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The Cost driven Approach to               Regulatory burdens (CAR)      “What will the Nordic business environment look li...
The Cost driven Approach to Regulatory burdens(CAR)   IntroductionThe Dutch government identified 10 business sectors in ...
The Cost driven Approach to Regulatory burdens(CAR)    Working principlesPerspective of business: “Any approach should fo...
The Cost driven Approach to Regulatory burdens(CAR)  Stepwise approach                                                    ...
The Cost driven Approach to Regulatory burdens(CAR)   Results  The CAR methodology quantifies                             ...
The Cost driven Approach to Regulatory burdens(CAR)   Results The CAR methodology allows for a                            ...
The Cost driven Approach to Regulatory burdens(CAR)  Pilot studiesChemical industry – “Top Sector Chemical Industry”    ■...
The Cost driven Approach to Regulatory burdens(CAR)  Examples of possible burden reduction measuresFees for permits:   ■ ...
SIRA ConsultingEdisonbaan 14 G-13439 MN NieuwegeinNetherlandsTel: 0031 30 602 4900Fax: 0031 30 602 4919www.siraconsulting....
SIRA ConsultingEdisonbaan 14 G-13439 MN NieuwegeinNetherlandsTel: 0031 30 602 4900Fax: 0031 30 602 4919www.siraconsulting....
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Conference_20130305_Peter Bex

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  1. 1. The Cost driven Approach to Regulatory burdens (CAR) “What will the Nordic business environment look like in the future?” 06-03-2013Conference organized by the Swedish Ministry of Enterprise, Energy and Communications and NordicInnovation, within the framework of the Swedish Presidency of the Nordic Council of Ministers in 2013 Presentation Peter Bex, managing director SIRA Consulting
  2. 2. The Cost driven Approach to Regulatory burdens(CAR) IntroductionThe Dutch government identified 10 business sectors in which the DutchEconomy 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 leadof Dutch companies by – amongst others – reducing their regulatory burdens andcoordinating 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 theCAR methodology in order to support the top sector approach. SIRA Consulting BV | Edisonbaan 14G-1 3439 MN Nieuwegein | www.siraconsulting.nl
  3. 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 ofthe 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 itsstarting point and makes all regulatory burdens visible.The focus on real costs enables scoping of new reduction measures thatdirectly increase competitiveness, innovation and employment opportunities. SIRA Consulting BV | Edisonbaan 14G-1 3439 MN Nieuwegein | www.siraconsulting.nl
  4. 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. 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. 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. 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-sizedenterprises (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. 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
  9. 9. SIRA ConsultingEdisonbaan 14 G-13439 MN NieuwegeinNetherlandsTel: 0031 30 602 4900Fax: 0031 30 602 4919www.siraconsulting.nlContactPeter Bex, managing director
  10. 10. SIRA ConsultingEdisonbaan 14 G-13439 MN NieuwegeinNetherlandsTel: 0031 30 602 4900Fax: 0031 30 602 4919www.siraconsulting.nlContactPeter Bex, managing director
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