The burden of your political convictions

“The greatest trick the devil ever pulled was convincing the world he didn’t exist.” – The Usual Suspects

Administrative burden reduction is an initiative taken by quite a few governments, many of them in the EU, including the EU itself, which aims to reduce the costs of compliance with laws and regulations for citizens and businesses. I know a bit about the subject matter because as an external consultant I was responsible for the Belgian federal measurement bureau, part of the Agence pour la Simplification Administrative (ASA) for a couple of years.

The risk of gold-plating regulation

Administrative burden reduction is very relevant and vigilance as to the escalation of administrative burdens is certainly necessary. Belgian administrations sometimes have the tendency to gold-plate regulation they want or need to impose. Gold plating means administrations or political actors make compliance more complex or more difficult than it should be. This can lead to a competitive disadvantage for Belgian companies. There is not any bad intent behind such occurrences. I’m quite convinced the people doing the redaction actually want to make better regulation. However, they often make it much more complex than it should be. In some cases they do not have the insight or the background to optimise the regulation.

Shifting costs from private to public sector

However, administrative burden reduction in its current form is problematically incomplete. Instead of fundamentally addressing an issue, the compliance work (i.e. the burden), when removed, is often moved from the private sector to the public sector. The country scores well in analyses of administrative burden, however, any analysis of administrative burden reduction conveniently forgets the government dimension and additional compliance related costs or inefficiencies there. This is a problem because you may be addressing a trickle with your left hand while increasing the flood with your right. In the past, this happened a few times.

OECD reporting is eye-opening

But how to detect this? An important indicator is the so-called “government production cost”. Actually, the OECD publishes a lot of information, and one of the comparisons they make across the OECD members is the comparison of those “government production costs”. To understand what is contained within that category, please follow the next link to look at the definition and recent data. What we find is quite significant: according to the OECD, the Belgian government production costs amount to 26,3% of GDP, as compared to an average of 22,5% in the OECD.

Creating a surplus instead of a deficit

Let that sink in for a minute. The cost of what the Belgian government produces in terms of GDP is 3,8% higher than the OECD average. Going for the OECD average is not really a very ambitious target for a developed country like Belgium, and it would just put us in the middle of the pack in terms of government costs, but what would that mean for us? Let’s do the calculation: applied to the Belgian GDP in 2018, 3,5% represents a bit more than 17 billion EUR. Therefore, just bringing Belgium to the OECD average would mean wiping out the current budget deficit and creating a surplus. Yet I have still to hear the first political party address this head on. And that is a missed opportunity.

Abolishing the Belgian government deficit by aiming for the OECD average in terms of government production costs would mean that Belgium would actually be able to make much needed investments. It would also likely mean less, and especially better aligned administrative structures. In general,the OECD Economic Surveys always make a good read.

Starting from first principles

I would like to see one or more political parties addressing the issue of our overall tax burden which most people consider considerably too high in the due diligent manner it deserves. After all, anything a government needs to do, needs to be paid via its budget, determined by its available income. So, the question on whether or not something the government does should be done at all, or, if it has to be done, whether government does it in the most effective way possible needs to be asked.

There are ample approaches to work on this. Not just zero based budgeting, but really asking the question: should this be done by government and if yes, what is the most optimal structure and approach to do this.

Questioning the burden related to your political convictions

To do this in an optimised manner, it means starting with the highest burdens, specific to the public sector itself. Let’s look at government efficiency and especially the costs – as well as the underlying choices made – in the context of our overly complex state structure. From there, we can work our way down. And let me be very clear, in my mind this is not about just suppressing administrations … I have worked for, with and among excellent public servants I respect a lot and who are underpaid as compared to their peers in other EU countries just because of the fact that we just have too many and too costly structures. An optimisation would therefore not just serve our country but serve the committed public servants working for it as well.

We need to dare go back to first principles, with a focus on country-wide optimisation of our entire state structures and with clear instructions to consider legislation as an optimisation exercise. Only after that we can start discussing political beliefs … because otherwise the cost of your convictions, be them federal or confederate, will just be too high for the citizens and the local businesses in our country.