BETTER REGULATION Cutting red tape has long been a dream of Swedish companies. But the current coalition government (Social Democrats and the Green Party) has put little effort into this issue. Strong measures are needed now, argues a second report from the project A Challenged Sweden. “We’re heading in the wrong direction. The numbers are alarming,” says Göran Grén, lawyer and author of the report.
Report author, Göran Grén argues that the Swedish government should take a holistic strategy to improving regulatory burdens including continual reporting on progress to the Riksdag.
In 2006, then Enterprise Minister Mauf Olofsson declared open hunting season on bureaucracy and red tape. This included her promise that companies’ administrative costs for regulatory compliance would be reduced by 25%.
The measures taken included requirements for impact assessments, problem statement, and explaining the purpose of new regulations when they are introduced. Additionally, the Swedish Better Regulation Council was created and tasked with reviewing the quality of the government’s impact assessments.
Despite these requirements, and the activities of the Swedish Better Regulation Council, regulations keep getting stacked on top of each other without any closer analysis, effectively discouraging enterprises.
A survey last year by the Board of Swedish Industry and Commerce for Better Regulation showed that 32% of entrepreneurs felt national regulatory compliance had become more difficult. Meanwhile, the share of entrepreneurs who say this has become easier has decreased since 2011. This figure was 21% then, while last year only 2% felt compliance was easier.
The declining trend is captured in the second section of the ‘A Challenged Sweden’ project report. It concludes that efforts to improve regulatory burdens have come to a halt, and that a revived process is needed to kick-start them again. It is vital that entrepreneurs have the opportunity and time to sell their goods and services, and to grow their businesses – instead of putting an increasing amount of time on administrative burdens.
“We are heading in the wrong direction. The numbers are alarming. Stifling regulations are being added, and Sweden is dropping in OECD rankings. We are falling behind many of our major competitors who are working to improve regulations to lighten the burden on their businesses,” argues Göran Grén.
He believes that many of the necessary instruments are already in place, they simply aren't used properly. Göran Grén highlights three vital changes:
First, the political approach must be holistic. The government should create a strategy for improving the current regulatory climate and to continually inform the parliament on its progress. “This is crucial in ensuring efforts to improve the regulatory climate are taken seriously and have a real impact -- extending beyond empty policy promises.”
Second, better impact assessments are needed. Most assessments conducted do not measure up. The latest Swedish Better Regulation Council’s report shows that of the 43 committee reports sent by the Government Offices, 81% did not meet the applicable requirements. The Ministry of Finance submitted 21 impact assessments. 19 where found inadequate by the Swedish Better Regulation Council, yet the Ministry of Justice did not investigate.
“The principle should be stopping all proposals from moving forward unless they include an approved impact assessment. Assessing and fully understanding the consequences of every proposal before taking any action should be the norm. But today, the opposite is true in many cases. The government starts by setting out its objectives and then the assessment is made,” notes Mr. Grén. “Fully adequate impact assessments also help to hold policy-makers accountable,” he adds.
Thirdly, he wants the Swedish Better Regulation Council to have a clearer role and organisation as a governmental authority – with a stronger mandate. The Swedish Better Regulation Council can play an important role, especially in terms of avoiding over-implementation of EU laws. “All the report's proposals can be implemented relatively easily, given the will to do so, and would have no budgetary impact in most cases.
Göran Grén would also like to see a broader business perspective when new regulations are implemented. “Businesses want regulations that are stable, proportional, and predictable. Poorly prepared regulation, unnecessary bureaucracy, and poor quality impact assessments are expensive and raise obstacles for business activities.”