Regulatory Standards Bill

  • lapsed on 22 August 2017

Regulatory Standards Bill

Government Bill

277—1

Explanatory note

General policy statement

The purpose of the Regulatory Standards Bill is to improve the quality of regulation (meaning Acts of Parliament, statutory regulations, and tertiary legislation) in New Zealand. The Bill has its origins in a private member’s Bill, then known as the Regulatory Responsibility Bill, that Parliament’s Commerce Committee examined in 2008. The Committee recommended that the member’s Bill not be passed, but that the Government establish a high-level expert taskforce to consider options for improving regulatory review and decision-making processes, including legislative and Standing Orders options.

Following the recommendation of the Commerce Committee, the Government established the Regulatory Responsibility Taskforce in March 2009. The current Regulatory Standards Bill is the result of the work of that Taskforce.

The Regulatory Standards Bill aims to improve the quality of regulation in New Zealand by increasing the transparency of regulation-making and the accountability of regulation makers. In essence, the Bill has 3 key components. It—

  • provides a benchmark for good regulation through a set of regulatory principles that all regulation should comply with; and

  • provides transparency by requiring those proposing and creating regulation to certify whether the regulation is compatible with the principles; and

  • provides monitoring of the certification process through a new declaratory role for the courts.

The Bill’s principles apply to Acts of Parliament, regulations, and tertiary legislation (excluding regulation made by local government). The principles are distilled from sources such as the Legislative Advisory Committee (LAC) Guidelines, the common law, and Parliament’s Regulations Review Committee.

The principles cover 7 key areas, including the rule of law, protection of individual liberties, protection of property rights, the imposition of taxes and charges, the role of the courts, review of administrative decisions, and good law-making processes. Any incompatibility with the principles is justified to the extent that it is reasonable and can be demonstrably justified in a free and democratic society.

The Bill provides transparency by requiring those proposing and creating regulation to certify whether the regulation is compatible with the principles, and the justification for any incompatibility. Depending on the kind of regulation, the Bill will require Ministers, chief executives, or both chief executives and Ministers, to certify compliance with the principles. This certification process ensures transparency about whether regulation is consistent with legal principle.

The Bill provides monitoring of the certification process, and accordingly incentives for accurate certification, by allowing the courts to provide declarations of incompatibility where they believe that the principles have been breached. This power is declaratory only; the courts will not have the power to strike down legislation, to issue injunctions against Parliament or the Crown, or to award damages to those adversely affected by regulation that is incompatible with the principles.

Initially, the courts will be able to make declarations only in relation to regulation made after the commencement of the Bill. After 10 years, the declaratory power extends to all regulation.

In addition to the key benchmarking, transparency, and monitoring components, the Regulatory Standards Bill directs the courts to prefer legislative interpretations that are consistent with the Bill’s principles. This direction applies initially only to new regulation, but after 10 years to the existing stock of regulation as well. The Bill also requires every public entity to use its best endeavours to review all regulation that it administers regularly for compatibility with the principles. The steps entities have undertaken to review their regulation and the outcomes from this process are required to be included in the entities’ annual reports.

Regulatory impact statement

The Treasury produced a regulatory impact statement on 2 February 2011 to help inform the main policy decisions taken by the Government relating to the contents of this Bill.

A copy of this regulatory impact statement can be found at—

Clause by clause analysis

The drafting of this Bill reflects the wording of the draft Bill contained in the Report of the Regulatory Responsibility Taskforce of September 2009. Part 4 of that report contains the Taskforce’s commentary on that draft Bill (http://www.treasury.govt.nz/economy/regulation/rrb).

Clause 1 is the Title clause.

Clause 2 is the commencement clause. The Bill comes into force 6 months after the date on which it receives the Royal assent.

Clause 3 sets out the purpose of the Bill.

Clauses 4 and 5 relate to interpretation. The legislation to which the Bill applies is defined broadly to include primary, secondary, and tertiary legislation, but does not include instruments made by local government.

Clause 6 provides that the Act binds the Crown.

Clause 7 sets out the principles of responsible regulation. In summary, the principles are that legislation should—

  • be consistent with certain specified aspects of the rule of law:

  • not diminish a person’s liberty, personal security, freedom of choice or action, or rights to own, use, and dispose of property, except as is necessary to provide for, or protect, any such liberty, freedom, or right of another person:

  • not take or impair property without the consent of the owner unless certain criteria are satisfied (including payment of full compensation):

  • not impose a tax except by or under an Act:

  • not impose a charge for goods or services unless the amount of the charge is reasonable (in relation to both the likely benefits of the goods or services to the payer and the costs of efficiently providing the goods or services):

  • preserve the courts’ role of authoritatively determining the meaning of legislation:

  • provide a right of appeal on the merits against certain decisions affecting any liberty, freedom, or right referred to above, and should state appropriate criteria for making those decisions:

  • not be made unless, to the extent practicable, the persons likely to be affected by the legislation have been consulted:

  • not be made unless there has been a careful evaluation of certain matters (for example, the issues concerned, the effectiveness of the existing law, the options, the benefits, and any reasonably foreseeable adverse consequences):

  • produce benefits that outweigh the costs of the legislation:

  • be the most effective, efficient, and proportionate response to the issue concerned that is available.

Subclause (2) provides that an incompatibility is justified to the extent that it is reasonable and can be demonstrably justified in a free and democratic society. This is similar to the qualification that exists in section 5 of the New Zealand Bill of Rights Act 1990.

Subclause (3) confirms that the clause does not limit the New Zealand Bill of Rights Act 1990.

Clauses 8 and 9 provide that the following persons must each sign, at each of the following times, a written certificate as to compatibility of new legislation with the principles of responsible regulation:

Type of legislationPersons who must each sign certificateTimes at which certificate must be given
Government Bill

The Minister responsible for the Bill.

The chief executive of the public entity that will be responsible for administering the Bill when it has been enacted.

Before the Bill is introduced to the House of Representatives.

Before its third reading.

Any Bill other than a Government Bill

The member of Parliament responsible for the Bill.

Before the Bill is introduced to the House of Representatives.

Before its third reading.

Any other legislation

The Minister responsible for the legislation (if a Minister is responsible).

The chief executive of the public entity that will be responsible for administering the legislation when it has been made.

Before the legislation is made.

A certificate given by a chief executive is not required to state whether any incompatibility with the principles is justified if a Minister has also given a certificate.

Clause 10 requires the certificate in respect of a Bill to be presented to the House of Representatives.

Clause 11 provides that wherever an enactment can be given a meaning that is compatible with the principles (after taking account of the qualification in clause 7(2) relating to what is reasonable and can be demonstrably justified in a free and democratic society), that meaning is to be preferred to any other meaning. This clause will apply to legislation made before the date on which the Bill comes into force only after the tenth anniversary of that date.

Clause 12 provides that certain courts may declare legislation incompatible with the principles. This applies to legislation made before the date on which the Bill comes into force only after the tenth anniversary of that date.

Clause 13 provides that a court declaration has only a declaratory effect, and does not give rise to any substantive rights.

Clause 14 provides that the principles do not have the force of law.

Clause 15 gives the relevant Minister power to issue certain guidelines.

Clause 16 requires every public entity to regularly review all legislation that it administers for compatibility with the principles.

Clause 17 requires public entities to publish certain information on the Internet.