The Standard Cost Model and perceptions of
administrative burdens in the road transport sector
by
Marcin Gancarz
Małgorzata Kałużynska
„It’s evident the art of losing’s not too hard to master though it may look like (Write it!) like disaster.” One art by Elizabeth Bishop
December 2005
Office of the Committee for European Integration
Warsaw
Table ofcontents
Introduction ... 3
Preface... 5
1. The pilot project for application of the Standard Cost Model in Poland ... 9
1.1. Goals of the Project ... 9
1.2. Profile of the road transport sector in Poland... 10
1.3. Implementation and project results ... 11
1.3.1. Overview of legal provisions ... 11
Identification of information obligations – building of catalogues... 11
1.3.2. The method of input data collection for cost calculation model ... 12
1.3.3. Results of the study in numbers ... 13
1.3.4. Conclusions ensuing from the resulting figures... 19
2. Social study on perceptions of administrative burdens in road transport ... 23
2.1. Goals of the project ... 23
2.2. Methodological assumptions of the study... 23
2.3. Results of the research... 24
2.3.1. Conditions for obtaining the Community license ... 24
2.3.2. Regulation of the number of authorisations ... 25
2.3.3. Labor law provisions: working time of drivers... 26
2.3.4. Co-operation with state offices ... 28
2.3.5. Checks ... 29
2.3.6. Scope of knowledge about legislation in force ... 30
2.4. Summary ... 31
3. Benchmarking administrative burdens in road transport sector: the Netherlands - Poland ………...33
3.1. Goals of the project ... 33
3.2. Assumptions concerning project implementation ... 33
3.3. Results of the benchmark project ... 35
3.3.1. Obligation 1 - obtaining Community license for passenger transport ... 35
3.3.2. Obligation 2 – obtaining Community license for transport of goods... 35
3.3.3. Obligation 3 – waybill in international transport ... 36
3.3.4. Obligation 4 – completion of journey forms... 36
3.3.5. Obligation 5 – checks of driving time and rest periods of drivers ... 37
3.3.6. Obligation 6 – dangerous goods security adviser... 37
3.3.7. Conclusions for the benchmark project... 38
4. Conclusions ... 41
4.1. Introduction of the Standard Cost Model in Poland... 41
4.2. Inclusion of SCM into better regulation policy... 43
Annex 1 ... 46
Introduction
Currently the interest of both the governments of individual Member States and the entire European Union focuses on measures aimed at development and application of a methodology for administrative costs measurement. Implementation of such methodology will help to improve or possibly eradicate those legal provisions that are not consistent with economic reality or impose unnecessary and excessive burdens on undertakings. Such effects of those measures as reduction of bureaucracy will also contribute to an improvement in the competitiveness of enterprises. This report is one of the first attempts in Poland at undertaking such measures1. It presents and describes results of the original study aimed at defining a new approach to legislative cost assessment. Moreover an innovative approach to legal regulation analysis was chosen. The authors hope that the figures and considerations contained in this paper will help to understand the issues of regulatory burdens, and administrative costs in particular, and will result in undertaking of specific actions targeted at their reduction. The authors also express their conviction that the report will draw readers’ attention to the applicability of the discussed aspects and the proposed solutions.
This paper analyses administrative burdens in some selected regulations in the road transport sector. Selection of the sector for analysis ensued mainly from prior research experiences of the Office of the Committee for European Integration in the area of transport, good co-operation with the Ministry of Infrastructure and with the road carriers associations.
The selection was also dictated by the important role played by this transport sector within the national economy, characterised in our country by a significant share of SME sector. Automotive transport generates very high revenues directly within the sector and in its entire surrounding – automotive industry and services. At the same time any changes in the conditions of its functioning have an impact on the transport market, owners of undertakings and drivers, as well as on the automotive industry directly linked thereto, service environment and consumers. Legal regulations both in the area of road transport and in the automotive industry affect manufacturers of the means of transport, carriers, drivers and their profits. Therefore additional costs related to fulfilment of information obligations have a bearing on many entities. At the same time this is one of many sectors where – despite high level of regulation (regulations for working time, access to the profession and market, requirements in transport of dangerous goods etc.), one can see a high level of competition.
The authors wish to thank cordially all those who participated in the works on individual studies comprising this report.
Particular thanks for co-operation and provision of data necessary for the research are due to the senior management and employees of the Department of Road Transport and the Legal Department in the Ministry of Infrastructure, the Office of Servicing International Transport, the Head Inspectorate of Road Transport, the Motor Transport Institute and Marshal Offices. The authors also extent their gratitude to Polish Confederation of Private Employers „Lewiatan” and the Association of International Road Carriers for their kind assistance, interest and useful advice.
1 It needs to be stressed that several papers encompassing broadly understood issues of administrative burdens have
been developed in Poland before, e.g. Administrative barriers related to starting up and pursuing economic activity in Poland. An assessment. A report developed for the Ministry of Economy and Labour as commissioned by the European Commission and with methodological support from FIAS – Foreign Investment Advisory Service of World Bank Group, theMinistry of Economy and Labour, November 2004; see also: J. Paczocha, W. Rogowski, Control of Polish economy in the years 1989 – 2003, the series: Materials and studies, the NationalBank of Poland, February 2005.
The authors also thank the members of the Interministerial Regulatory Quality Team, whose constructive remarks voiced during presentation of the results of the pilot project with regard to application of the Standard Cost Model, helped in preparing a better final report.
To the management and employees of the Dutch Ministry of Finance and the Ministry of Transport, Public Works and Water Management, who were a pleasure to work with, the authors wish to extent gratitude for openness, valuable remarks and assistance.
The authors would also like to thank friends from the European Union Law Department in UKIE for help in the implementation of the project.
If you have any questions about this report, please contact Malgorzata Kaluzynska (tel. 00 48 22 455 52 79 or e-mail malgorzata_kaluzynska@mail.ukie.gov.pl) or Marcin Gancarz (tel. 00 48 22 455 52 78 or e-mail marcin_gancarz@mail.ukie.gov.pl).
Preface
In order to safeguard its public interests, the state imposes on economic entities specific legal obligations. They include requirements related to provision of information on their actions and conduct, the so-called information obligations. Fulfilment of legal obligations involves costs. Those costs can be broken down into a few categories: financial costs (e.g. taxes, administrative charges), compliance costs and administrative costs borne by businesses in connection with provision of information as stipulated in legislation. According to the methodology applied in the research, whose results are contained in this report, it is deemed that only the costs ensuing from information obligations can result in administrative burdens.
