Alastair Hercus and Eddie Clark: Regulation high on Govt hit list

Rodney Hide says excessive charges and restrictions are hindering New Zealand's productivity. Photo / Richard Robinson

After seven months in office it is clear that one of the key differences between the current Government and its predecessor is its stance on regulation.

The most visible symbol of this is Rodney Hide's elevation to Minister for Regulatory Reform, a position that did not exist under Labour.

In his first speech in this capacity, he called for urgent reform, saying "a whole raft of excessive charges and unnecessary restrictions is having the combined effect of killing businesses ... [which] has the effect of lowering the productivity on which our standard of living relies. It's death by a thousand cuts."

It's a sentiment others share. Bill English, Minister of Finance, put a paper to Cabinet stressing the negative effects that regulatory compliance costs have on the economy and advising several areas be reviewed.

This paper has provided the framework and direction for all the major regulatory reviews the Government is undertaking.

Other government ministers have invoked the need to increase productivity and reduce compliance costs. A twofold solution is offered: remove unnecessary regulation and, where possible, streamline the regulation that is necessary.

This process has already begun. In part, it has simply involved cancelling regulatory reviews started by the previous Government, such as a competition review of the broadcasting sector and a review of franchising laws.

The Government has also begun to roll back a number of regulatory measures; for example, what was effectively a ban on incandescent light bulbs has been revoked, as has the obligation to include 3 per cent ethanol in petrol, and the ban on building any new thermal power stations.

In addition, the Emissions Trading Scheme is being reviewed by a parliamentary select committee. The entry of various sectors into the scheme will be delayed, and serious consideration is being given to aligning it to Australia's proposed Carbon Pollutions Reduction Scheme, in order to reduce the economic impact of the ETS on New Zealand.

The Regulatory Improvement Bill, developed by the previous Government, has also been progressed and is currently before Parliament. This is an omnibus bill that makes amendments to various pieces of legislation to reduce the compliance burden on business.

Possibly the most significant initiative has been the first stage of a review of the Resource Management Act, which has resulted in a bill before Parliament that will substantially change the way resource consents are dealt with.

The second stage of the RMA review is under way. This will consider a number of other work streams including infrastructure, fresh water, and the structure and functions of a new Environmental Protection Agency.

Other important regulatory regimes being reviewed this year include the electricity industry's governance regime, which is looking at both the roles of the different regulators (Electricity Commission and Commerce Commission) and general issues of market design.

Moves are also underway to simplify the Overseas Investment Act, to reduce unnecessary deterrents to foreign investment and lower compliance costs, and to consider various aspects of the Holidays Act, including calculation of holiday pay and whether employees should be allowed to take cash for some of their annual leave.

So far, all the reviews that have had their terms of reference released show a commitment to the Government's general principles of reducing and streamlining regulation.

Finally, the Regulatory Responsibility Bill, which started as a member's bill put forward by Hide, has reached the stage of being considered by the commerce select committee.

The bill's aim, according to Hide, is to "provide a proper framework to law-making that will ensure transparency and accountability, so that citizens will know how a proposed law will affect them".

This bill has now been referred to a Regulatory Taskforce chaired by former Treasury Secretary Graham Scott for consideration. The Taskforce will report back by September with its recommendations.

The present Government has expressed a clear and consistent intention to reduce the amount of regulation in New Zealand and, as far as possible, simplify that which remains. It has begun down that path and businesses and investors are keenly awaiting the promised outcomes.

* Alastair Hercus is a senior partner in Buddle Findlay's public law team and Eddie Clark is a senior solicitor in the team.