Administrative Simplification. Administrative Simplification: Insights challenges and opportunities, the experience of France

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1 SIGMA Support for Improvement in Governance and Management A joint initiative of the OECD and the European Union, principally financed by the EU SEMINAR On Administrative Simplification Organised by The Prime Ministry In collaboration with Sigma Administrative Simplification: Insights challenges and opportunities, the experience of France By Clarisse Reille Ankara, 8-9 May 2008 (SPO Headquarters) This document has been produced with the financial assistance of the European Union. The views expressed herein are those of the author, and can in no way be taken to reflect the official opinion of the European Union, and do not necessarily reflect the views of the OECD and its member countries or of the beneficiary countries participating in the SIGMA Programme

2 Clarisse REILLE is currently Special Advisor to the Minister of Finance in France. Since February 2008, she is in charge of a mission aimed at reducing administrative burden on business, and specially on small and medium sized companies. Today red tape is considered to be a major curb on business competitiveness. Reducing its business impact is one of the highest political priority in France. 2

3 ADMINISTRATIVE SIMPLIFICATION IN FRANCE FROM WISHFUL THINKING TO ACTION Administrative simplification has been a popular theme in French politics for more than 30 years. But it has begun to be tackled seriously only a few years ago. Up to now, the results have been quite variable according the standpoint: citizens or business. As far as individuals are concerned, much progress has been made in the last 5 years. Since Nicolas Sarkozy has been elected, the State modernization and simplification are at the top of the French agenda. Every public policy has to be evaluated. In this major public reengineering, reducing red tape for business is a major challenge to foster competitiveness. SIMPLIFICATION FOR INDIVIDUALS: ALREADY A REALITY Over the last years, the internet has been at the core of simplification. It has allowed many improvements: To access valuable information for almost any public obligation To receive official papers simply by ordering them through internet To fulfil the obligation themselves, to facilitate the various administrative procedures, etc. The program has been launched in 2003: ADELE. Adele is an acronym for Administration ELEctronique (Electronic Administration). A specific web site has been designed: that concentrates any information on any public procedure, one could deal with. Adele guides you within this web site in a friendly manner. Some examples: when you move, you can declare directly on the web site your new address and it is rerouted to all the main administrations you need to deal with; you can pay your fines through the internet; you can order a birth certificate in any city in France and it is then sent to you; etc This program is already quite consistent. Improvements are still to be made but already a lot has been achieved. 3

4 SIMPLIFICATION FOR BUSINESS: THE NEW FRONTIER The picture for business is unfortunately quite different: simplification for business has still to be achieved. We will focus on three main topics: The complexity is a real tax imposed to business Understanding the roots of complexity Bringing tangible answers to complexity Red tape on business: a tough reality that is weakening competitiveness For business, complexity arises form various and multiple sources: Difficulty to get the right information with a single demand or in a single place. Complex social law. Obligations related to specific businesses: today more than For an example to run a restaurant, you need at least : to get a special authorization, to fill in specific declarations concerning health, security, music broadcasting, and your employees, to give information on your opening hours, to get an agreement in order to accept restaurant checks. All those procedures have to be made to various institutions or organisms. Obligations for various events in business life: new building, changing headquarters, etc To start a business: there is no one-stop institution. You have at least to fulfil 6 different declarations and deal with the same number of institutions. Number of declarations on a daily basis with heterogeneous formats: a minimum of 38 declarations for a company with less than 5 employees; 92 for a company with 20 people. A very small company has to fill in an average of 260 pages every year, and this only for routine business. In addition, the due dates are quite different. Multiple taxes with heterogeneous criteria. For an example, the Code for the State Taxes is an impressive book: pages and more than articles. The legislation is changing frequently: in 30 years, changes have occurred in the State Taxes, which represents an average of a change every 2-3 days. Multiplicity of institutions that are requiring forms, especially in the social matters. Same data required several times, even by the same institution. For example in a small company, the turnover is asked for a minimum of 15 times a year. 4

5 Administrative delays in granting authorization, or giving information to business It is always difficult to compare administrative burden on an international basis: the criteria are not necessarily homogeneous. Nevertheless, hints can be given thanks to the DoingBusiness Project launched by the World Bank, France ranks 19 out of 24 in OECD countries on the ease of doing business; and 31 out of 178 countries. Ease of doing business Singapore United States United Kindom Canada Finland Switzerland Germany Netherlands France Italy Turkey Poland Figures from DoingBusiness 2008 It is true to state that administrative burden represents a real paper tax which impacts adversely competitiveness. In fact, when asked on the constraints that prevent them to grow, French small and medium sized companies highlight two themes: difficulty to get credits, and administrative burden. The complexity roots Why is it so complicated? Why have we reached such a situation? Why have we created such an administrative monster? There is a real paradox there. Nobody has pursued such a result. On the contrary if you ask to any civil servant, he will genuinely state that his administration is trying to do its best in order to alleviate the burden. In fact, nobody is responsible for such a situation. And the system goes on because, the company is there to bring the only possible solution to complexity, though it is not intended to deal with it. Its mission is surely not to fill in heterogeneous declarations with duplicate data. 5