Why should actions in the frames of the policy of limiting regulatory costs also focus on administrative burdens? Can administrative costs be a problem? Those are the major questions that studies of bureaucratic burdens for businesses try to find answers to. As an example, the Dutch government showed that until a few years ago the Netherlands managed to make improvements only in reducing the financial and substantial financial costs while administrative costs were constantly rising. This was peculiar because the policy of the Dutch government was aimed at reducing all regulatory costs. It turned out that for a government organisation it is relatively easy to deal with financial costs and substantial compliance costs. These are real and concrete costs, which are highly visible and thus easier to focus the policy on while administrative costs, were not visible, although they did cost an entrepreneur a lot of money. The time and the related additional expenditure spent by an entrepreneur to fill in forms or to get a license are not found back in the company’s bookkeeping system. This invisibility makes it difficult to deal with. The Dutch Bureau for Economic and Policy Analysis (CPB) calculated the costs of information obligations at 16.4 billion, which constitutes 3.6% of the Dutch GDP. According to British calculations administrative burdens add up to 3% of the British GDP. In Belgium burdens imposed on businesses were estimated at 3.43% GDP and in Denmark – at 2.3% GDP. The Dutch Bureau for Economic and Policy Analysis calculated costs of administrative burdens at Community level to add up to 3.6% of the GDP of the European Union.
The Netherlands developed the methodology of the Standard Cost Model, which allows for identification and quantification of administrative burdens. It can be used both to calculate costs of those burdens ex ante in regulatory impact assessment and ex post as an element of the simplification of regulations in force. In the frames of the Dutch strategy for better regulation, the Government of the Kingdom of the Netherlands made a decision to reduce administrative burdens for businesses by 25% by 2007. This shall mean a total reduction of administrative costs by EUR 4.1 billion. The Dutch Bureau for Economic and Policy Analysis calculated the macroeconomic effects of such reduction. The outcome was that a 25% reduction in administrative burdens could lead to a 1.5% increase in GDP and a rise in labour productivity by 1.7%.
The Dutch Bureau for Economic and Policy Analysis indicated that the reduction of administrative burdens has positive effects on productivity in the market sector, competitiveness, output in the market sector, employment and economic growth. Pushing back bureaucracy in the public sector frees thousands of workers to be redeployed for the primary process, which will in turn contribute to increasing the output and improving the quality of service provision in the public sector. Moreover, a drop in bureaucracy enables employers to respond more swiftly to changing market situations. It also creates dynamic effects like the increase of the entrepreneurial climate, rise of the starts up and has the impact on the growth of enterprises. Besides results of
analyses and statistics, the administrative costs were also considered too high by entrepreneurs themselves. It was clear that entrepreneurship was declining because of the poor business environment; the administrative costs were too high. This was for the Dutch government a clear incentive to start a new policy focused on the reduction of administrative costs.
The Dutch approach to quantification of administrative burdens has been in practice in the Netherlands since 1994, which offers the opportunity to look back. So far the focus on administrative costs with the standard cost model and with a political goal of 25% reduction seems to work. First of all administrative burdens have been identified and classified, which was impossible before the methodology was developed. The Standard Cost Model is considered a practical tool, easy to understand and very useful for monitoring and defining reduction options ex post. It is relatively easy for government officials to work with. The model is also helpful ex ante for defining the least burdensome policy option; that is useful when drafting new legislation. Calculation of administrative burdens was included into regulatory impact assessment in the Netherlands to assess impact of regulations on business environment.
By March 2004 all ministries in the Netherlands submitted legislative proposals for reduction of 18% of the identified administrative burdens. By the April 2005 plans for additional 7% have been presented. Actual reduction level, understood as implementation of specified legislative proposals, will add up to EUR 1.6 billion in reduced administrative burdens by the end of 2005. That corresponds to 40% of the total target to be realised by the end of 2007.
Administrative costs are an important element in improvement of regulatory environment for businesses, but it would not be sufficient only to focus on measures aimed at their reduction. Administrative burdens are an element in regulatory costs, which should be analysed in a broader context covering economic, social and environmental costs and benefits of regulations. When implementing its regulatory quality policy, the Netherlands focuses on all three kinds of regulatory costs and other factors that affect the business environment. However, only for administrative costs a reduction target of 25% has been formulated.
The methodology for measurement and elimination of administrative burdens based on the Standard Cost Model is applied in several states on various scale. A comprehensive review of legislation and determination of the reduction rate is performed or planned to be performed in: Denmark, Norway, the Czech Republic, Great Britain2 and Federal Republic of Germany. Norway introduces a new action plan for simplification Action Plan for Simplifying Norway 2005-2009, which programmes reduction of administrative burdens for businesses by 25% by 2012. Completion of the review of legislation, identification of burdens and their quantification is scheduled in Norway for 2008. SCM is used in Sweden to measure burdens in several areas.
2 In March 2005 Better Regulation Task Force presented the report Regulation – less is more. The report was developed at
the request from the Prime Minister of Great Britain to look at the possibility of adopting the Dutch standard cost model for measuring the administrative burden. BRTF recommended adoption of the Standard Cost Model and using it to provide a systematic measurement of the administrative burden by May 2006, setting a target for reducing the Administrative Burden by May 2006 (or earlier if the results of the measurement are available),putting in place an organisational structure and the necessary resources to facilitate measurement and target achievement by July 2005. According to the British, costs of measuring and reducing the administrative burden will give outstanding return on investment. According to Dutch estimates, spending EUR 35 million on reducing the administrative burdens (assuming that the target of cutting 25% from the administrative burden is reached) stimulates GDP growth by EUR 6.7 billion. The British estimate that if the administrative burden reduction process generates the same benefits for GDP as expected by the Netherlands, British GDP may rise by £16 billion. These estimates are based on the assumption that British economy will respond to the administrative burden reduction process in the same way as the Dutch economy did. Additionally it was assumed that administrative burden in Great Britain is at he same level as in the Netehrlands, i.e. 3.6% GDP and the reduction target will be also 25%.
