Key Features of New Zealand's Broader Regulatory Management System
The Regulatory Policy Team recently reported on New Zealand's Regulatory Reform Framework for a roundtable discussion by senior officials of APEC's Economic Committee meeting in Peru in February. The paper summarised the key features of New Zealand's broader regulatory management system for the benefit of other APEC members and provided an opportunity to share experiences with tools used to enhance regulatory quality.
A key motivation for regulatory reform is the Government's economic vision for New Zealand to be "a high-income, knowledge-based market economy, which is both innovative and creative and provides a unique quality of life to all New Zealanders."
In international and academic literature, "regulatory reform" refers to policies aimed at improving regulatory quality to enhance the economic performance, cost-effectiveness, or legal quality of regulations and related government formalities. Reform therefore applies to whole-of-government operations but particularly focuses on competition and market-openness policies and has two dimensions:
- Managing the flow of regulatory interventions and alterations; and
- Assessing the stock of regulation against economic performance and international best practice.
New Zealand has a range of measures in place aimed at improving the quality of new and existing regulation, but does not have set targets for curtailing "excessive" regulation. The development of quality regulation draws on New Zealand regulatory experience, generally accepted international best practice (as promoted for example by the OECD and APEC), and reviews of relevant academic literature.
Support for regulatory reform is required at the highest level of government in order to recognise that the three key elements - policies, institutions, and processes - are to be considered as a whole and in terms of structural public governance.
"Deregulation" is a subset of regulatory reform and usually refers to updating or simplifying a specific economic sector's policy framework to reflect present challenges. The complete or partial elimination of unnecessary or obsolete regulation to improve economic performance can therefore be a consequence of assessing the stock.
New Zealand has historically experienced cycles of economic de- and re-regulation and debate has tended to focus on the heavy or light-handedness of settings. After a period of significant deregulation and public sector reorganisation in the 1980s, the emphasis of regulatory policy is now on quality management and the maintenance of robust regulatory frameworks across all sectors.
New Zealand has institutions in each of the judicial, legislative, and executive arms of government to promote good quality lawmaking. Stakeholders utilise a range of consultation and transparency processes for engaging with the government on issues of reform and regulatory burden. Areas that receive the most attention are compliance costs and "red tape", and certainty of regulation for investment in key infrastructural sectors.
New Zealand, like other developed countries, uses Regulatory Impact Analysis (RIA) for considering the need for, and design of, regulatory intervention. Essentially RIA is a tool to inform stakeholders and assist decision-makers. RIA aims to make transparent the benefits and costs of different regulatory and non regulatory options. In this way the trade-offs between, and impacts of, different policy options are more apparent to decision-makers.
The location of the RIA oversight body receives considerable attention in the international literature and a range of approaches exist across countries. In New Zealand, the Regulatory Impact Analysis Unit (RIAU) sits within MED and independently advises Cabinet whether the RIA requirements have been met by departments making economically significant proposals.
New Zealand's RIA requirements were recently updated so that in the case of non significant proposals, departments must provide their own assessment against the same criteria. Previously, the RIAU looked at all proposals, irrespective of magnitude. South Korea has adopted a similar approach to New Zealand.
The RIAU has found that RIA procedures are sometimes considered too late in the policy development process to be truly integrated with decision making. Clarifying the purpose of the RIS and how it is different from a Cabinet paper; rationalising the guidance material; amending the approach to adequacy certification; raising expectations of the RIA/RIS quality; and providing support for analysts with no or little experience have all been advanced as possible ways to improve departmental compliance with RIA requirements. It remains an ongoing process to embed the substantive RIA principles in actual policy making and this is reflected in other countries experiences.
A key point made in Peru was that the RIAU is just one part of a broader regulatory reform "toolbox". Other institutions are also responsible for policy implementation and maintenance in the law, providing key reference points and guidelines for regulatory formulation and review, including:
The Cabinet Office Manual [external link to CabGuide website]
Legislative Advisory Committee guidelines [external link to Ministry of Jusctice website]
and
Guidelines for policy advisers in applying The Bill of Rights Act 1990 and The Human Rights Act 1993 [external link to Ministry of Jusctice website]
Periodic reviews of regulatory frameworks, key productive sectors, and general compliance issues across government are how New Zealand currently assesses and monitors the effectiveness of the stock of existing regulation. However, there is no central agency formally responsible for reviewing existing regulation. In the first instance, responsibility lies with individual agencies to review the laws that they administer.
The Regulations Review Committee, as a specialist committee within Parliament, conducts regular evaluations of out of date or seldom used regulations. Responsibility for coordinating whole sector or framework reviews with implications for business or the economy often rests with the Ministry of Economic Development.
The Ministry of Economic Development has also been directed to undertake a programme of in-depth sector studies to identify where improvements can be made to the existing regulatory environment from the perspective of businesses.
Due to its experience with economic policy reform, New Zealand is often looked to by other economies for examples of tools and experiences with policies. The regulatory reform agendas of APEC and the OECD, being so broad as to encompass institutional arrangements within government (and including the legislative and judicial branches), provides a key perspective to view the effectiveness of regulatory management systems and provide pointers for other countries reforming their current governance arrangements.
Author: Ben Temple
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