Submission on Regulatory Standards Bill

18 Jun

WEAll Aotearoa, once again, strongly opposes this bill and recommends the Select Committee report back to Parliament that this Bill should not proceed.

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Wellbeing Economy Alliance Aotearoa

WEAll Aotearoa is a registered charity that benefits New Zealand society by promoting a Wellbeing Economy in New Zealand, prioritising shared wellbeing for people and the planet and delivering on five core needs: dignity, purpose, nature, fairness and participation.

WEAll Aotearoa recognises the unique and irreplaceable role of good government in protecting individual liberties, supporting institutions of civil society, and promoting the common good. We honour the mana of politicians and all our fellow citizens who work in the public sector. We thank them for their contributions to our nation’s wellbeing.

An essential element of good government is the passing of legislation in a manner that is transparent and allows citizens who will be impacted by a proposed law to have input into its content. The Select Committee processes of Parliament are an important mechanism for this purpose, and we welcome the opportunity to make a submission on the Regulatory Standards Bill.

In theory, we support the overall aim of the Regulatory Standards Bill “to reduce the amount of unnecessary and poor-quality regulation by increasing transparency and making it clearer where legislation does not meet standards”. We note this aim is consistent with other mechanisms already created by Parliament, including the Government Expectations for Good Regulatory Practice published in 2017 and the Legislation Guidelines updated by the Legislation Design and Advisory Committee in 2021.

However, we submit the Regulatory Standards Bill will increase the costs of good government that will exceed any benefits the Bill might achieve. It therefore fails to meet its own principle in section 8(k) that “legislation should be expected to produce benefits that exceed the costs of the legislation to the public or persons”.

WEAll therefore recommends that the Bill should not proceed. The remainder of this submission expands on the reasons behind our recommendation.

Standards and Principles

This Bill is about regulatory standards. It creates a Regulatory Standards Board that reports to a regulatory standards Ministry. It creates a regulatory standards Minister. We note that whenever the Bill uses the word ‘standards’ it is always a reference to the names of the Bill, the subsequent Act, the Board, the Ministry, or the Minister.

The Regulatory Standards Bill provides no definition of what is meant by regulatory standards in general and contains no statement identifying specific standards.

Instead, the Bill provides “a benchmark for good legislation through a set of principles of responsible regulation”, which are listed in section 8. These principles generally take the form of normative statements such as “the law should be clear and accessible”.

Principles written as normative statements are not standards. Indeed, the professional process to develop standards is well known. This can be illustrated with a figure from Standards New Zealand, a unit within the Ministry of Business, Innovation and Employment. As stated on its website, the process “relies on expert involvement, consensus, and public consultations”.

The principles in this Bill are not founded on consensus, which means they cannot serve as standards across different governments.

The explanatory note further states that the Bill “intends to bring the same discipline to regulatory management that New Zealand has for fiscal management”. Section 26G of the Public Finance Act 1989, for example, sets out principles of fiscal management that might be considered an inspiration for section 8 of the current Bill.

Section 26G of the Public Finance Act 1989 does not use the word ‘should’ in any of its clauses. This is in contrast to the twelve times ‘should’ appears in section 8 of the Regulatory Standards Bill. The principles listed in the Public Finance Act are genuine standards; the normative statements listed in the Regulatory Standards Bill are not.

This distinction is important because the explanatory note states that a purpose of the Bill is to make it clearer “where legislation does not meet standards”. Because the Bill contains normative statements of certain principles and does not provide a list of standards, the Bill is not fit for this purpose.

Further evidence that the Bill is not fit for purpose is that the Regulatory Impact Statement for the proposed Regulatory Standards Bill prepared by the Department of Regulation is unable to identify any monetarised benefits for the Bill. We will return to this point in our section on Benefits and Costs below.

Future Generations

Section 26G of the Public Finance Act 1989 includes the following standard: The Government must pursue its policy objectives, when formulating fiscal strategy, by “having regard to its likely impact on present and future generations”. In contrast, there is no reference at all to future generations in the Regulatory Standards Bill. We submit that this is a major omission, reinforcing our view that the Bill is not fit for purpose.

By focusing narrowly on present-day regulatory impacts and neglecting principles like sustainability and long-term wellbeing, the Bill would entrench short-termism in law-making.

This contradicts the global shift to include future generations thinking in public policy. This year marks ten years of the Well-being of Future Generations Act 2015 in Wales, for example, and a similar Bill has been introduced in the Australian Parliament. A responsible regulatory framework must account for the needs of those yet to be born, ensuring today's decisions do not limit the capabilities of future generations to thrive.