Belgium applies the model in the area of taxes (VAT) and permits for start-ups and pursuance of economic activity. France and Italy use the model also to measure administrative burdens in the scope of permits for pursuance of economic activity. In Hungary and Estonia it is used in the area of taxes (VAT). Additionally Estonia uses it to measures burdens in the area of statistics. Apart from the completed pilot study in the area of road transport, Poland is in the process of implementing projects in the scope of VAT and bank law. OECD, Canada, the United States, Turkey, Australia and New Zealand are also interested in the model.
The Netherlands decided to expand application of the Standard Cost Model. In January 2005 it started a project to measure administrative burdens imposed on citizens. The Ministry of Education uses the methodology to reduce burdens imposed on schools. The Ministry of Finance intends to use the model to reduce burdens imposed by individual ministries on each other. Additionally administrative burdens imposed by local and regional authorities are measured and reduced.
The experiences to date and the initiative of the Dutch Ministry of Finance promoting application of the model in EU Member States inspired implementation of measurement of administrative burden on business in Poland. In the frames of the participation of the Office of the Committee for European Integration in the works of the Interministerial Regulatory Quality Team, works have been undertaken on a pilot project for identification and measurement of administrative burdens basing on the Standard Cost Model.
This report presents results of studies carried out in Poland in 2004 and 2005 by and at the request of the Office of the Committee for European Integration. Initially the assumption of the study program provided only for a pilot study consisting in verifying whether Dutch methodology can be applied in Poland. During project implementation, however, a decision was made to supplement the analysis with a social study, which would allow for verification of perception of the issue of administrative burden by domestic business entities. At the same time representatives of Dutch administration proposed a comparative study of the research results. This project aimed at comparing the level of administrative burdens and the ways of implementing the acquis.
The development of the pilot project into three complementary projects determined the structure of the report. The first part presents the methodology of the Standard Cost Model3 and figures from measurements of administrative burden. The pilot project concerned selected 11 national and Community legal acts regulating the issues of getting licenses and permits for performance of transport of goods and persons as of 30 November 2004. Figures ensuing from the study were supplemented with comments concerning application of SCM methodology in Poland and recommendations for application of specified solutions. A part of the study relating to identification of information obligations and verification of the entire project was performed in UKIE in co-operation with the Ministry of Infrastructure. Works related to performance of interviews and quantification of the results were outsourced to Red Code Business Process Institute Sp. z o.o.
The second part of the report presents those results of the social study carried out to UKIE order by KMS ResCom that are of major importance from the point of view of administrative burdens. The qualitative social study attempted at answering the question how domestic transport businesses identify administrative burdens but also to what extent those burdens and – more generally – regulatory environment is perceived as an element affecting their competitiveness.
The third part of the report presents results from the comparative project indicating differences in the implementation of information obligations between Poland and the Netherlands. The project also concerned selected regulations relating to starting up and pursuing business activity in road transport and was based on results of the pilot project in Poland and on Dutch achievements in the scope of applying the SCM. At the same time it was a novelty since no such comparative projects had been implemented before.
The fourth chapter presents conclusions from this report and justification of the recommendation for inclusion of SCM into better regulation policy in Poland. The part also indicates major advantages and problems pertaining to implementation of the SCM. Additionally it puts forward proposals for solutions that might be useful in development and implementation of the program for measurement and reduction of the administrative burden.
1.
The pilot project for application of the Standard Cost Model in Poland
1.1. Goals of the ProjectAs already mentioned, the main goal of the study was to verify the possibility to apply the Standard Cost Model in Polish economic and social conditions on the example of road transport sector. An additional specific goal was set for the study. It consisted in identification and quantification of administrative burdens found in road transport sector and ensuing from selected legal acts in force in Poland as of 30 November 2004. Such formulation of the specific goal ensued from specifics of the Dutch methodology, which requires that in the process of identification and subsequent reduction of burdens, the base year is identified for which the measurement is made – the so-called baseline measurement.
The study comprised the following Polish pieces of legislation:
1. The Act of 6 September 2001 on road transport (the Official Journal No. 125 item 1371 as amended)
2. The Act of 15 November 1984 – Carriage Law (consolidated text: the Official Journal of 2000 No. 60, item 601, as amended)
3. The Act on the transport of dangerous goods by road regarding the requirement for undertakings to appoint a dangerous goods safety adviser (qualifying requirements) (the Official Journal of 2002, No. 199, item 1671)
4. Regulation of the Minister of Infrastructure of 25 June 2004 on a model licence for operation of road transport and extract thereof (the Official Journal No. 153, item 1612)
5. Regulation of the Minister of Infrastructure of 22 December 2003 on handling of documentation relating to driver’s work (the Official Journal No. 230, item 2303)
6. Regulation of the Minister of Infrastructure of 16 May 2002 on conditions and modality for performance of checks of documents relating to operation of road transport and carriage on own account and documents used by persons authorised for checks and models of those documents (the Official Journal No. 120, item 1025, No. 205, item 1735)
Additionally the following Community regulations (directly applicable) were taken into account: 7. Council Regulation 684/92/EEC of 16 March 1992 on common rules for the international
carriage of passengers by coach and bus amended by Council Regulation 11/98/EC of 11 December 1997 (O. J. of the European Communities L 4 of 8.01.1998)
8. Council Regulation 12/98/EC of 11 December 1997 laying down the conditions under which non-resident carriers may operate national road passenger transport services within a Member State (O. J. of the European Communities L 4 of 8.01.1998, page 10)
9. Commission Regulation 2121/98/EC of 2 October 1998 laying down detailed rules for the application of Council Regulations (EEC) No 684/92 and (EC) No 12/98 as regards documents for the carriage of passengers by coach and bus
10. Regulation of the European Parliament and the Council 484/2002/EC amending Council Regulations (EEC) No 881/92 and (EEC) No 3118/93 for the purposes of establishing a driver attestation.
The performed studies measuring administrative burdens was intended to enable determination of outlays incurred by undertakings in road transport sector to fulfil information obligations ensuing from national and Community regulations. In the latter case it was also intended to enable identification of burdens created by directly applicable acts (regulations) and acts imposing upon the state obligation to attain specified goals (directives).
1.2. Profile of the road transport sector in Poland
Since 1 January 2002 the conditions for operation of national and international road transport services have been regulated by the act on road transport. The act comprehensively regulates the access to the profession of a road carrier and access to national and international carriage of persons and goods.
