Compliance Costs

  • John Luxton
Associate Minister of International Trade

PARK ROYAL HOTEL

(Please note these are brief speech notes from the Minister's off-the-cuff speech)

We are really talking about cost of regulation which costs time, money and lost opportunity. Government on behalf of society has created 1600 laws, 3700 regulations in the last ten years along with Gazette notices, codes of practice, conventions etc Introduced, no doubt, all with the best intent but with how much rigour?

Government has done well on the fiscal side of its operations in areas such as fiscal and monetary controls, monthly accounting requirements, annual budgets and accounts. All these are continually updated and meet best practice benchmarks

The Regulatory environment is equally as important or even more important than fiscal side as it affects all in society; individuals, families, business, Government, Central and Local.

However we are not as rigorous on the fiscal side of Government operations. What can be done about it?

The Business Liaison programme, which replaced the Manufacturers Advisory Group (MAG) highlights business, particularly small and medium sized business concerns about regulatory costs. The Ministry of Commerce is reviewing the cost to business of Government regulation.

The Compliance Cost Assessment framework was introduced in 1995 but now looking at how effective this has been.

We are looking at further ways of improving the quality of regulatory and legal interventions to address total costs; administrative, compliance, and economic.

Options being considered:

a code of Good Regulatory Practice, based on the principles of effectiveness, efficiency, equity, transparency and clarity, supported by best practice guidelines for departments;
a Generic Policy Development Process to ensure effective consultation by departments at key stages in developing policy and formulating new regulation;
a Regulatory Responsibility Act which would require government to certify that proposed regulatory actions are based on robust regulatory management principles;
a Regulatory Impact Statement which would extend the current requirement for Cabinet papers to include a Compliance Cost Statement, to cover the total regulatory costs. I expect to be able to take a paper to Cabinet on these possible initiatives shortly.
A second important part of the review is to examine certain existing legislation. It is recognised that some regulation can have unintended impacts; these can become more extensive over time as circumstances change.

On the basis of feedback from business, the following legislation has been selected for review, with officials to report by the specified dates:

Resource Management Act 1991, by 1 December 1997
Building Act 1991, by 1 March 1998
Health and Safety in Employment Act 1992, by 1 December 1998
Privacy Act 1993, by 1 July 1998
Human Rights Act 1993, by 1 July 1998
Meat Act 1981, Dairy Industry Act 1952 and related legislation governing food safety, by 1 March 1999
The Employment Contracts Act, Holidays Act, ACC are being considered by the Ministries responsible. These pieces of legislation are perceived by the Manufacturers Federation, Employers Federation, other industry representatives and small business as prime examples of regulatory interventions giving rise to some significant and possibly unnecessary costs on business.

The purpose is not to challenge the broader underlying objectives of the legislation concerned, but to analyse its impacts on business and identify the scope for minimising costs.

There are areas of further work required also:

On old regulations often retained because a clause may still be relevant eg Tramway Drivers Regs 1953

Legislation that has outlived its purpose and constrains business activity In my opinion Producer Board legislation is a big barrier for example. Some occupational licensing - chemist, optometrists and other health regulations under the guise of consumer protection but really is just protecting industrial patch.

Regular updating process for legislation and regulations over say 5 years old Why do we have them at all ? Often "compliance" or the regulation becomes the end, instead of the practice of behaviour trying to be encouraged or prevented. Eg North Carolina - no district scheme plans - market solutions

Need to speed up the process of change in Parliament. Required time to get through Parliamentary process too long. eg decisions made following 1987 crash into law 1st October this year, more than 10 years later - Investment Product disclosure legislation. Many Cabinet decisions for change or update knocked back because of other priorities. Some Labour ones still in the system. A need to revise the process and get better practice approaches into Government to remain relevant.
Compliance Costs are about quality assurance.

A need to focus away from prescription to incentive approaches.

Market mechanisms often work best.

Small to medium sized businesses often the hardest hit. Working manager has to meet all of the compliance costs requirements - unable to delegate. Eg Orchardist in my area has 55 responses to IRD/year not to think of other requirements of OSH, employment, or other imposed by Local Authority, Regional Authority or Government Department

Removing red tape in Government and Local Authorities is very important in assisting business growth and employment, particularly for smaller business.

