Nix NAIT Says Nicolson

ACT New Zealand Agriculture Spokesman Don Nicolson is applauding today's decision by the ACT caucus to oppose the remaining stages (2nd and 3rd readings) of the National Animal Identification and Tracing (NAIT) Bill.

The Bill will require all dairy and deer farmers to tag their animals electronically and register them online as from July 1 next year.

"It's a lemon," says Mr Nicolson, former Federated Farmers president and ACT's #4 list candidate.

"NAIT supporters claim it is the ultimate biosecurity measure, the ultimate guarantee against an outbreak of something like foot-and-mouth here. But since tens of millions more ruminant livestock will be out of it than in, that's a joke. Ultimate bureaucrats' dream, more like it.

"This Bill won't improve on what the industry already has. The existing national animal-tracing system (paper- and tag-based) is sufficient. If there were a market advantage to an electronic system it could be made a condition of supply without any need for regulation.

"New Zealand dairy companies are already recognised for quality assurance programmes for livestock management.  Our trading partners have exhibited no particular concern about New Zealand’s existing traceability procedures. Yet National and Labour want to railroad farmers, stock agencies and truckers into wasting thousands of dollars in administration time on something they don't need, with threats of $10,000 fines for failure to comply.

"If this legislation is to be passed, there should be a farmers-only referendum attached to it so that those who would have to pay get to have their say. And its implementation should be delayed till 2017, to coincide with the rolling out of improved broadband. The ACT Party will push for these changes in Parliament after the election.

"NAIT is a further illustration of why farmers should party-vote ACT and ensure a strong voice in Parliament against such unnecessary, draconian and anti-farmer legislation," Mr Nicolson concludes.

Brash Goes In To Bat For Auckland Restauranteurs

ACT Party Leader Don Brash says local council officials in Auckland should embrace the World Cup spirit and show some Kiwi camaraderie by easing up on restrictive bylaws and giving restaurant owners not based in ‘Party Central’ a fair crack.

Dr Brash was responding to New Zealand Herald reports that bar and restaurant owners anxious to extend World Cup hospitality have been warned they could face prosecution.<?xml:namespace prefix = o />

“Local officials need to get into the spirit of things and start getting behind local businesses, not making life hard for them”, Dr Brash said.

“I’ve had first-hand reports from several of these small business owners, and all they really want is to make the most of a once-in-a-lifetime opportunity.

"Pubs and restaurants close to Eden Park have already had to pay thousands of dollars just for approval to operate on match nights, unlike their counterparts in 'Party Central' on Queen's Wharf.

"No one wants to see the law being broken," says Dr Brash, "but Council officials need to loosen up and show some flexibility.

“Not all Rugby fans and tourists want to be corralled into ‘Party Central’ – Auckland’s got a lot more to offer.

“Restauranteurs and publicans have a great, one-off opportunity to showcase the rich array of great Kiwi hospitality the city has to offer, both in the inner city and on the outskirts.

"A lot of enterprising people, just keen to provide a great kiwi experience, have had their ideas knocked back.

"I've been told of one restauranteur being refused permission to allow buskers outside his establishment. Resource consent has been refused for street stalls. A proposal to hold a street festival in Kingsland has been turned down, notwithstanding enthusiastic support from the locals.

"Kingsland is one area where there are likely to be thousands more seeking food, drink and entertainment than existing establishments are legally permitted to cater for. But requests for flexibility have fallen on deaf ears. Some silly bureaucrats are treating the World Cup more as a Civil Defence emergency than a celebration.

"To those officials I say, lighten up and help us get out the welcome mat. ACT will champion the cases of any business being stymied by bureaucrats from trying to make this the best Rugby World Cup ever," Dr Brash concluded.

RMA is biggest obstacle

Act views top-class infrastructure as being a cornerstone of future economic growth. If New Zealand is to prosper we need great transport and power networks and great allocation of our water resources.

Of particular importance is rebuilding Christchurch's infrastructure and relieving the transport bottlenecks in Auckland and Wellington. Act strongly supports investment in infrastructure whenever and wherever a comprehensive cost-benefit-analysis stacks up.

We realise that such developments will be expensive. Serious consideration must be given to economic pricing for road usage. Act supports phasing out petrol tax and road user charges, where possible, in favour of congestion charges and tolls. Such changes will not always be popular but when the alternative is decades of gridlock, politicians should have the courage to do what is right.

Act fully supports the National Infrastructure Three Year Action Plan goal to encourage demand management and pricing in infrastructure sectors.

Private sector investment in road construction, both through direct ownership and through public private partnerships with central and local government should be encouraged.

All new infrastructure projects should be subject to rigorous cost-benefit-analysis. The Labour Government's disastrous buy-back of KiwiRail is a prime example of what happens when such an analysis is not carried out. 

The Government has committed to partial sale of some state assets if given the mandate after the November election. Act welcomes this and believes the scope should be extended to Government-owned infrastructure projects such as KiwiRail.

