Regulatory Standards Bill

Members, we now come to Part 2. Part 2 is the debate on clauses 8 to 40, “Principles of responsible regulation and regulatory stewardship”, and Schedule 2. The question is that Part 2 stand part.

Thank you, Madam Chair. Part 2 is divided into a series of subparts, and I will briefly describe each one of them, their purpose, what they do, and why they’re in the law.

Subpart 1 consists of clauses 8 and 8A. That is the principles of responsible regulation, and this is a key part of the legislation, setting out that responsible regulation should be consistent with the rule of law. It should not unduly diminish a person’s liberty. It should not take or severely impair or authorise the taking or severe impairment of property without the consent of the owner, and it goes on to give some conditions for that. Taxes, fees, and levies should be consistent with the Constitution Act, but also there are a series of criteria for setting out taxes, fees, and levies, with the effect that the people who benefit are those who pay them, and people are not taxed or levied for things that they don’t directly benefit from. The role of the courts is upheld and preserved as the arbiter of decision making, and there’s also a section in the principles on good lawmaking, which involves consultation, problem definition, cost-benefit analysis, and consideration of other alternatives. There is, finally, the other principles, standards, or guidelines. There’s a clarification that was added during the select committee process that says, “The principles … do not limit or affect any other principles, standards, or guidelines relating to the development of high-quality legislation.”

I will address one criticism of the principles that has been in the public domain, and that is that the principles are a limited or selective range of principles, and that a Government might pursue other objectives, such as upholding Te Tiriti o Waitangi, equity, public health, or perhaps environmental protection. Those are generally goals that I would describe as collective action. In fact, I remember being here when Jacinda Ardern stood right there and said that we do together, as Government, things that we cannot achieve alone. When the Government is introducing legislation or making secondary legislation, it’s reasonable to assume that they already have a collective objective, such as the ones that I just described. The purpose of these principles is to highlight and bring to the attention of the House, in line with the purpose of the bill, the impacts of that collective action initiative on the individual—their rights, their property, their liberty—and to check that the law has been made carefully and is consistent with the rule of law. I think that if that was better understood, a lot of the criticism that people have made of the bill might just dissipate a little. Hope springs eternal.

Subpart 2 applies to how the principles apply when developing legislation, and it sets out that when a bill is introduced, it should have a consistency accountability statement. It talks about the consistency of a Government amendment of the principles and when that applies, and also, in clause 12, when a Government amendment does not require a consistency accountability statement. It then goes on to talk about the application of the bill and the principles and the requirement for consistency accountability statements with secondary legislation.

Subpart 3 relates to what you might call post hoc stewardship of the existing stock of legislation, as opposed to the flow of new laws and regulations. That requires Government departments to make a plan, which some people have said will add a lot of cost and is somehow radical, maybe forgetting that Government departments are already required to have these stewardship plans. Much like other regulatory initiatives, such as regulatory impact statements, they haven’t been adhered to in the way that we hoped. What this law is really doing is highlighting and requiring Governments to do things that in theory they do, but in practice they have not been doing. I note that Megan Woods, a very experienced member, referred to that frustration in one of her earlier contributions.

We then come to Subpart 5, which makes the point, as referred to by Dr Duncan Webb in Part 1, that the Act does not confer or impose legal rights or obligations. That is certainly true; however, Duncan Webb helpfully answered his own question in an earlier part when he said that there are sometimes laws that you are in breach of but you do not necessarily face a consequence. It’s interesting that most New Zealanders actually don’t follow the law because they think they’ll be punished. Most people don’t shoplift, and the reason is not that they think they’ll be caught; it’s that they actually think it’s wrong to take other people’s stuff. There is power in having laws that people will follow, even if they do not believe that they will face a consequence. None the less, there is some real power in Parliament requiring Government departments to do something. Generally, Government departments do try to follow the law.

Subpart 6, in clause 27, sets out guidance and the criteria for the regulatory standards ministry, which, of course, at this point, is going to be the Ministry for Regulation, to set out guidance so that people completing consistency accountability statements—that is, people within Government departments and Ministers—know how and are able to produce these consistency accountability statements. There will be a lot of background to help them do that.

Finally, Subpart 7, which I think is the last subpart in this section, sets out the role of the Regulatory Standards Board. Part of the history here is that the Regulatory Responsibility Bill and the Regulatory Standards Bill—predecessors, if you like, of this piece of legislation—envisaged a role for the courts where they would be able to judge whether a consistency accountability statement, as it’s now called, had been correctly compiled in alignment with the principles. The Government has a view that in further empowering the courts to judge Parliament’s Acts, and perhaps judge Parliament’s Acts against each other, it may be unwise. That comes off the back of the declarations of inconsistency. That was made necessary, and Parliament agreed to that after, I think it was, the Make It 16 court case.

