The goal of Better Regulation is to ensure that policy is evidence-based, as far as possible, through stakeholder consultation and impact analysis; therefore, that regulation is introduced only when necessary, and that it has the intended effects once implemented. Additionally, the stock of existing regulation is evaluated to identify bottlenecks, inefficiencies or unnecessary costs that can be reduced.
The Department of Enterprise, Trade and Employment has developed an ‘SME Test’ to assist policymakers across government to think about the potential impact of any new legislation or regulation in terms of the regulatory burden it places on SMEs.
The SME Test is designed to invite consideration of less stringent compliance requirements for smaller companies, where appropriate and proportionate, including simplification of regulatory adherence through the use of templates, reduced regulatory thresholds for SMEs, and the use of exemptions where possible.
Ireland’s SME Test is comprised of a four-step process:
- Firstly, it is necessary for policymakers to identify affected businesses, based on size and sector.
- Secondly, policymakers should consider if early consultation with SME representative bodies, sectoral groups or relevant Agencies is required.
- Thirdly, it is important to establish the extent to which the proposal affects SMEs’ competitiveness or the business environment in which they operate. These will include consideration of compliance and administrative costs, such as fees, duties, and costs arising from any obligation to adapt a product or service to meet economic, social or environmental standards. It will also include consideration of aspects such as possible impacts on barriers to entry, and impacts on innovation.
- Finally, upon consideration of these factors, an assessment can be made as to whether measures should be introduced that make it easier for SMEs to comply with the legislation.
The Department of Enterprise, Trade and Employment is currently working with government departments to ensure application of the SME Test to legislation where there are potential impacts on SMEs.