Central and Local Government organisations need to remember who their clients are and become more and continually consumer focussed in their approach. PARK ROYAL HOTEL

(Please note these are brief speech notes from the Minister's off-the-cuff speech)

We are really talking about cost of regulation which costs time, money and lost opportunity. Government on behalf of society has created 1600 laws, 3700 regulations in the last ten years along with Gazette notices, codes of practice, conventions etc Introduced, no doubt, all with the best intent but with how much rigour?

Government has done well on the fiscal side of its operations in areas such as fiscal and monetary controls, monthly accounting requirements, annual budgets and accounts. All these are continually updated and meet best practice benchmarks

The Regulatory environment is equally as important or even more important than fiscal side as it affects all in society; individuals, families, business, Government, Central and Local.

However we are not as rigorous on the fiscal side of Government operations. What can be done about it?

The Business Liaison programme, which replaced the Manufacturers Advisory Group (MAG) highlights business, particularly small and medium sized business concerns about regulatory costs. The Ministry of Commerce is reviewing the cost to business of Government regulation.

The Compliance Cost Assessment framework was introduced in 1995 but now looking at how effective this has been.

We are looking at further ways of improving the quality of regulatory and legal interventions to address total costs; administrative, compliance, and economic.

Options being considered:

a code of Good Regulatory Practice, based on the principles of effectiveness, efficiency, equity, transparency and clarity, supported by best practice guidelines for departments;
a Generic Policy Development Process to ensure effective consultation by departments at key stages in developing policy and formulating new regulation;
a Regulatory Responsibility Act which would require government to certify that proposed regulatory actions are based on robust regulatory management principles;
a Regulatory Impact Statement which would extend the current requirement for Cabinet papers to include a Compliance Cost Statement, to cover the total regulatory costs. I expect to be able to take a paper to Cabinet on these possible initiatives shortly.
A second important part of the review is to examine certain existing legislation. It is recognised that some regulation can have unintended impacts; these can become more extensive over time as circumstances change.

On the basis of feedback from business, the following legislation has been selected for review, with officials to report by the specified dates:

Resource Management Act 1991, by 1 December 1997
Building Act 1991, by 1 March 1998
Health and Safety in Employment Act 1992, by 1 December 1998
Privacy Act 1993, by 1 July 1998
Human Rights Act 1993, by 1 July 1998
Meat Act 1981, Dairy Industry Act 1952 and related legislation governing food safety, by 1 March 1999
The Employment Contracts Act, Holidays Act, ACC are being considered by the Ministries responsible. These pieces of legislation are perceived by the Manufacturers Federation, Employers Federation, other industry representatives and small business as prime examples of regulatory interventions giving rise to some significant and possibly unnecessary costs on business.

The purpose is not to challenge the broader underlying objectives of the legislation concerned, but to analyse its impacts on business and identify the scope for minimising costs.

There are areas of further work required also:

On old regulations often retained because a clause may still be relevant eg Tramway Drivers Regs 1953

Legislation that has outlived its purpose and constrains business activity In my opinion Producer Board legislation is a big barrier for example. Some occupational licensing - chemist, optometrists and other health regulations under the guise of consumer protection but really is just protecting industrial patch.

Regular updating process for legislation and regulations over say 5 years old Why do we have them at all ? Often "compliance" or the regulation becomes the end, instead of the practice of behaviour trying to be encouraged or prevented. Eg North Carolina - no district scheme plans - market solutions

Need to speed up the process of change in Parliament. Required time to get through Parliamentary process too long. eg decisions made following 1987 crash into law 1st October this year, more than 10 years later - Investment Product disclosure legislation. Many Cabinet decisions for change or update knocked back because of other priorities. Some Labour ones still in the system. A need to revise the process and get better practice approaches into Government to remain relevant.
Compliance Costs are about quality assurance.

A need to focus away from prescription to incentive approaches.

Market mechanisms often work best.

Small to medium sized businesses often the hardest hit. Working manager has to meet all of the compliance costs requirements - unable to delegate. Eg Orchardist in my area has 55 responses to IRD/year not to think of other requirements of OSH, employment, or other imposed by Local Authority, Regional Authority or Government Department

Removing red tape in Government and Local Authorities is very important in assisting business growth and employment, particularly for smaller business.

