Officials have warned David Seymour's Regulatory Standards Bill could be much more expensive than previous estimates suggested. Photo / RNZ
By Russell Palmer of RNZ
Officials have warned David Seymour’s Regulatory Standards Bill could be much more expensive than previous estimates suggested, and could lead to business uncertainty, slowing economic growth.
Seymour is playing down the concerns, saying AI will solve some of those problems and the officials have not accounted for some aspects of the bill he expects will speed up government processes.
The documents released under the Official Information Act show Ministry of Business, Innovation and Employment (MBIE) officials feared $50 million to $60m a year in costs to government departments would be on the low end of estimates.
They also believed the bill would slow the passage of legislation by two to four weeks, and make the business environment more uncertain, slowing economic growth.
Like other departments and in line with the Regulatory Impact Statement prepared by the Ministry for Regulation, MBIE also expressed “concerns about the proposals outlined and their ability to support genuine improvement in regulatory quality”, and said there were other, better options for achieving the bill’s aims.
In feedback before last week’s select committee hearings, MBIE officials particularly expressed concern over the additional costs the bill would impose, saying up to three fulltime staff would be needed for each of the 95 laws the ministry is responsible for, costing the ministry up to $34.2m over multiple years.
“This translates to 95-285 FTE in total ($11.4m to $34.2m). The range in estimates reflects the differences in size and complexity between different pieces of legislation – larger acts such as the Building Act 2004 would take significantly more resources to review than smaller legislation.”
As an example, the Building Act includes 680 sections and has 34 pieces of secondary legislation.
“It is very roughly estimated that a dedicated team of 6-8 FTE (fulltime employees) with a manager may be required in order to undertake the consistency reviews and provide advice to the minister on whether departures are justified.”
This figure does not include new legislation and regulations, which are covered by the RSB. MBIE estimated an additional fulltime employee would be needed for each new bill the Government asks the ministry to write, with the requirements of the Regulatory Standards Bill adding “an additional 2-4 weeks into the legislative process”.
“As an indication, MBIE has supported the passage of 6 Acts so far in 2024/25,” the advice stated. “It is highly unlikely that we could meet these additional costs within baseline as suggested within the Cabinet paper without significant impacts on MBIE’s ability to deliver ministers’ policy priorities.”
The figures also do not include the estimated 450 to 550 pieces of existing secondary legislation (regulations) the ministry also oversees – which had originally been included in the RSB’s scope and could still be added at a later date.
Questioned about the figures, MBIE said they were high-level estimates and could yet change.
“The advice provided high-level estimates with a range of costs and timeframes based on the work that might be required as a result of the bill. We would need to revise and update these estimates when the bill is passed.”
MBIE’s advice also quoted from the Regulatory Impact Statement prepared by Seymour’s Regulations Ministry an estimated annual cost to departments of “$50m-$60m per year”, saying this was likely on the lower end.
“As per previous MBIE advice, MBIE considers that the assumptions made by the Ministry for Regulation in developing that estimate make it a lower bound. In regulatory-heavy portfolios, MBIE estimates that up to 15 percent of the policy resource will need to be engaged in this work.”
The documents show MBIE offered to help the Regulations Ministry come up with a more accurate accounting.
“We offered to work with the ministry to better cost the work that would be involved in undertaking consistency reviews. In the 48-hour timeframe for comment, it was not possible to complete robust analysis on agency impact but our assessment is this [is] substantial for agencies with a significant volume of regulatory stock such as MBIE”.
However, the publicly available Regulatory Impact Statement predicted the bill would cost $18m annually across the whole of government.
RNZ has sought clarification from MBIE about where the $50m to $60m figure came from, and whether it was still current.
Questioned about the costs, Seymour said the officials did not seem to be accounting for the fact the range of considerations in the RSB were narrower than already required under the Cabinet Manual, nor that it would replace most of the work done to produce Regulatory Impact Statements.
“It’s disappointing that MBIE officials think it’s too hard to consider the impacts of their regulations on Kiwis,” he said.
“It says more about their productivity and attitude towards Kiwis than the bill. Businesses who have to comply with their rules and regulations are constantly innovating and improving their processes, why can’t these officials?
“This isn’t a zero-sum game. Kiwis all over the country are faced with endless costs caused by overzealous bureaucrats who aren’t accountable. By preventing more bad regulations, and getting rid of pointless old ones, we’ll save the country far more money than these bureaucrats could ever spend.”
He suggested AI could also help.
“Look at the pace of development of AI, the cost estimates were based on a human reading through every piece of legislation, I suspect that actually we’ll be able to do it much faster than we expected because of AI,” he said.
“Could it change the way that a government department scans the legislation it’s responsible for to pick out things that might be consistent or inconsistent with a peer to principles? That’s already here.”
He pushed back when asked if AI could be trusted to do that work.
“I don’t think the issue is that you’re going to trust it. I think the issue is that you’re going to use it to speed up the work that humans are ultimately trusted for.”
The advice shows MBIE was also concerned about the effect of the RSB on business confidence, because the principles in it were likely to change under a future government.
“Because some of the principles in the bill are viewed as novel or contentious, as opposed to widely accepted, there is a risk to the durability of the principles, and potentially the bill as a whole.
“Future legislation, designed to be consistent with novel principles, may also take on characteristics that are seen as unorthodox, and eventually be subject to regulatory churn.”
Emails between officials show the ministry raised with Immigration Minister Erica Stanford that the bill would make the regulatory environment less predictable, “which can constrain business’ commitment to investment and growth”.
RNZ has sought comment from Seymour about the effect on business confidence.
The Green Party’s regulations spokesperson Francisco Hernandez said the ministry’s cost estimates were highly concerning, saying officials would be focused on “doing make-work jobs just to comply with the extremist provisions of the Regulatory Standards Bill”.
He was also concerned the bill would have a chilling effect on regulations “that protect people and planet”.
“Instead of the money going to frontline public services, it’s just going to be wasted on the cost of basically pursuing one person’s ideological vanity project.”
He said Seymour’s explanations sounded like “total BS”, saying it was “desperation”. He pointed to a study from the United Kingdom which suggested AI could save public servants two weeks in a 52-week year, less than 5%.
“AI is quite good for doing the sort of low-level administrative tasks and simplifying those things, but the level of nuanced work of interpreting secondary legislation and how it applies to a principles framework that, again, is like created by human beings – it’s not really the sort of thing that could easily be automated,” Hernandez said.
“Seymour is spinning.”
He said he agreed with the analysis on the bill impacting business confidence, and pushed back on suggestions the current opposition repealing the bill could be partly to blame for it – saying it was not just the opposition showing signs of not supporting it.
“The coalition itself is showing cracks around the seams around that, so if Seymour can’t even get the full unequivocal support of his colleagues in cabinet, then that goes to show how extreme this bill is.”
The documents also showed significant concern from MBIE about an earlier version of the RSB the ministries were asked to provide feedback on, which would have required all legislation and regulations to be reviewed at least once every decade.
This requirement was removed by Cabinet before the bill was introduced to Parliament.
An email in the documents showed concern about the 10-yearly reviews was widespread.
“David will address the resourcing issue in the meeting, as it has been raised by every agency and several ministers,” the email said.
Questioned about the prospect of changes to the bill following the select committee process, Seymour used the matter as an example of changes already made.
“People said ‘oh, that’ll be too much work for the department’, we said ‘well, if it’s too much work for the government to read all of its laws in 10 years, imagine the poor buggers who have to follow these laws out there anyway’. We said ‘okay, we’ll take the 10-year thing out, take pressure off that’. That’s the kind of change they’ve already made.”
– RNZ