The Regulatory Standards Board has two advantages: (1) it’s not a court, and (2) it’s more likely to have people appointed with expertise in regulatory economics. One of the criticisms of the bill was that judges aren’t necessarily the best people to make these kinds of judgments, so you can get a broader skill set for assessing public policy work with the Regulatory Standards Board. Subpart 7 sets out the appointments, that the board must act independently, and how it’s appointed. Of course, there have been changes made through the select committee process—for example, saying that the Governor-General, on the recommendation of the Minister, must appoint members to the board. This kind of separation, also changing the way that they’re appointed and the length of time they’re appointed for, is designed to address criticisms that were made during the select committee stage that, perhaps, the Regulatory Standards Board would not act with enough independence. I welcome these changes, because I’ve always wanted the Regulatory Standards Board to act independently.

That is a summary of the seven subparts of Part 2, their various purposes, setting out the principles, explaining when the principles apply to the requirement for a consistency accountability statement, explaining what the legal implications of the consistency accountability statement, and, indeed, the broader bill, are, and setting up the Regulatory Standards Board, which is there to judge the quality of work done on the consistency accountability statements in order to comply with the Act. I hope that is a helpful summary to the House, and, of course, I’m very happy to address genuine questions and amendments that members may have.

Point of order, Madam Chair. I seek leave to correct an earlier vote on the amendment by the Hon Dr Duncan Webb. I didn’t want to stop the Minister when he was explaining Part 2.

Leave is sought for that purpose. Is there any objection? Yes, there is.

Thank you, Madam Chair. Look, we’re now on Part 2, and Part 2 starts with clause 8, which is the “Principles of responsible regulation”, which is the very heart—the black heart—of this bill, if you will. I think it’s really important that we take this—particularly clause 8—very carefully.

I want to start my contribution by suggesting that the Minister for Regulation adopt one of my amendments. Many of my amendments, because this will enter the statute book, aren’t seeking to undermine this legislation but actually make it more workable. In clause 8—and I want to talk about the rule of law—one of the principles is “(a) the importance of maintaining consistency with the following aspects of the rule of law:”. Then it names them: “(i) the law should be clear and accessible: (ii) the law should not adversely affect rights and liberties, or impose obligations, respectively: (iii) every person is equal before the law: (iv) there should be an independent, impartial judiciary:”. Now, that’s actually really selective, because the rule of law is a very open-textured kind of aspect or concept which underpins our constitutional framework.

My amendment suggests that you don’t have the descriptors underneath, because they’re not descriptors; they’re limiters. It says, “the following aspects of the rule of law:”, and that’s what philosophers would call a thin rule of law—a rule of law which isn’t expansive and only looks to a narrow and formal range of rights and obligations. Whereas my proposal is simply saying that if you’re going to have a principle of the rule of law, say, “the importance of maintaining consistency with the rule of law”.

Look, I really respect the Legislation Design and Advisory Committee’s submission to the Finance and Expenditure Committee, because they were very careful not to be dismissive of the bill, and to recognise it. But when they used the words “selective” and “contested”—many of the principles are selective and contested—this is one of the ones that they were talking about. There is an aspect of the rule of law which says there should be equal access to the courts. That means you’ve got to have some kind of legal aid framework, you’ve got to have some kind of access to justice framework. There’s an aspect of the rule of law which says you should redress inequalities in society, that there should be genuine and substantive equality of opportunity and not just formal equality of opportunity. Now, that’s fallen off the end.

One of the challenges with trying to, kind of, legislate the rule of law is that it doesn’t respond well to a bullet point list. It’s a philosophical concept, not a legislative design principle. Whilst the rule of law is actually referred to in the Legislation Design and Advisory Committee’s guidelines, they actually are very open about saying that the rule of law looks to these kind of values. It doesn’t seek to dictate what the rule of law is but, rather, be a guiding set of values and concepts, not a bullet point list. I mean, “clear and accessible”, yes. But, in fact, if you’re going to say the law should be accessible, then it means much more than that. Accessibility isn’t a simple concept. But it’s not so much the principles that the Minister has included; it’s the fact that it excludes anything that’s not there. It’s only the following aspects of the rule of law, not those broader aspects.

Now, I can hear the Minister is likely going to say it’s OK, we all know that this is a non-exhaustive list of principles. But these are the principles—the only principles—by which the Regulatory Standards Board can measure the quality of legislation; they can’t look to other principles. Using this impoverished, narrow, thin concept of the rule of law is actually going to test legislation against a very poor articulation of the rule of law. But there is a fix. The fix is not to try and capture the rule of law; just point to it as a value set. Say, “Look, we want to have compliance with the rule of law—and that’s where we’re going to leave it.” It’s for the scholars on your Regulatory Standards Board to articulate and investigate what that is. That’s the first amendment that I would propose.

Thank you, Madam Chair. I have a very specific set of questions for the Minister for Regulation in regard to clause 8, specifically clause 8(c). These are the clauses of the taking of property.