Central and Local Government organisations need to remember who their clients are and become more and continually consumer focussed in their approach. PARK ROYAL HOTEL

(Please note these are brief speech notes from the Minister's off-the-cuff speech)

We are really talking about cost of regulation which costs time, money and lost opportunity. Government on behalf of society has created 1600 laws, 3700 regulations in the last ten years along with Gazette notices, codes of practice, conventions etc Introduced, no doubt, all with the best intent but with how much rigour?

Government has done well on the fiscal side of its operations in areas such as fiscal and monetary controls, monthly accounting requirements, annual budgets and accounts. All these are continually updated and meet best practice benchmarks

The Regulatory environment is equally as important or even more important than fiscal side as it affects all in society; individuals, families, business, Government, Central and Local.

However we are not as rigorous on the fiscal side of Government operations. What can be done about it?

The Business Liaison programme, which replaced the Manufacturers Advisory Group (MAG) highlights business, particularly small and medium sized business concerns about regulatory costs. The Ministry of Commerce is reviewing the cost to business of Government regulation.

The Compliance Cost Assessment framework was introduced in 1995 but now looking at how effective this has been.

We are looking at further ways of improving the quality of regulatory and legal interventions to address total costs; administrative, compliance, and economic.

Options being considered:

a code of Good Regulatory Practice, based on the principles of effectiveness, efficiency, equity, transparency and clarity, supported by best practice guidelines for departments;
a Generic Policy Development Process to ensure effective consultation by departments at key stages in developing policy and formulating new regulation;
a Regulatory Responsibility Act which would require government to certify that proposed regulatory actions are based on robust regulatory management principles;
a Regulatory Impact Statement which would extend the current requirement for Cabinet papers to include a Compliance Cost Statement, to cover the total regulatory costs. I expect to be able to take a paper to Cabinet on these possible initiatives shortly.
A second important part of the review is to examine certain existing legislation. It is recognised that some regulation can have unintended impacts; these can become more extensive over time as circumstances change.

On the basis of feedback from business, the following legislation has been selected for review, with officials to report by the specified dates:

Resource Management Act 1991, by 1 December 1997
Building Act 1991, by 1 March 1998
Health and Safety in Employment Act 1992, by 1 December 1998
Privacy Act 1993, by 1 July 1998
Human Rights Act 1993, by 1 July 1998
Meat Act 1981, Dairy Industry Act 1952 and related legislation governing food safety, by 1 March 1999
The Employment Contracts Act, Holidays Act, ACC are being considered by the Ministries responsible. These pieces of legislation are perceived by the Manufacturers Federation, Employers Federation, other industry representatives and small business as prime examples of regulatory interventions giving rise to some significant and possibly unnecessary costs on business.

The purpose is not to challenge the broader underlying objectives of the legislation concerned, but to analyse its impacts on business and identify the scope for minimising costs.

There are areas of further work required also:

On old regulations often retained because a clause may still be relevant eg Tramway Drivers Regs 1953

Legislation that has outlived its purpose and constrains business activity In my opinion Producer Board legislation is a big barrier for example. Some occupational licensing - chemist, optometrists and other health regulations under the guise of consumer protection but really is just protecting industrial patch.

Regular updating process for legislation and regulations over say 5 years old Why do we have them at all ? Often "compliance" or the regulation becomes the end, instead of the practice of behaviour trying to be encouraged or prevented. Eg North Carolina - no district scheme plans - market solutions

Need to speed up the process of change in Parliament. Required time to get through Parliamentary process too long. eg decisions made following 1987 crash into law 1st October this year, more than 10 years later - Investment Product disclosure legislation. Many Cabinet decisions for change or update knocked back because of other priorities. Some Labour ones still in the system. A need to revise the process and get better practice approaches into Government to remain relevant.
Compliance Costs are about quality assurance.

A need to focus away from prescription to incentive approaches.

Market mechanisms often work best.

Small to medium sized businesses often the hardest hit. Working manager has to meet all of the compliance costs requirements - unable to delegate. Eg Orchardist in my area has 55 responses to IRD/year not to think of other requirements of OSH, employment, or other imposed by Local Authority, Regional Authority or Government Department

Removing red tape in Government and Local Authorities is very important in assisting business growth and employment, particularly for smaller business.

Central and Local Government organisations need to remember who their clients are and become more and continually consumer focussed in their approach.