Cutting Red Tape - Removing Regulatory Roadblocks

Max Bradford Enterprise and Commerce

The Government will make life simpler for small businesses by cutting red tape, and removing outdated regulations and laws, Enterprise and Commerce Minister Max Bradford announced today.

Panels of small business experts would be set up to test the ease of use of new and existing laws and help reduce compliance costs.

"The panels will advise the Government on the impact of proposed legislation before final Parliamentary approval," Mr Bradford said.

"Small and medium sized businesses are the powerhouse of the New Zealand economy and the Government is committed to making doing business easier.

"Every year we'll be wiping unnecessary laws and regulations off the books.

"The Government will ensure businesses have to fill in less forms so they can get on with their work, earn more and eventually hire more staff.

"Compliance costs for doctors will be the first on the list for the test panels of small business expertise. A pilot panel will be announced this month to look at where coordination and collaboration between agencies like the Health Funding Authority, Accident Insurers and Pharmac, could reduce compliance costs."

Mr Bradford said that where unnecessary compliance costs were identified, an annual Compliance Cost Reduction Bill would allow Parliament to consider amendments to a number of different Acts to reduce these costs.

"All departments will have to do a regulatory stocktake and the Government expects to reduce the number of laws on our statute books by between 12 and 25 percent over the next year.

"Sunset and review clauses will be considered for use in new laws to make sure that laws stay up-to-date.

"Simpler laws and easier access to information will be a real help for small businesses and the self-employed and give them more freedom to be innovative," Mr Bradford said.


Q. How much difference will these initiatives really make?

    Regulation is necessary to achieve the social and economic goals shared by New Zealanders. It is a fact of life. However, regulation is not always the best way to achieve these goals and some regulation imposes unnecessary costs. Therefore we should impose strong disciplines on the regulation-making process so that only necessary and effective laws are put in place. We also need to continually scrutinise existing laws to ensure that they continue to be relevant and effective. The initiatives will strengthen the existing disciplines. They will provide better information to decisionmakers on the costs to business of regulation, and require regular reviews of existing laws.

Q. What are the biggest costs facing business that can be attributed to regulation?

    The compliance cost debate tends to focus on the paperwork required to comply with regulations. This is important but is not the only or indeed the most significant cost in many cases. Also important are the time it takes to keep up-to-date with new laws and changes in existing laws, training staff in new legal requirements, and putting in place procedures to ensure compliance. There is evidence that some small businesses in find these costs so onerous that they do not attempt to keep up-to-date with any but the most obvious requirements in the areas of tax, statistics and customs.

    The indirect costs of regulating are also important. Indirect costs arise when regulation is so stifling that firms are constrained from developing new products or processes, entering new markets or establishing new businesses. The indirect costs of regulation can be much higher than the direct costs.

Q. What do we mean by 'regulation'?

    This term embraces primary, secondary and tertiary legislation, including rules.

Q. How high are the costs of regulation?

    No comprehensive studies have been done in New Zealand. Overseas studies indicate that the costs of regulation could lie in the range of 4 - 10% of GDP.