Regulation Minister and Act leader David Seymour has defended his Regulatory Standards Bill after officials ascribed it no monetary value. Photo / Mark Mitchell
Implementing the Regulatory Standards Bill will cost a minimum of $20 million per annum across an estimated 20 years, government officials estimate.
However, the Ministry for Regulation, the agency responsible for the bill, has been unable to estimate a monetary value for benefits the red-tape busting law might bring.
The absence of any cost-benefit analysis is paradoxical for legislation that is aimed at, among other things, illuminating as poor laws those which fail to provide benefits that outweigh drawbacks.
The bill was introduced to Parliament on Monday.
It sets principles for regulatory quality and good law-making by requiring that both proposed and existing laws be measured against its standard.
The provisions would not be binding, but rather aim at greater transparency; oversight would fall to the Ministry for Regulation and a new statutory board.
The estimates are contained in a Regulatory Impact Statement (RIS) prepared by the ministry.
The analysis noted that the focus of the bill is to influence the decision-making of agencies and ministers rather than to directly change a piece of legislation or the regulatory system.
For this reason, officials said, “it is not possible to identify policy outcomes amounting to specific benefits at this stage”.
Both the bill and the Ministry for Regulation are Act Party initiatives, agreed to in the terms of the coalition Government.
The bill’s critics are unhappy with the principles of good law-making that the bill prioritises – particularly private property rights, without reference to some more broadly collective goods, such as the principles and values of the Treaty of Waitangi, those contained in international obligations, and provisions like a presumption against retrospectivity.
Eighty-eight percent of public submissions on the outlined proposal for the bill opposed it.
Officials’ analysis echoed some critics’ analysis, and emphasised that the principles of the bill are “selective” and don’t cover many of the aspects of regulatory quality already covered in the Government’s Legislation Guidelines.
These guidelines are produced by the Legislation Design and Advisory Committee appointed by the Attorney-General.
Act leader and Minister for Regulation David Seymour told the Herald that the bill does not throw up easy-to-value monetary benefits, and that “the intention is to change the behaviour of Government over time”.
“It is possible to do cost-benefit analysis on independent rules – earthquake regulations, for example – and this legislation will ensure that that kind of cost-benefit analysis is taken much more seriously, but to produce an aggregate of what the benefits might be is very challenging because, what’s the counterfactual? It very much depends on the cost of rules that might otherwise be proposed,” he said.
Seymour said the bill is analogous to the Public Finance Act (1989), which set out principles for good fiscal management, asking “ ... what has been the savings to New Zealanders for having a better, more transparent set of fiscal accounts over the last 35 years? I suspect it’s enormous, certainly so large that we’d be very unwilling to remove them. Nonetheless, nobody could have forecast that in 1989, just as we can’t forecast the benefit of having more transparent regulation-making today”.
Officials estimate the costs of the bill will include $8.6 million per annum for the ongoing assessment of new legislation against the bill’s principles.
The estimate was based on an annual volume of 100 government bills and amendments, and 1350 pieces of new secondary legislation – rules made by bodies or agencies other than Parliament, under delegation.
The review of existing legislation for consistency with the principles of the bill will cost an estimated $9.375m per annum. Officials expect that it would take at least 20 years to assess all of the roughly 1000 current pieces of primary legislation.
The bill also allows for the review of some existing secondary legislation, however, the cost of this is not included in the estimate.
The ministry would incur a further $1.1m to $1.4m cost per annum, for staff to prepare guidance for ministers, related to the standards bill.
And finally, a Regulatory Standards Board, to which those affected by objectionable existing laws could appeal, would cost $1.04m to $1.17m per annum, officials estimated.
Officials also noted a range of caveats to the cost estimates, including the possibility for the greater use of technology to reduce the cost of staff time.
In addition, Seymour said the costs of the bill would also be mitigated through the redirection of current spending on policy-making.
Officials did not identify a current cost for reviewing existing legislation, but they expected this would partially offset estimated costs.
Seymour said he was “not particularly happy” with his officials’ regulatory impact work in this instance, and that generally government departments need to become much more adept at measuring the effects of legislation on New Zealanders, who he emphasised bear the cost of inefficient and expensive rules.
In 2021, Act introduced an antecedent regulatory standards bill to Parliament (the history of the idea goes back decades) and Labour, then with a commanding majority, voted it down.
The party’s views haven’t changed much in the interceding years.
Duncan Webb, Labour’s spokesman for regulation, said that his party is not against spending money for “genuine good regulatory stewardship”, but that he was “deeply sceptical” the Regulatory Standards Bill is the right way to go about it.
He said that Regulatory Impact Statements already require an articulation of the problem or problems that new legislation aims to tackle, and they set out the costs and the benefits, in so far as that’s possible.
He also criticised the Government, and the Act Party in particular, for recently dispensing with the requirement to produce an RIS for its urgent passage of changes to pay equity provisions in its amendments to the Equal Pay Act.
Both the current Government and the previous Labour Government have dispensed with regulatory impact work on new legislation when it’s suited them, especially in favour of taking speedy action.
“We all want good rules, the concept of good stewardship is bipartisan, but this bill will not result in a good weighing of private rights against the broader public interest because of its selection of principles ... prioritising something like property rights is very simplistic, property rights are important, markets are important, but how they stack up against other values and principles is complicated,” Webb said.
He also objected to provisions for the Minister for Regulation to choose the members of the planned Regulatory Standards Board; he said it posed a “clear risk” that the bill would give rise to a politicised process.
Webb said Labour couldn’t commit to repealing the bill, should it form a Government after the next election. He had not read the bill, as the draft had not yet been released when the Herald spoke to Webb on Monday.
While New Zealand First has committed to supporting the bill through the coalition Government’s agreements, leader Winston Peters has also suggested that he is not happy with some of its provisions.
His spokesman did not respond to the Herald‘s related questions.
The Ministry for Regulation’s preferred course for achieving better regulation, articulated in the RIS but untaken, broadly favoured reliance on Part 4 of the Legislation Act (2019), which never came into force but is aimed at improving public disclosure for Government-initiated legislation.
Wai Mānuka launched in Citarella Gourmet Market's seven New York locations.