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TOWARDS BETTER REGULATION – CUTTING BUSINESS RED TAPE IN LITHUANIA

TOWARDS BETTER REGULATION – CUTTING BUSINESS RED TAPE IN LITHUANIA. Andrea Renda, Senior Research Fellow, CEPS Vilnius – 7 July 2011. THE EU BETTER REGULATION AGENDA. 2. Use of ex ante impact assessment since 2003

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TOWARDS BETTER REGULATION – CUTTING BUSINESS RED TAPE IN LITHUANIA

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  1. TOWARDS BETTER REGULATION – CUTTING BUSINESS RED TAPE IN LITHUANIA Andrea Renda, Senior Research Fellow, CEPS Vilnius – 7 July 2011

  2. THE EU BETTER REGULATION AGENDA 2 • Use of ex ante impact assessment since 2003 • Ex ante assessment of economic, social, environmental impacts of future policy initiatives • Quality assurance by Impact Assessment Board since 2007 • Ex post evaluation by ECA and external experts • “Closing the policy cycle” and fitness checks in the future • Administrative burdens reduction programme • Launched in February 2007 • Initial “fast-track actions” • Mixed results so far, both in the EU and Member States 2 2

  3. IMPACT ASSESSMENT IN MEMBER STATES Recent research projects (ENBR, EVIA, but also OECD EU15) have highlighted a huge adoption-implementation gap, which seems to be hard to fill in the near future 3

  4. LITHUANIA AND BETTER REGULATION • Impact assessment is in place since 2003, and was recently re-launched (Res. 1244 of 30 Sept 2009). Main lessons are: • Long-term political commitment remains essential • Patchy implementation to date • Persisting lack of skills in public administration • Reference to economic, social, political or “concrete private interest”: need to assess environmental impacts as well • Lack of a real watchdog with enhanced competences and powers to trigger a real cultural change • Legislative planning and consultation more important than widespread use of RIA 4

  5. AB REDUCTION: PARTIAL OVERLAP 5 5 Areas covered by Lithuanian AB Reduction Programme

  6. SCM: PROBLEMS ON THE WAY… Once ABs have been measured, RIA is still needed • Impossible to use SCM as a stand-alone tool replacing RIA The SCM does not consider all costs... • Investments (Material costs) • Taxes and charges (Financial costs) • Opportunity costs ...nor does consider benefits! • “third-party” IOs (e.g. labelling) • Efficiency criteria/welfare analysis The SCM assumes 100% compliance • This is the most critical flaw in the whole methodology, and must be taken into due account before drawing any conclusion in the measuremens results 6

  7. Evaluating AB reduction measures Ex post evaluation of effectiveness, efficiency, proportionality, actual perceived impact and macroeconomic impact Annual interim evaluations of the effectiveness and efficiency of reduction proposals Evaluation of design and implementation of the measurement programme 0 time Evaluation period Reduction period Measurement period Source: Allio and Renda (2011)

  8. POLICY RECOMMENDATIONS Key better regulation dimensions are missing Legislative planning and public consultation Improve RIA methodology (include environmental impacts, etc.) Use the SCM to lay the foundations for RIA Improve RIA process through a real “watchdog” Improve consultation and civil society representation Use indicators for M&E Avoid “short-termism” (e.g. focus on EODB and SCM) Align goals with all EU2020 flagship initiatives Expand SCM at least to financial services and company law Review the enforcement and inspection regime Strengthen institutions

  9. BEYOND BETTER REGULATION Digital Agenda v. (draft) 2010-2015 ISD Strategy Spectrum policy (800MHz band) a key priority Broadband for all by 2013 v. 98% by 2015 ICT development is the first regulatory reform Cloud computing strategy + resilience to attract investment Innovation policy Away from “modest innovators”: strengthen demand-side innovation policy, brokering and entrepreneurship Make the most of the upcoming flow of EU funds for 2011-2012 and beyond (mediate between EIB and local SMEs) Competition policy Weak enforcement: strengthen powers and skills Law on the Protection of Unfair Operations by Retail Trade Undertakings of 2009 is raising concerns in Brussels

  10. APPENDIX

  11. THE STANDARD COST MODEL Compliance costs Direct financial costs Substantive compliance costs Administrative costs Monetary transfers to public administration (taxes, duties, etc.) Modification of productive process or output 13 13

  12. THE STANDARD COST MODEL Administrative costs Business administration costs Administrative costs from central government regulation Administrative activities that businesses may continue if the regulations were removed (‘Business as usual’) Administrative activities that businesses only conduct because regulation requires it, i.e. administrative burdens 14 14

  13. CROSS-COUNTRY COMPARISONS (I)

  14. CROSS-COUNTRY COMPARISONS (II)

  15. CROSS-COUNTRY COMPARISONS (III)

  16. 18 THE NETHERLANDS: AB MEASUREMENT RESULTS

  17. 19 THE NETHERLANDS: REALISED REDUCTIONS

  18. 20 DENMARK: MEASUREMENT RESULTS (A)

  19. 21 DENMARK: MEASUREMENT RESULTS (B)

  20. 22 DENMARK: MEASUREMENT RESULTS (C)

  21. 23 UK: MEASUREMENT RESULTS (A)

  22. 24 UK: MEASUREMENT RESULTS (B)

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