After Poland’s accession to the European Union, the access to passenger transport market was liberalised under mutuality rule. As regards freight carriage, full market access covered international carriage, both international transport and cross-trade transport. In cabotage transport a mutual, five-year transitional period was introduced under 3+2 formula between the present and new Member States.
Regarding national transport, the Ministry of Infrastructure has data on issued licenses for passenger and freight transport as of the end of 2004.
In the national road transport, licenses are granted by a starost competent for the entrepreneur’s place of establishment. Pursuant to the act on road transport starost offices were obliged to submit information on the number and scope of the granted licenses and authorisations to the minister responsible for transport at least twice a year, by 15 January and by 15 July.
According to the data collected by the Ministry of Infrastructure from 378 starost offices, as of the end of 2004 there were 7 thousand businesses in the segment of passenger transport and over 41 thousand business in freight transport segment. The number of extracts of licenses (this number corresponds to the number of vehicles covered by licenses) for passenger transport amounted to 43.1 thousand and to 101.4 thousand for freight transport.
Statistical data on international carriage is available from the Office of Servicing International Transport (BOTM).
A steep increase in the sales of motor trucks resulted after Poland’s accession to the European Union. Sales of vehicles with total admissible weight in access of 6 tons reached the level of 12 thousand units in 2004. After Poland’s accession to the European Union and liberalisation of market access there emerged surplus supply of transport services in international carriage.
According to BOTM figures as of 1 January 2005, the number of businesses in international freight transport amounted to 11,835 (the number of extracts from licenses amounted to 59,706) and in international passenger transport - to 2,567 (the number of extracts from licenses amounted to 6,688). Additionally, basing on certificates of professional competence issued by the Motor Transport Institute (ITS), statistics were developed concerning entities performing freight transport. Basing on ITS data it was estimated that in 2004 over 80 thousand undertakings were in operation in transport for reward segment, including:
• approx.11.5 thousand businesses in international transport, • approx. 40 thousand businesses in national transport,
• approx. 30 thousand businesses in transport for reward segment with vehicles of maximum authorised mass under 3.5 tons
Table 1. Listing of transport authorisations in international road passenger and freight transport
An increase over the
previous period An increase over the previous period
As of Number of carriers possessing Community authorisation for freight transport in numbers % Number of carriers possessing Community authorisation for passenger transport in numbers % 01.05.2004 8 980 8 980 100 % 2 207 2 207 100 % 01.01.2005 11 835 2 855 31,8 % 2 567 360 16,3 %
Source: Report on functioning of international road transport in the period 1 January 2004 – 1 January 2005, the Office Servicing International Transport, the Ministry of Infrastructure, Warsaw 2005.
1.3. Implementation and project results 1.3.1. Overview of legal provisions
The first element in the study was to review pieces of legislation to identify information obligations (IO) they impose. The review of legislation yielded a list of information obligations, which were divided into the so-called activities. They correspond as closely as possible to legal provisions imposing fulfilment of IOs in a specified manner.
Identification of information obligations – building of catalogues
65 information obligations were identified in the reviewed pieces of legislation. Breakdown of IOs for individual legal acts is as follows:
- 25 information obligations following from the Act on Road Transport. - 14 information obligations following from The Act – Carriage Law.
- 8 information obligations following from The Act on the transport of dangerous goods by road.
- 4 information obligations following from the Regulation of the Minister of Infrastructure of 22 December 2003 on handling of documentation relating to driver’s work.
- 2 information obligations following from the Regulation of the Minister of Infrastructure of 16 May 2002 on conditions and modality for performance of checks of documents relating to operation of road transport and carriage on own account and documents used by persons authorised for checks and models of those documents.
- 1 information obligation following from the Regulation of the Minister of Infrastructure of 25 June 2004 on model licence for operation of road transport and certified true copy thereof.
- 11 information obligations following from four EU regulations:
• Council Regulation 684/92/EEC of 16 March 1992 on common rules for the international carriage of passengers by coach and bus amended by Council Regulation 11/98/EC of 11 December 1997 (O. J. of the European Communities L 4 of 8.01.1998).
• Council Regulation 12/98/EC of 11 December 1997 laying down the conditions under which non-resident carriers may operate national road passenger transport services within a Member State (O. J. of the European Communities L 4 of 8.01.1998, page 10).
• Commission Regulation 2121/98/EC of 2 October 1998 laying down detailed rules for the application of Council Regulations (EEC) No 684/92 and (EC) No 12/98 as regards documents for the carriage of passengers by coach and bus.
• Regulation of the European Parliament and the Council 484/2002/EC amending Council Regulations (EEC) No 881/92 and (EEC) No 3118/93 for the purposes of establishing a driver attestation.
Two exclusions were made in the identification of information obligations. Firstly, the obligation pertaining to complaints and appeals (this activity consists in lodging a complaint against a decision issued by authorities and appeals from such decision). Such decision was determined by the fact that a large number of obligations contained in the reviewed legal acts concerning applying for a license or permit was linked to information obligation consisting in appealing from an administrative decision. An entrepreneur has the right to appeal from a decision in this regard, and such right is stipulated either directly in provisions of the reviewed regulations or follows form the Code of Administrative Procedures. Due to the fact that appeal procedures are complex and information obligations following from them might have dominated the pilot project, a decision was made to exclude them from the scope of the study.
The second applied exclusion concerned the information obligation relating to performance by the authorities at least once in five years of checks of meeting by carriers the conditions for access to the profession in road transport4. The period of five years, after which the checks of meeting specified requirements should be performed, has not elapsed yet since entry of the regulations in force.
In line with the adopted methodology, each IO was divided into activities comprising fulfilment of individual obligations in the meaning of a given legal act. Implementation of this task was supported by typology of activities defined in the Dutch methodology.
1.3.2. The method of input data collection for cost calculation model
The goal of the SCM is to determine the administrative costs on the basis of a typical firm. Such a firm is identified basing on median. Because the study is based on a typical instead of average firm (median instead of average), distortion by exceptional, non-representative businesses of the general picture of compliance is avoided.
In practice the consultant will make the typical firm samples. The selection of typical firms depends primarily on the juridical specifications of the law. The total population of enterprises affected by a law is partitioned into a limited number of groups of typical firms, depending on the juridical specifications in that law and the level of differentiation.
During the selection of businesses for in depth interviews these aspects are taken into account. How exactly countries or consultants take these differences into account might differ, depending on all named aspects and interpretation.
