Business Impact Assessment

Address 3 topics Why carry out a Business Impact Assessment? What is a Business Impact Assessment? What do we do? The Proposed Legislation Desk Proces Type of regulation we assess Business Impact Assessment as a tool

Business Impact Assessment 1 Why carry out a Business Impact Assessment?

Business Impact Assessment Besides having the intended effects, legislation frequently has side-effects. Therefore, it is advisable to take a decision on proposed legislation only after all effects have been properly identified. This enhances the quality of proposed regulation and legislation.

Business Impact Assessment An important goal of performing the assessment is to improve the quality of legislation and make a contribution to balanced decision-making by the Cabinet and Parliament. This by means of the information provided by such matters as the business impact.

Business Impact Assessment 2 What is a Business Impact Assessment? A Business Impact Assessment helps us to indicate the intended and unintended effects of proposed legislation for the business community, like market mechanism effects and socio- economic effects

Business Impact Assessment Why is that important? If ministries fail to identify such effects properly, legislation may unintentionally undermine the principal objectives of policy. Therefore, for a balanced opinion-forming and decision- making process, it is necessary to provide an insight into both the intended and unintended effects. This is the only way to form an opinion about proportionality, i.e. the relationship between costs and benefits, desirability vs necessity.

Business Impact Assessment 3 What do we do? PLDs competences have been incorporated in Assessment guidelines for proposed legislation Describes -The Proposed Legislation Desk -Proces -Type of regulation we assess -Business Impact Assessment as a tool

Business Impact Assessment 3a Proposed legislation Desk The Proposed Legislation Desk is operated jointly by the Ministry of Economic Affairs, the Ministry of the Environment (Environmental Assessment) and the Ministry of Justice (Practicability and Enforceability assessment). It oversees and checks the quality of the RIAs. There is a weekly meeting with the representatives of these three Ministries.

Business Impact Assessment Staffing -Within the PLD 6 people work on the BIAs -2006: 205 BIAs were performed. -50% of the BIA showed substantial effects for the business community

Business Impact Assessment 3b Type of regulation we assess In a first instance, the BIA is for proposals for new laws, orders in council and amendments to them If thought necessary a BIA may also be performed on other forms of regulation.

Business Impact Assessment When should an assessment be performed? The BIA must be performed as early as possible, preferably as soon as a basic draft of new legislation has been designed. The outcomes of the assessment are most valuable precisely in the phases in which it is still possible to alter modalities: so you can choose the least burdensome alternative

Business Impact Assessment 3c Proces The initiating ministry is responsible for the quality of the proposed legislation as a whole. It is also responsible for ensuring that the effects and side- effects of the legislation are transparent by means of the performance of the BIA (and/or EA and P&E). The ministry responsible must then submit the IA to the Ministry of Justice for the legislative test of the proposed legislation, accompanied by the explanatory memorandum that includes the outcomes of the assessment(s).

Business Impact Assessment The results of an IA should be included into a separate paragraph in the explanatory memorandum accompanying proposed legislation. This enhances the so needed transparancy.

Business Impact Assessment The Ministry of Justice will forward the BIA and/or EA for review to the Ministry of Economic Affairs or the Ministry the Environment. The Ministry of Justice will review the P&E itself.

Business Impact Assessment The final part of the examination of the proposed legislation - both for the legislative test and for the performed assessments - is a legislative report produced by the Ministry of Justice that states approval or disapproval. This report is sent –together with the proposed legislation – to the Council of Ministers.

Questions ?

Business Impact Assessment 3d Business Impact Assessment as a tool Some basic assumptions about BIA:

Business Impact Assessment Quantification of possible effects is extremely important because it avoids differences of interpretation. The degree to which quantification is possible will depend on the availability of data.Certain elements of the questions are suitable for precise answers (especially questions that provide a picture of the present situation). Questions about the situation after the proposed legislation takes effect are subject to greater uncertainty (behavioural reactions play a role). The assumptions upon which estimations are made must be stated clearly with a reference to the source. The latter naturally also applies to "hard" data.

Business Impact Assessment BIA QUESTIONNAIRE 1For which categories of companies could the proposed legislation have a business impact? 2 Number of companies will actually be confronted with the proposed legislation? 3 Verification Framework for Permits 4 What are the most probable nature and scale of the costs and benefits of the proposed legislation for the companies concerned? E.g.Adm burdens and Compliace costs. 5 How do the costs and benefits of the proposed legislation square up to the strength of the part of the business community concerned?

Business Impact Assessment BIA QUESTIONNAIRE (Part II) 6 What is the current situation regarding legislation in the policy field concerned in countries that for the business community in the Netherlands are the most relevant competitor countries? (Foreign test). 7 Does the proposed legislation contain any rules that will cause a situation where: more requirements or more stringent requirements than apply under a EU Directive will occur in respect of access to and pursuit of a profession or business? a greater burden will be imposed on companies in performing certain activities than the one that occurs under an EU Directive? If so, what is the reason for imposing such a burden? 8 How will the proposed legislation affect market mechanisms? 9What are the socio-economic effects of the proposed legislation (in terms of employment opportunities, wage costs and similar)?

Business Impact Assessment Assistance The willingness to perform and the quality of the BIAs will be enhanced with maintaining good relations with the Ministries concerned.

Business Impact Assessment It will not always be easy to identify the effects and side- effects of proposed legislation. With this in mind, the Ministry of Economic Affairs, the Ministry the Environment and the Ministry of Justice provide assistance in the form of information about the assessments and, where necessary, by providing support in dealing with specific problems concerning the gathering of information.

Business Impact Assessment Compliance Costs Compliance effects are all the direct effects that occur within the business world as a consequence of complying with the obligations in the legislation and regulations, other than the direct financial effects. Compliance effects occur if the business world is obliged to implement behavioural changes or make adjustments to the production process, production methods or products and/or is obliged to report to the government

Permits

Bedrijfseffectentoets Essence Verification Framework for Permits In October 2006, the Licence Simplification Project introduced its standard verification framework into the BIA The purpose of this verification is to prevent legislators to introduce unnecessary permits. Licenses are a high administrative burden for entrepreneurs and an obstacle to quickly starting a new business. The framework asks the legislator if it is really necessary to check (entrepreneurial) behavior on beforehand. Control afterwards could be more appropriate or could be sufficient to prevent risks or problems. If, for important or consequential reasons, the conclusion is that a permit is the right instrument, the framework gives suggestions to keep the license as simple as possible.

Business Impact Assessment In short: -Besides having the intended effects, legislation frequently has side-effects. -Therefore, it is advisable to take a decision on proposed legislation only after all effects have been properly identified. -This shoudlbe done both qualitative and quantitaive. This enhances the quality of proposed regulation and legislation. Focus points:Business Impacts Admin Burdens National heads on EU legislation compliance costs Necessicty of the compulsion of Permits

Questions ?

Brian Huijts Meldpunt voorgenomen regelgeving