MAHA Global and IPR: Do Actions Speak Louder Than Words?
Conference_20130305_Peter Bex
1. The Cost driven Approach to
Regulatory burdens (CAR)
“What will the Nordic business environment look like in the future?”
06-03-2013
Conference organized by the Swedish Ministry of Enterprise, Energy and Communications and Nordic
Innovation, within the framework of the Swedish Presidency of the Nordic Council of Ministers in 2013
Presentation
Peter Bex, managing director SIRA Consulting
2. The Cost driven Approach to Regulatory burdens
(CAR)
Introduction
The Dutch government identified 10 business sectors in which the Dutch
Economy is most competitive internationally; so called Top Sectors.
The Top Sectors are:
■ Chemical industry;
■ Horticulture;
■ Water;
■ Agri & food;
■ Gmo;
■ Life sciences & health;
■ High tech;
■ Energy;
■ Logistics;
■ Creative industry (design, media & entertainment, fashion, etc.).
The intention of the “top sector approach” is to strengthen the international lead
of Dutch companies by – amongst others – reducing their regulatory burdens and
coordinating investment in R&D and innovation.
The Dutch Cabinet aims to achieve €2,5 billion in regulatory burden reduction.
The Dutch Ministry of Economic Affairs asked SIRA Consulting to develop the
CAR methodology in order to support the top sector approach.
SIRA Consulting BV | Edisonbaan 14G-1 3439 MN Nieuwegein | www.siraconsulting.nl
3. The Cost driven Approach to Regulatory burdens
(CAR)
Working principles
Perspective of business: “Any approach should focus on the real costs (i.e.
compliance costs) as much as possible (VNO NCW, MKB Nederland)”.
Responsive government: The CAR methodology integrates the perspective of
the end-user (business) in a cyclical better regulation program.
Better
Regulation
Program
Sector
Sector
Reduction
Analysis
Plan
Business
Analysis
The CAR methodology takes the financial administration of a business as its
starting point and makes all regulatory burdens visible.
The focus on real costs enables scoping of new reduction measures that
directly increase competitiveness, innovation and employment opportunities.
SIRA Consulting BV | Edisonbaan 14G-1 3439 MN Nieuwegein | www.siraconsulting.nl
4. The Cost driven Approach to Regulatory burdens
(CAR)
Stepwise approach
In this step we get an Result :
Step 1
understanding of the main An overview of the
Identify cost
characteristics of the business organisation and an outline
centres
and how it is structured. of its cost structure.
Business Analysis
We take as our starting Step 2 In this step we quantify the Result:
point the business Step-down cost flows in the business, its A (macro) understanding of
administration. Through it allocation of turnover, and (in)direct and the business economics based
we identify and quantify costs conversion costs. on annual accounts.
the costs of legal
obligations. These
regulatory burdens are
Step 3 In this step we measure the Result:
then expressed as % of
Quantify costs of legal obligations per A (micro) understanding of the
total business costs.
regulatory cost centre and express these costs of legal obligations based
burdens as % of (non)personnel costs. on invoices and accounting.
The goal is to scope
solutions and identify
measures that lead to a
tangible burden reduction . Step 4 In this step we trace legal Result:
Findings are summarised in Trace origin obligations to their codifying A (genealogic) understanding
a sector specific reduction of regulatory laws, including EU directives of the origin and original form
plan that leads to increased burdens and/or regulations. of legal obligations.
profitability,
competitiveness, and
employment opportunities. In this step we report our Result:
Step 5 findings, and make A report summarising step 1- 4
Report recommendations on a sector including graphs, figures,
specific reduction plan. tables and recommendations.
SIRA Consulting BV | Edisonbaan 14G-1 3439 MN Nieuwegein | www.siraconsulting.nl
5. The Cost driven Approach to Regulatory burdens
(CAR)
Results
The CAR methodology quantifies The CAR methodology traces the
regulatory burdens in relation to a origin of all regulatory burdens
company’s real costs. (administrative burdens and
compliance costs).
The methodology examines the
impact of regulation from the But rather than emphasizing
perspective of business. It provides abstract reduction targets, the
factual information and hard data focus is on growth and freeing up
about the cost of legislation. creative energy for innovation.
