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The Regulatory Checkup

The Regulatory Checkup Estimating the cost of regulation and identifying potentials for simplification and cost reduction Nicolas Wallart State Secretariat for Economic Affairs SECO Switzerland Nicosia, April 3 rd 2012. The Regulatory Checkup. The project Methodology Outlook.

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The Regulatory Checkup

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  1. The Regulatory Checkup Estimating the cost of regulation and identifying potentials for simplification and cost reduction Nicolas WallartState Secretariat for Economic Affairs SECO Switzerland Nicosia, April 3rd 2012

  2. The Regulatory Checkup • The project • Methodology • Outlook

  3. 1. The project • Origin oftheproject • International • DutchStandard Cost Model • EU actionprogrammeforreducingadmin. burdens • New developments (Substantive Compliance Costs NL, Handbook Bertelsmann Stiftung D) • Switzerland • Standard Cost Model Conference (2007) • Studies on SCM and administrative burdens • StrategyoftheSwiss Federationfor SME: 20% reduction in regulatorycostsuntil 2018

  4. 1. The project • Mandate • Parliamentaskedfor a report on themeasurementofregulatorycosts (Postulates Fournier andZuppiger): • Measure 15 areasbetween 2011 - 2013 • Decisionofthegovernment (Federal Council): • Interdepartmentalworkinggroup, directedbythe State SecretariatforEconomicAffairs (SECO) • Responsibilityforthemeasurement (andthefinancing): individual federaloffices • Developimprovementproposals, but no quantitative target

  5. Organisation of the project SECO BusinessAssociations Small Business Forum InterdepartmentalWorking Group 1. Food Safety 2. AccidentInsurance 3. Statistics 4. Old ageinsurance 5. Complemen-taryInsurance 6. Accounting 7. Foreignworkers 8. Business taxes 9. VAT 10. CustomsProcedures 11. VocationalTraining 12. Labour regulations 13. OccupationalSafety 14. Buildinglaws 15. Environment

  6. Organisation of the project SECO BusinessAssociations Small Business Forum SECO • Project coordination • Development ofthemethodology • Final report InterdepartmentalWorking Group Businesses / SME Forum • Regularlyconsulted 1. Food Safety 2. Accidentinsurance 3. Statistics 4. Old ageinsurance Interdepartmentalworkinggroup • Decisions 5. Comple-mentaryInsurance 6. Accoun-ting 7. Foreignworkers 8. Business taxes 9. VAT 10. CustomsProcedures 11. Voca-tionalTraining 12. Labour regulations Federal Offices • Financingthestudies • Responsiblefortheirprojects 13. Occupa-tionalSafety 14. Buildinglaws 15. Environ-ment

  7. 2. Methodology • Based on the Handbook forthemeasurementofregulatorycosts (Bertelsmann Foundation, D) • Withthefollowingchanges: • Estimateonlythemostimportantobligations • Onlydirectcosts • Costsareestimatedbyexperts • Businessesinterviewsforvalidationandsimplificationproposals • Business associationsarepartoftheprocess • Simplificationproposalsarepartoftheprocess • RIAsforsimplificationproposals (onlywhenthebenefitsoftheregulationarereduced)

  8. 2. Methodology : Which costs are estimated? Regulation Information obligations Other obligations to act Obligations to tolerate Obligations to abstain from sthg (Prohibitions) Cost of regulation Direct costs for businesses Indirect costs for businesses Other costs Problems forbusinesses(in additiontocosts) Personnelcosts(e.g. salaries) Micro- and macroeconomic costs (Impact on competition, prices, investments and innovations) Comprehensibility Opportunity costs (Income loss due to reduced freedom of action) Feasibility Investment costs (e.g. construction measures) Product substitution Acceptance Other material costs (e.g. third-party services) Costs for the State Delay costs Costs for the citizens Financialcosts(e.g. fees) Other costs (Legal costs, disclosure of informations)

  9. 2. MethodologyMeasurementprocess 1. Area definition 2. Call for projects Kick-off meeting with contractor 3. Determining the main obligations to act 4. Grouping obligations to act 5. Subdivision into different business groups (segmentation) Meeting with contractor 6. Determining the number of cases 7. Expert estimation if not possible 7.a Business interviews 8.a Calculation of standard values 8. Business interviews 8.b Workshop for the validation of the results 9. Cost calculation 10. Analysis of problems and simplifications 11. Workshop on suggestions for improvements 12. RIA for suggested improvements Meeting with contractor 13. Documentation and final report

  10. 2. Methodology Proposals for simplification and cost reduction Objective: Formulation of three to five improvement suggestions for each area Expert estimation of the costs Business interviews Written comments from business associations Other Inputs (e.g. research papers, business surveys) Collection of suggestions for improvements Workshop on developing improvement proposals(Discussion of existing and development of new ideas)

  11. 3. Outlook • Severalchallenges • Most regulationsareuseful(benefits > costs) • Somefederalofficeshaveotherpriorities • Resourcesfortheproject, timing • Risksrelatedtothedecentralisationofthestudies • Resultsofsimilarprojectsweremixed • Regulationsofthe 26 cantons(e.g. buildingrules)

  12. 3. Outlook • Whatcanweexpect? • Knowledgeofthecostsforeacharea awareness, culturalchange • Comparisonbetweentheareas prioritizeourwork • Proposalsforsimplificationandcostreduction canbeimplemented in a laterstage • A large reduction in regulatorycosts… • …ispossible but politicallydifficult(ex.: single VAT rate, harmonizationofbuildingrules)

  13. Thankyouforyourattention!

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