We are also aware that there will be a need to further expand our electricity lines network over the coming years. We support such upgrades.

The biggest obstacle to infrastructure development is the Resource Management Act.

We support the provisions in the Resource Management Act that provide for expedited consent processes for projects of national significance. However, we are concerned that the amendments introduced by the Government in this regard do not go far enough insofar as they still allow objectors who are not directly and tangibly affected by projects to raise objections. The RMA should be reformed so that only those whose property rights are directly and tangibly affected by a project can raise an objection.

Act is concerned that New Zealand's water resources are not being used optimally and that our water infrastructure leaves much to be desired. Tradable water markets have created exceptional efficiency gains in Australia and should be given serious consideration in New Zealand.

This article was first published in the New Zealand Herald on 9 August 2011.

Toothpaste Controls Given A Root Canal

New medical regulations which will come into force on Monday 1 August 2011 will lead to greater choice of sanitary products for consumers, and cut unnecessary costs for businesses, says Regulatory Reform Minister Rodney Hide.

“Under the Medicines Regulations, everyday products like fluoride toothpastes, anti-dandruff shampoo, barrier creams for nappy rash and acne creams will no longer be subject to the same burdensome controls applied to prescription medicines.  Because of the costs and slowness of these controls, many sanitary products freely sold in other countries have not been available in New Zealand in the past. 

“Other regulatory changes will allow 'general sale' medicines like cough and cold remedies and travel sickness products to be sold through vending machines.
"This is a great example of what 'better regulation and less regulation' means. More options for New Zealanders, lower costs, and less unnecessary hassle for business.  Everyone wins.

"Health regulation obviously needs to control risky substances.  But the old controls were ridiculous.  New Zealand treated toothpaste like medicines’.  Clearly, this had to change," Mr Hide said.

Anti-Smoking Bill An Affront To Basic Rights

ACT MPs Hon Heather Roy, Sir Roger Douglas and Hilary Calvert are taking the rare step of issuing this joint press release explaining why they voted against the Smoke-free Environments (Controls and Enforcement) Amendment Bill on Thursday.  They do so because they believe the constitutional implications of the Bill are greater than its content would suggest.  They note that the Bill violates the basic right to freedom of expression.

“Section 14 of the New Zealand Bill of Rights Act protects the right to freedom of expression. This Bill violates that right.  The right to display legal products in a store is basic,” Hon Heather Roy said.

“The fact that the Bill of Rights has been ignored by Parliament is a disgrace.  That the transgression was ‘minor’ is irrelevant.  Either we uphold the basic rights of all New Zealanders or we descend toward a society where rights have little meaning.  It’s no surprise that among recent international attempts to ban or restrict smoking is that spearheaded by North Korea’s Kim Jong-Il.  We are hardly keeping good company,” Ms Calvert said.

“The law is yet another tedious example of nanny-statism and political correctness.  Parliament is interfering in the lawful activities of ordinary New Zealanders to advance the agenda of anti-smoking activists.  That is a travesty of what Parliament is supposed to be about. I fear the activists won’t stop till they’ve achieved complete prohibition,” Sir Roger added.

“Smokers have rights too.  We support their rights.  We don’t like smoking, but we don’t believe it is for us as MPs to say whether people should smoke or not, much less whether they may display a legal product or not.  That our Parliament deems it fit to interfere in people’s personal lives, as it did on Thursday, saddens us,” the MPs concluded.

Farming Leader Announced As ACT Candidate

ACT New Zealand leader Don Brash today said that he was delighted to announce former Federated Farmers President Don Nicolson would be standing as an ACT candidate in the 2011 general election.

“Don is highly respected, not just among farmers but throughout the business and political sectors. He’s been a strong and tireless advocate for property rights in particular and for much less government intervention in the lives and businesses of all hard-working New Zealanders, so I think he is an ideal candidate for ACT,” Dr Brash said.

Mr Nicolson said he identified strongly with ACT’s core principles of individual freedom, choice and personal responsibility, and that he was particularly concerned about spiralling government spending and the costs and constraints on economic growth imposed by the Resource Management Act.

“I’m very pleased to be standing for the party that will hold the government to account over its borrowing and spending. I look at it like this: I’ve spent my working life paying back my borrowings out of earnings, but now find the government is borrowing around $4,000 a year for every New Zealander.

“If bigger government is good – and the total crown cost has multiplied by a factor of 2.5 in 11 years to almost $100 billion – then why is it that health, policing and education never seem to have enough money?

“With the government having more than doubled its spending I ask: do we feel twice as well served by the state? The answer is an emphatic no. So we have to cut back state spending and meddling and allow free enterprise and innovation to flourish.

“As a farmer, probably the worst example of state interference we face is the Resource Management Act, so it’s fitting I’m standing for the ACT Party whose policy is wholesale reform of the dysfunctional RMA.

“I’ve worked hard over the years representing farmers and I’m very excited about what could be a fantastic opportunity to represent not just farmers’ interests, but the interests of all owner operators, and indeed all New Zealanders,” said Mr Nicolson.

