Removal of administrative barriers through the recent procedural simplifications in Slovenia and Croatia

Kovač, Polonca; Ðulabic, Vedran; Čičin-Šain, Nevia Article Removal of administrative barriers through the recent procedural simplifications in Slovenia and Croatia DANUBE: Law, Economics and Social Issues Review Provided in Cooperation with: European Association Comenius (EACO), Brno Suggested Citation: Kovač, Polonca; Ðulabic, Vedran; Čičin-Šain, Nevia (2017) : Removal of administrative barriers through the recent procedural simplifications in Slovenia and Croatia, DANUBE: Law, Economics and Social Issues Review, ISSN 1804-8285, De Gruyter, Warsaw, Vol. 8, Iss. 4, pp. 207-228, https://doi.org/10.1515/danb-2017-0014 This Version is available at: https://hdl.handle.net/10419/184533 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc-nd/4.0 DANUBE: Law, Economics and Social Issues Review, 8 (4), 207–228 DOI: 10.1515/danb-2017-0014 207 REMOVAL OF ADMINISTRATIVE BARRIERS THROUGH THE RECENT PROCEDURAL SIMPLIFICATIONS IN SLOVENIA AND CROATIA Polonca Kovač1, Vedran Ðulabić2, Nevia Čičin-Šain3 Abstract The removal of administrative barriers (RAB) is a constant policy at both European Union (EU) and national levels. Initially, RAB has been seen as a part of economically-driven Regulatory Impact Analysis, while lately a more interdisciplinary approach dominates, through Smart Regulation and Public Administration Reforms programs. Slovenia and Croatia, as »new« EU members, address the respective goals of streamlining mostly by amendments in sector-specific laws. Additionally, there is an open question regarding the implementation of these amendments. The aim of the article is to address the legally set procedural dimensions of red tape reduction in comparative and competitive settings. Hence, this article tackles the topic with analyses of the most recent procedural changes in recent years in selected Slovene and Croatian laws covering key administrative areas relevant for entrepreneurs, based on the World Bank’s Doing Business rank, i.e. the registration of entrepreneurs, tax procedures and the issuing of construction permits. The results reveal that RAB in Slovenia and Croatia still highly lacks a systematic approach, and is mainly focused only normatively and in piecemeal manner. Consequently, we face an implementation gap. This study shows that the Slovene and Croatian examples can also serve as an illustration for other countries on how to improve their RAB policies, among others by introducing the modernisation of the Administrative Procedure Act as a leading administrative simplification measure. Keywords Administrative Burden/Barriers, Procedural Law, Simplification, Entrepreneurship, Slovenia, Croatia, EU 1University of Ljubljana, Faculty of Administration, Gosarjeva 5, 1000 Ljubljana, Slovenia. E-mail: polonca.kov[email protected]. 2University of Zagreb, Faculty of Law, Trg maršala Tita 14, 10000 Zagreb, Croatia. E-mail: [email protected]. 3University of Zagreb, Faculty of Law, Trg maršala Tita 14, 10000 Zagreb, Croatia. E-mail: nevia.cicin- [email protected]. 208 Polonca Kovač, Vedran Ðulabić, Nevia Čičin-Šain: Removal of Administrative Barriers through the Recent Procedural Simplifications in Slovenia and Croatia I. Introduction The concept of the removal of administrative barriers (RAB) is well-established policy at both supranational and national levels. The first level is mainly strongly supported by the European Commission (EC) by means of the Organisation of Economic Cooperation and Development (OECD). RAB incorporates systemic measures based on the scrutiny and simplification of existing (de lege lata) and reduction of future (de lege ferenda) regulatory framework that addresses entrepreneurial activities and obligations towards administrative authorities (sometimes judicial or other ones). Contemporary, globalisation and the economic crisis require smoother economic operations, yet due to preserving the development of a society as a whole, in certain administrative relations, public interest as a cardinal administrative value demands some limitations for business. The challenge facing public administrators is how to find a balance between these demands.4 Initially, RAB has mainly been developed as an economically-driven part of Regulatory Impact Analysis.5More recently, a holistic approach has prevailed by the embedment of RAB into broader or even interdisciplinary Smart Regulation and Public Administration reforms programs based on good governance doctrines (see Hammerschmid, Van de Walle, Andrews and Bezes (2016)). In this article, we focus on procedural simplifications or the elimination of administrative barriers in selected national procedural law that address entrepreneurs. The aim of the article is twofold. Firstly, we wish to emphasise the role of procedural dimensions and respective legal settings in reducing red tape. Secondly, our aim is to analyse the most recently adopted efforts of selected simplifications in comparable environments in order to identify key driving factors of national competitiveness in this respect. Slovenia and Croatia are small countries, with populations of approximately 2 million and 4.3 million, respectively. Both countries are successors to the former Yugoslavia and adopted much of its regulation after becoming independent republics in 1991, even after intensive war in Croatia. Slovenia became a full member of the EU in 2004 while Croatiafollowedin2013.Accordingtoassessmentsofsocietalandeconomicdevelopment, administrative capacity in Slovenia is usually regarded as significantly higher than in Croatia (Gov RS (2015), Gov RC (2014), WB (2016)). Nevertheless, we