The Impact of Better Regulation and Simplification Søren Bak, Auditor, NAOD

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1 Søren Bak, Auditor, NAOD

2 I. Quantitative target In 2002, the Danish Government set up a quantitative target for Better Regulation and that business administrative burden should be reduced by up to 25 per cent by

3 II. The objective of the NAOD examination was to evaluate the impact of Better Regulation and activities by answering the following 4 questions: a) How have the better regulation and simplification activities been managed? b) Which measurement methods have been developed to evaluate target fulfilment? c) What are the impact of the activities? d) How do the ministries ensure that new legislation is kept simple? 3

4 III. The main conclusions of the NAOD examination regarding the above mentioned sub-objectives are: The NAOD examination shows that the total reduction of government imposed administrative costs for the businesses is 5.1 per cent from 2001 to The impact of the measurable effort directed towards businesses has been relatively low. Reusing of data reported by businesses and citizens to the public authorities will lead to significant reductions of administrative costs. 4

5 IV. The AMVAB method The Ministry for Economic and Business Affairs has developed and implemented the AMVAB method Activity based Measurement of Businesses Administrative Burdens - in order to follow-up on the government objective to reduce administrative costs by up to 25 per cent The AMVAB method has been developed on the basis of the Dutch Standard Cost Method (MISTRAL method). Today, the AMVAB method is used within 18 European countries and since 2003, the Standard Cost Model Network (SCM network) has used the method. 5

6 V. The AMVAB measurements The AMVAB measurements serve 4 overall purposes: a) The aggregated administrative costs, b) An overview of the development in costs over time for all businesses, c) Analysing proposals expected to have a significant impact on administrative costs incurred by businesses, d) A detailed picture of the distribution of administrative costs and enables the ministries to target their effort within better regulation and simplification towards the legislation. The NAOD finds that the AMVAB measurements may be further improved, and supplemented with analyses of the administrative costs related to the removal of a certain rule. For example, when a cost reduction in one sector leads to increased costs in another sector or for citizens. 6

7 VI. Measuring the administrative burden on local government and on citizens The Ministry for Finance has developed a method to measure local governments administrative costs called the Evaluation of Administrative Consequences for the Municipalities with new Government Regulation (VAKKS method). The VAKKS method is in terms of method and process very similar to the AMVAB method. But in some ways, it differs from the AMVAB method, for example In addition to operating costs, the VAKKS method also includes the costs related to the adjustment to new legislation It provides an assessment of the impact of new legislation on autonomous local government. The Danish government has not developed a method to measure the administrative burden imposed on citizens. 7

8 VII. The impact of Better Regulation and The NAOD examination shows that the total reduction of administrative costs for the businesses is 5.1 per cent from 2001 to As ministries on average is half way through and have only achieved 20 per cent of reduction, and achieving 25 per cent reduction contains some risks. A report by the Chamber of Commerce and the Federation of Small and Medium Sized Enterprises states that 8 out of 10 businesses find that the administrative burden in 2006 has been largely on the same level as in

9 VIII. NAOD recommendations for Better Regulation and The NAOD recommends for achieving the quantitative target that businesses administrative burden should be reduced by up to 25 per cent by 2010 that the Ministry of Finance takes the initiative to establish a platform for reusing of data submitted to public authorities and Developing a method for measuring the administrative reductions for citizens The AMVAM method to be further developed and be used for measuring new legislation Furthermore, the NAOD will recommend that SAI s in Europe establish an examination with the same objective. 9