Mr Nicolson farms sheep, cattle, bloodstock and forestry in Waimatua, 12km east of Invercargill.


Private initiatives are the way to go

A group of business leaders have teamed together to create and fund a new group called Pure Advantage. Pure Advantage is dedicated to helping New Zealand make the most out of green growth opportunities. I think this is a great example of how private initiatives respond to both opportunities and community needs.

The launch of this group is simply another reminder that the Government doesn’t have to do everything for New Zealand. We are a country populated by people both willing and able to think and act for themselves. We can cope just fine without an all-encompassing nanny state.

Pure Advantage is a group of leading New Zealanders who saw an opportunity to improve New Zealand’s environment, economic prospects, and living standards. They have seized this opportunity - I think that is commendable.

The advantage of private initiatives like Pure Advantage, vis-à-vis Government initiatives, is that participation is optional. Not all New Zealanders will agree with Pure Advantage’s aim and because it is private they can make this clear by not participating. They can vote with their feet. Compare that with Government initiatives such as the Emissions Trading Scheme (ETS) where participation is compulsory; the only way New Zealanders can vote with their feet on the ETS is by voting ACT this election.

A further advantage of private initiatives is that they only work if they have community buy-in. This encourages competition of ideas and competition between groups trying to meet society’s needs, making it more likely that an efficient solution will be found. Compare this with Government initiatives such as the ETS: a small group of people in Wellington get to force a futile scheme onto all New Zealanders regardless of whether it is efficient and regardless of whether those forced to participate want it.

I wish Pure Advantage all the best in their endeavours – I have just one request: please don’t be tempted to lobby the Government for more regulation.

To the Government, I say the vast majority of Kiwis are capable of looking after their own interests and organising themselves voluntarily to deal with the problems and opportunities that exist in the world. We don’t need you to do it for us.

You can find out more about Pure Advantage at

Regulatory Standards Bill - First Reading

I move, that the Regulatory Standards Bill be now read a first time.  At the appropriate time I intend to move that the Bill be referred to the Commerce Committee for their consideration.

The Regulatory Standards Bill aims to improve the quality of regulation in New Zealand. 

As a Government, we use our power to regulate to ensure that people live safe lives, get treated fairly, protect the environment, maintain a competitive and efficient economy, and much more. 

But regulation also imposes costs.

Excessive regulation can impose unnecessary compliance costs on businesses and individuals, deter investment, and limit innovation and competition.

Decade by decade, the quantity of regulation made in New Zealand has increased.  Between 2000 and 2009, over 68,000 pages of legislation were passed.  This equates to creating or amending around 105 Acts and 405 regulations, every year. 

Many of the countries we compete with have focused on improving the quality of their regulation, with more success than New Zealand. 

New Zealand’s ranking in the OECD Product Market Regulation Indicator has fallen from 4th in 1998 to 14th in 2008.

As a small, isolated country, we need to do better, if we want to be competitive in the global economy.

Regulatory quality has been a strong focus for this Government, as set out in its Statement on Regulation of August 2009. 

We have introduced a number of administrative measures designed to improve regulation as it is made, and the stock of existing regulation. 

These measures include strengthened regulatory impact analysis requirements, a programme of regulatory reviews, and a government-wide scan of the regulation on our books.

These measures have led to improvements in the quality of regulatory policy advice provided to Ministers. 

The fact is, however, that administrative measures alone will never be enough to deliver the level of improvement that New Zealand needs. 

Only the Regulatory Standards Bill’s more stringent requirements can bring about a change in the way governments think about regulation.

The Regulatory Standards Bill has its origins in the Regulatory Responsibility Bill, which I introduced as a Private Member’s Bill in 2006. 

The Regulatory Responsibility Bill was examined and substantially revised by an expert Regulatory Responsibility Taskforce established by the Government in 2009.

The Regulatory Standards Bill is the result of the work of that Taskforce.

I would like to thank Dr Bryce Wilkinson who first put forward the case for a Regulatory Responsibility Bill in his 2001 publication "Constraining Government Regulation".  I would also like to acknowledge Roger Kerr, Executive Director of the New Zealand Business Roundtable for his tireless work in gaining support for this Bill over the past 10 years.

The Regulatory Standards Bill aims to increase the transparency of lawmaking and the accountability of law-makers.  The Bill has three key components:

  • It provides a benchmark through a set of regulatory principles that all regulation should comply with. 
  • It provides transparency by requiring those proposing and creating regulation to certify whether the regulation is compatible with the principles. 
  • And it provides monitoring of the certification process through a new declaratory role for the courts.

The Bill identifies a set of principles of responsible regulation, which all regulation should be consistent with.

“Regulation” is defined to include Acts of Parliament, statutory regulations, and tertiary legislation, but excludes regulation made by local government.

The principles are distilled from sources such as the Legislative Advisory Committee Guidelines, the common law, and Parliament’s Regulations Review Committee.

