Dalziel Lianne: Regulatory Reform Bill — First Reading 
Dalziel Lianne: Regulatory Reform Bill — First Reading 
[Volume:670;Page:16740] 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 The genesis of an annual bill that improves the regulatory environment was in fact the Quality Regulation Review which I led in my role as Minister of Commerce. Arising out of the Quality Regulation Review was a desire from business to see continuous quality improvement from the Government with the ability to tidy up features of different aspects of the regulatory frameworks without having to wait for the individual department or indeed the Minister to give it the legislative priority it needed. This was the reason I called the annual bill we committed to in Government the Regulatory Improvement Bill because I believe that the principles and guidance that are enshrined in the Code of Good Regulatory Practice should be embedded within every layer of Government. That is something I always believed in as a Minister and that I believe in today. I believe that we must commit to that if we are going to make a difference in the long term. 
The Minister is calling this bill a Regulatory Reform Bill; I assume that he has just simply changed the name to the Regulatory Reform Bill as opposed to the Regulatory Improvement Bill. I deliberately chose “Improvement” because I wanted the focus to be on continuous quality improvement. That also suggests to me that the Minister was not prepared to highlight the fact that this bill is actually late. If it were called the Regulatory Improvement Bill it would have been the No. 2 bill and that would have highlighted that despite the fact that we have the country’s very first Minister for Regulatory Reform the Government has not met its very first target because this year’s bill should have been bill No. 3. There should have been one in 2009 there should have been one in 2010 and we should be dealing with the third piece of tidy-up legislation at the beginning of 2011. 
I will talk about the legislation this bill amends and I particularly want to focus on the Takeovers Act 1993 which the Minister did not mention in any detail. I mention to anyone who might be vaguely interested in this debate and may in fact be interested in any Acts that will be amended by it that I am deeply disturbed for example that the Government made the decision to take the regulatory impact statements out of bills. It does mean that one has to go to the website of either Treasury or the Ministry of Economic Development to print them off. Of course because so many Acts are being amended there are different regulatory impact statements for each of the bills being amended but they make for fascinating reading. Some of these regulatory impact statements do not meet the standards of good practice around regulatory matters which I find somewhat ironic. But there is more than one irony in the debate that we are having today. 
I want to mention for example the changes to the Registered Architects Act 2005 which will hardly excite a lot of comment. The changes to the Act as I read them will reduce the cost of the complaints process from $33300 per case to a mere $19100 per case and that is by removing the hearing processes from the investigating committee and disciplinary committee and replacing them with a hearing if necessary in front of the actual board itself on the report of the investigating committee. So a sensible proposal is being made. It seems like good sense to me and what it will really do is knock the time off the investigation process and the hearing process which sounds to me to be a good thing as well. 
But there was this little bit that I thought was really interesting. I have had quite a lot to do with architects of late given the circumstances down in Christchurch and they might be interested in this. Architects will still pay the same fees and the time taken to process a complaint will at least halve. This will give the architects in question more certainty about their future but I could say less bang for their buck at the same time. So it will be interesting to know why they are not having their fees reduced since there will be such a major cost saving to the Registered Architects Board. But I am sure that will come up at the Commerce Committee which I chair. 
I want to refer to the takeovers legislation because that is the one that has excited the most public comment and certainly in the  
New Zealand Herald  
this morning there was quite an article of substance on it. But before commenting on this specific issue I wanted to use this as an opportunity to acknowledge the work of the Capital Market Development Taskforce whose work is being recognised in the legislation that we have before us. It spent I know quite a considerable amount of time with the Takeovers Panel in order to establish what changes needed to be made to the panel’s arrangements in the code in order to facilitate the work that it was doing. It is good to see that some of its recommendations are finding their way into law through this particular process. 
Of course the regulatory impact statement on this particular case has been helpful in identifying the magnitude of the change. Although I note that when referring to the cost of complying with the takeovers regime when the number of voting shareholders in the company is very small it says: “These costs are incurred on a transaction by transaction basis and do not occur frequently. These costs are not significant to the economy as a whole but are to the parties involved in the relevant transaction. Because of a lack of a mechanism to collect data it is unknown how many companies are affected by this problem.” So sometimes the Minister for Regulatory Reform has a habit of overstating the impact that a lot of these things will have. 
I do not disagree with making some of the changes that are proposed to the law but there is one that I really do want to deal with in detail and that is the question of international comity between New Zealand and any other country being added to the objectives of the code. I have commented before on irony in the debate today and this is really where the irony kicks in. A National Government passed the Takeovers Act in 1993. In fact I have been around so long that I sat on the select committee that considered the Takeovers Bill as it was at that time. I wonder whether anyone in the House today remembers how long it took the Government of the day the National Government to allow a code to be written to give the Takeovers Panel some work to do. I wonder whether there is anyone in the House today who can remember how long it took the National Government to do that. I do not think anyone in the House has been here quite as long as I have. John Carter is in the House; he may recall exactly how long the National Government took to implement the Takeovers Code after passing the legislation in 1993. It is of course a trick question because it never did. It never gave the Takeovers Panel a code to enforce. It did not empower the Takeovers Panel to write a takeovers code that would come into force. So for a number of years the head of the Takeovers Panel used to sign off on an annual report to Parliament which was nothing more than a blank sheet of paper. So that is why it is ironic. 
This morning’s  
New Zealand Herald  
states that the panel administers the Takeovers Code and can issue exemptions for companies looking to take over another business where it believes they are warranted. “Amid concerns about the Government’s proposal to partially privatise state-owned power companies the Takeovers Act and code are seen as a key protection for retail investors and New Zealand’s wider interests. In combination with ongoing majority state ownership the act—which requires any would-be purchaser of more than a 20 percent stake in a company to make an offer to all shareholders and secure at least 50 percent of it—is seen as a safeguard against the companies falling into the hands of foreign investors. Ministry of Economic Development officials said the amendment had been added to allow the Commerce Minister to take into account comity between New Zealand and any other country as an objective when formulating any recommendations relating to the code.” It is unfortunate that that is not what the officials advised the Minister for Regulatory Reform when they prepared the regulatory impact statement that went to Cabinet. They made it absolutely clear that this was about making it easier for the panel to provide exemptions in cases such as these. So I think that there is a very genuine concern about this. 
I will comment on section 20 itself—the objectives of the Takeovers Code. These are all listed in the regulatory impact statement encouraging the efficient allocation of resources encouraging competition for the control of specified companies and the list goes on. But the second paragraph from section 20 of the Takeovers Act is missing and it is relevant: “In formulating recommendations … it is for the Minister to determine the weight that should be given to any particular objective …”. The Minister of Commerce is the Minister for State-Owned Enterprises and we should be worried.