SME president: ‘Less regulation as important as ‘better’ regulation’

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Small and medium-sized enterprises could save billions every year if administrative processes were more straightforward and part of the regulatory burden were lifted from them, says long-standing SME lobbyist Christoph Leitl in an exclusive interview with EURACTIV.

Christoph Leitl is the President of the Austrian Chamber of Commerce and of SME Union (the EPP’s SME organisation). He ran his own medium-sized company in the brick kiln sector and held several political posts in his native region of Oberösterreich (Upper Austria), including the one of deputy regional president. 

Mr. Leitl, in meetings with Commission Vice-President Günter Verheugen, you urged to reduce the bureaucracy for SMEs by 25% until 2010. Less than a year ago you where asking for a reduction by 50% until the end of 2006. Did so much happen in the meantime? 

I cannot remember having asked for a 50% reduction. I said that concerning statistics 30% should be feasible within three years. I want to give you a concrete example: We have developed a so-called single flow model. You know that foreign trade statistics always include exports and imports. If I take into consideration that every export is an import elsewhere, I don’t have to list the imports – it suffices to list the exports. This means 50% less of administrative burden. This concerns 200,000 companies in Europe, it is a concrete measure and it is indeed realistic and feasible. 

I also welcome Verheugen’s screening of provisions and regulations. Talk should not only be about ‘better regulation’ but also about ‘less regulation’. That is just as important. 

Is the Commission’s pace fast enough for you?

Verheugen’s deadline is 2012; but I would suggest that the course should be set during the current Commission’s term of office. It is going to take some time until the impact can be realised in full. The target of minus 25% is a fascinating figure. This also refers to the suggestions which can be drawn from the Dutch example. We will not be able to achieve all at once. But both the way and the potential are sketched out. If you don’t define the potential and if the timeframe, there won’t be an efficient outcome of the whole process.

On the one hand, you urge “more business-focused impact assessments”, on the other hand you want ot reduce the regulatory burden conencting to raising statistical data. Where are you going to get the raw data for research then? 

You are right at first glance. But at a second glance, concerning statistics, there are other sources for small and smallest enterprises – say, up to 10 employees. Sources such as from the revenue office or social security, which can be implemented easily won’t distort the quality of the statistics. Tha means that only bigger enterprises will be counted, and only on the basis of samples, and will have to make some effort. Bigger enterprises are also more dependent on data.

Would you agree, then, to data being collected by revenue authorities to be used for statistics in an anonymised manner? 

Of course. That is already happening quite often. And if it is done more systematically we will be able to establish a new European level, and it won’t be left to every country itself. What we need is a secured data and thus a secured method in Europe. That means that we need an agreement.

In terms of money, how much do you expect to be saved? 

Verheugen said that administrative activities are worth an amount of 600 Billion Euro yearly. Reducing this by 25% will mean taht  the potential which we aim at, together with the Commission and the Parliament, would be 150 Billion Euro. And we will be the ones who will push for that.

How would this amount of money be invested? In particular, what job creation impact do you expect?

In this regard, I would also like to refer to Verheugen’s figures. He said we could achieve remarkable an economic growth, namely by 1.5%. This means that we are going into the right direction. The companies are faced with less administrative and less financial burden and they can use their time and money more efficiently. This boosts growth.

In terms of cutting red tape, the Commission does not have more competency than to define and praise an example, as has been the case with the Dutch example. Do you expect all member states to follow that kind of example? 

Of course member states and also regions, which form the lowest level, have to be part of it. I just assume that every member state is motivated to do so, that they are grateful that those examples exist and that they also would be happy to accept that the Commission coordinates the process. Someone has to do the coordination if new standards are supposed to be created.

In a democracy the revocation of a legislation is technically as difficult as the launch of a law. Every law is backed by a lobbying group which in the individual case would try to exercise its influence so that the law won’t be canceled. With this in mind, is it realistic to set 2009 as a deadline for disposing of superfluous regulation? 

I think there would be a simple principle. First: an impact assessment needs to be drawn up for every new directive, not only of the administrative burden of the Union itself, but also of those who are subjected to the norm. Then one can have discuss of course if the cost-benefit ratio is in balance. Second: I would think about introducing a general five-year expiration date. Just imagine how much could be eliminated just by that. 

That is the so-called ‘sunset clause’. German Chancellor Angela Merkel put forward a new option: discontinuity, which means new legislation which is not concluded by the end of the legislation period of the European Parliament would have to be opened up again or would expire otherwise.

That sounds like a double-edged idea. In many cases, business needs legislation – just think of better regulation legislation. If we have to start all of this over again in 2009, it will be counterproductive.

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