assume that both countries in question share more similarities than differences due to their joint historical, legalandeconomicdevelopment.Theiradministrative cultures are characterised by a mixture of German-Austrian Rechtsstaat (state governed by a rule of law) and postsocialist or transitional indicators and processes. In both countries, approximately 99% of all enterprises are registered as small and medium-sized enterprises (SMSE).6As such, we 4In the literature and policy papers, one can find different definitions and notions of RAB. See especially Radaelli and de Francesco (2007), OECD (2010); cf. Kovač (2009). Many other sources (OECD (2010, 2012), EC (2014)) use specific wording, such as “cutting red tape”, “administrative simplification”, “regulatory guillotine”, “debureacratisation”, etc. 5More in Radaelli and de Francesco (2007). Cf. Buckley (2016, pp. 136–142), who critically assesses EU co-funding, declaratory based on public interest but in fact reduced economic categories. 6According to the EU criteria of employing fewer than 250 persons and having an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43 million. See Commission Recom- DANUBE: Law, Economics and Social Issues Review, 8 (4), 207–228 DOI: 10.1515/danb-2017-0014 209 compare their efforts and achievements within RAB policy based on analyses of selected sectoral laws that the WB, OECD and EC acknowledge as key administrative procedures in terms of administrative simplification, i.e. registration of a business, tax collection and construction permitting. The research questions that we elaborate are the following: How is RAB understood in Slovenia and Croatia, regarding EU guidelines and comparatively? What are the main regulatory changes in selected sector-specific laws in the last three years, their goals and factors of level of implementation? Our hypothesis is that any sector-specific regulatory reforms lacks systemic effects, therefore RAB should be driven in terms of procedural simplification in future mostly through general Administrative Procedure Act (G/APA; see Ziller (2008)). Such a law is characteristic for almost all EU countries; the most recently adopted one was in France in 2015. Based on national good practices, the EU APA has been prepared as well, particularly due to its systemic and anti-fragmentary function for the administrative or multi-layered governance system.7As for Slovenia and Croatia, the GAPA has a long tradition, based on the Austrian law in force in this territory since 1925. Slovene law is rather conservative, even though it was adopted in the Republic of Slovenia as a new statute in 1999.8 On the contrary, the Croatian GAPA was significantly reconceptualised in 2009 and has been in force since 2010.9Methodologically, the paper has been based on a normative analysis of the main legal acts dealing with construction permitting and spatial planning, tax procedure and the registration of new companies in Slovenia and Croatia. The article is structured in several sections. First, we provide the theoretical, policy and legal framework of RAB in the EU and respective countries. Second, we elaborate the legal procedural dimension of RAB-related regulations as a path to the balanced protection of public interest, yet streamlining administrative burdens for entrepreneurs. In the next section, we identify and critically assess all procedural novelties in selected statutes in Slovenia and Croatia. Moreover, we study their implementation and effects based on previous measures and the systemic goals of RAB. Finally, we put forward the main issues that we believe are relevant for future discussion on the field based on the results of normative and other analyses. These findings serve as a basis for concluding recommendations that are also valid for other similar EU Member States. mendation 2003/361/ES of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (notified under document number C(2003) 1422), Official Journal of the European Union, L 124, 20 May 2003, p. 36. National legislation may define these criteria differently, as for instance the Slovene Companies Act set a limit of annual turnover under EUR 29.2 million, and/or an annual balance sheet under EUR 14.6 million. Croatia had also set limits lower than the amounts in the Recommendation. SMEs are defined as enterprises whose annual turnover, and/or balance sheet do not exceed EUR 40 million or EUR 20 million, respectively. 7National profiles and comparative insights elaborated by Auby (2014). Regarding the EU APA, see draft Regulation on open, efficient and independent European Union administration, adopted by EP (2016). For its background, see Meuwese, Schuurmans and Voermans (2009), Hofmann, Schneider and Ziller (2014). 8Zakon o splošnem upravnem postopku, ZUP, Official Gazette (OG) of the Republic of Slovenia (RS), No. 80/99, and amendments 2000 to 2013. More Androjna and Kerševan (2006), Kovač (2015). 9Zakon o općem upravnom postupku, ZUP, OG of the Republic of Croatia (RC), No. 47/09. More Koprić and Ðulabić (2009). 