The principles cover seven key areas including: the rule of law, protection of individual liberties, protection of property rights, taxes and charges, the role of the courts, review of administrative decisions, and good law making.

These principles are guides, not binding rules.  From time to time, breaches of the principles will be necessary. 

The Bill provides for this, allowing Parliament to pass any legislation regardless of whether it complies with the principles.  All that the Bill requires is that departures from the principles are “reasonable and demonstrably justified in a free and democratic society”.

In order to encourage transparency about whether regulatory practices are consistent with the principles of responsible regulation, the Bill imposes certification requirements on those who make regulation.

Under the Bill, Chief Executives and Ministers responsible for proposed regulation must certify whether that regulation is consistent with the principles. 

Where regulation does not comply with one or more principles, the Minister responsible must explain why that non-compliance is demonstrably justifiable in a free and democratic society.

If there is no Minister responsible, as is the case with some tertiary legislation, the responsibility falls to the Chief Executive.

Certification allows others to understand the impacts of proposed regulation and the trade-offs that we have had to make. 

We can, and do, have significant impacts on New Zealand businesses and individuals when we use our regulatory powers.  It is only right that we should be open about the impacts that our proposed regulation will have.

The Regulatory Standards Bill provides monitoring of the certification process by allowing the courts to provide declarations of incompatibility where they believe that the principles have been breached.  This power is declaratory only.  The courts will not have the power to strike down legislation, to issue injunctions against Parliament or the Crown, or to award damages to those adversely affected by regulation that is incompatible with the principles. 

The purpose of the declaratory function is to provide an independent, informed opinion on whether regulation complies with the principles.  This function encourages Ministers and Chief Executives to certify diligently and in good faith, as their certifications are liable to be tested in court.

Initially, the courts would only be able to make declarations in relation to regulation made after the commencement of the Bill.  After 10 years, the declaratory power would be extended to all regulation.

In addition to its three key components of principles, certification, and monitoring by the courts, the Regulatory Standards Bill requires the courts to prefer legislative interpretations that are consistent with the Bill’s principles. 

This provision initially applies only to new regulation, but after 10 years applies to the existing stock of regulation.

The Bill also requires every public entity to use its best endeavours to regularly review all regulation that it administers for compatibility with the principles.  The steps entities have undertaken to review their regulation, and the outcomes from this process, must be included in the entities’ annual reports.

This Bill provides us with better disciplines for creating and managing our regulation. 

It provides transparency in a similar way to the Public Finance Act.  That Act imposes certain responsibilities on government spenders.  It says, if you are spending public money, justify it, and be accountable for it.

The Act has created a cultural shift in the way that money is spent in New Zealand and the whole mindset around public expenditure.

The Regulatory Standards Bill places similar responsibilities on government regulators.  It says, if you are using the Government’s regulatory powers, justify it and be accountable for it. 

This transparency will result in higher quality regulation that has fewer unintended consequences, reduced compliance costs and that better achieves policy objectives.

I commend the Regulatory Standards Bill to the House.

Farming: Vital in Our Past, Our Present, and Our Future

Speech by ACT Leader Don Brash to the Federated Farmers Annual Conference
30 June, 2011 

Mr President, ladies and gentlemen,

This afternoon you're enduring a procession of politicians.

I'm sure we'll all be telling you what a great contribution farming makes to the New Zealand economy.

We'll probably all make the point that exports from the land generated some $23 billion in exports last year, nearly 60% of all exports of goods from New Zealand.

Some of us will acknowledge that, in the decade after agriculture was so abruptly stripped of all subsidies by the Labour Government of the eighties, farming achieved the highest rate of productivity growth of any major New Zealand industry, while over the whole 30 year period to 2008 labour productivity in agriculture has been right up there with the very best in the economy.

And achieved that without subsidies, and with the lowest rate of taxpayer support of any farming industry anywhere in the world.

I was reminded of just how extraordinary that productivity growth in agriculture has been when I visited the Wairarapa last week. I was told by one farmer that in 1946, shortly after the Second World War, it took seven men to produce 300 bales of hay in a day. In other words, one man could produce about 43 bales of hay in a day. Now, one man can produce 2000 bales in a single day - a near 50-fold increase in labour productivity!

If the whole economy had performed as well as farming has over the last 25 years, New Zealand would have living standards on a par with Australia, not well below Australia.

Despite this extraordinary achievement, of which all farmers should feel immensely proud, successive governments have tended to see farming as a sunset industry, important in our past but increasingly irrelevant to our future.

Politicians have talked about riding a Knowledge Wave, about the importance of the creative industries, of movies, and of fashion. They've talked about high tech start-ups, and the opportunity to build a back office for the world's financial industry.

And yep, all of those things are good and to be welcomed. Some New Zealand high tech companies are doing some extraordinarily innovative things.

But the foreign exchange earned from exporting movies and fashion garments is tiny compared with the exports from the farming industry.

And yet farming is pilloried by people who should know better.

All farmers get blamed for the environmental sins of the minority.

