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European Commission

José Manuel Durão Barroso

President of the European Commission

Public sector innovation: towards a business friendly public administration

For a business-friendly Public Administration High-level Conference /Brussels

29 October 2013

I was thanking Antonio Tajani for organising this conference and I want to reiterate my thanks to him and to his cabinet and his services, because I really believe that innovation needs our best minds and our best thinking and this is why your presence here today is so important.

I would like particularly to thank the Minister from Lithuania, our current Presidency of the Council, but also the distinguished representatives of the governments from Sweden, from Greece, from Spain.

This conference focusing on a business-friendly public administration is indeed very timely: just four days ago, the European Council highlighted once again the importance of the digital economy and innovation across all sectors of the economy, including in particular the public sector.

In fact, I had the honour to present to the Heads of State and Government some of our action for instance relating to ICTs. What ICTs can do to modernise not only our public administration, but also to give more competitiveness to our economies. And we have the occasion also to discuss about REFIT, the programme launched by the European Commission to have administration and legislation fit for purpose and I was particularly happy to see the very strong support of Heads of State and Government to this programme of reducing the administrative burden.

I emphasized that investment and innovation in the digital sphere will be key drivers of future growth, and jobs and competitiveness. Completing the digital single market by 2015 and delivering on our innovation agenda are therefore both high priorities to deliver on our Europe 2020 strategy for smart, sustainable and inclusive growth.

The current economic situation allows for cautious optimism. But the fragility of the recovery means that work towards reforming the economy and creating growth and jobs must continue with determination. We are not yet out of the crisis, as we have been saying. How could we be out of the crisis when we have such high levels of unemployment still in many parts of Europe, including, by the way, youth unemployment?

We have the conditions to overcome this situation provided we show determination in the reforms that have been launched. And a part of this is a business friendly administration. It is obviously a key lever to achieve that goal. But I see it as more than a lever. Together with public sector innovation, I see it as an opportunity:

  • An opportunity for competitiveness, for growth and jobs.

  • An opportunity to strengthen structural reforms and put public finances on a sound footing

  • And an opportunity to broadly connect with our citizens.

Ladies and gentlemen,

In you first panel this morning, you have highlighted Members States' efforts at strengthening governance and quality of institutions. And I know that in the next panel discussion you will debate around: What do enterprises expect of a modern public administration today?

So let me underline the impact of the public sector when it comes to competitiveness, as well as growth and jobs. The public sector accounts for nearly half of Europe's Gross Domestic Product, public procurement for 20% of Europe's GDP and public sector for more than 25% of the total employment in the European Union. And we know that in some of our countries this is even more impressive, these figures.

This clearly shows how much public sector is part of the solution. It has to be a partner for change. It is about what we can do to stimulate growth. It is also about jobs and well-being.

That's why creating an innovation-friendly environment is so crucial for our businesses and for our economies. From the cost of dealing with administration to the time taken to complete procedures, to the predictability of the outcomes, to the stability of the legal framework, to the quality of public services: these are all moments that can make a difference. These are all elements of a comprehensive reform of public administration and public services in our Member States.

And every effort invested in improving one or other of these services - or even better: all of them - will give projects a better chance to survive and to succeed.

European SMEs expect, and rightly so, less administrative burdens and a more innovation-friendly administration framework.

At European level, the Commission this year, like the previous years, has identified the modernisation of public administration as a priority in the European Union's Country Specific Recommendations. This means the promotion of efficiency measures across the public sector, such as greater use of shared services and information technology solutions or reducing delays in payment to supplies.

I welcome the interest that these targets are now receiving from our Member States because all of them, in a way or another, are indeed now more committed to this public reform administration.

Another point that I know that Vice-President Tajani mentioned to you in his introductory remarks today, is precisely tax administration. One of the most important areas where we can improve the relation between the public administration and the citizens and business is precisely in the simplification of tax regimes that are extremely complex, sometimes with extremely high costs, this could be avoided with some modernisation.