210 Polonca Kovač, Vedran Ðulabić, Nevia Čičin-Šain: Removal of Administrative Barriers through the Recent Procedural Simplifications in Slovenia and Croatia II. RAB Development in the EU, Slovenia and Croatia Regarding Slovenia and Croatia, national RAB policies have been designed as a reflection of European efforts. The EU has started to design a systemic RAB program based on the Edinburgh Summit (1992) that, under the British presidency, expressed concern about the quality and quantity of regulations produced in Brussels. It took time, but an important further milestone was the Mandelkern Report from 2001 on the cost effects of administrative burdens amounting to 4–6% of GDP that could be reduced or omitted by at least 15%, i.e. EUR 40 billion. That would be the case if principles of necessity, proportionality, subsidiarity, transparency, accountability, accessibility and simplicity were met at the preparation and adoption of the regulatory environment for businesses.10 Therefore, the EC adopted in the same year the White Paper on European Governance pursuing better regulation. In 2002, the EC adopted minimum standards on public consultation and Regulatory Impact Assessments (RIA) regarding the environment, social affairs and economy-related impacts of legislation on European, national and other levels. Later, increasing stress was placed on reducing administrative burdens on the level of the EU Competitiveness Council (Meuwese (2009, p. 97)). In 2004, the Council called upon the EC and the EU Member States (MS) to evaluate and adopt measures to reduce the cumulative impact of the legislation influencing the competitiveness of specific industrial sectors. In 2007, the Council adopted a program that aimed to reduce administrative burdens arising from EU law by 2012 by 25% and required the same for MS. Some countries have developed their programs even more ambitiously prior or parallel to that.11 The EC has continued with its action program for 2007 to 2012 and guidelines to MS level, aiming to save approximately EUR 30 billion. Although there is an implementation gap due to reduced coordination (see EC (2014), on termination of High Level Group on Administrative Burdens), the EC lately pursues RAB under an umbrella of Smart Regulation as an initiative of developing overall political and administrative capacity. This programme included priority fields and altogether 72 measures of RAB, especially in the sectors of environmental, tax and labour law. InSlovenia,theRABprogramwas firstofficiallymentionedonthesystemiclevelwithinthe StrategicPlanof Implementation of PublicAdministration Reforms in1997.A special State Secretary, appointed in 2000 by the prime minister, subsequently coordinated it. In public relations, the program was promoted as an »administrative guillotine« or »administrative sweeper«. RAB was further developed by design of so-called meta-regulation (regulation on regulatory process) by amendments to Rules of Procedures of the Government in 2006 (see in detail Kovač and Virant (2011, pp. 250 and the following)). Furthermore, the parliament enacted the Resolution on Legislative Regulation in 2009.12 Other measures 10 On principles of better regulation, see Radaelli and de Francesco (2007, pp. 35, 114), OECD (2010, 2012), Kovač and Virant (2011, p. 247). 11 E.g. the UK, the Netherlands, Denmark, see OECD (2012, pp. 2 and the following). Some countries (have been) directed more toward citizens and some to business. 12 In Slovene: Resolucija o normativni dejavnosti, OG of the RS, No. 95/09. This document is further supported by rules of conduct within regulatory procedures of the parliament and the government. There are also special manuals and e-tools on legislation drafting, public consultation and different forms of RIA. DANUBE: Law, Economics and Social Issues Review, 8 (4), 207–228 DOI: 10.1515/danb-2017-0014 211 have been taken on the non-normative dimension, by conducting trainings and manuals for officials that prepare legislation for entrepreneurs, developing cooperation with chambers of commerce, e-government mechanisms,13 particularly advanced Standard Cost Model (SCM methodology, see EC (2005), OECD (2007)). Lately, the key milestone in RAB development in Slovenia is represented by the Single Document to Ensure a Better Regulatory and Business Environment and Increase Competitiveness, adopted by the government as a continuous program in 2013. This program addresses in the original plan over 240 measures in 16 administrative fields (such as economics, finances, environment, labour, education, agriculture, etc.) with a total of EUR 375 million in expected savings in three years. The document has been adopted in close cooperation with the chambers of commerce and crafts and is constantly updated by proposals of ministries, chambers, entrepreneurs and interested public. Action plans supplemented this policy with sector ministries being responsible under set deadlines and the government to monitor progress three times annually. As an autonomous project but part of the governmental program, a special one-stop-shop initiative was carried out in the field of establishing business entity, firstly for single entrepreneurs and later for other companies as well, by combining normative novelties, organisational mergers and the one-stop shop platform. Moreover, the Strategy of PA Development by 2020 is devoted to RAB with a special chapter, upgrading the Single Document. The Strategy also addresses the general modernisation of administrative procedural law in Slovenia (Gov RS (2015, pp. 88–98)), with a plan to further cut down administrative burdens by 5%, or EUR 10–45 million annually. For instance, in 2016 a pilot project was initiated on a special test within RIA for small and medium-sized enterprises (SMSE test, cf. EC (2016)). Reducing administrative obstacles for entrepreneurs (and citizens) is also a constant theme in the Croatian public space. The most prominent advocates of such initiatives are, among others, the Associations and Entrepreneurs and two professional chambers, of crafts and the economy. Over the past decade, there have been several attempts to reduce administrative obstacles and make space for the economy to become vibrant and competitive. The regulatory guillotine initiative was conducted