The Regulatory Standards Bill Proposals - Part 1

A Consideration - the content of the Proposals

This is the first part of a three-part series on the proposals for a Regulatory Standards Bill. The Proposals (there is not a Bill as yet) are contentious. Some might think that the opposition to the Proposals are a reflexive response to anything proposed by the ACT Party.

In an effort to shed some light and reason on the debate the first part of this series looks at the proposals themselves and what they contain. It is in the form, of a summary – albeit a detailed one – and traces some of the earlier iterations of similar attempts at such legislation.

Part Two will address the responses to the proposals and will mainly focus on the themes that appear from a selection of submissions and article in opposition.

Part Three will consider my analysis of the responses, why classifying the proposals as “libertarian” is wrong and arguing in fact that the proposals are an example of Classical Liberalism in action.

Introduction

It is a principle of law that all actions are permitted unless the law prohibits a certain act. In this way the law erodes an aspect of individual liberty or freedom. Thus when the law prohibits an act there is a restraint on liberty or freedom.

This principle was turned on its head in the early days of the Covid pandemic when the rule seemed to be that everything was prohibited unless the law allowed it. Things like freedom of movement and association – things we take for granted in a free society – were rigorously restricted.

Over the last 20 years or so there have been benchmarks that lawmakers are meant to apply to legislation. Consistency with the New Zealand Bill of Rights Act 1990 is one such benchmark. If a proposed law is inconsistent the Attorney-General must advise the legislature who may heed the concern although in most case that advice is ignored.

The proposal for a Regulatory Standards Bill is to improve Government legislation and regulation and ensure that regulatory decisions are based on principles of good law-making and economic efficiency.

It is proposed that the Regulatory Standards Bill would include:

· a benchmark for good regulation through a set of principles of responsible regulation

· mechanisms to transparently assess the consistency of new legislative proposals and existing regulation with the principles, and '

· a mechanism for independent consideration of the consistency of existing regulation, primarily in response to stakeholder concerns.

It would also include provisions to support the Ministry for Regulation in its work to improve the quality of regulation.

A discussion paper with a copy of the proposed Bill was released for consultation. The consultation period has closed but some of the responses have been highly critical of the proposals.

The first part of this article will consider and summarise the main points contained in the materials provided surrounding the proposal.

The second part will consider some of the criticisms of and support for the proposals and in the third part I will offer my own commentary on the proposals.

Before I begin I should observe that at the moment there is no Bill before the House.

The Regulatory Standards Proposals.

The proposals surrounding a Regulatory Standards Bill were published by the Ministry for Regulation. It sought feedback which would inform the development of a draft Bill that might be introduced in 2025. Further opportunities to provide feedback on the Bill would be available as the Bill progresses through the Select Committee and Legislative process.

The documents that were provided were:

1. A Cabinet Paper CAB-24-SUB-0437 seeking approval to consult on a proposed approach to the Regulatory Standards Bill

2. An Interim Regulatory Impact Statement

3. A Preliminary Treaty Impact Analysis

4. A Guidance document for making Submissions on the proposals.

The key document is the fourth one – what I have called the Guidance Document for making submissions. As is the case with all such documents there is a certain structure to the information that is sought and the questions that are asked.

This is not the first time that a Regulatory Standards Bill has been proposed and an understanding of the historical background is of assistance before discussing the substance of the proposals.

The Historical Background.

Various forms of a Regulatory Standards Bill have been introduced to the House on three previous occasions – in 2006 as the Regulatory Responsibility Bill (the 2006 Bill), in 2011 as the Regulatory Standards Bill (the 2011 Bill) on the recommendation of the Regulatory Responsibility Taskforce (established in 2009), and in 2021 as a private Member’s Bill (the 2021 Bill).

The Legislation recommended by the Regulatory Responsibility Taskforce contained six tests for legislation in a free democratic country.

• The rule of law that includes equality before the law.

