Regulatory reform in the Netherlands 1999

269 Pages·1999·3.286 MB·English

by  OECD

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The Dutch experience in regulatory reform has vital lessons about the R M
modernisation of the European welfare state and its integration into the European E
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single market. Regulatory reform is the most recent element in the reshaping of O
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the Dutch model. Following reforms to labour markets and the social welfare L
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system in the 1980s, Dutch governments in the 1990s have sought a "new balance A E
between protection and dynamism" based on competition policy, regulatory T V Regulatory Reform
Regulatory Reform
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reform, and market openness. Today, the Netherlands ranks among the top OECD
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countries by many measures of economic performance, including employment
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growth. Though still in its early phases, regulatory reform has already produced D
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in the Netherlands
major gains for the Netherlands in terms of competitiveness, flexibility, and N in the Netherlands
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consumer benefits. Yet major challenges are still to be faced. Some important F A
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reforms have been slow, indicating that the balance between consensus-building
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and policy responsiveness is still being adjusted in the modern Dutch model.
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Further reforms in many areas will bring important gains in boosting the
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employment rate, improving sectoral performance, and providing social I T
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protection at lower cost.
T R
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The Netherlands is one of the first OECD countries to request a broad review by E P
the OECD of its national regulatory practices and domestic regulatory reforms. N O W S O F
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regulatory reform in framework areas such as the macroeconomic context, the R E G
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quality of the public sector, competition policy and enforcement, and integration R C
of market openness principles in regulatory processes, and in sectors such as L I
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electricity and telecommunications. The policy recommendations present a A
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balanced plan of action for both short and longer-term based on best international
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regulatory practices.
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Further Reading
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In the same series: Regulatory Reform in Japan, Regulatory Reform in Mexico

and Regulatory Reform in the United States. The general policy analysis that is R
the basis for these country reviews is presented in the OECD Report on O
Regulatory Reform: Synthesis, and the supporting two-volume OECD Report on F