All farmers are assumed to be incredibly rich and to pay no tax.

All farmers are assumed to treat their animals with total indifference to their well-being.

After the next election, ACT will not be using its influence to re-introduce subsidies for the farming sector. I know you wouldn't believe me even if I said that we would be doing that!

But to the extent we can influence the policy of the next government - and that depends entirely on how many party votes we get in the election - we will be aiming to achieve three objectives of direct relevance to the farming sector.

First, we will be pushing to get government spending under control.

In the first four or five years of the Labour Government's nine years in office, you'd have to say that they were reasonably responsible, as left-of-centre governments go. Government spending grew slightly more slowly than the economy as a whole.

But in their last three or four years, they started throwing money around in all directions. In the four years to June 2009, national income grew by 20% but government spending grew by an astonishing 43%, and largely as a consequence the government's budget moved from surplus to deficit.

Much of this increase in spending was of very poor quality. Earlier this month, the Minister of Education mentioned that government spending on early childhood education had roughly trebled over the past five years, from about $500 million a year to about $1.4 billion a year - and yet all that extra money has increased the level of participation at preschool centres by just 1%.

The National Government didn't create this mess. Labour did. But tragically National has failed to fix the mess.

Why does it matter? Well, most obviously the huge increase in government spending, coming on top of the slow growth in revenue as a consequence of the recession and, now, the cost of the Christchurch earthquakes, is pushing up government debt at the rate of knots.

The Government has been borrowing over $300 million a week, week after week. At that rate, before long you're talking serious money! That's equivalent to $300 for every household in the country, every week.

But from the point of view of you in the export sector the most serious consequence of all this borrowing is its effect on the exchange rate. When the Treasury sells $300 million of bonds every week, most of those bonds are not sold to Mum and Dad investors in New Zealand, or even to New Zealand-based institutions. They're sold to foreign investors, and of course those foreign investors have to buy New Zealand dollars to buy New Zealand dollar bonds.

And that adds to the upward pressure on the exchange rate.

Yes, export prices in foreign currency have been pretty good lately, and this has shielded the farming sector from the worst effects of the very high New Zealand dollar.

But New Zealand needs the export sector to be doing not just well but extremely well at present! Over decades, New Zealand has accumulated massive amounts of overseas debt - indeed, our net indebtedness as a country puts us in the same league as Greece and Portugal. Why? Because year after year (indeed, every year since 1973!) we've run balance of payments deficits, and last month's Budget predicts that we'll be running deficits for as far ahead as the eye can see.

So we need you in the export sector to be doing extremely well, strongly motivated to produce more milk, produce more meat, and produce more wool.

And the high level of government spending, and the resultant high level of government borrowing, is blunting those incentives by putting upward pressure on the exchange rate.

Actually, the high level of government spending - and government spending today is higher, relative to the size of the economy, than in any year under Labour - has another damaging effect on the exchange rate.

The Reserve Bank is charged with keeping inflation low and stable. But when the government is spending a lot more than it's taking in in revenue, the Reserve Bank has to keep interest rates at a higher level than would otherwise be necessary. Today, the Reserve Bank's OCR is lower than at any other time in our history, but it's still relatively high compared with other countries (with the single exception of Australia). That makes New Zealand an attractive place for foreign savers to invest their money, with resultant upward pressure on the exchange rate.

So that is the first thing ACT would try to achieve of direct relevance to you in the farming industry, getting government spending under control to help ease the upward pressure on the exchange rate.

Secondly, we would seek a root and branch reform of the Resource Management Act and all the bits and pieces that hang off it - like the proposed National Policy Statement on Indigenous Biodiversity.

As some of you know, I've been the chairman of the 2025 Taskforce for the last couple of years, charged with providing advice to the Government about how to lift New Zealand living standards to the Australian level by 2025.

I'm sometimes asked: what's the single most important thing to be done if we're to achieve that goal? I reply that there's no single thing which will get us all the way there, but the most important single thing to be done in my opinion is to remove the extraordinary obstacles to progress created by the RMA.

I'm constantly regaled with horror stories of the little Hitlers who far too often seem to populate the lower levels of local and regional government, charging for this, complaining about that, throwing their weight around (sometimes in flagrant breach of the law), refusing to grant consents on the most flimsy excuse.

And I've already had anguished letters from farmers distressed about the implications of the National Policy Statement on Indigenous Biodiversity if adopted in its present form.

As I probably don't need to tell you, that directs that local governments ensure that there's "no net loss of biodiversity of areas of significant indigenous vegetation" (Policy 5); and requires that tangata whenua be fully involved in developing and implementing regional and district plans to protect indigenous biodiversity (Policy 7).

No mention at all of compensation for trespassing on the property rights of farmers. No suggestion that tangata whenua should have no more rights to be consulted than any other member of the community.

ACT believes that if a council wants to restrict your ability to manage your property as you see fit, then, provided that what you are doing on your own property is not directly and adversely affecting others, the council must demonstrate one hell of a good reason for doing so. And if the council does restrict you in a way that disadvantages you financially, it should compensate you.

