56. It is recommended that the Committee:
a. Note that the Minister of Commerce has at the invitation of the Prime Minister convened a Ministerial Group for Quality Regulation comprising the Ministers of Finance, Fisheries, Agriculture and Forestry, Energy, Transport, Local Government, Labour, ACC, Communications and Building Issues to carry out a Ministerial Review of Regulatory Frameworks.
b. Direct the Ministry of Economic Development to convene and lead an Inter-Departmental Taskforce for Quality Regulation, which will include officials from The Treasury, the Department of Prime Minister and Cabinet, the Department of Labour, the Accident Compensation Corporation, the Department of Internal Affairs, the Department of Building and Housing, and the Ministries of Transport, the Environment, Agriculture and Forestry, and Fisheries to ensure that the agreed work programme is met.
Establishing a "Fast Track" Process
c. Note that the Inter-Departmental Taskforce for Quality Regulation will promote "fast tracking" of administrative and managerial responses for issues raised by business where these can be effective.
d. Agree that officials develop statutory, delegated legislation (for example, Regulations or Orders in Council) and/or other options for "fast track" mechanisms to quickly remedy identified failures in regulatory frameworks.
e. Note that officials will provide an initial report to the Minister of Commerce on these options by 30 June 2006.
Quality Regulatory Frameworks - Implementation and Interaction
f. Agree that the Review will support the economic transformation agenda by ensuring that New Zealand's regulatory environment is one that promotes economic growth, business confidence, globally competitive firms and social wellbeing, by:
- identifying clearly the objectives of the individual regulatory frameworks;
- ensuring that the legal framework is "fit for purpose" in that the nature and level of intervention meets the tests of proportionality, clarity, consistency, transparency, effectiveness and equity;
- ensuring that there is an appropriate level of self-regulation;
- identifying whether the framework needs to be (and if so can be) flexible to cater for the different characteristics of businesses within the framework;
- ensuring that the enforcement of the legal framework is focused on the objectives and proportionate to the risks of non-compliance (both likelihood and consequences); and
- coordinating and integrating centrally, any information collection or dissemination, enforcement and other requirements of more than one regulatory framework applying to a single business.
g. Agree to review particular regulatory frameworks that interact with each other, in particular to:
- identify problems and implement solutions that minimise compliance requirements for businesses, with a separate consideration of the impacts on small and medium-sized enterprises (SMEs), for example:
- requirements under the Injury Prevention, Rehabilitation, and Compensation Act 2001 (ACC), the Health and Safety in Employment Act 1992 (HSE) and the Hazardous Substances and New Organisms Act 1996 (HSNO);
- The practical issues surrounding the implementation of District and Regional Plans and resource consent processes, Building Act 2004, Building Code, territory authority building consent and inspection requirements; and
- Accreditation or Quality Assurance requirements and contract compliance requirements for public funding.
- identify adjustments that could provide that compliance with one regulator would automatically mean that the compliance requirements of another regulator were met, in order to reduce compliance costs to business in a significant way, without increasing risks to any of the objectives of the frameworks or the regulators.
- consider the appropriate role of Standards in the regulatory frameworks.
- consider whether "safe harbour" provisions should be provided in legislation so that businesses, which have worked proactively with the relevant regulator and been approved as complying, can be given real comfort that they have achieved an appropriate standard and will not be 'punished' for genuine error or mishap.
h. Agree that the Review undertake research to explore the ways in which enforcement strategies can be subject to a sufficient level of scrutiny to ensure that they are optimal in the particular circumstances in which they are used.
Sector Studies
i. Agree that the Review conduct vertical regulatory reviews by undertaking specific sectoral studies of the regulatory frameworks identified by the sectors as raising particular regulatory and compliance issues, commencing with the food and beverage (including wine, as a separate but related study), retailing and hospitality sectors.
j. Note that aspects of certain regulatory frameworks reflect international obligations and any study will need to take account of these.
k. Note that there are existing work programmes underway in the key infrastructure areas of energy and communications and that these are outside the scope of the Review.
Regulatory Process Disciplines
l. Agree to strengthen the quality of the process going forward by requiring all government agencies with the power to create and/or enforce regulatory frameworks or any aspects thereof to confirm that the principles of the Code of Good Regulatory Practice (namely, efficiency, effectiveness, transparency, clarity and equity) have been complied with and that the regulatory impact analysis (RIA) has been undertaken in accordance with the new requirements.
m. Agree to strengthen the regulatory impact analysis (RIA) requirements by:
- Introducing a requirement to prepare a draft Regulatory Impact Statement (RIS) for consultation;
- Focussing MED's Regulatory Impact Analysis Unit on those proposals with significant potential impact on economic growth, and allowing the Regulatory Impact Analysis Unit to deem a Regulatory Impact Statement inadequate if it:
- Fails to explain why the existing framework would not suffice to deal with the problem being addressed;
- Fails to include an appropriate cost-benefit analysis, risk assessment and statement of compliance costs; or
- Has been subject to manifestly inadequate consultation.
- Including an implementation and review section in the Regulatory Impact Statement.
n. Direct officials from MED, The Treasury, the State Services Commission and the Department of Prime Minister and Cabinet to consider the implementation of the changes to the regulatory impact analysis requirements noted above, and any further refinements that are necessary to meet the objectives of the regulatory impact analysis regime, and report back to Cabinet by 31 July 2006.
o. Direct officials to evaluate options for a stand-alone group to assess the implementation of regulation at a suitable time after its enactment and to prepare a report on these options by 30 June 2006.
p. Agree that the Australian standard costing tool (the "Business Cost Calculator") be implemented through a two year pilot programme within government departments and that its effectiveness in the New Zealand environment be evaluated over two complete years with a report back to Cabinet at the end of 2008.
q. Direct the Minister of Commerce to report back on the Ministerial Review of Regulatory Frameworks on or before 31 July 2007, with a first Milestone Report provided before 31 October 2006 and a second Milestone Report before 31 March 2007.
r. Note that I intend to publish this Cabinet paper on the MED website after the announcement on 22 May 2006.