Rodney Hide's crusade to cut red tape

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Abolishing "dopey" regulations such as having to register anti-dandruff shampoo as a medicine will do more to grow New Zealand's economy and close the income gap with Australia than the tax changes the prime minister flagged last week.

That's the view of Regulatory Reform Minister Rodney Hide, who says he will shortly introduce legislation that will "set fire to the red tape that is clogging our great country".

Hide said it was outrageous, for example, that health inspectors from the Far North District Council last year ordered a woman to stop making preserves for a local hospice because she did not have a "registered kitchen". The hospice and the council later found a way around the regulations, allowing Gloria Crawford to keep selling the preserves.

Business consultants KPMG estimate that the average compliance cost burden on business is $28,000 a year. Hide says the Regulatory Responsibility bill will review and remove hundreds of regulations, thus reducing by thousands of dollars the annual compliance costs for individual businesses and generate billions more in the economy through increased investment.

Hide claims the bill is the "number one" reform the government can do to improve productivity and make the economy more competitive. Regulations were as much a brake on business as tax. They were costly, time-consuming and restricted innovation.

"People concentrate on tax, but regulation is a tax too. If we strip out the dopey laws and red tape, the economy will grow. Right now, people won't invest in New Zealand and good businesses that would otherwise succeed and flourish cannot get off the ground because the compliance costs are too big and too exhausting.

"This [bill] would be the biggest change you can make to the New Zealand economy.

"Getting rid of red tape and excessive laws makes cutting taxes look like small beer."

In the past 10 years parliament has passed 68,000 pages of legislation and regulations.

Hide said a company that wanted to develop an old shopping centre had abandoned its investment after trying for two years to get approval to put up new entry and exit signs in the car park.

"That was a major investment that should have happened in New Zealand and it didn't."

Hide claims the bill is "pioneering" because it will also ensure that future regulations and laws must pass a "principles" test that citizens can challenge in court if they feel any proposed laws impinge on their rights or freedoms. He said it would make the process of law-making more transparent and governments more accountable to the people.

"We have never put law-making into a systematic framework before, like we have, say, with government spending."

Labour's commerce spokeswoman, Lianne Dalziel, said the bill was little more than window dressing and would hinder rather than help, although she admitted much more could be done to remove regulatory "roadblocks".

She said New Zealand was second only to Singapore when it came to ease of business, and that the bill was a "red herring".

"There are things in this country that need to be fixed, but just get on with the job of fixing them rather than mucking around with a bill like this."

Prime Minister John Key last week started the parliamentary year with a major statement on the government's plan to transform the economy.

He emphasised six drivers for change: tax reform, regulatory reform, better public services, support for science, innovation and trade and more investment in infrastructure and education.

- © Fairfax NZ News