Under this project collection of input data for the calculation model was made through direct interviews with employees of transport firms who provided information about the levels of internal and external tariffs related to fulfilment of a specific information obligation and time spent for fulfilment of individual information obligations as well as related activities and frequency of fulfilment of a given obligation per annum.
To this aim, a questionnaire survey was used, including an interview scenario and specification of identified information obligations listed in catalogues and a custom designed spreadsheet allowing for recording of collected information, e.g. about costs.
Firms operating transport of persons comprised one group of respondents, while firms operating transport of goods comprised the other group. As a result, two sets of catalogues of information obligations were created, containing answers in a form allowing for estimates to be made for two market segments – transport of passengers and of goods.
Information about populations of entities in individual groups was obtained from the Office of Servicing International Transport. According to data as of 9 December 2004, the following numbers of licenses and certified true copies thereof were granted for operation of international road transport (irt):
• Licences to operate irt by coach and bus – 1,832.
• Certified true copies of licenses to operate irt by coach and bus – 5,261. • Licenses to operate irt of goods – 10,609.
• Certified true copies of licenses to operate irt of goods – 56,671.
• Licenses to operate irt by passenger cars other than a coach or bus - 615.
• Certified true copies of licenses to operate irt by passenger cars other than a coach or bus - 1080.
Statistical figures for 2004 concerning the number of examinations verifying professional competencies with breakdown to transport of goods and persons were obtained from the Motor Transport Institute. In 2004 the total of 722 examinations were held for 21,643 and 14,987 certificates were issued (see: Annex 1).
Information on the number and results of checks performed by Voivodship Road Transport Inspectorates in the period from 01.01.2004 to 31.12.2004 was obtained from the Road Transport Inspectorate (see: Annex 2).
1.3.3. Results of the study in numbers
Basing on information obtained during interviews, the cost of fulfilment of information obligation following from a specific regulation was estimated. The empirical result was calculated separately for each obligation. The total cost of identified information obligations amounted to PLN 1,080.2 mio. In 2003 revenues in motor transport sector amounted to PLN 27,630.5 mio (PLN 22,985.2 mio in transport of goods and PLN 4,645.3 mio in transport of persons, excluding municipal transport). The identified administrative burdens in the reviewed legal acts translate to 3.9% of the revenues of the road transport sector in Poland.
For the passenger transport sector information obligations were identified with aggregated cost of PLN 825.02 mio.
Chart 1 – Structure of administrative costs in the sector of transport of persons (in mio PLN)
1. The Act – Carriage Law
In total the general cost of information obligations under this catalogue amounted to PLN 585.26 mio. The greatest burden under in the act is the one related to development and printing of passage tickets for those using services of the carrier. This cost was estimated at PLN 340.3 mio. The second greatest cost was generated by information obligation to create an identification system for inspectors authorised to perform checks, which amounted to PLN 129.07 mio. Those two information obligations generated over 80% of the costs of obligations following from the Act - Carriage Law.
Placement of the time tables in all places listed as stops implies costs of PLN 82.67 mio, while public announcement of carriage restrictions – PLN 17.63 mio. The study showed that a regular updating of information on operation of transport services including updating of time tables generated cost of PLN 9.7 mio, which constitutes slightly more than 10% of the original cost of he development and placement of the time table. The remaining information obligations did not constitute such a significant burden to entities, since fulfilment of another information obligation, consisting in regular updating and publishing of information on performed transport services generated the cost of PLN 3 mio PLN. The cost related to development of the rules and regulations and dissemination of information on the validity thereof amounted to PLN 1.06, while creation of ticket distribution system in connection with information provision system yielded the cost of PLN 0.94 mio.
The above set of information obligations illustrates how high are the costs of administrative activities accompanying the system of communication with passengers through such instruments
IO cost structure - transport of persons
585,25 215,95 1,16 0,31 0,17 1,64 22,18
Carriage Law Act on Road Transport Reg. on licence forms
as tickets, time tables, rules and regulations of travel and inspectors. Information obligations under this category are the most costly obligations.
Chart 2 – Structure of administrative costs under the Act - Carriage Law (in mio PLN)
2. The Act on Road Transport
In total the cost of information obligations under the Act on Road Transport amounted to PLN 215.94 mio. Ten major and most costly ones are presented below.
It turned out that the greatest burden for entities under the Act on Road Transport is the fulfilment of information obligations pertaining to provision of proof of financial standing in the process of applying for licenses, whose cost was estimated at PLN 47.63 mio. The costs of activities related to obtaining of a vignette (apart from the purchase cost) amounted to PLN 30.99 mio for the entire passenger transport sector.
Significant administrative costs for business entities were the costs related to additional requirements to be met by a business entity applying for a license for transport of persons. The costs of market situation analysis, comprising an appendix to the documentation submitted during application for authorisation amounted to PLN 27.6 mio, while the cost of developing appendices to the authorisation and updating thereof amounted to PLN 20.25 mio.
A significant burden turned out to be also activities related to fulfilment of the obligation concerning technical checks of vehicles, which amounted to PLN 27.17 mio. Over twofold smaller, amounting to PLN 13.72 mio, turned out to be the costs related to planning of passage routes. Burdens of similar scale are administrative activities related to regular checks of drivers, whose cost amounted to PLN 11.88 mio. One, however, adds on top of that the cost of burden, which was related to establishment and maintenance of the register of regular medical and
129,07 92,39 3,01 1,06 0,94 0,83 5,84 17,64 340,33
tickets controllers identification system timetables placement
info on limitation of transport uptade of timetables development of rules and regulations
psychological checks, professional qualifications obtained throughout the entire driver’s employment period and storage of documents. This IO amounted to PLN 4.21 mio. One can see that significance of those obligations is relatively high.
Of relatively high relevance turned out to be also the costs related to the obligation to carry and produce documents at request of the checking body during journey and those related to establishment and maintenance of the register of drivers’ certificates and the information required to obtain them, subject to checks by bodies of state administration. Costs of those obligations amounted to PLN 6.72 mio and 3,67 mio respectively.
An analysis of their character indicates that they concern mainly activities accompanying applying for a transport license or authorisation and those related to maintenance of a register of working time and employment of drivers. A separate category of IOs are obligations related to financial standing, fulfilment of the obligations to pay charges for use of infrastructure, perform market analysis and technical checks of vehicles, whose fulfilment is very costly but pursuance of transport activity is impossible without their fulfilment. On the other hand the obligation to carry and produce the required documents is a good illustration of the category, which is difficult to identify without the standard cost analysis and is hardly realised by business entities.
