Complex, Unclear Or Onerous Accountability
Many interviewees saw the costs of compliance as either altogether unnecessary, or disproportionately high. This category of concerns was perhaps the most difficult to synthesise, as each matter that appears unnecessarily onerous to business has to be seen in the wider context of the regulatory environment. It was also the largest category, in that it affects all businesses to some extent.
It is the weight of cumulative requirements that accentuates the difference for smaller businesses. As they are less likely to have staff dedicated to compliance, the time that smaller businesses spend meeting requirements usually directly reduces the time in which they can conduct their core activities. For example, for small businesses the cost of training includes down-time to enable staff both to travel to and attend training courses.
Some regulation was perceived as particularly onerous in the start-up phase but ceased to be a cause for concern once a business had grown.
The cumulative burden of compliance can seem overwhelming to small businesses. One interviewee listed 13 taxes or fees to report to government on. Another noted that transition to new systems in order to comply adds cost and complication.
A well-designed regulatory framework will provide clarity about the accountability of the various parties involved. The extent to which businesses are held accountable for administration is important. Businesses can feel disempowered or presumed guilty by regulatory approaches that are entirely out of their hands. By contrast, they feel that the level to which they are required to take responsibility for some administrative requirements compromises their core business activities. Similarly they expect that the officials responsible for the design and implementation of regulation will ensure it is fit for purpose, impose the least cost on business and be administered fairly and consistently.
Summary of the issues:
The implementation of some regulations can impose costs that discourage business activity.
Businesses frequently mentioned that some licensing requirements appear unreasonable when compared to other regimes.
It was also seen as onerous to require multiple renewals for licences or permits where the holder's circumstances had not changed in the interim period.
They also often stated that the demands imposed by surveys seem inappropriate in circumstances where the information collected is either unrelated to the business surveyed, or where a large amount of paperwork is required for an exercise that does not contribute any discernible benefit to the business.
Businesses often noted difficulties related to being an employer. Some of these were onerous because of the amount of time taken to calculate leave, and to work out how to pay staff who work irregular hours. Businesses saw potential benefits through being able to exercise greater flexibility to accommodate casual, part-time and seasonal staff, given the flexibility with which these groups are prepared to work. Interviewees were interested in having less complex and more flexible employment law – for example, having a shortened employment agreement for casual workers, setting out the essential terms on one page.
Several businesses in the retail, wine, and horticulture sectors raised concerns that certain biosecurity requirements are stricter than they need to be.
Businesses also stated that it is unnecessarily onerous to require staff to undergo extensive training in areas which do not appear relevant to their core business activities.
Issues about where accountability lies for regulations can, in extreme cases, prove to be fraught matters of legal liability. At the other end of the spectrum are straightforward issues to do with the quality of information that businesses are expected to act upon.
Businesses raised concerns about the capability of government agencies. Some felt that certain agencies lacked either the staff or resources to interact effectively with business. Others considered that the issues would be addressed if agencies were to improve their information sharing, both within government and with stakeholders.
How business sees it:
In a small business where only one person can sign off excise and GST paperwork, overseas travel opportunities are limited to two weeks. [wine]
Commercial licence requirements seem onerous when transporting a small number of guests. [hospitality]
It is guess work to identify responsible gambling when gamblers' disposable income is unknown. [hospitality]
A permit for an agricultural vehicle to travel on the road between 10am–2pm on weekends or on Public Holidays costs $600 per year. [wine]
Health and Safety used to involve staff members as delegates, but has escalated into an industry of its own. [retail]
Anomalies between the Holidays Act and Shop Trading Hours Act make pay and leave administration a burden, especially when staff work non-standard hours. [retail and hospitality]
Employment law is difficult to deal with and inflexible, especially around casual, seasonal and/or non-unionised staff. Developing individual agreements for all staff is time-consuming and frustrating. [horticulture]
It can be so hard to comply with the law for wheelchair access within and to shops that businesses end up doing nothing. [retail]
Having to pay a lump sum for ACC instead of paying out with PAYE makes the process unnecessarily cumbersome and requires a lot of accountant involvement. [hospitality]
Escalating and onerous development contribution levies are required by an increasing number of local authorities. [retail]
Applying for consent to have opening hours extended (taking into account legal costs) can lose a business as much as 5% of its gross sales for a year. [hospitality]
Faced with "never-ending" paperwork and Resource Management Act requirements, a business opted not to develop a new track on Department of Conservation land. [hospitality]
Businesses are required to make deductions from employees' pay to cover debts they have with various agencies. This is hard to administer; amounts and payment dates differ between employees as well as between agencies. [hospitality]
The Building Act places overly prescriptive and draconian requirements on business. Building warrants of fitness are particularly onerous when travel costs for inspectors are added to the cost of inspections. [hospitality]
Approved Handler Status training is too expensive. Course fees range from $75 to $300. Wage costs and lost production costs add to the outlay. [horticulture]
Detailed reporting conditions have made annual reports longer and more complex, due to the notes to the accounts. [retail]
NZQA liquor qualifications are designed to meet the needs of both the on- and off-licence trade, despite the fact that they are separate industries [retail, wine and hospitality].
