Practice Advice in Regulatory Policy and Management
Administrative Simplification (OECD)
Description: Administrative simplification is a regulatory quality tool to review and reduce administrative and regulatory procedures. In most OECD countries, efforts to reduce administrative burdens are driven by desire to improve the cost-efficiency of administrative regulations.
Commentary: Administrative regulations are the paperwork and formalities through which governments implement their policies. As administrative burdens grow in number and complexity, governments need more information in order to be able to implement policy more efficiently and target regulations on specific issues and societal groups. The growing use of formalities and administrative burdens ( the so called “red tape burdens”)in turn, create additional costs and inefficiencies for businesses and contribute to investor uncertainty. Government efforts aimed at reducing administrative burdens have focused on reducing the time and resources spent on formalities and paperwork, as well as the administrative resources required to ensure and enforce compliance. Administrative costs represent a part of regulatory costs that can be relatively easily identified and measured; they are also perceived as politically neutral and thus easiest to implement. The following administrative burden reduction programs have been identified as noteworthy:
Standard Cost Model. Developed by the Dutch Ministry of Finance, this model provides a methodology for mapping and measuring administrative costs and obstacles and benchmark them against quantitative targets and other regulatory benchmarks.
European Commission Action Programme. Launched in 2007 by the European Commission, the program seeks to measure the administrative costs that arose as a result of EU legislation and seeks to reduce administrative burdens by 25% by 2012. The program also encourages EU member states to set similar quantitative targets of administrative burden reduction targets at the national level. The EU program includes, but is not limited to, removing the requirement of costly expert reports, simplification of reporting obligations in the agricultural sector, removal of unnecessary requirements for finishing vessels and easing of the paperwork for receiving export refunds for agricultural products.
Increased use of Information and Communication Technologies. Governments in OECD countries have re-engineered administrative processes, data collection, sharing and reporting through centralized and secure Data Hubs. The Data Hubs reduce the data collection burden for local authorities, and ensure that local authorities have the right information to gauge own performance against national indicators.
Based on the experience of member countries, the OECD recommends the following policy options and best practices in the area of administrative burden reduction and administrative simplification.
Governments must broaden and widen administrative simplification projects. Although the economic costs of administrative burdens on businesses are significant, governments, nevertheless, should also focus efforts on reducing the regulative and administrative burdens on citizens, and the public sector as a whole.
Governments should adopt a broader definition of administrative burdens. Administrative simplification projects mainly focus on the administrative costs incurred by regulated entities, such as businesses, neglecting the costs that arise when business entities and individuals comply with information obligations and compliance requirements. In addition, governments also need to take into account the so called “irritation costs”, which depend on the user’s perception of how burdensome a regulation or an administrative procedure is, and the general lack of understanding about the “raison d’être” of the regulation.
Governments should measure administrative burdens and set quantitative targets for their reduction. Monetizing the value of administrative burdens will make it easier for the media and the public to understand why and how the government intends to “cut red tape”. In addition, once quantified, it will be possible to identify most burdensome regulations, set feasible targets for cost reduction and allocate responsibility for implementation to individual ministries, and departments responsible for regulation.
Governments should also develop systematic methods of assessing administrative burdens which involve quantitative as well as qualitative techniques. Qualitative techniques should express administrative burdens in measurable terms, but rather assess information stemming from client and user feedback which is subjective and not quantifiable, yet relevant.
Governments should integrate administrative simplification with other regulatory reforms and e-government. In many OECD countries, administrative simplification is used as an umbrella term for a set of ad hoc, uncoordinated policies. When red-tape reduction efforts are not coordinated, policy effects may not be useful. Governments need to tailor their administrative burden reduction policies to the institutional structure of their regimes, and also integrate policies within the entire bureaucracy. It is also important to assess the need for regulation with the state of affairs after the process of reduction of administrative burdens has been completed. Given that supranational and national policies can result in contradictory requirements, new regulations must be scrutinized and assessed in light of administrative burden reduction.
Governments must integrate administrative simplification with other regulatory reforms and e-government. ICTs (Information Communication Technologies) should be used to create one-stop-shops for integrating data storage and processing among government departments. Government should offer internet based services to its businesses and citizens. It is also recommended that a single governmental unit must be tasked with the coordination, maintenance of such a database as well as the cooperation and coordination between institutions.
Governments should create efficient institutional structures and involve sub-national goverments in the coordination and implementation of administrative reforms. Administrative simplification/ burden reduction is a policy which requires the involvement and cooperation of all central government bodies, and a specifically mandated governmental entity, able to exert pressure and tasked with the oversight of the implementation across all departmental levels. Governments should also involve advisory bodies (commissions, watchdogs, etc) which should consist of stakeholder representatives from both public and private sectors to strengthen accountability and oversight.
Governments should strengthen communication with stakeholders. Governments should involve the immediate stakeholders of administrative regulations when assessing the need for, and framing administrative burden reduction strategy. Results of the administrative simplification projects need to be communicated to the stakeholder groups.
Governments should conduct a cost-benefit analysis before launching an administrative burden reduction program. Despite the political popularity of administrative burden reduction programs, not all provide sufficient immediate relief, putting the broad dissatisfaction with the effectiveness of the program and the “value for money” of the policy into agenda.
Source: OECD (2010). "Future Policy Directions for Administrative Policy Reduction" in Looking Beyond 2010: Why is Administrative Simplification So Complicated?at http://www.oecd-ilibrary.org/governance/why-is-administrative-simplification-so-complicated/future-policy-directions-for-administrative-burden-reduction_9789264089754-5-en (accessed 11 November 2012).
Page Created By: Khilola B. Zakhidova on 1 December 2012. Updated by Ian Clark on 2 January 2013. The content presented on this page is drawn directly from the source(s) named above, and consists of direct quotations or close paraphrases of material drawn from it. This material does not necessarily reflect the opinions of the creator of this page or the researchers associated with this project. Further, the opinions expressed in the source and presented on this page do not necessarily reflect the official institutional positions of the organization responsible for the source’s publication.