in Croatia in order to identify legislation that represented obstacles to the economy and citizens. Under the title Hitrorez, literally meaning ‘fast cut’, Croatia conducted a project that aimed to reduce administrative burdens, primarily the removal of unnecessary regulations for entrepreneurs and citizens. The project lasted two years (2006–2008) and resulted in the analysis of 1,451 regulations. The project drafted 799 recommendations for the removal of unnecessary regulations. However, the implementation of the Hitrorez recommendations was rather problematic (more in Šimić Banović (2015)). It resulted in the implementation of only 195 (25%) recommendations. The foundation for the most recent initiative to reduce administrative burden could be found in the Government Decision from November 2014, which adopted SCM methodology as a main tool for measuring of administrative burden for economy in 2015 (Decision, 2014), as a pilot project in selected administrative areas.14 13 There are several IT schemes, such as joining up databases to enable the exchange of information among administrativebodies,but ofspecialimportance isthe portal StopBureaucracy,seehttp://www.stopbirokraciji.si/. 14 Mostly those which are in the competence of the Ministry of Economy and the Agency for Investment and 212 Polonca Kovač, Vedran Ðulabić, Nevia Čičin-Šain: Removal of Administrative Barriers through the Recent Procedural Simplifications in Slovenia and Croatia Adoption of the new GAPA in 2009 should also be considered an instrument for RAB, for both citizens and entrepreneurs. By reducing the number of its norms, the introduction of new legal institutes and broadening the scope of the law, the GAPA represents a step toward RAB. This is especially the case with the regulation of the one-stop-shop principle, which has been regulated in article 22 of the new GAPA. The same goal of RAB should be achieved by other instruments that have been regulated in other adopted pieces of legislation. In 2011, the Croatian parliament adopted the Regulatory Impact Assessment Act; in addition, several soft-law documents and mechanisms under the auspices of the Government Office for Associations have been adopted in order to improve the quality of the legislative process in Croatia.15 With the institutes and the whole system of planning of regulatory activity, which have been regulated in that act, the end goal should be visible in the overall reduction of the administrative burden. To wrap up, significant convergence in the EU and national policies regarding RAB can be observed. Yet, the level of implementation highly depends on at least mid-term planning and continuous external pressure. This is revealed by assessments of RAB as a whole and its parts or related programs (as RIA), since various studies show that there is a significant implementation gap in the area in both countries and even higher in Croatia. Especially for Croatia, the EC (2016a, p. 3) says directly: »Despite some improvements, the business environmentremains unfavourabletogrowth.Steps have been taken to reducethe high level of administrative burden and parafiscal charges, but they remain prominent. Furthermore, the regulatory environment for service providers and the regulated professions remains very restrictive. So far these restrictions have not been addressed; in some cases, even additional requirements are being imposed«. For Slovenia, most evaluators, internal and external, official and from academia (cf. Kovač and Virant (2011), Gov RS (2015), EU (2016)), point out that the measures taken in the last three to ten years are exemplary as designed in governmental policy papers and meta-regulation, but in practice they have brought about only approximately a quarter to two thirds of the intended (measurable) effects. Apparently, lacking (almost) full realisation leads to lost potentials in a systemic way. III. Procedural Regulation as part of RAB Some if not all of the above-mentioned initiatives have been reflected in the administrative and governance theory and vice versa: scholars elaborated RAB within the theoretical doctrines of public governance in order to support systemic administrative reforms. One of the key contributions in this sense is a systemic definition of RAB that has been elaborated. Namely, one must admit certain administrative burdens to be inevitable due to Competitiveness, see http://mingo.hr/ and http://www.aik-invest.hr/. The pilot project started in January 2015 and the Action Plan for the Reducing of Administrative Burden for the Economy was adopted in August 2015. 15 Zakon o procjeni učinaka propisa, OG of the RC, No. 90/11. The most important among soft instruments is the Code of conduct in process of consultation with interested public in the process of adoption of legislation and other legal acts (Kodeks savjetovanja sa zainteresiranom javnosti u postupku donošenja zakona, drugih propissa i akata, OG of the RC, No. 140/09). The latter are directed towards the improvement of public consultation and increasing the quality of newly adopted legislation. DANUBE: Law, Economics and Social Issues Review, 8 (4), 207–228 DOI: 10.1515/danb-2017-0014 213 the protection of public interest (e.g. not allowing fully free construction to ensure safety, environmental protection, etc.). On the other hand, some burdens can be recognised as barriers not necessary for such legitimised goals. In this respect, one can find substantive but mainly procedural legal and organisational approaches to reduce these excessive burdens, i.e. eliminate red tape and/or define necessary burdens to comply with them in the easiest way possible.16 There are administrative