ACT also believes that local and regional government should have an obligation to consult with all members of the community equally, and not give any kind of preference to one racial group over another.

So that's the second thing of direct relevance to the farming sector we want to do.

And thirdly, and finally, ACT will press for the abandonment of the Emissions Trading Scheme.

Why do we have an ETS? I have to admit I know of no good reason at all.

To be sure, it seems pretty clear that on average temperatures around the world have been increasing. But they've been increasing for at least the last 200 years, since the days when the Thames regularly froze over, and that warming began long before greenhouse gases caused by human activity could've had a significant influence on the climate.

And we know temperatures were very warm in the medieval period, and in Roman times, when grapes were routinely grown in what is now the United Kingdom. And greenhouse gases could hardly explain that, or the cooling which took place between those warm periods.

Even if a case can be made that human activity is behind the gradual increase in global temperature, it isn't obvious that an increased temperature is necessarily a bad thing for life on the planet. We know that plant life thrives on an atmosphere high in carbon dioxide - which is why many market gardeners deliberately pump carbon dioxide into their glass houses.

And we know that human societies thrive both in Singapore and in Finland, though average temperatures in the two places could hardly be more different.

Incurring the many trillions of dollars in cost which would be involved in any serious global attempt to slow the increase in average temperature would place an enormous burden on all societies, especially those already living on the margins of existence.

And even if it were accepted that human activity is causing the planet to warm, and that the enormous cost of trying to slow that warming is justified, it's entirely unclear why New Zealand should be at the forefront of that effort, at considerable cost to all New Zealanders, including New Zealand farmers.

It's estimated that the average dairy farmer is already incurring increased costs of nearly $4,000 annually (including both on-farm costs from the increased cost of diesel and electricity and the increased costs incurred by Fonterra), and that that will rise to over $10,000 annually by 2015.

So ACT favours the abolition of the ETS system, or at very least its suspension until comparable schemes are in place in all our major trading partners.

But Mr President, ACT's ability to achieve those goals - bringing government spending under control in order to take the pressure off the exchange rate, a fundamental reform of the RMA and all its off-shoots, and the abandonment of the ETS - depends entirely on one thing and one thing only: how many party votes we get in the election.

By all means vote for Bill English in Clutha-Southland, or Shane Ardern in Taranaki-King Country - but please give your party vote to ACT!

Speech to Wellington Employers Chamber of Commerce Business Breakfast

Minister for Regulatory Reform Rodney Hide
Wellesley Boutique Hotel, 2-8 Maginnity Street, Wellington.
Thursday, April 24 2011

Thank you for the opportunity to speak with you this morning.  It’s always a pleasure to be amongst the people who create the wealth in this community. 

If New Zealand is going to close the income gap with Australia, we’re going to need a lot more of you!

My topic for today is regulation – why it matters, and what the Government is doing about it. 

I suspect that for a business audience, the question of why regulation matters is pretty self-explanatory.  But I think it’s worth briefly discussing why regulation is important.

Regulation is important because it can be costly.  Some of these costs can be attributed to lost time, as people like you, have to wait for a license or a permit before you can get on with business. 

But a major proportion of the cost of regulation comes from lost opportunities

Take the Hazardous Substances and New Organisms Act.  One effect of the Act has been a ‘significant reduction’ in New Zealand research into genetic modification. 

This is concerning.  The primary sector is a key driver of New Zealand’s income.  Genetic modification is an opportunity to create more wealth from our major export industry, and the chance to develop new supporting industries.  Yet we’ve set the bar so high, that farmers and researchers have basically given up.

Or consider the case of IKEA – the world-famous furniture and homeware retailer.  They wanted to set up shop in Mt Wellington in 2008, but were blocked by the Environment Court - because they might attract too many customers and create traffic problems.  

According to the 2025 Taskforce, almost one-third of the income gap between New Zealand and Australia could be due to regulatory barriers.  We simply can’t afford to waste these chances, especially given the state of our economy. 
Regulation is also important because it is one of the key levers of Government influence. 

Governments can tax you, they can spend money on your behalf, and they can try to change your behaviour by regulating.

We apply a great deal of scrutiny to how our money is collected and spent – and rightly so.  Every year, the Government produces lots of documents on the Budget, spending, and the fiscal position.  Journalists comment on these in the press, and politicians debate them in Parliament.

Much less attention is paid to regulation, yet its effects can be just as significant on us as taxes and spending.

This is one of the reasons why I became the first ever Minister for Regulatory Reform. 

For me, good regulation is a question of good governance. 

Governments shouldn’t impose more costs and restrictions on people than they absolutely have to. 

They should consider the full range of options – including self-regulation – before they create more rules.   

And governments should be open and transparent about the reasons why they are regulating, and the likely impacts regulations will have.

These three goals – keeping costs down, ensuring good analysis, and providing openness and transparency – are what I have focused on over the past three years. 

