The challenges for a more efficient assessment of compliance costs in multi-level governments: recommendations from the Normenkontrollrat


Photo credits: Gustavo CC BY 2.0

What’s going wrong with the assessment of compliance costs in multi-level governments, and how can they be improved? An expert report from the Normenkontrollrat (NKR), the German National Regulatory Control Council, published on April 2015, makes a comparison of the parameters for determining regulatory follow-up costs at the EU and German federal levels. The report (here is the summary in English) starts from a parallel analysis of the legislative processes in the EU and in the Federal Government, finding out the weaker phases as regards the compliance and administrative costs assessment. The starting point is a common framework, where both the EU and the Federal Government are committed to monitoring and assessing the costs in an implementation-oriented legislation. Nonetheless, as the report highlights, such activity is not as easy as it would be in a single level jurisdiction, where the actors accounting for the added costs and those called to implement them (or likely to incur in them) almost coincide.

The analysis aims to find out how the so called “administrative knowledge” is obtained within Germany and by the EU with regard to Germany and the other Member States. It therefore sketches out some recommendations both for the EU and the federal legislative process in order to improve the exchange of administrative information from the lowest level to the highest. The basic assumption behind such parallel analysis, which is worthy of support and can be profitably extended to many other countries (like Italy, for example), is that «[th]e better the exchange of information between the Federal Government, Federal States and municipalities, the easier it would be to manage the required information at the EU level» (p. 15 of the English summary). Therefore, pledging to improve the domestic system is also a preliminary effort to help improve the EU multi-level flow of information.

The analysis takes into account three categories: the institutional framework (legal provisions), the procedures (deadlines, regulation of procedures, steps, methods and tools for assessment of administrative costs) and the resources employed (expertise, methodology needed).

As for the institutional framework, in both systems there no provisions on how administrative costs are to be considered; in the EU there are no formal obligations and, in general, Member States are scarcely encouraged to provide information. In Germany, although since 2011 the Federal Government is formally committed to assess the compliance costs of legal requirements, in order to make them transparent and possibly reduce them, a lack of legal specification regarding, for example, necessity and deadlines for Federal states and municipalities to provide the needed information to the Federal Government. An “unclear” supervisory  role of the Bundesrat is also reported. In general, the lower levels are not involved and engaged enough to timely and exhaustively participate to the assessment process.

The NKR, therefore, suggests both systems to enhance the obligation to determine administrative costs and to involve administrators by means of institutional provisions.

  • For example, the obligation of the Commission/Federal Government to request information and the obligation of the Member/Federal States to provide it should be formalized.
  • Besides, the positions of the oversight bodies of the EU and Federal Government levels should be strengthened: the recently appointed Regulatory Scrutiny Board, at the supranational level, and the NKR itself, at the federal one, could be attributed such supervisory role.
  • In general, regarding the Member States, it is highlighted a need for national oversight bodies to ensure that government departments check the plausibility of the EU’s cost assessments and provide the necessary data.
  • As for the timing, it is correctly remarked that administrative knowledge and figures on administrative costs should be considered at an early stage of the decision-making process.

As for the procedures, both processes lack a common standardized procedure and technical support. Neither the Commission nor the Federal Government have agreed any procedures or deadlines with, respectively, the Member States and the federal states or municipalities, so whether the information is provided or not depends on the single States’ degree of promptness.

Regarding the recommendations in this field, NKR states that procedures should be defined and methodological and procedural competence should be developed:

  • In general, in both systems a knowledge management system should be set up. In particular, the EU ought to better structure the impact assessment procedure in order to involve the compliance costs ex ante assessment, while the Federal Government should try to agree with the lower governments on a standardized and systematic procedure for involving administrators in determining the correct amount of costs.
  • Moreover, established cost assessment methods should be considered and further developed. For example, NKR says, the EU could profitably build upon the experience of the Member States, for instance by developing its methods in line with the OECD’s guidance on the assessment of compliance costs, which would also avoid the need to carry out a survey on all the countries for every impact assessment. Even sharper indications are addressed to the German system: one is that the Federal Government be able to request administrative knowledge directly from municipalities, for example by pooling a representative number of municipalities chosen by Federal States and top-level municipal associations.
  • Therefore, it is important that information on administrative costs be re-used, processed and combined with other administrative models, at both EU and national levels.
  • Finally, a user-friendly online tool should be developed to retrieve information on administrative costs without the without the personnel involved having to have any advanced methodological and procedural skills.

Finally, as for the resources, it is reported for both cases that there is no broad methodological or procedural competence for gathering and using administrative knowledge; there is no systematic processing, analysis or re-use of administrative knowledge that has been gathered (no knowledge management); in Germany, moreover, there is only sporadic use of process models.

In order to fill such gaps, the NKR says, first of all, clear responsibilities and resources should be assigned, and, if possible, a cross-level compliance costs network should be established.

  • The EU could for instance make better use of the expert working groups, where often legislation experts team up with representatives of the Member States responsible for the administration. The latter, as they generally come from the Federal Government level, should first request administrative knowledge from the Federal States and municipalities and then use it to make proposals for adjustments to planned EU legislative acts. Other viable precautions could be to:
  • set up a central contact unit for all issues concerning the assessment of compliance costs, for instance in each Directorate-General (accordingly, to better support the existing contact units and commissioners at the federal ministries)
  • and to engage in sensitizing, training and better motivating legal advisors at both levels.

(Federica Cacciatore)