Better regulation in Denmark

1. Better regulation in Denmark Presentation by Flemming N. Olsen Senior Advisor, Division for Better Regulation Ministry of Finance, Denmark Conference on Better and Simpler Regulation for Business and People, Reykjavik, June 6th 2006

2. Facts about Denmark • Population: 5.4 million • Electoral system based on proportional representation • Coalition and minority governments • Levels of government: - State (158.000) • 16 regions (173.000) • 271 municipalities (416.00) • (due to an ongoing reform changing to 5 regions and 98 municipalities)

3. Political culture • Welfare state ideology • Participation • Consensus • Informality • Strong ministerial autonomy

4. Types of regulation • Primary regulation – Laws passed by the Parliament • Secondary regulation – Regulations issued by ministers: • 1st. Level: Regulations binding for both citizens and authorities • 2nd level: Regulations binding for authorities

7. What is Good Regulation? • Regulation that obtains its goals without unnecessary or unintended consequences (content) • Regulation that is transparent and legitimate (process) • Regulation that is dynamic

8. Regulatory Reform: Key areas • Structures • Impact assessment • Consultation • Access to regulation • Simplification

9. Structures • Fragmented structure: 4 key ministries involved in the work on better regulation • Regulation committee • Division for better regulation, Ministry of Finance • Division for quality in business regulation, Ministry of Business and Industry • Legislation Technique Division, Ministry of Justice • Digital Task Force

10. Regulation Committee (structure II) • 4 permanent secretaries • Manage the legislative agenda for the coming year • Develops policy on legislative quality • Division for Better Regulation and Prime Ministers Office act as secretariat for the committee • Parallel committee of less senior officials

11. Division for Better Regulation(structure III) • Set up in Ministry of Finance in 2002 as part of government platform • No formal powers • Responsible for promoting and supporting regulatory reform • Coordinating simplification programme • Conducting analysis of areas of regulation, for example regulation aimed at small businesses or municipalities

12. Regulatory Impact assessments (RIA) • RIA’s are applied to all draft bills • Mandatory to assess: • Financial impacts on national an local government • Administrative impacts on national and local government • Economic and administrative impacts for companies • Administrative impacts for citizens • Environmental impacts • A new handbook on RIA • Two phases: • Preliminary RIA when legislative agenda is prepared • Full RIA when draft law is presented to Parliament

13. Consultation • Normal (but not legally binding) to consult affected parties • Consultation document to parliament • Consulted parties • Resume of replies • Answer to suggestions and complaints • No minimum period for consultation – normally minimum 2 weeks

14. Access to regulation • Laws and regulations under preparation published on a consultation portal; www.Danmark.dk • Draft laws and parliament debates on parliament’s website; www.folketinget.dk • Website containing consolidated regulation (laws and regulations); www.retsinfo.dk • Mandatory for ministries to update content • Access free of charge

15. Simplification • Priority in the government platform November 2001 • Experience with deregulation in the 80’s was negative • Focus today on administrative burdens/red tape and regulation restricting competition • Three target groups: • Businesses • Municipalities and regions • Citizens

16. Method for simplification Instruments for improvement of existing regulation: • Modification or abolishment of obligations • Thresholds for obligations • Co-ordination between obligations • Administrative simplification • Better communication and guidance • Use of ICT for easier compliance Approach: • Ownership in each Ministry • Strong involvement of target groups • Strategic selection of areas by the Ministry of Finance

17. Rolling action plan for simplification • Three action plans published in 2002-2004 • Contains 100-200 initiatives covering the regulation of all line ministries • Three target groups: citizens, companies, and authorities • Both simplification of rules and procedures (frequently by use of ICT) • All initiatives have a clear goal and a deadline • Initiatives chosen in cooperation between line ministries and the division for better regulation

18. Simplification and measurements of administrative burdens • Target of reducing the administrative burdens for business with 25 percent by 2010 • From 1998 and until 2003 the overall development in the administrative burdens in Denmark was measured with a survey method • Denmark has recently shifted from using the survey method to the Dutch-inspired Standard Cost Model (SCM). • Full scale measurement in 2004-2005

19. Main results of the SCM-measurement • Total administrative burden on companies: 32 billion DKK – equals 2,2 pct. of GDP • 7 ministries responsible for approx. 97 pct. of the burdens • ”Top Ten” for the 7 ministries with most business regulation accounts for approx. 87 pct. of the total burden (28 billion DKK)

20. New approach to the Action Plan for Simplification • SCM-measurements as point of departure • Link to the goal of 25 percent reduction in 2010 • Long-term action plans from most relevant ministries (June 2006) • Systematic simplification of larger regulations

21. New Action Plan for Simplification

22. Incentives and deregulation/simplification