3. Regulation of the Minister of Infrastructure of 22 December 2003 on handling of documentation relating to driver’s work
The cost of maintenance by the entrepreneur of separate documentation for each hired driver amounted to PLN 19.50 mio PLN, while application of model documents in the obligatory maintenance by entrepreneurs of documentation related to drivers’ work – PLN 2.64 mio. Costs related to the obligation to keep the driver’s documentation for checking purposes for 5 years amount to PLN 0.037 mio.
The aggregated cost of fulfilment of IOs under this catalogue amounts to PLN 22.18 mio
It is worthwhile stressing, however, that IOs in place here are detailed statements of the provisions of the act. Nevertheless they were quantified separately.
4. Regulation of the Minister of Infrastructure of 16 May 2002 on conditions and modality for performance of checks of documents relating to operation of road transport and carriage on own account and documents used by persons authorised for checks and models of those documents
Under this regulation one OI was quantified, consisting in provision during checks of answers subject to recording in written form, i.e. in the form of post-check protocol, which is required to be signed by the checked entity. The cost of this obligation amounted to PLN 1.16 mio.
The key factor breeding costs is the time spent by drivers for roadside checks. The obtained result, however, shows that this cost is not so high on national scale, which indicated relatively low frequency of checks in relation to the number of Polish carriers on the market.
5. Regulations of the Minister of Infrastructure of 25 June 2004 on model licence for operation of road transport and certified true copy thereof.
Under this regulation also one OI was quantified, consisting in the requirement to carry and produce at each request of the checking body the certified true copy of the license. The cost of this obligation amounts to PLN 0.31 mio.
6. EU legislation
In the reviewed pieces of EU legislation three IOs were quantified, which are complementary to the reviewed national legislation regulating the area of road transport of persons. The information obligation consisting in keeping in the vehicle of the Community licence or the certified true copy of the license involves the cost of PLN 0.036 mio. The obligation to collect and analyse information on the impact of services on railway transport market, which determines whether a license / authorisation will be issued or extended, involves the cost of PLN 0.12 mio. IO relating to maintenance of the required journey documentation by carriers operating non-scheduled carriage with the use of journey form books generates the cost of PLN 0.07 mio. For the sector of the transport of goods, the following information obligations were identified with aggregate costs of PLN 255.19 mio.
Chart 3 – Structure of administrative costs in the transport of goods (in mio PLN)
1. The Act on Road Transport
In the case of OIs following from the Act on Road Transport the total cost amounted to PLN 182.92 mio. The greatest cost among them was generated by issuing of way bills in line with rules in force in national and international transport, which amounted to PLN 54.83 mio. Costs related to purchase of the vignette (excluding the cost of the vignette itself) amounted to PLN 48.83 mio. The obligation related to maintenance of the documentation on driver’s work with detailed
182,92 56,3 3,56 0,51 0,48 4,55 11,44
Carriage Law Act on Road Transport Reg. on licence forms
listing of vehicles used in haulage by the driver and working time generates the costs PLN 28.15 mio. Proving that the entrepreneur has the title to use the vehicle meeting technical requirements set forth by road traffic regulations involves cost of PLN 10.10 mio. Creation and maintenance of the registry of drivers’ certificates and the information required to obtain them, subject to checks by a state administration body, involves the cost of PLN 7.5 mio. Obtaining the proof that the person pursuing activity has the required certificate of professional competence – PLN 5.7 mio, while the cost of regular checks of drivers – PLN 5.32 mio.
The costs of the obligation pertaining to marketing of pressure vehicles under the condition of obtaining the required safety attestation amounted to PLN 4.26 mio. The obligation to produce an authorisation – in place in the transport of dangerous goods in accordance with ADR - imposes on entrepreneurs the cost of PLN 0.416 mio, while providing access to readings of a device automatically recording driving speed and times and idle times for checks outside premises of the transport firm – PLN 0.258 mio.
Vignettes and the entire catalogue of obligations related to the process of obtaining the license and maintaining the drivers’ working time register are the obligations that rank high in the transport of goods.
Chart 4 – Structure of administrative costs under the Act on Road Transport (in mio PLN)
2. The Act – Carriage Law
The cost of IOs quantified in the law amounted to PLN 56.28 mio, including PLN 7.6 mio for the IO related to observance of the guidelines of the Ministry of Infrastructure concerning conditions for the transport of goods (causing transport difficulties), and PLN 5.96 mio for the IO related to establishment of a procedure for acceptance and handing out of freight on the basis of the way bill.
48,83 10,52 9,86 6,51 5,41 4,26 2,58 18,76 28,45 11,67 54,83
issuing of waybills applying for a vignette driver's work documentation
storage of drivers documentation title to use the vehicle certificate of professional competence
regular checks of drivers permit for dangerous subst. Transport attestation of pressure vessels access to tachograph recordings
3. The Act on the transport of dangerous goods by road
The cost of all IOs quantified in the aforementioned law amounted to PLN 3.56 mio. The IO consisting in appointment at own cost of safety advisers for the transport of dangerous goods (creation of a post or identification of a scope of responsibilities or hiring someone under a work contract) amounted to PLN 1.1 mio. The IO related to obtaining of confirmation of conformity of a device with the technical requirements from the notified checking unit by placement of P marking thereon under the modality of primary conformity assessment and performance of regular checks was estimated at PLN 0.87 mio. PLN. Obtaining the certificate admitting vehicles to transport of some dangerous goods and tank cars in accordance with the stipulated modality encompassing performance of technical checks by the Road Transport Inspection generates the cost of PLN 0.73 mio.
4. Regulation of the Minister of Infrastructure of 22 December 2003 on handling of documentation relating to driver’s work
Maintenance of separate documentation for each hired driver involved the cost of PLN 6.01 mio. The obligation to use model documents in the obligatory maintenance by the entrepreneur of the documentation related to driver’s work – PLN 4.78 mio; obligation consisting in storage and destruction of documents covered by the registry maintained by the entrepreneur – PLN 0.63 mio. The cost of all IOs quantified in this catalogue amounted to the total of: PLN 3.56 mio
5. Regulation of the Minister of Infrastructure of 16 May 2002 on conditions and modality for performance of checks of documents relating to operation of road transport and carriage on own account and documents used by persons authorised for checks and models of those documents
Provision during checks of answers subject to recording in written form, i.e. in the form of post-check protocol, which is required to be signed by the post-checked entity, involves the cost of PLN 0.50 mio.
