The Australian Labor party is promising to take an existing regulation off business for every one new one it puts on. The Labour party here has agreed to a select committee hearing for Rodney Hide’s Regulatory Responsibility Bill.
What’s going on? Aren’t Labour parties supposed to be trigger-happy regulators?
That instinct originated from a socialist mistrust of markets as unfair and oppressive for the weak. Capitalism, for all its wealth-creating energy, had to be tamed before it could be trusted to work in workers’ interests.
The first Labour government even proposed locking into law the sweeping second world war command-economy controls. It pulled back but did pass the Economic Stabilisation Act, under which Ministers of Finance till 1984 could and did dictate wide-ranging controls, even fixing wages and prices.
But shackle the capitalist beast too much and its roar dwindles to a whimper. By the 1980s the issue in this country was not how to tame capitalism but how to revitalise it.
For all the Clark governments’ rhetoric about “1990s excesses”, they have understood that wealth creation needs relatively free markets.
That implies some people profit at others’ expense, some prosper more than others and some get hurt. The issue, for governments of all stripes, is setting the balance.
That implies removing unnecessary, excessive and counterproductive interferences, especially for small and medium-sized enterprises (SMEs), which don’t have the administrative resources big businesses have.
Hence Commerce Minister Lianne Dalziel’s regulation quality review, started last year, to reduce the time, effort and cost of complying with government requirements and laws, with a special focus on SMEs.
Officials are collecting and in small ways responding to business gripes about complex form-filling, complying with audits, overlapping laws and so on. Each gain is small in itself but over time should accumulate. A final report is due end-August and Dalziel wants an ongoing process.
Not enough, say Hide and business lobbies. Hence his bill. He wants to regulate the regulator.
The bill seeks to require all law not to diminish personal security, liberty and rights in contract and property and, if it does, to meet a strict and narrow public interest test.
It emulates Ruth Richardson’s 1994 Fiscal Responsibility Act, now part of the Public Finance Act, which has required governments to keep debt at a “prudent” level, “prudently” manage fiscal risk and maintain a “reasonable degree of predictability” about future levels and stability of tax rates and, if departing from those principles, tell Parliament why. It has had a salutary effect on Budget-making.
Hide’s bill lays special emphasis on compensation for taking property and abrogating common law rights and a requirement that government agencies state the reasons for a regulation, the effect on property and other legal rights and alternative options — and publish an official notice if departing from these principles.
Dalziel is not opposed in principle but reckons the bill is unworkable in practice and can’t be made workable. She quotes in support a report by Sir Geoffrey Palmer, now head of the Law Commission, who pronounced it “inapt and inept in conception and in design”.
Sir Geoffrey focused particularly on a clause aiming to stop the courts reviewing actions taken under Hide’s bill. He compellingly concluded the courts would do so any way. He also said it misconstrued common law rights and could damage other reforms of law-making Dalziel has in train. Sir Geoffrey suggested a White Paper be drafted.
Dalziel’s other reforms are to the processes for assessing the impact of laws, including regulations.
Bills have carried “regulatory impact statements” for some years but they often read more like ex-post-facto justifications than the supposed genuine examination of alternatives to new laws.
Since April 1 the Ministry of Economic Development’s regulatory impact audit unit, which oversees the impact statement process, has been told to send back to the originating agency any “inadequate” statement on a proposal going to the cabinet. (Which presumes, yet to be fully tested, that the unit itself can exercise adequate oversight.)
The cabinet is also insisting on impact statements for policy discussion papers so citizens and businesses can make an early case for rejection, alternative action or amendment.
Hide says he will remove his courts ouster clause but the bill needs much more amendment if he is to get the numbers to enact it. National is still months away from fixing its own competition and regulation policy and is withholding judgment.
But Hide’s bill and Dalziel’s initiatives underline how distant are the “regulation is good” days. New Zealand is a highly creditable No 2 on the World Bank’s “ease of doing business” index. Dalziel wants to be No 1.
It won’t be enough for business. Nothing ever is. But her ambition would once never have crossed a Labour minister’s mind. Times change.