Groser Tim: Subordinate Legislation (Confirmation and Validation) Bill (No 3) — First ReadingText is incorporated into the Bound VolumeGroser Tim: Subordinate Legislation (Confirmation and Validation) Bill (No 3) — First Reading[Sitting date: 11 October 2007. Volume:642;Page:12321. Text is incorporated into the Bound Volume.]TIM GROSER (National): I will just take a brief call on this legislation that the National Party is of course supporting. Quite clearly this is fairly technical legislation—a part of our legal process to ensure that the regulations that are subordinate to legislation are fully consistent with the law. We have just heard a fairly comprehensive explanation of the range of activities we are talking about here which go from the relatively mundane but no doubt popular idea that we might be able to bringin three duty-free bottles of gin rather than just one in the future knowing that this is fully legally consistent through to things that are of great importance to the people of New Zealand such as the consumer price index adjustments for their superannuation payments. So we are dealing with smaller pictures and with some quite large issues of great importance to our society actually in making sure that this proceeds in a proper rigorous legal framework. Let me also just say that the fees and charges levied from a number of organisations are used to perform a number of public goods in a pretty efficient way in my opinion.Before going into a couple more examples I would like to make some more general comments on regulations. It is probably stating the obvious to say that Governments of whatever complexion they may be achieve their objectives either by the direct provision of public goods financed by taxation or other revenues or by relying on private agencies and then putting regulatory frameworks around them. There is a lot of hot air I think sometimes of an ideological nature about free markets versus regulatory frameworks. The reality is that most free markets in order to operate in a socially responsible way do indeed require an adequate regulatory framework. This myth of the untrammelled power of the free market is usually totally exaggerated in political discussion; we all buy into the idea that we need effective and firm regulatory frameworks to police the free market. Then it becomes a matter of looking at market failure remembering there is no such thing as a perfect alternative or a perfect regulation and making a sensible and balanced judgment.So we are dealing with a number of Governmental objectives here—shared I am sure probably by all parties and not just the two major political parties. I will take the commodity levies as one example. They are essentially designed to deal with what is called in the literature the free-rider problem. We know if we take Pipfruit New Zealand for example that the organisation itself needs to come to a democratic vote as to whether it wants to levy its members but because of the existence of the free-rider problem it needs the power of Government and the force of regulation behind it to levy its members. So it can start from a democratic base and deal with the free-rider problem through regulatory frameworks then use the money from the levies—which are then compulsory on its members—to achieve public goods that the State would otherwise have to fund directly. Those are usually excellent public goods: research and development joint marketing promotion and other activities that all of us recognise are in the collective interests of the industry as a whole and they can proceed in a pretty efficient manner. In this case I have just taken pipfruit but we could use the seafood examples mentioned earlier to make the same basic point.On the other hand we also know that there is a bigger picture out there; it is called regulatory creep. I do not want to enter into a divisive debate on that when we have just discussed it in question time but frankly the almost ludicrous example of the spread of regulations concerning childcare facilities to Sunday schools gyms and creches is an example of where mindless regulation needs to have some greater political judgment put on to it. I do not have the exact quotation in front of me but I recall very clearly a well-known anecdote that says that the Ten Commandments are something like 100 words long the Gettysburg address is 120 words long but the European 2002 oilseeds regulations are 23684 words long. So it is not just a problem for us—let us be quite clear about this—this problem of regulatory creep is a global problem and we need some greater discipline there.Although these regulations are widely supported politically in other areas the debate perhaps gets off to not quite the right footing by its being seen solely as a compliance cost issue. Well yes that is a serious issue but when we analyse it more deeply we find that the real costs are not the compliance costs—although they can be substantial inthemselves—they are the actual economic effects of the regulations which will often lower productivity and disadvantage productive behaviour in the country. By analogy one could ask “Taxation—what does it do?”. Yes taxation has a compliance side to it and it costs a great deal of money although all Governments need to have that side to raise revenue—in the literature it is called the deadweight costs of taxation. But the more powerful issues are not about the compliance costs; they are about the actual economic consequences of taxation. In an economy that is driven essentially by market forces influenced by regulatory frameworks this is the bigger picture.The National Party supports this legislation. It is a fairly mundane technical and proper thing to do but we should bear in mind that there is a bigger picture out there. There is a problem of regulatory creep and we need a greater resolve to address that if New Zealand is to move forward in a sustained and competitive sense.