40%
35%
30%
25%
Business expenses
20% Regulatory burdens AB
15% Business expenses CC
10% IN
5%
0%
Non-personnel Personnel costs Material costs
costs
From: Comparison regulatory burdens SMEs in four EU member states (2013) From: Comparison regulatory burdens SMEs in four EU member states (2013)
SIRA Consulting BV | Edisonbaan 14G-1 3439 MN Nieuwegein | www.siraconsulting.nl
6. The Cost driven Approach to Regulatory burdens
(CAR)
Results
The CAR methodology allows for a The CAR methodology identifies
comparison over multiple years. tangible burden reductions.
This makes it possible to assess However, the objective is never to
the impact of one-time, periodical change or delete certain policy
and annual regulatory burdens goals, but rather to make sure that
and expands the scope of these policy goals are reached at
possible reduction measures. lower costs.
Business expenses
Food Safety (Food
Hygiene) Regulations
CBA/CEA pension
obligations
Employment Law
Food Labeling Regulations
Control and traceability
From: Top Sector Chemistry (SIRA Consulting 2012) From: Comparison regulatory burdens SMEs in four EU member states (2013)
SIRA Consulting BV | Edisonbaan 14G-1 3439 MN Nieuwegein | www.siraconsulting.nl
7. The Cost driven Approach to Regulatory burdens
(CAR)
Pilot studies
Chemical industry – “Top Sector Chemical Industry”
■ in this study the CAR methodology was applied in the Chemical Industry;
■ the focus was on “formulators” (these are blenders of chemical products,
producing paint, pigments, glue, detergents etc.);
■ results of the pilot are used to draw up a specific ‘Regulatory Burden Reduction
Plan’ for the chemical industry;
■ the Dutch Branch organization for the Chemical Industry (VNCI) is enthusiastic
about the CAR methodology, and therefore a second project is planned for March;
■ the new project will focus on chemical production plants (more specifically, plants
involved in the production of plastics);
■ both projects will be included in the policy initiative “Top Sector Chemical
Industry”.
Bakery Sector – “Comparison Regulatory Burdens small and medium-sized
enterprises (SMEs) in four EU member states”
■ an international comparison of the regulatory burdens experienced in the bakery
sector of four EU member states: the Netherlands, Lithuania, Ireland and Spain;
■ provides an insight into the regulatory burdens (= administrative burden and
compliance costs) of micro, small and medium sized bakeries;
■ reduction measures aimed at SME bakeries carry over and benefit other sectors
too;
■ study is SIRA Consultingstage and the report will be published in March.
in its final BV | Edisonbaan 14G-1 3439 MN Nieuwegein | www.siraconsulting.nl
8. The Cost driven Approach to Regulatory burdens
(CAR)
Examples of possible burden reduction measures
Fees for permits:
■ a bakery in the Netherlands serves ready-to-eat sandwiches for lunch;
■ provides clients with a small seating area outside like an outdoor café;
■ the municipality charges €5.000,- for a permit for this “outdoor terrace”;
■ the bakery has to literally sell thousands of breads just to pay for the permit.
Reliable sampling:
■ a bakery in Lithuania is required to sample food and water for microbiological
examination in a laboratory and has to pay an up-front fee for the privilege;
■ as there is no supervision of how or where samples are taken, Lithuanian bakers
have no confidence in the credibility of the results as there are no safeguards build
in to prevent cheating (if results are unreliable all costs are too high);
■ independent sampling by the inspectorate or an auditor would be such a safeguard.
Labeling requirements:
■ allow different ways of labeling;
■ by allowing experimentation with other, more innovative ways of providing product
information, it is possible to arrive at more sustainable solutions with smaller
packages and less paper labels (i.e. a product book, a printout from the register, a
digital information column, using an app for a smart phone);
■ relevant for many sectors, from small traditional food manufacturers to chemistry
(which is confronted with a quick succession of changes like VOS2010 and
REACH).
SIRA Consulting BV | Edisonbaan 14G-1 3439 MN Nieuwegein | www.siraconsulting.nl