Regulatory Reform: Sectoral and Thematic Studies, published in 1997.
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ISBN 92-64-17074-X 99 O
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OECD Reviews of Regulatory Reform
REGULATORY REFORM
IN THE NETHERLANDS
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article1 of the Convention signed in Paris on 14thDecember 1960, and which came into force
on 30thSeptember 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote
policies designed:
– to achieve the highest sustainable economic growth and employment and a rising standard of living in
Member countries, while maintaining financial stability, and thus to contribute to the development of the
world economy;
– to contribute to sound economic expansion in Member as well as non-member countries in the process of
economic development; and
– to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance
with international obligations.
The original Member countries of the OECD are Austria, Belgium, Canada, Denmark, France, Germany,
Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland,
Turkey, the United Kingdom and the United States. The following countries became Members subsequently
through accession at the dates indicated hereafter: Japan (28thApril 1964), Finland (28th January 1969),
Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic
(21stDecember 1995), Hungary (7thMay 1996), Poland (22ndNovember 1996) and Korea (12thDecember
1996). The Commission of the European Communities takes part in the work of the OECD (Article13 of the
OECD Convention).
Publié également en Français sous le titre:
LA RÉFORME DE LA RÉGLEMENTATION AUX PAYS-BAS
© OECD 1999
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FOREWORD
The OECD Review of Regulatory Reform in the Netherlands is among the first of a series of country
reports carried out under the OECD’s Regulatory Reform Programme, launched in1998 in response to a
mandate by OECD Ministers.
The Regulatory Reform Programme is aimed at helping governments improve regulatory quality
–that is, reforming regulations which raise unnecessary obstacles to competition, innovation and
growth, while ensuring that regulations efficiently serve important social objectives.
The Programme is part of a broader effort at the OECD to support sustained economic
development, job creation and good governance. It fits with other initiatives such as our annual country
economic surveys; the Jobs Strategy; the OECD Principles of Corporate Governance; and the fight
against corruption, hard-core cartels and harmful tax competition.
Drawing on the analysis and recommendations of good regulatory practices contained in the
1997 OECD Report to Ministers on Regulatory Reform, the Regulatory Reform Programme is a multi-
disciplinary process of in-depth country reviews, based on self-assessment and on peer evaluation by
several OECD committees and members of the International Energy Agency (IEA).
The country Reviews are not comprehensive, but, rather, targeted at key reform areas. Each Review
has the same structure, including three thematic chapters on the quality of regulatory institutions and
government processes; competition policy and enforcement; and the enhancement of market openness
through regulatory reform. Each Review also contains chapters on sectors such as electricity and
telecommunications, and an assessment of the macroeconomic context for reform in the country under
review.
The country Reviews benefited from a process of extensive consultations with a wide range of
government officials (including elected officials) from the country reviewed, business and trade union
representatives, consumer groups, and academic experts from many backgrounds.
These Reviews demonstrate clearly that in many areas, a well-structured and implemented
programme of regulatory reform has brought lower prices and more choice for consumers, helped
stimulate innovation, investment, and new industries, and thereby aided in boosting economic growth
and overall job creation. Comprehensive regulatory reforms have produced results more quickly than
piece-meal approaches; and such reforms over the longer-term helped countries to adjust more quickly
and easily to changing circumstances and external shocks. At the same time, a balanced reform
programme must take into account important social concerns. Adjustment costs in some sectors have
been painful, although experience shows that these costs can be reduced if reform is accompanied by
supportive policies, including active labour market policies, to cushion adjustment.
While reducing and reforming regulations is a key element of a broad programme of regulatory
reform, country experience also shows that in a more competitive and efficient market, new regulations
and institutions are sometimes necessary to assure that private anticompetitive behaviour does not
delay or block the benefits of reform and that health, environmental and consumer protection is
assured. In countries pursuing reform, which is often difficult and opposed by vested interests,
sustained and consistent political leadership is an essential element of successful reform efforts, and 3
OECD 1999
Regulatory Reform in the Netherlands
transparent and informed public dialogue on the benefits and costs of reform is necessary for building
and maintaining broad public support for reform.
The policy options presented in the Reviews may pose challenges for each country concerned, but
they do not ignore wide differences between national cultures, legal and institutional traditions and
economic circumstances. The in-depth nature of the Reviews and the efforts made to consult with a
wide range of stakeholders reflect the emphasis placed by the OECD on ensuring that the policy
options presented are relevant and attainable within the specific context and policy priorities of each
country reviewed.
The OECD Reviews of Regulatory Reform are published under the responsibility of the Secretary-
General of the OECD, but their policy options and accompanying analysis reflect input and commentary
provided during peer review by all 29OECD Member countries and the European Commission and
during consultations with other interested parties.
The Secretariat would like to express its gratitude for the support of the Government of the Netherlands
for the OECD Regulatory Reform Programme and its consistent co-operation during the review process. It
also would like to thank the many OECD committee and country delegates, representatives from the OECD's
Trade Union Advisory Committee (TUAC) and Business and Industry Advisory Committee (BIAC), and other
experts whose comments and suggestions were essential to this report.
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OECD 1999
ACKNOWLEDGEMENTS
This series of Reviews of Regulatory Reform in OECD countries was prepared under the direction of
Deputy Secretary-General Joanna R. Shelton. The Review of the Netherlands reflects contributions
from many sources, including the Government of the Netherlands, Committees of the OECD and the
IEA, representatives of Member governments, and members of the Business and Industry Advisory
Committee (BIAC) and the Trade Union Advisory Committee (TUAC), as well as other groups. This report
was peer reviewed in March 1999 in the OECD’s ad hoc Multidisciplinary Group on Regulatory Reform.
In the OECD Secretariat, the following people contributed substantially to the review of the
Netherlands: Head of Programme and lead drafter: Scott H. Jacobs; Document preparation: Jennifer
