Federal Department of Economic Affairs FDEA
State Secretariat for Economic Affairs SECO
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 3rd 2012
The Regulatory Checkup
1. The project
2. Methodology
3. Outlook
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1. The project
Origin of the project
International
• Dutch Standard Cost Model
• EU action programme for reducing admin. burdens
• New developments (Substantive Compliance Costs NL,
Handbook Bertelsmann Stiftung D)
Switzerland
• Standard Cost Model Conference (2007)
• Studies on SCM and administrative burdens
• Strategy of the Swiss Federation for SME: 20% reduction in
regulatory costs until 2018
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1. The project
Mandate
Parliament asked for a report on the measurement of regulatory
costs (Postulates Fournier and Zuppiger):
- Measure 15 areas between 2011 - 2013
Decision of the government (Federal Council):
- Interdepartmental working group, directed by the
State Secretariat for Economic Affairs (SECO)
- Responsibility for the measurement (and the
financing): individual federal offices
- Develop improvement proposals, but no quantitative
target
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Organisation of the project
SECO
Business
Associations
Small Business
Forum
Interdepartmental
Working Group
1. Food Safety
2. Accident
Insurance
3. Statistics
4. Old age
insurance
5. Complementary
Insurance
6. Accounting
7. Foreign
workers
8. Business
taxes
9. VAT
10. Customs
Procedures
11. Vocational
Training
12. Labour
regulations
13. Occupational
Safety
14. Building
laws
15. Environment
EVD/SECO/DPRA/wni
Organisation of the project
SECO
Business
Associations
Small Business
Forum
Interdepartmental
Working Group
Businesses / SME Forum
• Regularly consulted
1. Food
Safety
2. Accident
insurance
3. Statistics
4. Old age
insurance
5. Complementary
Insurance
6. Accounting
7. Foreign
workers
8. Business
taxes
9. VAT
10. Customs
Procedures
11. Vocational
Training
12. Labour
regulations
13. Occupa14. Building 15. Environtional
laws
ment
Safety
EVD/SECO/DPRA/wni
SECO
• Project coordination
• Development of the methodology
• Final report
Interdepartmental working group
• Decisions
Federal Offices
• Financing the studies
• Responsible for their projects
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2. Methodology
Based on the Handbook for the measurement of regulatory
costs (Bertelsmann Foundation, D)
With the following changes:
• Estimate only the most important obligations
• Only direct costs
• Costs are estimated by experts
• Businesses interviews for validation and
simplification proposals
• Business associations are part of the process
• Simplification proposals are part of the process
• RIAs for simplification proposals (only when the
benefits of the regulation are reduced)
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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
Personnel costs
(e.g. salaries)
Investment costs
(e.g. construction
measures)
Other material costs
(e.g. third-party
services)
Financial costs
(e.g. fees)
Opportunity costs
(Income loss due to
reduced freedom of
action)
Product substitution
Delay costs
Other costs (Legal
costs, disclosure of
informations)
Measured and considered qualitatively
Problems for businesses
Other costs
(in addition to costs)
Micro- and
macroeconomic costs
(Impact on competition,
prices, investments and
innovations)
Comprehensibility
Feasibility
Acceptance
Costs for the State
Costs for the citizens
Considered only qualitatively
Not considered
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A) Preparation –
administration
2. Methodology
1. Area definition
2. Call for projects
Kick-off
meeting with
contractor
3. Determining the main obligations to act
Measurement
process
B) Preparation –
contractor
4. Grouping obligations to act
5. Subdivision into different business groups (segmentation)
Meeting with
contractor
6. Determining the number of cases
C) Data collection
7. Expert estimation
if not possible
7.a Business interviews
D) Problem
identification and
validation
8. Business interviews
E) Calculation of
regulatory costs
9. Cost calculation
8.a Calculation of standard
values
8.b Workshop for the
validation of the results
10. Analysis of
problems and
simplifications
F) Simplifications
11. Workshop on suggestions for improvements
12. RIA for suggested improvements
Meeting with
contractor
G) Documentation
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Public Administration
13. Documentation and final report
Contractor
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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)
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3. Outlook
Several challenges
- Most regulations are useful (benefits > costs)
- Some federal offices have other priorities
- Resources for the project, timing
- Risks related to the decentralisation of the studies
- Results of similar projects were mixed
- Regulations of the 26 cantons (e.g. building rules)
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3. Outlook
What can we expect?
• Knowledge of the costs for each area  awareness,
cultural change
• Comparison between the areas  prioritize our work
• Proposals for simplification and cost reduction
 can be implemented in a later stage
A large reduction in regulatory costs…
…is possible but politically difficult
(ex.: single VAT rate, harmonization of building rules)
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Thank you for your attention!
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