In order to assist the business sector and the economy following the coronavirus crisis, Prime Minister Naftali Bennett, Finance Minister Avigdor Liberman and Justice Minister Gideon Saar have decided to advance a national plan to improve regulation and reduce the excessive regulatory burden. The plan was formulated by the Prime Minister’s Office, the Finance Ministry and the Justice Ministry based on the recommendations of the OECD.
The plan includes, for the first time, the legislation of a framework law for regulation that will provide an institutional basis for long-term infrastructures for formulating regulation in Israel, as well as a regulation authority that will oversee the processes of determining new regulation and will work to reduce the excessive regulatory burden. In the framework of the law, principles will be determined for optimal regulation, risk management, the use of international standards as a foundation, advancing a competitive economy, the reduction of the cost of living, and regulation that is adapted to small and medium businesses.
The plan will provide for immediate assistance by temporarily easing the burden including restraining new regulation in order to create certainty for businesses during the exit from the crisis, will allow them to focus on business development and will allow them to delay investments that they are required to make according to regulatory requirements. This is alongside a reform of business licensing that will make it easier to open businesses and receive a business license.
Following are the main points of the plan:
1. Establishment of a regulation authority with the following functions and responsibilities:
Oversight of new regulation
* Overseeing processes for determining new regulation and issuing opinions as to the quality of the new regulatory process;
* Significant regulation that the authority believes is the product of an unprofessional process will require the approval of a ministerial regulation committee before it is advanced;
* Adopting an “adopt or explain” mechanism – the authority will contact regulators with requests to adjust old and burdensome regulation that is the responsibility of the regulators. The regulators will either adopt the adjustment or have to justify why they do not think it is correct. If the regulator refrains from adjusting old regulation accordingly, a ministerial regulation committee will be able to rescind the regulation within two years.
* Alongside approval of the annual budget, the government will approve an annual plan to reduce the excessive regulatory and bureaucratic burden.
2. The regulation framework law
* As regulation is being formulated, the regulator will also evaluate – alongside the public interest it is required to protect – the direct and indirect consequences of the regulation: How much the regulation will cost those under supervision, how it will affect competition and the cost of living or if it is adapted for small and medium businesses.
* As a rule, regulation will be based on international standards, apart from exceptional cases.
* Regulators will issue annual reports in advance on all regulation that they want to promote in order to create certainty for businesses and allow regulators to plan and coordinate among themselves in advance in order to prevent contradictions and disagreements.
* Digitization requirement – New regulation that imposes a previously nonexistent obligation to register will be digitally accessible to businesses and to the public.
* All regulation will be issued in an accessible manner – from the perspective of the public – on one government website.
3. Business licensing reform
* The necessary conditions for a business license will be eased and registration requirements will match common global practices.
* The number of businesses that require registration will be reduced.
* The time required by businesses for receiving a license, as well as the required costs, will be reduced.
The authority will also promote coordination, planning and mediation among regulators and will report to, and advise, the government on regulatory matters by gathering information and data from regulators, taking surveys and making evaluations, and will build networks capable of training, overseeing and advising the various regulators.
The plan is based on OECD recommendations for the State of Israel and adopts the standards accepted in developed countries for managing regulatory policy, such as the U.S., Britain, Canada, Germany, South Korea and Australia.
Prime Minister Bennett: “Our government is a government that cares about citizens and is engaged in making corrections. We have come to deal with genuine problems. Prices in Israel are very high. We are not prepared to accept this reality and need to tell the truth: The main factor, both for complications for businesses and for the cost of living, is government itself, Israeli governments. Instead of making life complicated, we need to level out the path. All of this is going to change. The government needs to serve citizens, not make them chase after it with stacks of forms. Therefore, we are all here. Today we are announcing the first step in our flagship economic plan for the self-employed and business-owners in Israel. Our goal is clear and our test is simple – to significantly reduce the bureaucracy over the businesses and citizens in the State of Israel.”
Finance Minister Liberman: “Over the years, excessive regulation has become one of the main obstacles to increasing growth in the Israeli economy and improving productivity and competition. Upon assuming office, I said that I aspire to adopt all of the standards of the world’s most advanced countries, certainly in the field of regulation. Improving regulation will lead to results in productivity, boost competition in the economy, reduce the cost of living and create the certainty necessary to the business sector to make investments. Israeli governments over the years have always excelled in writing reports and much less in implementing the same reports that they themselves requested. I have no doubt that this time we will succeed in having a genuine revolution in this area and in moving the Israeli economy forward to a better place.”
Justice Minister Sa’ar: “A deep process of deregulation is long overdue. Over the past decade, we heard many words and speeches about deregulation but very little was actually done. Regulation is essential but it must be put into a framework. We need a policy and law that will organize regulation in Israel and make it balanced and logical. We will deal with the excessive regulation that has accumulated in layers. We will create an annual plan for regulation that will ensure advance planning and certainty for businesses and, mainly, we will ensure that regulators internalize the costs to the public and oversee orderly processes.”