NZ 'muddling through' on rule-making

02:00, Mar 13 2014

New Zealand has a big and complex regulatory system with no overall strategy for improving it and no clear owner, the Productivity Commission says.

The commission today released a draft of its inquiry into the country's regulatory system, which was "not broken" but was "muddling through".

It reached its conclusions after receiving more than 50 submissions and surveying 1526 businesses about their experiences.

Almost two-thirds of the chief executives of regulators surveyed said they were often working with legislation that was out of date or not fit for purpose.

With as many as 200 different regimes, a large number of regulatory agencies and more than 10,000 people employed to administer regulations, the report said the regulatory system was a major piece of government infrastructure.

It was as significant as the tax and spending systems, but differed from them because there was so little information on its performance and no clear ownership.


"Not enough attention is being paid to the needs and performance of the regulatory system as a whole," the report said.

One of the submitters, electrical engineer Alan Marshall, expressed frustration with proposed regulations that were put out for consultation, but were not run past industry experts before being gazetted.

"So we start with a perfectly good draft regulation, and end up with a different regulation, changed by people (in government) who do not fully understand the technical implications of the changes they make," he said.

"For some regulations, this means having to amend the regulation two, three or four times, over a period of four to six years, before finally getting a 'good enough' version in law. This is very inefficient and very frustrating."

In another submission, Air New Zealand said it supported a core set of guidelines concerning all regulatory development.

However, regulators needed to recognise companies that operated globally, and help them overcome the challenges of scale that they faced.

The airline favoured light regulation generally, but in cases where that was not working, there needed to be a heavier hand with enough enforcement.

This was particularly so when dealing with private enterprise "which rightly seeks to maximise its return to shareholders".

In its report, the Productivity Commission noted that New Zealand heavily relied on legislation through Parliament, which meant it was hard to change things quickly.

Other countries delegated more powers to regulators and New Zealand could do the same, "provided these powers are appropriately defined and controlled".

Business surveys also showed there were low levels of confidence in the skills of regulatory staff. The report suggested ways to lift skills and best-practice knowledge where there were gaps.

It also recommended that more resources be given to Parliament's regulations review committee, which could recommend a regulation be cancelled if it was unfair or onerous.

This power was seldom used successfully and the committee said it should play a more active role.

Finally, the commission said there should be stronger leadership at ministerial level and more evaluation of how regulations were working.

Governments tended to "set and forget" rules, and that could put ministers and officials on the back foot.

Although the Government had introduced a number of initiatives to improve evaluation, New Zealand did not use low-effort, high-payoff techniques that had been proven overseas.

"A more strategic approach to evaluation would allow governments to make better progress on keeping regimes current," the report said.

Submissions on the draft report close on May 8 and a final report will be sent to the Government in late June.

Fairfax Media