The proposal
As foreshadowed in the National-ACT coalition agreement, reform of regulations and regulatory processes (aka the "slashing of red tape") is seen as fundamental to rebuilding the economy and improving productivity. Following the creation of the Regulation ministerial portfolio, the establishment of the Ministry for Regulation (Ministry) and regulation sector reviews, a significant new measure has been announced by Hon David Seymour – a proposed Regulatory Standards Bill (Bill), with the coalition agreement specifying that it be passed "as soon as practicable".
The Minister sees this as a legacy reform that will long outlast his time in office – akin to the Public Finance Act or the Reserve Bank Act in its institutionalised significance.
Although the Bill has been announced, it has yet to be drafted as the Ministry is first seeking submissions on the form and content of the Bill through its Discussion Document. The Discussion Document provides that the current proposition is for the Bill (applicable to any government intervention that is intended to direct or influence behaviour or interactions including both Acts and regulations made under delegated authority) to establish:
- principles of "good regulatory practice" that government agencies would need to consider when developing legislative proposals;
- a duty on government agencies to maintain, review and update their relevant regulatory systems;
- a Regulatory Standards Board which would assess complaints about existing regulation that is inconsistent with the principles and issue non-binding recommendations and public reports; and
- a framework under which the Ministry would operate its advisory role.
Given the breadth and depth of the proposed Bill, this consultation provides a significant opportunity for input on a piece of legislation that will have a wide reach across government, and a significant impact on those affected by government regulation (though for those in need of a more urgent solution, we suggest the Red Tape Tipline established earlier this week). The consultation period is from 19 November 2024 until 13 January 2025.
Considering the patience and sheer determination that has gotten us to this point – a similar bill was first introduced in 2006 as a private member's bill (which failed at the Select Committee stage but resulted in the establishment of the Regulatory Responsibility Taskforce in 2009) followed by further bills that were introduced but failed to progress in 2011 and 2021 – the odds are that this time the Bill will proceed. The proposed Bill is largely based on the 2011 and 2021 Bills, albeit with some changes.
Inputting on the proposal
The consultation seeks feedback on the current and proposed new arrangements that promote regulatory quality. Currently, responsible Ministers and agencies are required to provide:
- a regulatory impact statement for regulatory proposals taken to Cabinet; and
- a disclosure statement for most legislation introduced to the House.
Additionally, regulatory oversight arrangements are embedded into:
- Parliamentary processes (such as question time and select committee processes);
- the role of the new Ministry (which includes being responsible for the quality assurance of regulatory impact statements, auditing and undertaking regulatory reviews, and providing second opinion advice on other agencies' regulatory proposals); and
- the role of other entities (such as the Parliamentary Counsel Office, the Legislation Design and Advisory Committee, Ministry of Justice, and Office for Māori Crown Relations | Te Arawhiti).
There are no specific requirements for the ongoing review and maintenance of legislation and regulatory systems, though, guidance documents, international agreements and duties of the public service address these broadly.
In addition to seeking feedback on how the current arrangements for regulation are working, the scope of the Ministry's consultation includes:
1. The "principles of responsible regulation"
As noted above, the standard for "good regulation" is to be guided by "principles of responsible regulation" (Principles). These Principles are intended to be high-level, supported by detailed guidelines released by the Minister for Regulation which would set out how the Principles should be interpreted and applied. The proposed Principles are largely based on the Taskforce's recommendations (set out in the 2021 Bill) but also include new principles focused on the review and maintenance of existing regulation. In broad terms, the proposed Principles cover:
- rule of law;
- liberties;
- taking of property;
- taxes, fees and levies;
- role of courts;
- good law-making; and
- regulatory stewardship.
As these are not new concepts, the Discussion Document invites comment on whether it is appropriate to set out such principles in an Act, whether the principles are the right ones, and whether additional principles should be included. The Ministry explains that they have taken a "selective", rather than "comprehensive", approach.
2. Assessment for consistency with relevant Principles
The Discussion Document proposes that both new and existing regulation must be consistent with the Principles. Any departure would need to be justified by the Responsible Minister. The proposed approach would require Ministers and agencies to maintain, review and update regulatory systems (discussed further below at 4).
The exact process for assessing consistency is proposed to be issued by the Minister for Regulation in guidelines. The Ministry considers that some circumstances may warrant exemptions from consistency requirements – such as in emergency situations or for minor technicalities. The application of consistency assessments excludes legislation that gives effect to, or is otherwise related to, full and final Treaty of Waitangi | Te Tiriti o Waitangi settlements.
The Discussion Document recognises the potential for overlap between the proposed approach and existing arrangements, and the need to align these. Arrangements for regulatory impact statements and other guidance (such as Legislation Guidelines) can be designed once the Bill has been drafted, while the disclosure statement process will need to be amended or repealed given it is provided for by the Legislation Act 2019. The Discussion Document invites comment on whether the new consistency checks are necessary, how they might be refined, and what exemptions would be appropriate.
3. Mechanism for complaints
The establishment of a Regulatory Standards Board has been proposed to respond to complaints about the consistency of regulation with the Principles. In summary, the Board would be:
- a statutory board;
- able to make non-binding recommendations and provide reports (publicly available);
- independent of Ministers and agencies;
- supported by a secretariat from the Ministry and its members appointed by the Minister for Regulation;
- able to consider complaints about inconsistencies, implementation of regulation, and content and design of legislation;
- able to undertake reviews on its own accord or with the direction of the Minister for Regulation; and
- able to choose whether to consider complaints and operate "on the papers" without a hearing and using available information (discretion in order to manage costs).
The introduction of a Regulatory Standards Board is a change from the enforcement mechanisms proposed under previous versions of the Bill, which, as noted in the Discussion Paper, instead created a specific role for the Courts in applying the Principles.
The Discussion Document invites comment on whether an organisation is needed to consider complaints about the quality of regulation, and, if so, whether the Regulatory Standards Board is the best mechanism. It also seeks input on how the Board might best be designed.
4. Provisions to enable the Minister and Ministry for Regulation to have oversight of regulatory performance
The proposed Bill would give the Minister and Ministry for Regulation powers and obligations related to the function of reviewing regulation, including:
- a statutory power for the Chief Executive of the Ministry to obtain information from entities that exercise regulatory functions;
- the ability for the Minister to initiate a regulatory review and set the terms of reference for such a review; and
- a requirement that the Ministry produce regular reports on the overall performance of the Regulatory Management System (including consistency with the Principles) for the Minister to present to Parliament.
The Bill would also require agencies to maintain and improve legislation that they administer, and require the development and publication of a review plan of their legislation. The Minister for Regulation could set further requirements on how this should be done.
The Discussion Document invites comment on whether the information gathering powers would be justified and, if so, if they are sufficiently broad, or (conversely) require the institution of safeguards and limitations, including whether they should apply to all or only some entities.
Submissions will inform the drafting of the Bill that is proposed to be introduced in the first half of 2025. Please contact one of our experts below if you would like to discuss the potential impact of the proposed Bill and what this may mean for you.