ACT is proposing a new Minister and Ministry of Regulation to control the impacts of regulation like the Minister of Finance controls the supply of money taxed from New Zealanders. The Minister and Ministry would ensure new and existing regulations meet tough new standards and would put red tape on the chopping block.
There have been numerous attempts to reign in bad lawmaking, but at best they get lip service. The next Government needs a political party that will put its political capital behind cleaning up the jungle of red tape that holds New Zealand back.
New Zealand is plagued by red tape introduced by various Governments that have passed laws to respond to negative headlines. If ACT has its way, future Governments aren’t going to be able to get away with making knee-jerk, populist laws to scratch political itches.
Most of New Zealand's problems can be traced to poor productivity and poor productivity can be traced to poor regulation. In nearly every sector, we hear complaints that red tape increases compliance costs and creates missed opportunities by stopping productive activity. Our No. 8 wire culture is gradually eroding as people find it more attractive to do less.
But there’s no serious attempt to deal with red tape. Good regulation is done poorly, and MPs and media pay little attention to it. As a result, Ministers and bureaucrats face little incentive to regulate responsibly. The political benefits of being seen to 'do something' are high; the costs are spread over millions of people long after politicians have left office.
New Zealand needs a regulatory equal of the Finance Minister – someone to act as a guardian for good regulation, just as the Finance Minister is supposed to mind the public purse.
A Regulatory Standards Act, a Ministry, and a Minister of Regulation
ACT will introduce a Regulatory Standards Act to set a higher bar for new regulation, and will create a Minister and Ministry of Regulation who will be responsible for applying the principles across sectors.
The Act will provide a benchmark for good regulation through a set of regulatory principles, including the rule of law, protection of individual liberties, protection of property rights, the imposition of taxes, and good lawmaking processes.
A new Ministry of Regulation, funded from the baselines of Treasury and MBIE, will administer the principles of the Act.
The key functions of the Minister and Ministry would be to:
- Evaluate new regulatory proposals, making recommendations for a law to be passed or not, and evaluating it against the requirement for problem definition and cost-benefit analysis.
- Review existing red tape in specific sectors, and present omnibus bills to Parliament that would remove surplus rules and regulations in collaboration with the relevant Minister.
The review process would work as follows:
- The Minister of Regulation would declare a sector that the Ministry will conduct an inquiry into.
- The Ministry of Regulation will dig into all regulations in the sector over six months, hearing from the people affected by the rules, and testing them against the key principles of the Regulatory Standards Act.
- The Minister of Regulation would publish a report addressed to the relevant portfolio Minister, identifying the regulations that could be cut.
- The relevant portfolio Minister must respond within three months with approval for the regulations to be cut in an omnibus bill, and a timeline for when they will cut the remaining red tape. If the relevant portfolio Minister declined to remove a regulation, they would be required to explain to Parliament and the public why the regulation should remain in place.
- The Minister of Regulation will be responsible for introducing the omnibus bill and will publish an annual audit to report on progress towards achieving all of its recommendations against the agreed timelines.
The Act can also be used by the public to get a court declaration if a law has been made in a way that’s inconsistent with good lawmaking. That wouldn’t cancel the law, but it changes the incentives for politicians and bureaucrats. It says, if you want to make knee-jerk, populist laws, you’re going to rack up a lot of hostile declarations from the courts.
As Undersecretary to the Minister for Regulatory Reform in the last Government, David Seymour was responsible for raising the quality of Regulatory Impact Analysis. This approach has been necessary but insufficient. The quality of analysis by public servants varies vastly, analysis has been retrofitted to support the Minister’s preferred option, and too many laws are introduced even when the RIA produced does not support the change, or before a quality RIA can be produced.
Real change is needed. The new Ministry of Regulation would be responsible for overseeing the RIA process and setting expectations for quality, and the Regulatory Standards Act creates new mechanisms for challenging laws and regulations that have already been enacted. Once a problematic regulation has been identified, the portfolio Minister can repeal, amend, or repeal and replace it.
In the past, Ministers have said of such initiatives, ‘great idea, just not in my portfolio’. That’s not good enough and ACT has the solutions. These proposals are needed to hold Ministers and departments accountable for regulating New Zealanders’ lives.