burdens and barriers that apply for citizens and/or administrative agencies only or additionally to burdens and barriers for business. Consequently, RAB tackles mostly administrative burdens, which are not considered inevitable due to public sector interests and present excessive consumption of time and costs for business holders. These barriers are regulated in the law as: a) substantive ones, mainly through definition of some administrative fields as ones in the public interest, and if so, setting conditions to acquire certain right, licence or concession or lower public obligation; b) procedural requirements, which might hinder economic activity and public duties fulfilment. When dealing with the first group, theory of deregulation and substantive RAB as political decision-making applies, while on the second level we deal with RAB in »true«, i.e. a stricter and administrative sense (Kovač and Virant (2011, p. 249)). Consequently, particular emphasis shall be put on the boundary between simplifications of administrative procedures resulting from (a) deregulation that imply a shift in the relation between public and private spheres or (b) optimisation of selected procedures without redefinition of public interest and decreasing the role of public authority. In other words, procedural aspects should prevail, since the same level of public benefit protection is achieved while the substantive changes thereof are lower. RAB is in this respect measured in several different ways, politically, economically and administratively conditioned (cf. EC, OECD, Radaelli and de Francesco (2007)). The focus on the above-emphasised procedural dimension is explicitly evident in the broadly acknowledged WB ranking of Doing Business. The WB evaluates several fields, among which there are three that are directly linked to administrative authorities on the national level (others address, for example, judicial procedures, acquiring investment credits from banks, entry to public infrastructure networks, enabling international business, etc.). The methodology is also developing in order to gain feedback that is more objective. Hence, the WB takes into account the number of authorities that an entrepreneur needs to deal with when acquiring some right or permit, the interconnection of these authorities, number of different procedures for one’s life situation, duration of procedures (in days), cost required, 16 See TUC (2006, pp. 2, 9), Avberšek (2011), Kovač (2012), Kalaš and Bačlija (2015, pp. 4, 7). The latter found out when surveying entrepreneurs that many understand all burdens as unnecessary ones, hence do not differentiate burdens from barriers, while a majority reasonably considers the difference. For example, if a company is required to submit its trucks to regular review for public safety, we speak of a burden, but if this company is obliged to submit additional paperwork based on these checks to other authorities, there is clearly a barrier to be removed (OECD (2017, p. 163)). There are administrative burdens and barriers that apply for citizens and/or administrative agencies only or additionally to burdens and barriers for business. 214 Polonca Kovač, Vedran Ðulabić, Nevia Čičin-Šain: Removal of Administrative Barriers through the Recent Procedural Simplifications in Slovenia and Croatia etc. These indicators are weighted since entrepreneurs especially find most disturbing loss of time that is most often a consequence of unclear and too frequently amended legislation (Kalaš and Bačlija (2015, p. 11)). The WB (2016) therefore puts forward the following procedures as particularly relevant for entrepreneurs: ∗registration of a company and entry to the market, category of Starting a Business (in Slovenia and Croatia that usually means the establishment of a certain company, often related to the EU or national regulated professions); ∗construction permitting, since it represents typical investments; and ∗tax collection when taxpayers are entrepreneurs. Regarding 2016 ranking, the results for Slovenia and Croatia out of 189 countries and 2017 out of 190 countries in total are as indicated in Table 1. If these results are compared to ranks in previous years, there are some vicissitudes (see for a comparison between 2016 and 2017 in Table 1 with arrows), but mainly both countries have been assessed until 2016 as being better over time. Contrary to this, it is worrying that the latest, methodologically further developed (see WB (2016, report for 2017, p. 116)),17 evaluations show more back stepping than progress according to all the measures taken. Another issue noted is, once again, that Slovenia ranks significantly higher compared to Croatia in all categories considered. We believe these results to be in direct linkage to longer EU membership and EC pressure on national governments rather than internal policies. Table 1: Doing Business ranks for Slovenia and Croatia 2016 and 2017 In sum Starting a business Construction permitting Paying tax WB Report 2016 2017 2016 2017 2016 2017 2016 2017 Slovenia 29 30 ↓18 49 ↓71 80 ↓35 24 ↑ Croatia 39 43 ↓99 95 ↑126 128 ↓23 49 ↓ Source: WB (2016) Despite some systemic consideration related to these measurements, one can conclude that the same methodology is applied for all countries included, hence at least the comparative value of ranking is sufficiently objective. In addition, they reflect trends in a certain country and the tangible effect of national policies and legal amendments. In this dimension, the mostquestionableissueseemstobeinbothcountriesrelativelylow administrativecapacity. These findings are compliant whether we look not only at WB or EC assessments but also national studies (Gov RS (2015), Gov RC (2014)). Low capacity is especially reflected in Slovenia in excessive length of respective administrative procedures and even systemically in Croatia regarding its fragmentised administration.18 17 See critical considerations on methodological elements in Kalaš and Bačlija (2015, p. 12); for construction permitting by Sever, Ðulabić and Kovač (2016, p. 165). Compare »myths« on burdens in the UK by TUC (2006). For instance, often data is gathered based on subjective opinions of entrepreneurs or regarding timing of procedures, the legally prescribed maximum timing is taken into account instead of the real average one. 18 For Slovenia, see EC (2016, p.2): »Slovenia’s business environment is hindered by a high level of administrative DANUBE: Law, Economics and Social Issues Review, 8 (4), 207–228 DOI: 10.1515/danb-2017-0014 221 this administrative field, have been regulated in a single piece of legislation, but not clearly and consistently. During 2015, several new laws have been adopted, creating an integrated system of legal regulation in these administrative areas, such as Chamber of Architects and Civil Engineers chambers and the Spatial Planning Act.32 Rather surprisingly, despite the fact that Croatia enacted new building legislation only recently, it seems that there has been no huge influence on boosting the building sector. The number of issued constructing permits is still in decline in comparison with previous years. In 2015, there were 6,328 issued construction permits, which is 4% less than the 6,589 permits issued in 2014. Despite that, the planned worth of investment in 2015 was 3.2% higher than in 2014, which was probably more because of the economic crisis and not administrative obstacles in construction permitting. Contrary to the registration of business or tax payments, the building field seems to be recently much more RAB-oriented in Croatia compared to Slovenia (despite overall lower Croatian ranks by the WB (2016), indicating status and less direction of trends). Several approaches are similar in both countries, but Croatia seems to face more severe difficulties, so its legislation adopted in 2013 radically changed the notion and roles in construction permitting procedures. In this respect, (longer or shorter) full membership in the EU also does not appear to be a factor of changes. However, regulatory amendments or even radical changes are not sufficient. It is necessary to systematically develop the administrative capacity of all stakeholders in these procedures.33 Finally, letus compare GAPA noveltiesinboth countries regarding RAB-oriented institutes and goals. One would assume based on international experiences that general law has significantly broader impact in relation to sector-specific ones.34 Particularly, general law has developmental potential in a systemic sense.35 A state governed by the rule of law, mostly guaranteed by constitutional and general administrative procedural law, is a value cherished by business and (post)capitalism too, since it provides equality, predictability, certainty and the protection of weaker market players. That is the case if there is a balance between need in reality and stability of legal regulation. This is proven, for instance, by the Slovene project on data exchange in all public records as an official burden through GAPA novelty in 2004 (articles 66 and 139) and accompanied measures in administrative structures, special training and database informatisation that earned Slovenia second-best position in the EU in 2007 regarding e-services).36 The Slovene GAPA was adopted in 1999. The law has not been changed since 2013, with only minor novelties in-between. Despite necessary modernisation in this respect on 32 Zakon o komori arhitekata i komorama inženjera u graditeljstvu i prostornom ureðenju, OG of the RC, No. 153/1378/15), Moreover, Works and Activities of Physical Planning and Construction Act, Zakon o poslovima i djelatnostima prostornog ureðenja i gradnje, OG of the RC, No.153/13, 78/15, and Assessment of the Value of the Property Act, Zakon o procjeni vrijednosti nekretnina, OG of the RC, No.153/13, 78/15). 33 Radaelli and de Francesco (2007, p. 29), Rose-Ackerman and Lindseth (2010, p. 337). 34 Cf. Croatian and other modernised laws. See Koprić and Ðulabič (2009), Rusch (2014, p. 191, etc.), Hofmann, Schneider and Ziller (2014), Kovač (2015, pp. 27, 71), Koprić, Kovač, Ðulabić and Ðinić (2016). 35 See Ziller (2008, pp. 4–7). Cf. Androjna and Kerševan (2006, pp. 74, 85), Rusch (2014), Kovač (2015, pp.15, 31). 36 See for this and other changes, Kovač and Virant (2011, pp. 197–225, 251, etc.). 222 Polonca Kovač, Vedran Ðulabić, Nevia Čičin-Šain: Removal of Administrative Barriers through the Recent Procedural Simplifications in Slovenia and Croatia systemic level (also by Gov RS (2015, p. 95)), there was only one amendment proposed in 2015 (ZUP-I). This amendment aimed to simplify delivery and reduce formality in applications and administrative acts comparable to other EU MS regulation (mainly German model). In general, there is a need in Slovenia to prepare the law that will pursue public policies that are more efficient. Simultaneously, the law should enable parties to protect their fundamental defence rights. But not even minor novelty in 2015 has been adopted due to a lack of political understanding of and commitment to the GAPA’s role and dominance of particular interests (e.g. the National Post Office, now earning millions of EUR annually with formalised delivery). The GAPA in Croatia was as a new law adopted in 2009. That law was a step towards the simplification of general administrative procedure. The