6. Regulation of the Minister of Infrastructure of 25 June 2004 on model licence for operation of road transport and certified true copy thereof.
Under this regulation also one OI was quantified, consisting in the requirement to carry and produce at each request of the checking body the certified true copy of the license. The cost of this obligation amounts to PLN 0.48 mio.
1.3.4. Conclusions ensuing from the resulting figures
The following conclusions concerning methodology surfaced during performance of the study: 1. First of all the presented figures are largely underestimated due to lack of the possibility to
obtain all statistical data in proper time. This concerns in particular the number of entities operating in the national road transport sector in Poland. The Ministry of Infrastructure was in the process of gathering data on national carriers from 378 starost offices. According to figures available as of the end of 2004, there were 7 thousand businesses in the segment of passenger transport and over 41 thousand businesses in freight transport segment in domestic haulage. When calculations were made these figures were not available yet. For international transport, all calculations were made for the number of firms as of 9 December 2004. For
transport of goods, the number of carriers amounted to 10,609 (11,835 as of 1 January 2005) and in the segment of transport of persons the number of carriers amounted to 1,832 (2,567 as of 1 January 2005). Statistical data play an important role in such type of project because they allow for correct identification of the research sample.
2. Under the Polish pilot project, there was a diversified approach of studied entities to the definition. Although its understanding was rather not a problem for the entities, but reservations were raised by referring administrative burdens solely to the issue of information obligations. Entrepreneurs quite frequently identify administrative burdens with adjustment costs related to application of legal provisions. At the same time there were situations when entrepreneurs narrowed the term of administrative burdens solely to the issue of filling in the documentation (forms, applications etc.). Moreover the studied entities very frequently pointed out that the entire study does not focus on the most important burdens encountered by entrepreneurs in pursuance of business activity and broadly understood relations with the administration.
3. The level of detail and cross-sectional character of the information, which was expected to obtain during the interview, surprised all entities covered by the study. Each entrepreneur was asked mainly about all information obligations concerning him. In the case of reviewing a larger number of legal acts and information obligations it seems advisable to design questionnaires covering a comparable or smaller number of information obligations. This will allow for more efficient performance of the interview and should ensure more precise data. 4. With regard to some activities related to fulfilment of information obligation it was
impossible to ascribe any cost to them due to the fact several activities, related by logic and nature of actions, were performed jointly. For this reason the ascribed costs were also aggregated. It seems, however, that such approach did not affect the result of the entire IO. From the point of view of implementation of reduction program, however, this can give rise to difficulties related to underestimating the costs of a given IO, due to lack of possibility of deaggregating costs into individual activities.
5. A problem surfaced in the study with determining frequency of occurrence of an IO related to provision of documentation set when a transport firm lays off a driver. There are no sources of information in the form of legal acts or statistical data for the above IO. Interviews or an optional method of obtaining this information. There are doubts, however, how to design such interview in this situation. Interviews should be preceded by an analysis whether the studied IO is similar or the same in all types of transport firms. If not, one should perform relevant categorization. Next one should select model firms in specified categories for interviews.
6. The issue of taking into account various forms of drivers’ employment in the IO consisting in provision of answers to checking authorities (subjecting oneself to checks). In Polish realities there are two situations present: firstly when checks concern only a firm hiring drivers on the basis of employment contract. Secondly, when a transport firm cooperates with self-employed drivers. As regards the above situations, if the method and thus the cost of fulfilling the IO is different for those two cases, one should make a division into two categories and measure costs of IO for them. The cost of a given IO will be a sum of results for those two categories.
7. The information obligation related to legalisation of tachograph. When tachograph is purchased, other activities are also necessary – installation of the device and its legalisation by
an accredited institution. In practice all those activities are performed by a single firm, which issued a collective invoice without separate listing of costs of individual operations (price of the tachograph, installation and legalisation). Installation of the tachograph is not treated as an administrative cost. Such obligation however, exists in the procedure for tachograph legalization, but it was not estimated in this project. In this cases one should consider how to quantify this type of obligations also in other situations (sectors etc.).
8. One should adopt a specified rule for measurement of the costs, which are one-off or are incurred regularly such as the total costs of IO related to obtaining a license for the entire population of entities. In the case of this study it was assumed that the total cost of obtaining the license, which is valid e.g. for (x) years for the time interval (t) assumed in the study, should be calculated as a fraction t/x of the cost of the given IO multiplied by the number of entities in the population. There is, however, another possibility, where it is calculated for a given time interval by multiplying the total costs of fulfilment of the IO by the number of entities that fulfilled the given burden in the given time interval. This, however, gives rise to problems with obtaining statistical data concerning frequency of fulfilment of a given IO in the assumed time interval.
9. During project implementation there were difficulties with obtaining information related to functioning of safety advisers for the transport of dangerous goods (number of advisers, examinations, percentage of positive results). This follows from the fact that in Poland there is no central register of advisers and data are dispersed in several hundred entities running examinations. Due to kindness of Marshal Offices, which presented list of persons carrying out examinations, it was possible to obtain a part of the required information.
10. Attention should be drawn to the issue of designing the research sample and securing representativeness of the results. Determination of administrative costs under the SCM is based on a research of entities meeting the criterion of a typical firm. Such a firm is identified basing on median of the population of firms. Because the study is based on a typical instead of average firm (median instead of average), distortion by exceptional, non-representative businesses of the general picture of compliance is avoided. In practice the consultant will make the typical firm samples. The selection of typical firms depends primarily on the juridical specifications of the law or on fulfilment by business entities of an information obligation or a group of information obligations of similar nature. The total population of undertakings affected by a given law is divided into limited numbers of groups of typical firms, depending on the juridical specifications of that law or information obligation and the level of differentiation of the population of enterprises. In the case of the pilot project, the indicator for calculation of the median was solely the number of owned vehicles.
11. In some situations it may turn problematic how to quantify costs (time) of activities performed comprehensively under one or several information obligations. This concerns a situation where entities are only able to determine what percentage of time of the responsible person is taken by fulfilment of a given obligation.