Half the course is irrelevant and half the cost is over and above the company's needs. [retail]
Training is the most expensive part of problem gambler harm minimisation planning. Compliance requirements are high, and disproportionate to other policies. [hospitality]
One can hold a General Manager's licence for 20 years yet have to sit a four-hour course every two years and pay a contractor who provides the answers during the course. [wine]
An auditor for the ACC Workplace Safety Management Practices programme ticked all the boxes yet failed the business without explaining why. He seemed more interested in promoting his services than providing information on how it could comply. [wine]
The Commerce Commission could hold retailers liable for claims such as "90% fat free". Ensuring compliant pack labelling on all lines would be nearly impossible. [retail]
Illegal workers have IRD numbers so it makes it hard for employers. [wine]
As firms are liable for tax that contractors haven't previously paid, the firm now employs local people on PAYE despite the added paperwork. [wine]
Vineyards are held liable for problems with delivery trucks and drivers. [wine]
The new vehicle registration system lacks incentives for consumers to submit change of ownership forms. [retail]
Government initiatives to address complex, onerous or accountability issues include:
The Ministry of Economic Development:
- is leading work on Standard Business Reporting. This is a transformational, whole-of-government programme to reduce reporting burdens for business and support the e-government strategy. Standard Business Reporting would enable businesses to electronically submit their financial data to many government agencies in the same transaction thereby reducing the time and effort spent preparing and filing reports. Standard Business Reporting is in its infancy in New Zealand and implementation details and timelines are yet to be fully considered by officials. Ministers are currently considering the appropriate priority for Standard Business Reporting as part of the Quality Regulation Review. As a first step it is working with ACC, the Inland Revenue Department and Statistics New Zealand to analyse the feasiblity and/or requirements for the establishment of a Centralised Information Repository; and
- has developed a Business Cost Calculator, which allows the compliance cost of proposed regulation on business to be calculated. This will be ready for application within government departments in the first half of 2008 for a two-year trial.
The Inland Revenue Department:
- established on 1 October 2006 new PAYE subsidy rules to allow small employers to outsource their PAYE compliance obligations and focus their efforts on their business and reduce late or shortfall penalties on small businesses;
- is investigating whether it can lower compliance costs for small businesses by reducing the number of fringe benefit tax returns that have to be filed; and
- is considering including a review of the threshold for twice-monthly PAYE payments as a part of the Government's upcoming discussion document on reducing compliance costs for SMEs.
The Department of Labour:
- has an online Individual Employment Agreement Builder on its website which provides assistance with draft employment agreements;
- released an online tool to assist with entitlement calculations associated with the Holidays Act in March 2007. The Minister of Labour will report to Cabinet on the implementation and effectiveness of this tool by June 2008;
- will review licensing requirements in the Approved Code of Practice for the Training of Forklift Operators in the 2007/08 financial year;
- has been permitted to disclose to potential employers whether non-citizen prospective employees are entitled to work, and the duration of that entitlement (without explicit consent from the prospective employee). This will enable the Department of Labour to develop a system for employers to find out about entitlements to work via the Internet; and
- established an immigration policy specifically for employers in the horticulture and viticulture industries.
The Ministry of Health is reviewing the way that the Alcohol Advisory Council of New Zealand levy is calculated. The Associate Minister of Health is considering a number of options to improve the current regime and it is expected that government will introduce an amendment Bill this calendar year.
Statistics New Zealand:
- is implementing a Respondent Load Strategy that provides a framework for other initiatives that will reduce respondent load over the next three years, such as reduction of load for individual small to medium enterprises where the load is demonstrated to be unreasonable and out of step with industry typical load levels; and
- along with the Ministry of Tourism, has committed to halving the load associated with the monthly Accommodation Occupancy Survey by June 2008.
The Ministry of Transport has:
- recently amended regulations to fix unintended problems arising from a legal technicality which removed the eligibility of certain dealers (primarily boat and trailer dealers) to hold trade plates; and
- removed the requirement for all vehicles with a gross laden weight of less than 6,000kg to have a goods service licence, regardless of whether they are being used for "hire and reward" or not.
The Ministry of Agriculture and Forestry, Ministry for the Environment and ERMA New Zealand have developed proposals to address current problems with the Biosecurity Act/Hazardous Substances and New Organisms Act interface covering the importation of new organisms. The Ministry of Agriculture and Forestry is working with ERMA to address the concerns raised in the Industry Plant Import Action Group report and will be liaising with the Industry Plant Import Action Group as solutions are developed and implemented.
The Ministry for the Environment is also working on new regulations to prescribe some organisms as no longer "new" and clarifying those organisms that were never "new" through the Plant Biosecurity Index. This will make it easier for businesses to determine when HSNO approvals are not necessary.
The Inland Revenue Department:
- has redesigned the certificate of tax exemption which will in future be issued with a holographic foil surface. This surface will give a distorted image if photocopied or scanned, which will make it easier for companies to ensure that the certificate they are sighting is the original; and
- is investigating a web-based system for validating certificates.
The Society of Local Government Managers has initiated a Recruitment and Retention Programme, an over-arching initiative to encourage recruitment across the whole local government sector, as one way to address capacity and capability issues.
Cabinet has agreed to strengthen the offence provision for non-notification of vehicle ownership change and create an offence for this, enforceable by Police, local authorities and Land Transport New Zealand – for introduction mid-2007.
ACC will be reviewing payment options in 2007, including method and frequency, and will take into account inconsistency with other business payments (such as GST and PAYE).
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