Speech to Remuera Rotary Club

Good evening. Thank you for the invitation to talk to you today.  

As MP for Epsom it is a particular pleasure to talk to you in my role as MP for Epsom and Minister for Regulatory Reform.  

As Minister for Regulatory Reform I am confident that in 2010 there will be some significant milestones.

Ever since I entered politics in 1996 and before that I have had concerns about the amount and type of regulations that have been choking the New Zealand economy and holding back endeavour and enterprise.  We are essentially drowned in red tape.

That of course is the problem so it was great when I was invited to become a Minister, because I then knew there was an opportunity to do something about it, especially as I secured the Regulatory Reform portfolio.  

One of the first things I did as Minister was oversee the release of the first Government Statement on Regulation. It is important because it contained two key commitments: 

• to introduce new regulation only when the government is satisfied that it is required; and,


• to review existing regulation and remove requirements that are unnecessary, ineffective and costly.

The Government will require a particularly strong case to be made for any regulation that is likely to:

• impose additional costs on business during the current economic recession;


• impair private property rights, market competition, or  incentives on businesses to innovate and invest;  or 


• over-ride fundamental common law principles.

I know how difficult it is for businesses struggling to keep up with the many new rules and requirements that have been introduced over recent years.  And I'm sure many of you will concur.

We realise the high compliance costs that are incurred and the time that has to be spent by businesses in dealing with these many and varied regulations.  

I would much rather see business operators, like you, devoting their energy and talent to growing your businesses, creating jobs and earning income.  

That is, after all, what will drive New Zealand's economic performance forward - not complying with unnecessary regulation. 

Having said that we still need regulations - they are a necessary feature of any lawful society - but they need to be reasonable, relevant and coherent. 

We need to achieve a real culture shift in the approach of government agencies to regulation.   

The public service implements regulation, and ultimately this will be where the Government Statement on Regulation will meet its sternest test.   

We have made it clear to the public service that the change of Government means a change to the way that things will be done from now on.    

To help with this change, we are introducing the following measures to support the delivery of the Government Statement on Regulation:

• Departments must provide annual regulatory plans of all known and anticipated proposals to introduce, repeal or review legislation or regulation 


• Departments must certify Regulatory Impact Statements and provide assurance that all policy options have been analysed and major risks and uncertainties identified 


• Departments must put in place systems for continually and systematically scanning existing regulation to identify possible areas for reform or further review. 

One of my other first tasks in the portfolio was setting up a taskforce to recommend changes to the Regulatory Responsibility Bill.

The Regulatory Responsibility Bill is designed to clean up the red tape problem.  The Bill is a new institution, one that demands proper and deliberate reflection on new and existing regulation.

I introduced the Bill in the last term of Parliament. The Bill was referred to Parliament's Commerce Committee which recommended that a taskforce review the proposal.

The Taskforce's recommended Bill is in many ways similar to the model I introduced.

However, it provides more specific proposals about how Ministers and regulators can depart from principles and the role of courts.

It requires those responsible for promoting regulations or administering them to certify as to their compliance or non-compliance.

One of the most exciting parts of the Taskforce's proposal is that citizens can hold a government to account should the government mislead the public over whether proposed legislation complies with the principles of good law making.

Any member of the public may apply to the Courts for a Declaration of Incompatibility, which states that a particular piece of legislation does not comply with the principles.  

This Declaration has no effect on the validity of the legislation, but will nevertheless send a powerful message to the government that sloppy legislative practices will be exposed.

This will not only reduce unnecessary regulation and reduce red tape but is also an example of "democracy in action," because it provides an opportunity for real public input.

Ministers will need to state where the legislation departs from the principles and the reasons why.

If they don't they will be found out. That's what transparency and accountability in law making is all about.

So changing the mindset across all areas of government is an important objective alongside removing much of the costly or ineffective legislation that we endure in our daily lives.

The Taskforce also proposed various supporting measures to give the Bill more oomph.

For example, they suggested that a Special Select Committee be assigned the task of reviewing bills for consistency with the principles of responsible regulation.

The Taskforce's Bill is a challenge to Parliament, but it is a challenge that Parliament asked for.

The taskforce is saying: "Here is a set of tools and disciplinary measures that we expect to improve the way you regulate." And the rest is up to us.

There is no close international precedent to the Regulatory Responsibility Act I am proposing.

That of course means some people will be nervous about its impact.

I will always argue that we need to be bold in dealing to red tape, sloppy law and outdated and wealth sapping legislation. And we need to be bold and uncompromising in making New Zealand a better place to live and work.

Nothing in this Bill asks Parliament not to respond to public concerns; rather, it asks ministers to explain how and why its actions satisfy those concerns and regulatory actions.

Regulatory Responsibility legislation will run parallel to the Public Finance Act.

The Public Finance Act imposes on government spenders certain responsibilities. It says if you are spending public money, justify it, and be accountable for it.

And it has created a cultural shift in the way that money is spent in New Zealand and the whole mindset around public expenditure.

The Regulatory Responsibility Bill will do the same for the way we make law and regulate by promoting a new level of transparency in holding lawmakers and regulators to account.

Of course, we are not relying on the Bill alone to guard against government failure.

We have already introduced the "Better Regulation, Less Regulation" policy statement, which sets the agenda for improvements to regulation under this Government.

We have strengthened the Regulatory Impact Analysis regime, demanding better, more objective analysis from officials, and more responsibility for that analysis.

We have also asked for regulatory scans and plans so that we can get a picture of how much regulation we will impose on people, and how much we are imposing already. And we have targeted some of the most important regulations for review, to see what we need to keep and what we need to fix.

The point of all these measures is to get people thinking about the costs of regulating.

I don't mean the financial costs to government (which are easy to think about), or even the compliance costs to business, but also the dynamic, opportunity costs.

Those costs are the least easy to observe, but often the most important.

Regulations that cost little to enforce and impose no direct costs on business can still be burdensome. For example, they might prevent firms and individuals from taking advantage of opportunities or from taking on competitors.  

Regulations that stop businesses and others from doing valuable things need particular, systematic scrutiny.

So as you can see, I am working assiduously on convincing my colleagues that passing the Regulatory Responsibility Bill is the right thing to do. For me, it's not only the right thing to do, it's hugely important.

I am determined to see an end to the absurd regulations such as having to register anti-dandruff shampoo as a medicine or those that prevent a good community minded Northland woman from making preserves for a local hospice, because she doesn't have an appropriately designated commercial kitchen. 

These are the sorts of things that not only impose costs and time, but strangle the spirit out of people and strip us of jobs, income and the ability to be innovative.

It breaks my heart to hear the stories of lost opportunity and the frustrations caused by poor law. And often these stories end with people turning their backs on business opportunities or worse leaving New Zealand to try their luck elsewhere.

For many of you here, this evening, you will know what I'm referring to.  I know, for example, from the stories I have heard here in the Epsom electorate and other places, how burdensome regulations have become.

But it is time for solutions and I see this Bill as an important part of that. 

This of course is cornerstone policy for the ACT Party. I know that many people voted for us because of this policy. That's why  am so committed to convincing my ministerial colleagues of its benefits and getting it into law.

It is however a bigger issue that just this. 

More importantly it is about making New Zealand a better place to work and do business in and live in.  

In closing I would like to extend my thanks to the Remuera Rotary Club President John Beck for the opportunity to talk to you this evening.   

I am sure you have some questions and I am looking forward to some interesting dialogue.

ends