• Law should only reduce liberty to protect the liberty of others.

• Property should not be taken without compensation.

• Taxes and charges should not be imposed except by Parliament.

• Only courts should interpret laws.

• The benefit of a law should outweigh the cost.

Public consultation on a Regulatory Standards Bill was also carried out over several different occasions:

• The 2006 Bill received over 220 submissions from individuals and organisations as part of the Select Committee process.

• From June to August 2010, the then-Minister for Regulatory Reform ran a public consultation process on the draft 2006 Bill produced by the Regulatory Responsibility Taskforce via a consultation document “Questions arising from the Regulatory Responsibility Bill”. Submitters were asked to respond to a set of questions on the draft bill and regulatory quality generally.

• Public consultation on the 2011 Bill opened through the Select Committee process after its introduction in March 2011. The 2011 Bill received around 50 submissions from a range of submitters encompassing businesses and industry associations, legal institutions and practitioners, academic think-tanks and unions.

Public feedback on previous versions of a Regulatory Standards Bill has been mixed.

While there has been general support towards the aim of improving regulatory quality, including through the consolidation of a set of standards regulation should adhere to in its design, development and implementation, some components of previous Regulatory Standards Bills have received considerable criticism from legal practitioners, academics, and constitutional experts.

Much of this criticism centred around the proposed roles for the judiciary to prefer interpretation of legislation consistent with the principles set out in previous Regulatory Standards Bills and to declare legislation inconsistent with the principles.

This role has been cited as being likely to impact on the respective balance of powers between Parliament and the judiciary, invite a level of judicial interference which may seek to undermine Parliamentary supremacy in passing legislation, and introduce significant ambiguity in New Zealand’s legal and constitutional landscape.

For these and several other reasons (e.g. the novel wording of principles), the Parliament’s Commerce Committee recommended that the Bill not be passed on two separate occasions during the Select Committee process.

In 2011, a previous Regulatory Impact Statement (RIS) was written to accompany the introduction of the 2011 Bill into the House. The RIS recommended strengthening Parliamentary review to improve scrutiny of legislation, over the Regulatory Responsibility Taskforce’s proposed Bill.

As the 2011 Bill was halted at the Select Committee stage, the National-ACT Confidence and Supply Agreement instead included a commitment to achieve a “mutually agreed outcome” based on the Treasury’s preferred option as expressed in the 2011 RIS.

This was followed by a discussion document released by the Treasury in 2012 to consult on a revised proposal, eventually resulting in the enactment of Part 4 of the Legislation Act and given administrative effect as the current disclosure statement regime.

In 2021, the Bill was again introduced to the House as a private Member’s Bill, but did not progress past First Reading.

The Purpose of a Regulatory Standards Bill

The quality of regulation is important for New Zealand’s long-term productivity, growth, and living standards, and in supporting New Zealanders’ wellbeing, but there are challenges in design and implementing good quality regulation.

The present Regulatory Management System does not currently support a high level of transparency to enable a broad range of stakeholders to easily identify whether new and existing regulation meets standards of good regulatory quality.

This transparency is an important component of an effective Regulatory Management System because it helps strengthen incentives for responsible Ministers and agencies to work throughout the regulatory policy cycle to ensure new and existing regulation meets quality standards.

The purpose of the Regulatory Standards Bill is to introduce clear, authoritative standards for good quality regulation, and mechanisms that require clear and accessible assessment of regulation against these standards.

This will ensure that regulation keeps up with societal changes and drives productivity. ​

The Bill aims to codify principles of good regulatory practice, requiring future regulatory proposals and existing regulations to comply with these principles unless lawmakers justify deviations. ​

It also establishes a Regulatory Standards Board to assess complaints about existing regulations, issuing non-binding recommendations and public reports. ​

Additionally, the Bill provides a framework for the Ministry for Regulation to promote good regulatory practice across all sectors, ensuring transparency, accountability, and effective regulatory management.