Significant steps have also been taken with our recent communication to make European Union legislation lighter, simpler and less costly, with the Commission's Regulatory Fitness and Performance Programme, the so-called "REFIT" which I already mentioned because it was a major topic in the European Council last week.

We all know that regulation plays a critical role in making the single market work and maintaining high standards in areas such as the environment or consumer rights, for instance. So I think it's important to make clear to our citizens (namely the public debate) that we need European regulation, because very often this regulation for the internal market is the only way to have the necessary harmonisation so the companies of Europe, namely SMEs, have access to other countries so that the European internal market is able to deliver. And very often, one regulation at European level is able to replace 28 other regulations at national level. But it is true, and the Commission has acknowledged it, that sometimes our legislation is not as simple as it should be and it creates unnecessary burdens. That is why we have with this programme REFIT made clear that we need to attain those objectives, make the single market work, in the most efficient way, avoiding unnecessary burdens for businesses, particularly the smallest. That is why several years ago I created this Stoiber group, a high-level group presided over by Dr Stoiber, with stakeholders from many sectors in Europe, precisely to reduce administrative burdens in our legislation. And I'm happy to say that basically the European Commission is delivering and in fact sometimes has been over-performing in its goals of reducing Red Tape and administrative burdens.

Nevertheless we believe more has to be done. As I said, quoting Montesquieu, 'Les lois utiles affaiblissent les lois nécessaires', it means 'useless laws weaken the necessary ones'. We need to have less regulation in some areas, where we think that the value added by legislation at European level does not compensate for the bureaucratic procedures and administrative charges or burdens that it originates. And I'm happy to say that today this is a culture that is permeating the Commission, and I'm sure it's important to recognise that the other institutions should also cooperate with this, from the Council to the European Parliament, and of course at national level. Because let's be honest, and that was a matter that we also discussed in the European Council last week: Heads of State and Government recognise that sometimes the problem is also the so-called 'gold-plating', when legislation comes from Brussels, but afterwards in the transposition more and more layers of administrative procedures are added. So it's a collective effort, and this is an important point, if you want Europe to be competitive, if you want Europe, as my friend Antonio Tajani is doing his best, to have a modern industrial policy for competitiveness, we need at all levels, from the European Union side to the government side, a commitment to reduce unnecessary administrative burdens. This is critically important for the competitiveness of our economy.

At Member States' level, public sector innovation is also key to reduce the administrative burden for our businesses and create more favourable conditions for them to develop and expand. We already have a number of success stories that show what can be done. In fact from that point of view, the sharing of best practices is extremely interesting. In the last meeting we shared the experience from Estonia, in terms of what they have done in their e-government, to other examples in Finland, to other examples in Portugal, where we have seen some initiatives taken by the government that have simplified in a very considerable way the life of business.

However – and let's be honest about the results – however, a 2012 Eurobarometer survey on public sector and company innovation revealed that four out of five companies think public services need to work harder at becoming more innovative. Besides learning from good practices, public administrations need to foster innovation and encourage their workforces to contribute to this process.

Ladies and gentlemen, the crisis we have endured has taught us a lesson: structural reforms are not an option, they are indeed indispensable.

We need to have balanced public accounts and to consolidate structural reforms in order to ensure Europe's competitiveness. This is why we have targeted our efforts towards a financial sector at the service of the real economy; towards policies promoting competitiveness and sound public finances; and towards a genuine Economic and Monetary Union that includes a banking union with a strengthened social dimension.

Member States work, and rightly so, on more efficient administration or services delivery, to help them address today's growing budgetary pressures and to better define policy responses to tomorrow's challenges. New technologies are there to do better with less.

We have everything to gain from making these reforms and investing in innovation in order to keep our competitive edge in the traditional sectors but also in the reform of our industrial policy.

Public finances also have everything to gain from innovation. Let me just take two examples:

  • The adoption of e-invoicing in public procurement across the European Union could lead to substantial savings. Indeed, the Commission estimates that it could save up to €2.3 bn across the European Union.

  • Moving to e-procurement can save substantial public money too. Contracting authorities and entities that have already made the transition to e-procurement commonly report savings between 5 and 20%.