I’d like to talk a bit about each of these goals, what we’ve been doing to achieve them, and what they mean for you.

The first goal has been tackling regulatory costs, both big and small.

At the big end, the Government has been reviewing the major pieces of regulation that business has identified as big constraints on growth.  Two of the most significant constraints have been the Resource Management Act and the Building Act.

On the RMA, the Government acted quickly once it came into office to remove some of the more troublesome aspects of the Act. 

This included removing the potential to make frivolous, vexatious and anti-competitive objections to development, and streamlining processes for projects of national significance.

Since then, my colleague Dr Nick Smith has been working on a number of more complicated aspects of the RMA.  These include:

  • reducing duplication between the RMA and other laws, such as the Conservation Act, the Building Act and Forest Act;
  • reducing unnecessary barriers to the development of the aquaculture industry; and
  • improving the planning, design and delivery of infrastructure and urban environments.

On the Building Act, the Government has agreed to replace the old system with a risk-based model, which will clarify who is accountable for failures, ease compliance costs, and remove consenting requirements for low-risk and smaller renovations.

These are just two parts of a much wider programme of major regulatory reviews, covering such laws as the Holidays Act, Employment Relations Act, Food Act and the law covering the electricity industry.  In each case, the Government is working to modernise the law and reduce unnecessary burdens.

The Government has also been focusing on the smaller sources of compliance costs. 

There are a whole lot of laws and regulations scattered throughout the statute books, which create hassles for specific industries. 

Until recently, it’s been hard to make any progress overhauling these laws because – on their own and individually – they’ve been too minor to get on to Parliament’s agenda.

What we’ve done is bundle up all these minor amendments into one piece of legislation, called the Regulatory Reform Bill, so that industries burdened by out-of-date and clumsy red tape can finally get some relief.

For some industries, these burdens are substantial.  Here’s an example; one of the laws we are currently in the process of reforming is the censorship legislation. 

The current law says that any DVD, video or computer game must have a rating label ‘affixed’ to its cover. 

What this means in practice is that every time a distributor brings into a new DVD for sale in New Zealand, they have to hire someone to unwrap it, remove the cover from the plastic casing, stick on the censorship label, and then wrap it up again.  This process costs the film industry over $10,000 a day!

We’re going to change the law, so that DVDs can have the rating labels printed directly on to the covers, just like in other countries.  It’s a small change, but it will cut $3m a year off the industry’s costs. 

Other changes we are making through the Regulatory Reform Bill may save some of your businesses money. 

For example, we’re proposing to change the Companies Act, so that shareholders can vote at AGMs using electronic technology and can receive company documents electronically, rather than in print.  This will save business about $1.5m a year.

My aim is to introduce a Regulatory Reform Bill each year, so that we can keep chipping away at outdated and costly rules.  If you know of any laws or regulations that need updating or replacing, let me know so that we can put them on the agenda next year.

We’ve also been working on clearing up the statute books, and getting rid of laws and rules that aren’t needed any more. 

The law books are bit like hedges – if you don’t prune them from time to time, they soon get out of hand. 

So I have a Bill before Parliament at the moment which will repeal 31 obsolete laws, and am preparing an Order for the Governor-General that will revoke over 150 unnecessary regulations.

My second major goal for regulatory reform has been getting better analysis.  The Minister of Finance and I have put a great deal of work into raising the quality of thinking across the government. 

Back in 2009, we issued a Government Statement on Regulation, which laid out our expectations for better regulation and less regulation.  We said that we would only introduce new regulation if we were satisfied that it is required, reasonable and robust. 

This set the benchmark against which all departments and Ministers have to justify their proposals for new regulation.

Next, we have raised the quality standards that we expect from Regulatory Impact Statements. 

For every proposed new regulation, Government departments must prepare these Statements, spelling out the problem they want to fix, the full range of options, and why they recommend one option over another. 

Where the proposed regulation could have a significant impact on the economy, Treasury has to review the Statement and make sure it is of a high enough quality.

In some cases, departments disagree with their Ministers about the best way forward. 

Many of these Statements are published on departmental websites, or on the Treasury website, so that you – as citizens and taxpayers – can judge whether the Government has made the right call. 

In addition, the Government has established a New Zealand Productivity Commission.  The idea for the Commission came from the Confidence and Supply Agreement that ACT made with the National Party, and I am especially proud that it has come to fruition.

Those of you who are familiar with the Australian Productivity Commission will know that it has led the charge for policy reform across a wide range of issues, including aged care, gambling, energy efficiency and the impact of migration. 

It has also looked closely at the regulatory burdens facing specific industries, and proposed improvements to lighten the load.

This is very much my vision for the New Zealand Commission. 

My hope is that, like its Australian counterpart, the Commission will bring independent and high-quality thinking to the big issues and problems facing New Zealand. 

It will engage with communities like yours, to fully understand all the issues and to build support for change. 

And it will help raise the quality of debate in the public, politicians and press about key public policy matters.

