Going Dutch

About 18 months ago the Doing Business team was asked to study the Dutch regulatory reform program and make some suggestions about its future focus. The resulting report listed several ideas. Most important among those: to conduct surveys of businesses and ask what their main constraints are; to combine the (then) four different units in the Ministries of Finance and Economy into one regulatory reform group; to study the costs of some existing regulations, not just of new regulation; and to communicate the reforms through the views of business people, not the minister or other government officials.

I visited the Dutch Ministry of Finance recently and was shocked to find that all these ideas were implemented. It's so rare!

On second thought, I shouldn't be so surprised. The Dutch are already leaders in regulatory reform in Western Europe. They mean business.

This is unlike the rest of the European Union. There, bureaucrats are required to do regulatory impact assessments before they submit new legislation to parliament. This is how it is supposed to work in theory: the ministry or agency responsible for the new legislation does an in-depth economic analysis of its likely costs and benefits. It then quantifies these costs and benefits and submits this "audit" with their legislative proposal. Here is how it works in practice: once the legislation is drafted, the bureaucrats make up some numbers, always making sure that the benefits far outstrip the costs. They pass this to other bureaucrats, who pretend to study it carefully before giving an OK. Parliament pretends to believe the numbers and happily passes the legislation. No one asks businesses what they think.

I look forward to visiting the Hague soon again and learning how the new Dutch approach is working. I hope that other EU countries will take note too. Go Dutch!