Given the size of the total procurement market I mentioned earlier, each 5% saved could return around €100 billion to the public purse which is really impressive. Once again, in our meeting at the Heads of State and Government level last week we discussed some cases of success in some of our Member States which have made these reforms of public procurement with very encouraging results.

Indeed, public sector innovation can save a lot of money. Public money. Taxpayer's money. Saved for other projects. Hence, public sector innovation becomes a driver for competitiveness. This works for all levels of government. From local to regional to national and to the European level.

A lot is already being done. However, I think that public sector innovation still tends to happen randomly, rather than as a result of deliberate strategic efforts. This is a pattern that we have observed in different Member States. We see that in some cases there is a Minister or a State Secretary or some promoter who has done something, sometimes with what I call 'administrative charisma', who was able to convince their stakeholders and there are results. But not necessarily in a sustained manner across all our Member States. And this shows precisely that one of the difficulties that we have in dealing with public administration, as you know, is the very uneven character of those administrations. Some sectors are quite open to innovation, they are ready to support it; some sectors to be honest resist it, they don't want this innovation to happen. This is why we need the political ownership of the governments of Europe, of course here in the European institutions as well, but we need an ownership of these reforms and those reforms not to be just a kind of one-off or a demonstration, or a pilot project, but to be a real effort across the board and sustain over time. Determination, sustainability, this is critical if we really want to succeed.

This is in fact one of the key findings of the European Public Sector Innovation Scoreboard, a pilot instrument to measure how much the public sector is responsive to business and citizens' needs.

Ladies and gentleman,

Last but not least, public sector innovation serves citizens and social cohesion, creating a more growth-friendly environment and this matters to business too.

Europeans citizens expect, and rightly so, public services that they can trust and rely on. They range from modern education systems and efficient employment services to well-organised health services. A number of key Commission recommendations in this direction have also been endorsed by the European Council last June.

The Commission, as I've said before, has identified once again this year the public administration reform as one of the priorities. Indeed, we need to better connect public sector innovation to the implementation of relevant policy objectives notably in the employment and social field.

As a recent example, the Social Investment package for growth and social cohesion that we have adopted last March, offers guidance to Member States on how to put a greater focus on policies that strengthen people's capacities and skills and remove barriers to finding work.

Public sector innovation also helps empowering citizens, leading to greater social cohesion. We have an excellent example of this right here in Brussels, with the initiative called "Fix my Street". Citizens have the possibility to report directly to the local services when they see a problem in the street, from a damaged road sign to a pothole. They can download an app and play their part as they go. It's easy, it's quick, and it's user-friendly. And they see that their comments matter. So this idea, I believe, is also very important. The public administration reform and the public innovation in general not only has to be owned by the leaders, by the heads of governments, by the governments, but also to have a bigger participation of citizens, so that citizens can see a real difference. If not, there can be also some societal resistance. That's why mobilising the digital tools, that's why using the possibilities offered by the digital communication to communicate and to express the preferences of people is so important.

Last June, the European Commission awarded the European Prize for Innovation in Public Administration to celebrate innovative, forward-looking public initiatives which benefit citizens, firms, or the research sector.

These initiatives show that, by harnessing new ideas and technology, public sector innovation matters both for citizens and for our economies.

At the same time we are trying also at the European Commission level to innovate in the reform of our administration, a very complex and interesting administration. And indeed we are making these reforms and also trying to connect better with people through our Citizens' Dialogues. I believe this is very important, also having in mind the need to have across all Europe, from European institutions to governments, that effort of linking better with the concerns of our people.

Ladies and gentlemen,

To conclude, let me say that serving our strategy for growth and jobs, serving reforms for sound public finance, serving our citizens, these are major objectives that public sector innovation can help us to achieve. The Commission is fully committed to creating the right environment for businesses and it welcomes the commitment of Member States to work towards this direction too.

But more still needs to be done to deliver on our objectives. This is why your work today is so important.

I wish you a very fruitful conference and am looking forward to the outcomes.

I thank you for your attention.

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