a justification for a great deal of legislation for consumer protection. Purchasers of food, for instance, cannot analyze the nutritional content or the health hazards of various food products so that there has to be some organ that ensures these tests are fulfilled.
To compensate for unequal bargaining of powers
Contracts between banks & customers, insurers & the insured, employees & employers are adhesive in their nature. Either the consumer has to take it or leave it. Hence, it becomes self-evident to regulate and set minimum standards to minimize the effect of unequal bargaining of power.
B) Government exactions
In addition to regulation, administrative agencies may also engage in government exactions. Government exactions are the traditional powers and responsibilities of agencies. Such functions include collection of tax and military conscription.
C) Disbursement of money or other commodities
This purpose of administrative agencies is also the prominent one which characterizes the welfare state. In this regard, through the social security programme and other government systems of insurance or compensation, agencies disburse public money as payment of pensions for veterans or assistance for the aged, the disabled, the unemployed and generally the needy. The payments may be directly through cash or food rations.
D) Provision of goods and services
Nowadays, the government is in charge of building and maintaining roads, high ways and dams, the provision of police force and other protective services. Funding public education and the health service may also be mentioned as additional examples. More recent additions include mass transit communications, satellite systems, government research and development programmes, public hospitals and public housing.
i) Intensive form of government; welfare state
(ii) Informal, cheap and quick vs. expensive, time-consuming litigation in court
(iii) Expertise, specialization and experimentation needed to develop and apply new public law standards
(iv) Growing emphasis on preventive justice rather than punitive justice
(vi) To reach decisions not strictly according to law as such, but on the ground of policy considerations and mutual give and take
(vii) Courts are groaning under the weight of pending cases and if the whole mass of fresh litigation arising in an intensive form of government is diverted to them, the judicial system would virtually collapse