Hide Rodney: Regulatory Standards Bill — First Reading 
Hide Rodney: Regulatory Standards Bill — First Reading 
[Volume:673;Page:19751] 
Hon RODNEY HIDE (Minister for Regulatory Reform) 
: 
 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 its consideration. 
The Regulatory Standards Bill aims to improve the quality of regulation in New Zealand. As a Government we use our powers 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 and to tier investment and can limit innovation and competition. Decade by decade the quantity of regulation made in New Zealand has increased. Between 2000 and 2009 over 68000 pages of legislation were passed. This equates to creating or amending around 105 Acts and 405 regulations each and every year. Many of the countries we compete with have focused on improving the quality of their regulation with more success than New Zealand has had. New Zealand’s ranking in the OECD product market regulation indicators 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 the  
Government Statement on Regulation 
 of August 2009. We have introduced a number of administrative measures designed to improve regulation as it is made and to improve 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 legislative 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 so desperately needs. Only the Regulatory Standards Bill’s more stringent requirements can bring about a change in the way that Governments think about regulation. 
The Regulatory Standards Bill has its origins in the Regulatory Responsibility Bill which I introduced as a 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 a result of the work of that task force. I would like to thank Dr Bryce Wilkinson who first put forward the case for the 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 last 10 years. 
The Regulatory Standards Bill aims to increase the transparency of lawmaking and the accountability of lawmakers. 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 who propose and create regulation to certify whether the regulation is compatible with those principles; and it provides monitoring of the certification process through a new declaratory role of the courts. The bill identifies a set of principles of responsible regulation that 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 Legislation Advisory Committee guidelines common law and Parliament’s own Regulations Review Committee. The principles cover seven key areas including the rule of law the protection of individual liberties the protection of property rights the imposition of taxes and charges the role of the courts the review of administrative decisions and good lawmaking. These principles are guides not binding rules. From time to time breaches of the principles will be necessary. The bill provides for this and this is a key point: it allows 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 can be 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 New Zealanders when we use our regulatory powers. It is only right and proper that we should be open about the impacts that our proposed regulations will have. 
The bill provides for the monitoring of the certification process by allowing the courts to provide declarations of incompatibility where they believe 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. Parliament members will be pleased to learn remains sovereign. The purpose of the declaratory function is to provide an independent informed opinion on whether regulation complies with the principles. The 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 be able to make declarations only in relation to regulations made after the commencement of the legislation; after 10 years the declaratory power would extend to all regulation. 
In addition to the three key components of the bill in terms of principles certification and monitoring by the courts the 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 that entities have undertaken to review their regulation and the outcomes of the process must be included in their annual reports. 
This bill provides us with better discipline 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 spending. It says that if we are spending public money we should 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 in the whole mindset on public expenditure. This bill places similar responsibilities on Government regulators. It says that if we are using the Government’s regulatory powers we should justify that and be accountable for it. This transparency will result in higher-quality regulation that has fewer unintended consequences. It will reduce compliance costs and that better achieves policy objectives. I commend the bill to the House.