Stein; Economics Department: Chapter 1 was principally prepared by Richard Kohl, and benefited from
work by Giuseppe Nicoletti on regulatory indicators; Public Management Service: Rex Deighton-Smith;
Trade Directorate: Evdokia Moïsé, Anthony Kleitz; Directorate for Financial, Fiscal and Enterprise
Affairs: Patricia Heriard-Dubreuil, Patrick Hughes, Bernard J. Phillips, Sally Van Siclen, Michael Wise;
Directorate for Science, Technology, and Industry: Wonki Min, Dimitri Ypsilanti; General Secretariat:
Pierre Poret. In the International Energy Agency: Peter Fraser, Caroline Varley.
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OECD 1999
TABLE OF CONTENTS
Part I
Executive Summary....................................................................................................................................... 11
Chapter 1: Regulatory Reform in the Netherlands................................................................................... 15
Chapter 2: Government Capacity to Assure High Quality Regulation.................................................... 35
Chapter 3: The Role of Competition Policy in Regulatory Reform.......................................................... 45
Chapter 4: Enhancing Market Openness through Regulatory Reform.................................................... 53
Chapter 5: Regulatory Reform in the Electricity Industry........................................................................ 61
Chapter 6: Regulatory Reform in the Telecommunications Industry...................................................... 69
Chapter 7: Conclusions and Policy Options for Regulatory Reform in the Netherlands...................... 79
Notes............................................................................................................................................................... 91
Annex: Other Figures..................................................................................................................................... 95
References...................................................................................................................................................... 107
Tables
1.1. Economic costs of sub-optimal allocation in the Netherlands: a summary................................. 23
1.2. Measured inefficiencies in public activities in the Netherlands................................................... 27
1.3. Status and expected impact of regulatory reform in sectors in the Netherlands........................ 28
5.1. Comparison of the Dutch industry structure and regulation: impact of 1998 Electricity Act..... 64
5.2. Status of transmission business in OECD jurisdictions with reformed electricity sectors......... 67
Figures
2.1. Indicators of strengths and weaknesses in the Netherlands regulatory system.......................... 39
4.1. Share of trade in selected OECD Member countries’ economies, 1996....................................... 54
4.2. Share of stocks of inward and outward direct investment in GDP in 1995................................... 54
6.1. Comparison of residential tariff basket (August1998).................................................................... 72
6.2. Comparison of business tariff basket (August1998)........................................................................ 72
Annex Figures
1.1. Netherlands macroeconomic figures................................................................................................. 96
1.2. Economic performance vs. eight OECD countries............................................................................ 97
1.3. Performance in manufacturing and services..................................................................................... 99
1.4. Classification of countries according to overall performance:
business and manufacturing sectors.................................................................................................. 100
1.5a. Netherlands overall performance in manufacturing vs. OECD countries...................................... 101 7
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Regulatory Reform in the Netherlands
1.5b. Netherlands overall performance in services vs. OECD countries................................................. 101
1.6a. Netherlands growth performance in telecommunications vs. OECD countries........................... 102
1.6b. Netherlands performance in levels in telecommunications vs. OECD countries........................ 102
1.7a. Netherlands growth performance in rail transport vs. OECD countries........................................ 103
1.7b. Netherlands performance in levels in rail transport vs. OECD countries..................................... 103
1.8a. Netherlands growth performance in air passenger transport vs. OECD countries....................... 104
1.8b. Netherlands performance in levels in air passenger transport vs. OECD countries.................... 104
1.9a. Netherlands growth performance in road freight transport vs. OECD countries.......................... 105
1.9b. Netherlands performance in levels in road freight transport vs. OECD countries....................... 105
Boxes
1.1. What is regulation and regulatory reform?....................................................................................... 17
1.2. Curing the Dutch disease: policy reforms have paid off in economic performance................... 21
1.3. Labour market performance in the Netherlands............................................................................. 22
1.4. Estimating the economic impact of regulatory reform.................................................................... 27
2.1. Managing regulatory quality in the Netherlands............................................................................. 38
2.2. Environmental covenants in the Netherlands................................................................................. 42
3.1. Self-regulation by industry and trade organisations in the Netherlands..................................... 46
3.2. The EU competition law toolkit.......................................................................................................... 48
3.3. National enforcement for national problems................................................................................... 50
4.1. The OECD efficient regulation principles for market openness.................................................... 56
4.2. Standards harmonisation in the European Union........................................................................... 58
5.1. Potential benefits of electricity market liberalisation in the Netherlands................................... 62
6.1. Milestones in telecommunications competition in the Netherlands........................................... 70
Part II
Background Report on Government Capacity to Assure High Quality Regulation............................... 113
Background Report on the Role of Competition Policy in Regulatory Reform..................................... 153
Background Report on Enhancing Market Openness through Regulatory Reform............................... 185
Background Report on Regulatory Reform in the Electricity Industry................................................... 211
Background Report on Regulatory Reform in the Telecommunications Industry................................. 247
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OECD 1999
Part I
OECD REVIEW
OF REGULATORY REFORM
IN THE NETHERLANDS