KEY POINTS:
More than a decade ago, a Wellington hairdresser was taken to task by the Human Rights Commission for offering haircuts to male pensioners at a cheaper rate than younger, more hirsute customers.
It's easy to find examples of the battles of individuals against the lunacy that regulations inspire
in bureaucracies. Like the Aucklander attempting to create a duck pond in a soggy section of his five-acre (2ha) block who was fined $10,000 for an alleged breach of the Resource Management Act.
Or the Taumarunui farmer who faced a fine of $250,000 if he milled a dead totara tree that had been lying in one of his paddocks for 30 years. Or the firm denied the right to advertise for a junior or a senior analyst, but advised that advertising for an intermediate would be acceptable.
While some of these incidents are simply absurd, many have been hugely costly and destroyed people's lives, their businesses and dreams.
Our statute books are loaded with dubious laws and regulations, which have mushroomed in recent years. Many enable the blatant taking of private property rights without compensation, such as last year's forced "unbundling" of Telecom's network.
Others are ill-conceived and the result of knee-jerk reactions to problems, like the requirement to micro-chip all dogs as a way of stopping vicious dog attacks. Some intended to protect people, for example groups of workers, achieve the reverse effect.
To its credit, the Government has acknowledged the need to improve the quality of regulation. The strengthened regime for regulatory impact analysis of all policy proposals has been widely welcomed.
Commerce Minister Lianne Dalziel has promised more "teeth" for the agency scrutinising proposals. And a more rigorous approach that involves "clearly identifying the problem and objective, considering any existing regulatory frameworks, setting out options, identifying risks and opportunities". Plus "always asking whether the response is proportionate, conducting the all-important cost-benefit analysis, and consulting on all of these with key stakeholders."
Bold promises indeed, but business groups can be forgiven for feeling a little cynical about the effectiveness of these sharpened "teeth", given that this requirement was apparently waived entirely for the KiwiSaver provisions of the taxation bill before the House.
Past and present experience shows it is all too easy to bypass or fudge these requirements in the case of politically desired policies. Departments may be unwilling to come up with unwanted findings.
Faced with assessing intangible benefits such as "intrinsic value", disagreements about costs, special-interest pressures and a lack of clarity about the policy objective, they can readily arrive at a pre-ordained conclusion.
And while cost-benefit assessments of regulations are useful, they raise many thorny issues, such as how much is too much to spend on saving lives?
In a 2005 study of the economic analysis of regulation, American Enterprise Institute scholar Robert Hahn found that the cost effectiveness of a range of US health and environment regulations aimed primarily at saving lives varied from less than zero to almost US$36 billion per life saved.
Small wonder then that an alternative and complementary approach to analysing and screening regulations has been steadily gaining favour among business and professional organisations. The proposal was set out in Constraining Government Regulation, a discussion paper published in 2001 by the New Zealand Business Roundtable, Federated Farmers and the Auckland and Wellington Regional Chambers of Commerce (available at www.nzbr.org.nz).
It proposes a well-constructed regulatory statute, similar in some ways to the Fiscal Responsibility Act 1994, that would not force governments to do specific things but rather would set up principles for them to follow and processes to make them accountable for their decisions.
Last month a version of the idea was embodied in a member's Regulatory Responsibility Bill promoted by Rodney Hide. It passed its first reading by 114 votes to six and is now before the Commerce Committee for public submissions. The bill proposes a systematic "decision tree" process for every law and regulation, in which those promoting them will have to answer some basic questions publicly, such as:
* What is the rule for?
* Will it work?
* Is there a cost, and if so, are the benefits greater?
* Does it involve taking someone's private property?
* If so, will they be compensated?
The dog micro-chipping measure, for example, would not get past the first two hurdles.
The same process and principles would be used to assess all existing regulations and the bill would require those responsible for administering regulations to certify a Statement of Responsibility for each measure.
It is to our Parliament's credit that this bill has been voted through to select committee stage with an overwhelming majority. It's a golden opportunity to improve the effectiveness and efficiency of government, and in so doing promote a society that respects the rights of others and improves incentives to create wealth.
* Roger Kerr is the executive director of the New Zealand Business Roundtable.
