1. 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 3 rd 2012

2. EVD/SECO/DPRA/wni The Regulatory Checkup 2 1.The project 2.Methodology 3.Outlook

3. EVD/SECO/DPRA/wni 3 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 1. The project

4. EVD/SECO/DPRA/wni 4 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 1. The project

5. EVD/SECO/DPRA/wni Organisation of the project Interdepartmental Working Group SECO 5. Complemen- tary Insurance 7. Foreign workers 8. Business taxes 6. Accounting 9. VAT 10. Customs Procedures 11. Vocational Training 12. Labour regulations 13. Occupational Safety 14. Building laws 15. Environment 1. Food Safety 2. Accident Insurance 3. Statistics 4. Old age insurance Business Associations Small Business Forum

6. EVD/SECO/DPRA/wni Organisation of the project 6 SECO Project coordination Development of the methodology Final report Interdepartmental working group Decisions Federal Offices Financing the studies Responsible for their projects Interdepartmental Working Group SECO 5. Comple- mentary Insurance 7. Foreign workers 8. Business taxes 6. Accoun- ting 9. VAT 10. Customs Procedures 11. Voca- tional Training 12. Labour regulations 13. Occupa- tional Safety 14. Building laws 15. Environ- ment 1. Food Safety 2. Accident insurance 3. Statistics 4. Old age insurance Business Associations Small Business Forum Businesses / SME Forum Regularly consulted

7. EVD/SECO/DPRA/wni 7 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)

8. EVD/SECO/DPRA/wni 2. Methodology : Which costs are estimated? 8 Measured and considered qualitatively Considered only qualitatively Not considered Regulation Obligations to tolerateOther obligations to act Obligations to abstain from sthg (Prohibitions) Information obligations Cost of regulation Direct costs for businesses Personnel costs (e.g. salaries) Financial costs (e.g. fees) Other material costs (e.g. third-party services) Investment costs (e.g. construction measures) Problems for businesses (in addition to costs) Other costs (Legal costs, disclosure of informations) Delay costs Product substitution Opportunity costs (Income loss due to reduced freedom of action) Indirect costs for businesses Acceptance Feasibility Comprehensibility Other costs Micro- and macroeconomic costs (Impact on competition, prices, investments and innovations) Costs for the State Costs for the citizens

9. EVD/SECO/DPRA/wni 9 2. Methodology Measurement process A) Preparation – administration B) Preparation – contractor C) Data collection D) Problem identification and validation E) Calculation of regulatory costs F) Simplifications G) Documentation Public Administration Contractor 1. Area definition 2. Call for projects 3. Determining the main obligations to act 4. Grouping obligations to act 5. Subdivision into different business groups (segmentation) 7. Expert estimation 6. Determining the number of cases 7.a Business interviews 8. Business interviews 9. Cost calculation 8.b Workshop for the validation of the results 8.a Calculation of standard values 10. Analysis of problems and simplifications 11. Workshop on suggestions for improvements 12. RIA for suggested improvements 13. Documentation and final report Kick-off meeting with contractor Meeting with contractor if not possible

10. EVD/SECO/DPRA/wni 2. Methodology Proposals for simplification and cost reduction 10 Collection of suggestions for improvements Expert estimation of the costs Other Inputs (e.g. research papers, business surveys) Business interviews Workshop on developing improvement proposals (Discussion of existing and development of new ideas) Objective: Formulation of three to five improvement suggestions for each area Written comments from business associations

11. EVD/SECO/DPRA/wni 11 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) 3. Outlook

12. EVD/SECO/DPRA/wni 12 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)

13. EVD/SECO/DPRA/wni 13 Thank you for your attention!