The Principles

Section 8 sets out principles of responsible regulation under six headings: rule of law; liberties; taking of property; taxes, fees, and levies; role of courts; and good law-making. Following on our point about the omission of any reference to future generations, we agree with paragraph 113 of the Regulatory Impact Statement, which makes the following observations about the Bill’s list of principles (p. 31):

“The principles are selective rather than broad-based – they focus particularly on the effect of legislation on existing rights and liberties and on the processes that should be followed in making that legislation. They do not reflect the wide scope of expectations or principles set out in the Government Expectations for Good Regulatory Practice or the Legislation Guidelines, including in relation to showing appropriate respect for the spirit and principles of the Treaty/te Tiriti. In addition, the wording of some of the principles depart significantly from established expressions of those principles in the Legislation Guidelines or elsewhere (e.g., the Bill of Rights Act 1990).”

The selective nature of the principles in section 8 might not be a concern if the principles were genuine standards, defining minimum requirements for laws and regulations. Because the principles are written as normative statements, however, a comprehensive list is required to ensure that trade-offs between different norms are properly addressed in Parliament’s decision-making.

This can be further illustrated with reference to the principle of liberties: “legislation should not unduly diminish a person’s liberty, personal security, freedom of choice or action, or rights to own, use, and dispose of property, except as is necessary to provide for, or protect, any such liberty, freedom, or right of another person.”

As noted in our introduction, good government has a unique and irreplaceable role in protecting individual liberties, supporting institutions of civil society, and promoting the common good. Consequently, WEAll Aotearoa agrees the protection of liberty is an important consideration when developing legislation but it is not an absolute standard. There are times when individual liberties must be balanced with the responsibility to support institutions of civil society and to promote the common good.

A simple example is air quality in Christchurch. During winter, cold air over the city can be trapped beneath a layer of warmer air, resulting in smog that exposes citizens to health-harming particulate matter. Policy has responded by making home heating systems subject to regulations. These regulations are a proportionate diminishment of personal liberties to promote the common good by protecting the health of young children, the elderly and people suffering from respiratory and cardiovascular disease.

Many other examples could be given. Our point is that section 8 prioritises the principle of liberties in a way that does not reflect the traditions of our country, which respect liberties but allow for proportionate constraints on liberties when needed to promote vital elements of the common good, evaluated by Parliament on a case-by-case basis.

Taking of Property and Tino Rangatiratanga

Section 8(c) of the Bill states that “legislation should not take or impair, or authorise the taking or impairment of property, without the consent of the owner”, unless there is good justification, fair compensation and payment to the extent practicable by the beneficiaries. This clause is a reminder that a large number of statutes passed during this country’s colonisation took or impaired property without consent of Māori owners.

Those historical statutes of dispossession were possible because Parliament ignored the promise made in the name of Queen Victoria in 1840 “to protect the chiefs, the subtribes and all the people of New Zealand in the unqualified exercise of their chieftainship over their lands, villages and all their treasures”. We note the Bill excludes Treaty settlement Acts; nevertheless, we submit that legislation on Regulatory Standards should explicitly state that the Crown accepts its responsibility for honouring Queen Victoria’s guarantee.

WEAll Aotearoa therefore recommends that the principle of taking of property should be extended by adding a new subclause: legislation should protect Māori in the unqualified exercise of tino rangatiratanga over their lands, villages and all their treasures.

Benefits and Costs

The principle of good law-making in section 8 of the Bill includes a normative statement that “legislation should be expected to produce benefits that exceed the costs of the legislation to the public or persons”. WEAll Aotearoa supports this principle, which in economics is called the principle of Pareto efficiency.

We note the Regulatory Impact Statement makes an estimate of the annual costs that will result from the Bill’s passage into law. Based on the Minister’s preferred option in the Cabinet paper, the administration costs might be around $18 million per year across the Public Service, the costs of developing guidance material and supporting agencies might cost between $1.1 million and $1.4 million per annum, and the Regulatory Standards Board might cost between $1.04 million and $1.17 million per annum.

Thus, the Bill might add $20 million to the Crown’s operating expenses every year. Treasury estimates the deadweight loss associated with taxation to finance operating expenses to be 20 per cent. This adds a further $4 million in costs per annum, or $24 million per annum in total. This is a significant cost to taxpayers.

We have already observed in paragraph 9 above that the Regulatory Impact Statement is unable to measure any monetarised benefits for the Bill.

This Bill does not meet its own principles of responsible regulation, being unable to provide evidence that it will produce benefits that exceed the costs of the legislation.

The National & ACT Coalition Agreement

WEAll Aotearoa acknowledges that the New Zealand National Party and ACT New Zealand have entered into a Coalition Agreement in which the parties agreed they will pass the Regulatory Standards Act as soon as practicable. We accept that agreement was made in good faith.

We submit that this Bill is not fit for this purpose because it does not provide a definition or list of standards (paragraph 8 above).

Further the agreement between the two parties states that the Coalition Government will make decisions that are principled, meaning decisions will be “based on sound public policy principles, including problem definition, rigorous cost benefit analysis and economic efficiency”.

We submit that this Bill does not produce benefits that exceed its costs (paragraph 27 above). Hence, the principled decision as defined in the Coalition Agreement is to reject this Bill.