main points of reform were the reduction of the length of laws, introduction and regulation of new legal institutes (e.g. administrative contract), enabling the use of electronic communication in administrative procedure, simplification of legal remedies and introduction of new ones (e.g. complaint). Despite many novelties, the new GAPA represents a combination of tradition and modernisation with the prevailing elements of tradition. Nevertheless, the special administrative procedures that exist in Croatia are still a huge source of unnecessary administrative burdens for citizens and the economy. There are more than 100 special laws that contain procedural provisions, so it might be reasonable to consider the limited prevalence of special law over the GAPA. The new Croatian GAPA has been assessed as a law that represents the combination of modernisation and tradition with prevailing elements of tradition. Although modernisation efforts have been undertaken within the law itself, it seems that the wider modernisation effects have not been achieved. This is particularly seen in the perception of civil servants who state that their everyday work has not changed despite the fact that the new law has been adopted (Ðulabić (2014, p. 192)). The same research also showed that implementation challenges greatly lie outside the legal text itself. They should predominantly be sought in prevailing administrative culture, commitment to public administration reforms and awareness building. All these dimensions should enable civil servants to properly implement the new law, as well as citizens to use the new institutes envisaged in the new GAPA. V. Discussion Based on the findings of the analyses, there are some key issues to be underlined when discussing systemic RAB policies on a national or broader level. If politicians and administrators aim for optimal effects, they should primarily put more emphasis on systemic approach in planning RAB measures, legislative amendments and coordinated or reduced implementation, on both national and EU levels. As established by the case studies of Slovenia and Croatia, other methods, even though incorporating novelties of important administrative laws (such as tax or construction acts), do not suffice or even have counterproductive impacts for entrepreneurs and administration itself. RAB will be effective if the government takes over accountability and does not disperse it among ministries. Governmental policy on administrative reforms of that calibre as RAB cannot be just a sum of sectoral measures and ministries proposals, as is often the case, especially if certain DANUBE: Law, Economics and Social Issues Review, 8 (4), 207–228 DOI: 10.1515/danb-2017-0014 223 policies are mostly externally driven (e.g. by the EC). Instead, it should be strategically managed based on the prior definition of national interests in the region. However, for Slovenia and Croatia, the EU apparently represents an inevitable external incentive and key grounds for developing respective national programs. Under the European conditionality doctrine (see Buckley (2016, p. 130)), this is especially so when certain approaches shall be met if cohesion fund resources are deployed. Therefore, both countries emphasise RAB as cross-sectoral measures within their national strategies of PAR, at least declaratory. As a result, it is not surprising that countries with longer EU membership introduce broader and more in-depth-oriented sets of RAB measures. Moreover, good governance and the contemporary development of administrative relations demand more interdisciplinary administrative methods as traditional judicial and normative measures (more by Barnes in Rose-Ackerman and Lindseth (2010, pp. 336–356)). In the RAB field, consequently classically dominating economic view does not suffice. If primarily selected interests of stakeholders are considered (e.g. of investors in construction permitting) and not balanced proportionally to others and public interest (cf. OECD (2007, p. 25)), such (legal) solutions would be disputed, annulled or omitted. A negative example, again based in Slovenia and Croatia, is given by strategies on public administration development. Namely, in Slovenia, the Ministry of PA is simply denying its accountability for the environmental and construction area even though the ministry is cross-sectoral by definition and respective field constantly assesses as a critical one by EC, WB and national chambers of commerce. In Croatia, the respective strategy is not even acknowledged to be in force due to recent internal political instability and still awaits any action plan. In sum, when RAB is concerned, declaratory policy papers and dead letters in the law cannot lead to sustainable development. Citizens and entrepreneurs expect and deserve more tangible and faster response from public administration unless they take advantage of a globalised world and over the years leave a non-stimulating environment. In sum, progress in Slovenia and Croatia is too slow and not sufficiently intensive, both on national and comparable scales. The significant implementation gap regarding RAB measures, even the most important ones (see EC (2014, p. 33)), is the result of several suboptimal approaches. Firstly, it is obvious that both countries have main problems where partial measures are taken and not systemic ones. Secondly, usually the first and often the only step taken is an amendment to a sector-specific law. Hence, there are no systemic effects across the field addresses, as lacking unavoidable interconnection of social and tax measures. Thirdly, due to formal(istic) administrative tradition, it is underrated that a normative component is necessary but not sufficient. To raise overall capacity, it needs to be accompanied by organisational, managerial, e-government related and other activities to provide systemic progress. Finally, any changes, legislative as well, should be part of a regulatory feedback loop,37 with ex post assessments that is in respective countries not so far incorporated in a regulatory system. Additionally, there is a need to distinguish RAB sectors according to the priorities set for a specific field or beneficiaries. This is the case 37 Normative component must be considered, especially in more formally-oriented administrative environments. See Rusch (2014). On the importance of IT support in RAB, see OECD (2012, p. 4). On regulatory feedback loop, see Kovač (2009, 2015) and EC (2014, p. 45). 