The Government has recently given the New Zealand Commission its first two tasks – an inquiry into housing affordability and one on international freight transport services.  As I’m sure you will agree, these are two issues that have a direct bearing on New Zealand's international competitiveness.

I hope that those of you in the audience with an interest in these topics will make a submission to the Commission and get involved with its work. 

My third goal is to ensure more openness and transparency.

Many of you will know the statement made by US Supreme Court judge Louis Brandeis that sunlight is the best of disinfectants, and electric light the most efficient policeman.

The idea behind this statement is that openness can act as a check on the misuse of power, or on bad ideas.

I think there’s a lot to this idea. 

The knowledge that you are being watched, or that your actions are open to challenge, means that you are more likely to act carefully and think through your proposals.

The problem with applying the full force of openness and transparency to regulation is that there is so much regulation made every year.  To give you a sense of the scale here, last year Parliament passed 139 Acts, totalling 3020 pages. 

Much of this regulation is also very technical and complex, which makes it difficult for the ordinary citizen to comprehend how a Bill might affect them.

What we need is something which spells out very clearly and very succinctly what each law will do, in terms of the key things that matter to New Zealanders.

This is what my Regulatory Standards Bill is designed to do.

The Regulatory Standards Bill lays out a set of principles that all new legislation and regulations will need to comply with.

These principles set out what I think we’d all agree good laws should look like. 

For example, good laws don’t take your property away without a good reason and without full compensation. 

They don’t take away your right to appeal to the Courts.  They respect your freedom.  And good laws treat everyone equally. 

Ministers and public service chief executives will need to certify that any new proposed rules and laws meet these principles. 

Parliament will still be able to pass laws that do not comply with these principles.  But MPs and Ministers who want these laws will need to explain to Parliament and to you why it is necessary to break the principles, and why it is ‘reasonable and can be demonstrably justified in a free and democratic society’. 

And if you as a citizen believe that a law doesn’t meet the ‘good regulation’ principles, you will be able to apply to the Courts. 

If the Courts agree with you, they will issue a ‘declaration of incompatibility’. 

The law in question will remain in force, but the ability to have the Courts issue a declaration will put pressure on MPs and Ministers to be honest with New Zealanders about the impacts of their regulations.

The Regulatory Standards Bill is due for its First Reading shortly and my colleagues in the National Party have agreed to support it to Select Committee. 

I think the Bill has much to offer business, and I would encourage you to have a look at it and to make a submission.

I’d like to take my Ministerial hat off briefly here, and talk a bit about one more initiative that should be of interest to you.

As we are all too aware, the Government’s coffers are in pretty poor shape.  We are facing one of the biggest deficits in recorded history and are unlikely to return to surplus for several years.

Some of this is due to the unexpected and dreadful Canterbury earthquakes. 

But a significant part of our current economic woes arise because previous Governments spent too much. 

They assumed that the windfall gains from the debt-fuelled boom of the past decade were permanent and they locked in more spending on such dubious projects as ‘interest free’ student loans.

This is unsustainable. 

Too much spending during a boom increases inflationary pressures, squeezing businesses like yours. 

And too much spending now is just committing our children and grandchildren to indebtedness and penury.

We need more discipline and responsibility in Government spending.

My Spending Cap (Peoples’ Veto) Bill will introduce this discipline.  Under the Bill, Government spending would only be able to increase at the rate of inflation and population growth. 

To put this in context, if my Bill had been in place from 2004, Government spending would be around $10 billion dollars lower than it is today. 

A spending cap puts pressure on Governments to prioritise.  It makes Ministers think long and hard about what needs to be done, and limits the potential for waste.

Of course, some Governments will want to spend more.  That is part of the democratic process.

But under the Spending Cap Bill, a government that wanted to spend more than the cap would need to explicitly seek the permission of the people through a referendum.  They will need to prove to the public that the extra expense is worthwhile. 

I will be introducing the Bill to Parliament in the middle of the year, and look forward to interest and submissions from the business community.

Coming back to my main theme for today, getting the regulatory environment for business right is one of this Government’s key economic goals. 

We know that poor regulation costs you time and money, and costs New Zealanders opportunities.

We are working across a number of fronts to get compliance costs down, to improve the quality of decision-making, and to bring greater openness and scrutiny to the creation of regulations.

But it’d be fair to say that there is still a lot of work to be done.

It would also be fair to say that, as Minister for Regulatory Reform, I am sometimes ahead of my Cabinet colleagues on the sorts of steps that should be taken to control red tape. 

The focus that this Government has put on reforming regulation is new.  Unlike Australia and the UK, New Zealand hasn’t had a Ministerial portfolio devoted to regulatory improvement.  It’s still a bit of learning curve for us.

Embedding the sorts of cultural changes across government that are needed to control regulation is going to take time. 

It’s also going to need people like you reminding us that getting compliance costs down is a priority for business, and reminding us that we need to constantly keep our eye on red tape. 

If I were you, I’d expect no less from my elected representatives.  And as one of your elected representatives, I welcome your scrutiny.

Thank you.