House Oversight Subcommittees held a hearing on international regulatory reform best practices to cut private sector costs
Governments around the world are implementing Standard Business Reporting (SBR) to modernize how they interact with the private sector and collect regulatory reporting. The Data Coalition is making the case for SBR in the U.S. federal government.
Currently, the U.S. regulatory compliance regime is fragmented by industry and by purpose. Government agencies collect regulatory information in silos. For instance, the Internal Revenue Services collects individual and corporate tax filing, the Securities and Exchange Commission collects filings on securities, the Federal Deposit Insurance Corporation has oversight over the banking sector, the Department of Labor gathers workforce data, and the list could go on. Each agency, separately, has the legal authority to impose restrictions on and collect information from regulated companies and other entities. The separate, incompatible reporting regimes are burdensome, but also most of all, time-consuming.
Reforms now appear to be both possible and achievable. Congress signaled last week that they are in the early stage of exploring a way to simplify existing fragmented compliance regimes. Our board member, Matt Vickers of Xero was invited to testify before the House Intergovernmental Affairs and Healthcare, Benefits, and Administrative Rules Subcommittees last Thursday, September 28. Matt spoke to the impact of SBR implementation in Australia and suggested that similar reforms could be introduced in the United States to ease compliance and business reporting.
Xero, a New Zealand based software company, has been a member of the Data Coalition since July 2017. The company got its first big break in Australia when the federal government implemented SBR for regulatory reporting. When looking to streamline reporting regimes and requirements, the Australian government set up a working group to implement changes to “existing processes to reduce the cost to business compliance by $800 million Australian dollars over six years at a cost of $320 million AUD over the same period.” In his testimony, Vickers stated that the SBR saved “the government and private sector over $1 billion AUD in 2015-2016.”
Committee members also heard from other international, state, and non-profit representatives. The hearing provided committee members with an opportunity to hear how Australia successfully implemented SBR, and how Canada and the Commonwealth of Kentucky had reduced regulatory burden for business.
In his opening statement, Vickers laid out the underlying premise of SBR as “the idea that multiple regulatory agencies should all agree on a common, standardized data structure for the information they collect from private sector companies through their reporting requirements.” Vickers emphasized that “SBR does not change the intent, or the content, of the regulatory reports,” and highlighted how it “improves the efficiency of the government’s information collection mechanisms by reconciling and structuring the information the private sector is required to report to the public sector.” The real value proposition, Vickers declared, is “like a tax cut, this puts money back in the hands of small businesses, but unlike a tax cut, this also gifts them with a possibly more precious resource: time.” Read his full written testimony here.
Chairman Gary Palmer (AL-6-R) questioned the witnesses about overly burdensome regulations that affect small businesses. Voicing his interest in the topic, the Chairman described how the Governor’s office in his home state of Alabama is looking at a “one-stop-shop” for regulation that would “reduce obsolete and duplicative” regulations, and create a hub for business owners to get quick and straightforward information on how to be compliant with all state and federal regulations.
Vickers responded to the Chairman stating that SBR “is in effect a one-stop shop” in Australia for all businesses to interact with government agencies. In essence, SBR is “a single reporting framework” where all agencies use the same consistent data formats. The benefits to Australian small business are noteworthy. As Vickers stated, “of the $1.4 billion AUD savings following SBR implementation, 97% of that is savings to small businesses.”
As Vicker’s testimony noted, the House has recently passed the Grant Reporting Efficiency and Agreements Transparency (GREAT) Act (H.R. 4887, S. 3484), which would legally mandate similar reforms for the universe of federal grant reporting. This demonstrates that Congress is serious about pushing government-wide data standardization to help make private sector compliance more efficient.
For the financial regulatory agencies and information collected from regulated public companies, banks, and financial firms, the Financial Transparency Act (FTA) (H.R. 1530) would require the U.S. government to adopt a standardized and common data structure. Such a legislative reform would put the U.S. on the path to implementing an SBR program.
Vickers explained that the technologies and governance structures have been tested and refined by the Australian SBR programs. All that is needed in the U.S. is congressional action and agency’s determination to seize this opportunity.
To realize savings for regulated companies and the regulators themselves, and to enable new growth in financial technology and market data, Congress and the executive branch must act.