224 Polonca Kovač, Vedran Ðulabić, Nevia Čičin-Šain: Removal of Administrative Barriers through the Recent Procedural Simplifications in Slovenia and Croatia since Slovenia and Croatia both seem to have such strategies as required by the WB or known comparatively. Above all, apparently SMSE should be taken into account (see TUC (2016), under the title of »Think Small First«, cf. EC (2014), WB report (2016; p. 3)). Tax procedure in this respect indeed plays a significant role in enabling more effective administrative efficiency and business productivity (Kovač (2012, p. 413)). Further, an open question arises as to what extent the legislator takes into account traditional principles of smart regulation.38 Above all, it is questionable as to whether ministries as policy makers understand the principle of the necessity of regulating social affairs. Based on the results of our analyses, some tend to regulate all details regardless of its level of importance by law, and the other extreme do not change even a law in place practically the same for 90 years (as the Slovene GAPA). There is also an important dilemma of distinguishing substantive issues to be (de)regulated as opposed to procedural simplifications, often neglected or misunderstood. The principles of necessary legal regulation impose on the draft legislator (i.e. regulating administrative authority) firstly the necessity of an in-depth analysis of the policy (which is initiated or amended and supplemented) giving rise to questions that need to be regulated, causes of problems, precise objectives, and methods of regulation. It requires self-restraint and proportionality by proposing to parliament comprehensible regulation, without unnecessary burdens but simultaneously expressed awareness of public benefit to be protected in exposed areas. The study of Slovenia and Croatia reveals that results are the lowest when evaluating national competitiveness, especially in those fields lacking such an approach regardless of formally modernised laws (like ConstrA and even the GAPA in Croatia as the most obvious cases in this study). Another systemic aspect relates to the combined need for simplifications and therefore substitute mechanisms of measures respectively. In other words, if the level of formalities and even conditions for a business activity is reduced, it has to be clear who takes over the accountability for a possible gap in public interest in the field, such as an endangered environment or lower amount of taxes collected. Particularly, when simplifying any administrative relation, self-regulation and state control have to be strengthened. The state cannot only avoid its own responsibility for public governance.39 Deregulation and simplification, respectively. RAB also necessarily leads to an increased responsibility of entrepreneurs to the society as a whole. The GAPA is generally considered an important instrument of administrative technology (Koprić and Ðulabić (2009)). That is the reason why it should be approached as an important tool for wider administrative reform, especially when it comes to activities connected with RAB. It should not just be seen as a law, which regulates procedural aspects of authoritative, unilateral decision-making about rights, obligations and legal interests of participants in administrative procedure. From that point of view, the GAPA could be an important enabler of the RAB, but also a significant obstacle if it regulates procedure in too formalistic and bureaucratic a manner. There should be a balance between creating legal preconditions for simple and citizen-oriented public administration and respecting 38 See Radaelli and de Francesco (2007, p. 32) or Slovene Resolution (2009) or Croatian law on RIA (2011). 39 Cf. Avberšek (2011, p. 113), WB (2016, pp. 62–63). DANUBE: Law, Economics and Social Issues Review, 8 (4), 207–228 DOI: 10.1515/danb-2017-0014 225 basic rule-of-law principles, at the same time. The Croatian experience shows that, despite significant modernisation of the GAPA, that taken as an isolated effort will not result in significant administrative reform nor RAB that would have stronger impact on improvement of the business environment. Doing Business ranking and other indicators show that, despite the modernisation of legal texts, there are several meta law activities that should be undertaken in order to achieve a wider positive effect. VI. Conclusion Inthisanalysis,wehaveshownRAB asbeingessentialinprocedural terms,since respective simplifications preserve the level of public interest on the individual administrative area, but ease business activity. It is therefore not surprising that we detect the most efficient changes on this level, particularly if pursued by general procedural law and upgraded along the same line by sector-specific acts. 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