Business Compliance Costs Perceptions Survey
In addition to undertaking specific compliance cost-related initiatives and ensuring a robust process for ongoing regulatory decisions, it is also important for the government to "stay in tune" with business concerns about compliance costs.
Consequently, in mid 2002, the Ministry of Economic Development (MED) and The Treasury commissioned the Business Compliance Costs Perceptions Survey. This followed a commitment made by the government in Striking the Balance, its response to the recommendations of the Ministerial Panel on Business Compliance Costs. MED commissioned Massey University's New Zealand Centre for SME Research to carry out the survey.
Given the difficulties in accurately quantifying compliance costs, the survey was to focus on business "perceptions" of compliance costs and provide an insight as to the relative concerns of business in relation to different regulatory requirements. More specifically, and in keeping with the government's Growth and Innovation Framework (GIF) and its broader focus on the impact of regulation on business performance, it was intended that the survey provide an understanding of the extent to which regulatory compliance requirements affect firm growth, innovation, and performance.
Survey Methodology and Structure
Following a series of focus group meetings that helped to frame the survey, the consultant carried out a telephone survey of approximately 500 firms. The survey focused on SMEs, with the firms surveyed employing 50 or fewer employees. However, the size of the firms varied within this bracket. Firms also varied in terms of firm stage (maturity), growth intentions, export involvement, and industry type.
The survey was comprised of several parts - individually concerned with:
- the balance of costs and benefits that firms perceive accrue to their firm or industry through compliance with different regulatory requirements;
- the particular regulatory compliance requirements that firms perceive inhibit firm productivity, growth and general performance;
- the types of problems and difficulties firms perceive as created by regulatory compliance requirements, and the particular regulations most responsible for those problems; and
- how firms perceive that regulatory requirements have changed over time.
An additional section of the survey was specifically concerned with exporters' perceptions as to the obstacles to growing their export business (with regulatory compliance requirements being only one of these potential obstacles).
Definition of "Compliance Costs"
In order to properly interpret and understand the results of the Perceptions Survey, it is first of all important to clarify the definition of compliance costs.
In the government policy environment, compliance costs are understood to be the administrative or "red tape" costs of regulatory compliance (e.g. the cost of completing forms or training staff about regulatory obligations). Compliance costs are incidental to the regulatory obligation itself, and do not, for instance, include direct costs of regulations such as the actual levels of taxation or ACC levies etc.
The Ministerial Panel on Business Compliance Costs, appointed by the government in 2000 to provide recommendations as how to reduce compliance costs, used the following definition of compliance costs:
"Compliance costs are the costs to affected parties of interacting with government in meeting an obligation or providing a service. Compliance costs are incidental to the obligation itself and are often related to the processing and providing of information. "
Some businesses, business groups, and at times the media tend to apply the term compliance cost in a much broader sense, incorporating many of the perceived direct and indirect costs of regulation. The wider costs of regulation are, of course, extremely important to the government's regulatory policy decisions. However, whenever attempting specifically to elicit business views on the "red tape" costs of regulation, the tendency of businesses to think of compliance costs in a wider sense can be problematic. Certainly, some of the survey participants appeared to be thinking in terms of the wider costs of regulation, and the results of the perceptions survey need to be considered with this in mind.
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