dr. andré nijsen adviser regulatory reform scm experiences in oecd countries scm steering group...

Dr. André Nijsen Adviser Regulatory Reform

SCM Experiences in OECD Countries

SCM Steering Group

Warsaw

March 5, 2010


Issues

Background of benchmark Methodology of benchmark Short history of SCM Implementation of SCM in selected OECD countries Managing SCM projects Special methodological topics New directions and related initiatives SCM and related reform initiatives Conclusion


Background of Benchmark

Origin: World Bank/FIAS idea to implement SCM in developing countries

Necessary input: lessons learned from SCM implementation in OECD-countries

Selected countries: Denmark, UK, Czech Republik, Germany, Australia/Victoria, The Netherlands

Additional countries: Poland and Italy


Methodology of benchmark

Deskresearch (manuals and evaluation reports) and consultation SCM Network

First step: comparison SCM Network Manuals 2004 and 2005

Second step: comparison countries Reference point: Dutch baseline measurement 2002 Reference period: 2002-2009 Perspective: institutional en methodological aspects


Short History of SCM

SCM: method for determining costs of businesses of complying with information obligations

Forerunner Mistral developed in the Netherlands: 1992-1994

2002: Dutch Cabinet declared SCM being best practice

2007/8: World Bank, OECD and EU declared SCM being best practice

Nowadays SCM implementations in over 20 countries


Seven institutional aspects

Ex-ante and ex-post Scope (coverage laws and sectors) Reduction targets Organizational patterns and project management Ensuring policymakers understand and accept

results Training Central data base


Eighteen methodological aspects (1)

Definition IO One-off costs ‘Voluntary’ obligations bases on law Codes of conduct, covenants Business as usual costs Overhead Demarcation between departments Segmentation business target group P-parameter: Standard list of IOs available?


Eighteen methodological aspects (2)

P-parameter: standard list of DRs available? P-parameter: standard list of AAs available? P-parameter: standard list of tariffs available? P-parameter: standard profile AAs/time per type IO available? P-parameter: clear demarcation line between BUA and

marginal costs available? P-parameter: clear demarcation between IO and SO available? Proposition to measure perception entrepreneur available? Q-parameter: clear concepts like population, rate and

frequency available? Labelling of IOs available?


First Implementation of SCM in The Netherlands (1)

1st base line measurement in 2003 (year of reference 2002) Device: let flower as many flowers as possible Leading philosophy: to stimulate the implementation of SCM by

as many ministries and consultants as possible IPAL (the then RRG) had a coordinating function only Every ministry (9) was in the lead of its own measurement Actually there were nine base line measurements The first manual available in December 2003, almost one year

after the completion of the 1st base line measurement As a consequence the original Mistral was implemented in

various ways


Implementation of SCM in selected countries: lessons learned (2)

Dutch climate was very innovative and stimulating for Denmark and UK, who implemented the SCM in 2003

Main lessons they learned from NL: importance of centralization of ownership/leadership, availability of good manual and central database at the beginning

Germany followed and even boosted the tendency of centralization: organization and methodology

Czech Republic: decentralization because of recent EU-membership and lack of funding

Australia: Treasury and Finance in the lead. No base line measurement. Assessment of base line by external consultants

Finally, The Netherlands again. Second base line measurement (2008). Leapfrog effect. Strong centralization etc.

The Dutch SCM implementation 2007 far closer to the original Mistral then the Dutch SCM implementation of 2002


Implementation of SCM in additional countries: lessons learned (3)

Poland and Italy are new countries from the perspective of SCM implementation

They seem to encounter some difficulties with understanding concepts like:

* typical firm

* compliance in a normally efficient way


Implementation of SCM for new countries: lessons learned (4)

Succesful SCM implementation needs a learning proces Advise: don’t start with measuring the whole stock of existing

laws Start with measuring the AB of just one simple law or one event Stakeholders (government, businesses and consultants) should

be prepared to invest budget and expertise in the learning process on a permanent base

Take time to run SCM projects General conclusion: towards more centralization regarding

institutional aspects and more standardization regarding methodological aspects


Managing SCM Projects

How to manage depends on size and complexity of involved laws

Two possibilities:* ex-ante implementations (flow)* ex-post implementations (stock)

Ex-ante implementations: 95% of all cases should be carried out by the civil servant who holds the dossier. The remainder cases (5%) with assistance of external consultants because of complexity/size

Ex-post implementations: there is no standard situation. All laws, a selection of laws or one law. One event or one or more branches of industry. Mostly two teams: civil servants and external consultants


Methodological issues: public policy perspective (1)

SCM looks from a public policy perspective and not from a business perspective

Because SCM reckons only that part of compliance costs which can be influenced by the public sector

That’s why the businesses are assumed to comply in ‘a normally efficient way’

IO is measuring unit and not the business The functionality of a legal obligation is decisive of

categorizing as IO, substantive obligation or financial obligation


Methodological issues: typical firm (2)

A typical firm according to SCM is not a synonym of a firm which complies in ‘a normally efficient way’

A typical firm is the starting point for segmentation of the group of regulated firms under scrutiny

Only if the legal specification of an IO differs between categories of firms there is an argument to distinguish two or more categories of typical firms

The strategy for segmentation to select businesses for interviews should reckon with the number of categories of typical firms only


Methodological issues: compliance in a normally efficient way (3)

The concept ‘compliance in a normally efficient way’ starts with defining for every single category of typical firm, per IO:* the data requirements (DRs), and* associated administrative activities (AAs)

This blue print of IO/DRs/AAs is the questionaire to gather data about time consumption for every single AA

Finally, outliers in time consumption should be removed if they are not plausible


New directions and related initiatives

New directions of SCM in NL, SW, DE and Australia Extension of SCM with other compliance costs like

substantive and financial costs (separate modules or one integrated instrument like in NL-transaction costs theory and in Germany-Regulierungs-kostenmodel (DE)

Also initiatives to extend the SCM to civilians and enforcing institutes

Related but quite different initiative in Belgium and NL: Kafka-instrument, the permanent instalment of a complaint office for civilians and entrepreneurs


SCM and related reform initiatives

The SCM does not stand alone It’s an integral part of already existing regulatory reform programs The question is not to implement the SCM or a RIA, BIA, or to

introduce a staged repeal of licences etc. At the end, all these instruments have the same objective: to increase

welfare In most OECD countries, SCM is integrated within the RIA-system

related to new laws The more massive SCM implementation of base line measurements

seems to stand alone by just facilitating reduction programs Be aware, most RIA just tell you what to do. SCM tells you how to do

this.


Conclusion (1)

Measuring compliance costs is hot stuff, from scientific perspective as well as from policy praxis

The number of persons involved has increased considerable Almost by consequence, the debate about concepts etc. starts

again, every time new participants are joining the debate Two key questions

* should we introduce the public goals coming into the measurements?* which methodology is most appropriate to measure B/C of regulations?


Conclusion (2)

It’s important to bring more transparancy in order to stimulate a more impartial discussion about deregulation and its consequences

Important elements of this transparancy are:* an adequate categorization of the separate cost and benefit effects* a systematic evaluation of these cost and benefit effects, and * finally, an evaluation of the available techniques and methodologies

Such a transparancy could be a guidance for all who are involved in the law making process and the measurement of compliance effects


Closure

I thank you for your invitation I thank you for your attention It will be my pleasure to answer your

questions

dr. andré nijsen adviser regulatory reform scm experiences in oecd countries scm steering group...

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