Chapter 1: Introduction
21. On 13 September 2006 the Ministers of Commerce and Energy announced a review of the regulatory provisions under the Commerce Act 1986 to be undertaken by the Ministry of Economic Development.
1.1 Objectives of the review
22. Experience with two regulatory control inquiries and the electricity lines thresholds regime have highlighted a number of potential issues with the regulatory control provisions of the Commerce Act (Parts 4, 4A, and Sections 70-74 of Part 5). It is therefore desirable to review the regulatory control provisions in the Commerce Act to ensure that regulatory control is consistent with providing for the long-term benefit of consumers within New Zealand. Economic regulation involves setting or influencing the prices that firms charge and the quality of goods and services they supply. Consistent with the broad objective, the Review will consider whether any amendments to the Act are desirable to reinforce the Government's objectives concerning infrastructure investment.2
23. The Ministry considers that the desirable characteristics of a regulatory regime include:
- regulatory uncertainty is minimised and stability and predictability of regulatory outcomes are improved over time;
- regulatory approaches are consistent and coherent across different firms/industries and over time;
- regulatory processes are transparent, cost-effective and timely, and also tailored to New Zealand's small scale in terms of resources and business size;
- the regulatory regime is sufficiently flexible to account for firm/industry specific circumstances, changing market conditions, innovation and experience; and
- there are appropriate levels of regulatory accountability and independence.
24. Note that there is tension between some of the characteristics, for example between flexibility and predictability. Note also that the process of review and subsequent change, in itself, generates a degree of uncertainty and instability as it takes time for legislative changes to be made and implemented and for case law to develop. In the interest of regulatory certainty, legislative change should only occur in circumstances when it is likely to result in clear benefits, such as greater certainty over time.
25. Throughout this document, the Ministry has attempted to assess proposed amendments to the regulatory provisions against the above characteristics. In addition, an economic cost benefit analysis may be undertaken after submissions have been accounted for and prior to making final policy proposals.
26. The Ministry promotes improvements in the quality of regulations that shape the business environment, to minimise the compliance burden and provide as much certainty and flexibility as possible. This Review is separate to the current Quality Regulation Review, which will work with businesses to identify aspects of regulatory frameworks that are constraining economic growth and implement practical solutions to address these problems. However, the principles and objectives of the two reviews are consistent.
Questions for submitters: Chapter 1
Q1. Do you have any comments on the desirable characteristics of a regulatory regime as outlined in this Chapter?
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