12. Another issued pertaining to design of the sample is performance of the research on adequate number of typical firms. The more detailed is the specification of a typical firm – basing on specific IOs instead of e.g. legal acts – the smaller can be the number of studies typical firms (in the case of the study made in The Netherlands some samples included only 4-5 typical entities). When such a project is implemented globally (the entire legislation) it is important to strike a balance between quality of the obtained data and the available research resources.
13. The catalogue of IOs and the related activities used in the project should be adjusted to the reviewed legal acts and specifics of obligations contained therein. This ensues from the fact that some activities related to identification of IOs, if identified basing on the catalogue presented in the methodological manual, is non-measurable.
14. The pilot project did not study the learning curve5 effect related to the fact that a significant part
of entities fulfilling information obligations with time learn to do it more effectively. One can state, however, - at least theoretically – that this effect significantly affects the volume of burdens only in case of completely new information obligations or if there are significant changes in the method of fulfilment of an existing obligation. The simplest solution in this regard is introduction for a repeatable costs in individual years of additional one-off cost related to learning of the rules in the first year of fulfilling a given information obligation. One should, however, analyse the added value of inclusion of this element, when methodology is applied on the global scale, against introducing complexity to methodology. 15. Moreover, this project did not take into account a gradual increase in the costs of a given
information obligation and thus no detailed proposals for approaching this problem were presented6. Similarly to learning curve effect, one should analyse the added value of inclusion of this element, when methodology is applied on the global scale, against introducing complexity to methodology. In this case it seems proper to use the case study tool.
5 This effect was identified in pilot projects carried out by the European Commission. Those projects involved a
slightly modified Dutch methodology – see details below.
2.
Social study on perceptions of administrative burdens in road transport
72.1. Goals of the project
Bearing in mind conclusions ensuing from the pilot study in the scope of using the Standard Cost Model, it was extremely important to determine to what extent perceptions of administrative burdens by entities operating in transport sector is consistent with the definition adopted in the project. Of key significance was also to determine whether all information obligations giving rise to administrative burdens are actually perceived as burdens. On the other hand, it seemed justified to investigate whether there are any obligations stipulated by legislation that are perceived by entrepreneurs as administrative burdens but are not considered as such under the definition assumed in the project.
Apart from several introductory issues related to perception of own competitiveness on the Community market, the study aimed at gathering information on:
• The scope of legal obligations perceived by transport businesses as administrative burdens and their impact on the level of competitiveness of Polish firms on the Community market and free operation in road transport sector.
• Impact of how a given issue is regulated on generation of additional burdens, barriers and corruption, in particular as a result of use in legal acts of open-ended catalogues and discretional character of decision-making criteria applied by the administration and local authorities.
• Comparison of the administrative burden definition under SCM methodology with their interpretation by business entities and identification of the sources of differences.
• The extent of readiness of entities to subordinate to law provisions giving rise to administrative burdens.
• Readiness of entities to identify and quantify administrative burdens as a source of additional costs of pursuance of economic activity.
• Assessment of the effectiveness of the legal system in Poland and its fairness.
• Assessment of the budget of own time and impact of administrative burdens on restriction of time budget.
• Differentiation of the perceptions of administrative burdens depending on the character of rendered services (freight vs. passenger transport, transport of dangerous goods, scale of operations, area of activity – local, entire country, the EU, former Soviet Union, others if applicable)
2.2. Methodological assumptions of the study
The study was performed with the use of in-depth interviews, also called free-form interviews, on a purposefully selected sample of representatives of the transport sector. Both the research method (qualitative), and the sampling method allow for considering the performed research as an exploratory one. Its results mainly indicate trends in the experiences of carriers related to pursuance of activity in the transport sector. Research results may not be interpreted as diagnosis of the situation in the road transport in Poland, but they do illustrate certain regularities observed in the sector.
7Perceptions of administrative barriers in road transport. Report form a study commissioned by the Department of Analyses
and Strategies of the Office of the Committee for European Integration and carried out by KMS ResCon, Warsaw September 2005. The study concept was developed by the team headed by: Elżbieta Skotnicka-Illasiewicz,
Interviews were performed in four regions (Śląskie, Warmińsko – Mazurskie, Pomorskie and Mazowieckie voivodships) on a purposefully selected sample of SMEs operating road, international and domestic, motor transport of goods. 20 interviews were performed; in some cases respondents were two owners or an interview was performed simultaneously with owners of two co-operating transport businesses.
Additionally an interview was made with the department director in the Association of International Road Carriers (ZMPD) and with two persons in managerial positions in the Office of Servicing International Transport (BOTM).
Interviews with carriers were performed in the period from 29 July to 25 August 2005. Interviews with ZMPD and BOTM were performed on 1 – 8 September 2005.
2.3. Results of the research
2.3.1. Conditions for obtaining the Community license
In connection with harmonisation of Polish legislation with the acquis for carriers, a new obligation emerged for proving professional competencies by passing a state examination. Possession of the professional competence certificate is a prerequisite for pursuance of activity and applying for the Community license.
In the opinion of the interviewed entrepreneurs, obtaining the Community license is easy provided certified and not dated documents are gathered, which certify existence of the firm, as well as certificates of not having criminal record of the owner or Management Board members. Carriers, however, challenge the rationale behind collection of updated certificates of entry into the register of economic activity or certified copies of entries from the National Judicial Register (if the firm is a corporate body) thinking that if a company exists and has once confirmed its existence, there is no need to do it again. Obtaining proofs of not having criminal record is not burdensome, but usually requires a trip to a locality with access to the National Penal Register, payment of a fee of PLN followed by about two weeks of waiting for the proof to be issued. Moreover PLN 4,000 must be paid for the license itself and additionally PLN 440 for each certified per a vehicle.
Objections of carriers are raised by the fact that the new, Community licenses are issued for 5 years, whereas before accession such licenses were valid for indefinite time. They perceive this as deprivation of acquired rights. Moreover cost of renewal of the license are not known because five years have not elapsed yet since Poland’s accession to the EU.
A certified copy of the license must be kept in each vehicle. Certified copies of licenses are issued by the Ministry of Infrastructure; the procedure is relatively simple; each copy costs PLN 440. Carrier are of an opinion that initial formalities related to obtaining of the professional competence certificate and obtaining the Community license are quite burdensome but one goes through those procedures only once. Therefore they treat them as hardly burdensome form the point of view of daily operations.