Now, there was a substantive and very interesting submission that the Finance and Expenditure Committee heard, and this was from Transpower. They expressed very articulately their concerns that clause 8(c) had the potential to raise electricity costs for New Zealand. This was largely due to the fact that 8(c) says, “legislation should not take or severely impair, or authorise the taking or severe impairment of, property without the consent of the owner”. Then paragraph (c)(ii): “fair compensation for the taking or severe impairment is provided to the owner;”.

Their concern was about the interception of these clauses with the Electricity Act 1992 and for the protections for the national grid that are already contained under the Resource Management Act. They were concerned that any updates to the Electricity Act could result in having to pay increased compensation payments for the laying out of national infrastructure, which is for the national benefit. Transpower laid out their concern, and it’s not surprising they had these concerns, given that 93 percent of our overhead electricity infrastructure goes over private property—and in terms of what would happen at subsequent revisions around that.

This actually opened up a further discussion at select committee around infrastructure more generally, in terms of the Public Works Act; in terms of how we would balance the private property rights, which are given primacy under this legislation, against the national interests and the need for infrastructure. I think these are very big questions. The Government tells us that it is a Government that wants to advance the build-out of New Zealand’s infrastructure, but we are in danger, in this bill, in clause 8(c), of actually imposing more cost, making it more difficult, and, indeed, imposing uncertainty in a number of those build projects.

I’d like to know from the Minister whether or not he has considered the changes and the amendments that Transpower suggested in their submission. Their submission was that they be explicitly excluded from this legislation, that there does have to be some national interest, and the national grid needs to be given some protection in that space. More broadly, has the Minister sought advice from officials around the interplay with infrastructure projects and how clause 8(c) may impact on that; how this may work with not only the Electricity Act 1992 but the Public Works Act and any land acquisitions that may occur under these pieces of legislation, which are all about putting the national interest at the fore; and whether or not the Minister has considered any other alternatives; whether officials provided him with any advice in regard to infrastructure, particularly, obviously, electricity infrastructure, but, more broadly, roading and other forms of infrastructure; and whether or not he has sought advice from his officials in light of these submissions that we heard at select committee?

Point of order, Madam Chairperson. I seek leave to correct the vote on Dr Duncan Webb’s tabled amendment replacing clause 3 in Part 1.

CHAIRPERSON (Barbara Kuriger): Leave is sought for that purpose. Is there any objection? There is not. The member may correct the vote.

Dr LAWRENCE XU-NAN: For the tabled amendment, 15 in favour.

Thank you.

Thank you, Madam Chair. I’ll just address the last two questions and, colleagues, try to finish before 10 p.m. so we’re not putting any additional impost on you.

In terms of Duncan Webb’s question about the definition of the rule of law—and there was quite lengthy philosophical treatise that, I’m sure, must have impressed first-year law students back in the day. But here it’s very simple: we have set out a series of criteria that define the rule of law and then said, in clause 8A, that other criteria can also be considered. This is not an exhaustive list; that’s what the law says, if you read it. On the other hand, if you believe that the rule of law is some mythical, distant thing that the average person can’t really understand and can’t have written down for them, you can start to understand why the Reformation happened, because, actually, we live in a Protestant society where people like to be able to read and understand the law, even ordinary people who are not professors.

Megan Woods asked about clause 8(c), property rights, and the requirement that severe impairment of property rights be compensated if a law takes away property. She then raised Transpower and their desire to build transmission lines, I assume, and I guess she referred to other infrastructure—perhaps roads—that might be built over other people’s property. I think the Public Works Act was passed in 1981 or 1982. It’s been a very long time, and the common law that that was based on—that you can’t just take people’s stuff; if you’re a citizen, you can’t just steal people’s stuff. If you’re a Government, you can’t just take people’s land because it’s politically popular to do so. You actually have to compensate them. These are very old common law principles, and when it comes to impairing people’s property, there is already, in the Public Works Act, jurisprudence where, if you partially take someone’s property, you have to compensate them for that.

What’s really interesting is to draw out what Megan Woods is actually saying. She says that if people want stuff to be cheaper, it might be OK to make it cheaper by taking other people’s property and not compensating them for it. This is quite an extraordinary proposition. It’s actually a massive deviation from the Public Works Act, from our common law traditions, and from the way that most New Zealanders think. You shouldn’t just take other people’s stuff without compensating them for it. Most people who go into a shop pay for it, they don’t just walk out with it. The idea that somebody comes to a select committee and says, “We’d like to be exempt.”—what that really tells you is that their business model is to impair other people’s property, to take value from other people and redistribute it to each other. In a civilised society with the rule of law, if you’ve got a public purpose and you want to achieve it, you shouldn’t achieve it by just putting all the costs on somebody who happens to be in the way. That’s the opposite of a civilised society, and that’s precisely why clause 8(c), on the severe impairment of property needing compensation, is there.

Members, it is time for me to leave the Chair. The committee is suspended, and the Chair will resume at 9 a.m. tomorrow.

Sitting suspended from 9.59 p.m. to 9 a.m. (Thursday)