6 Therefore, it is crucial to understand the reasons, the roots of complexity: Multiplicity of administrations, institutions. Each of them ignoring the others. Each of them relying on its own administrative language. Each of them relying on its own IT system, its own technological platform, and its own processes. Each of them cherishes its own autonomy, as far as declarations are concerned. Up to now, the impact on business has been largely ignored or underestimated, when laws are voted, regulations put in place, forms created or modified. Business, end users are not yet considered as clients by the public service world. Culture is changing slowly in this respect. Little culture within public service about organization, process and reengineering. How to overcome complexity? First of all, due to the very nature of complexity, it is of the utmost importance to choose a target. It is almost impossible to tackle all the problems at the same time. In this paper, the priority is given to the recurring declarations: the declarations that any company has to fulfil and to fill in. Many reasons concur in adopting such a choice: To simplify those declarations will have a direct impact on the every day life of the entrepreneurs. It is crucial that simplification could be felt in a tangible way. The method to simplify those recurring declarations would put in place a virtuous system that could last and embed in the institutions good practices. What are the prerequisites for successful simplification? First of all, it is important to be careful about what could be a bad good idea : dematerialisation. Everyone hears frequently the motto: simplification through dematerialisation. A tendency is to put the various forms on line and, indeed, we can already see several institutions creating their own websites. But the company would have to deal with as many internet channels as existing forms. This would be of little help for its daily life. Dematerialisation is not enough. It is necessary but not sufficient, it has to be included in a broader program. An overall vision is needed, and it implies to think about processes first. If we want to bring tangible solutions to the business, it is crucial to start from business needs and constraints. Therefore, the target solution would be to stick to the business reality. A company lives, acts, develops itself and by doing so, it generates figures for its own purpose, for the employees, the shareholders and various stakeholders vital for its growth. In this 6

7 perspective, it is clearly unacceptable that a company should give several times the same information to different institutions, just because they are unable to share information. COMPANY From multiple heterogeneous declarations to streamlined processes COMPANY Datawarehouse The ideal process is the one by which the company generates a database where all the useful administrative information is stored and sent automatically to the administrations according to their needs. This can be achieved in various ways: directly from software used by the company or through portals specifically dedicated to reroute the information to institutions. 7

8 In this situation, the company is not distracted from its main objective: doing business. This is a solution that respects the business needs, but also the administrative efficiency. This is a win-win situation. The overall vision focused on processes first, allows at the same time to reduce red tape and to improve public efficiency. Data standardisation is crucial to achieve simplification. The data warehouse cannot be achieved easily without this prerequisite. Today, it is almost impossible because the languages used by the various administrations and institutions are not the same. And then it is impossible to automate through software. For example the very meaning of number of employees varies according the institution. It might mean the number of employees on the 31st of December, the average during the year, it might include or not short time contracts, or it might exclude training periods. A common language is absolutely necessary. It means that a real certification process on the data has to be put in place, by a specific institution. This would allow the identification of all duplicate data and reduce dramatically the number of data required. This would therefore rationalise all the data that the business needs to report. This standardisation has to be understood as a clarification process on the meanings and an enforcement of a common administrative language across the administrative world. The overall result would be a real business reporting standard. Last but not least, how to avoid complexity arising from new laws, decrees, etc? Putting in place effective consultation would be of crucial importance before any decision impacting business. In France, there is no tradition to conduct thorough cost-benefit analysis for draft legislation. Some countries, Canada, England, Australia, have already embedded in their legislation such procedures which prove quite useful and efficient. Taking into account the real needs and impacts of the end-users is key for securing simplification and efficiency. CONCLUSION Administrative simplification for the businesses has become a major political objective since the election of Nicolas Sarkozy. Today the administrative burden can be compared to a paper tax that weakens competitiveness. The task is huge and encompasses several types of actions. When concentrating on recurring declarations, the target solution relies in enforcing a business reporting standard. This could lead to a win-win situation: growth for business and cost reduction in the public sector, by streamlining the processes and leveraging on dematerialisation. Simplification clearly brings benefits for the business but at the same time improves the public sector efficiency and the quality of service. 8