Submission: Consultation on proposed Regulatory Standards Bill

January 14, 2025

About the New Zealand Council for Civil Liberties

The New Zealand Council for Civil Liberties (‘the Council’) is a voluntary, not-for-profit organisation founded in 1952 which advocates to promote human rights and maintain civil liberties.

Introduction

The proposals set out in the consultation document on a proposed Regulatory Standards Act include some run-of-the-mill ways in which the quality of regulation can be improved.¹ However, the proposals also go far further than this and in this respect seek to embed an ideologically driven concept of liberty that is inimical to internationally agreed norms and standards for personal liberty and human rights.

The proposed legislation seeks to significantly redefine and limit the very purpose of our government. The proposals are therefore of a quasi-constitutional nature, so the idea that they should become law simply by passage of an Act is entirely inappropriate.

The Council opposes the proposals set out in the consultation document in the strongest possible terms. A Bill should not be drafted or introduced along the lines set out. Existing standards for the quality of legislation and regulation can be strengthened without legislation. The expense that further development of these proposals will require would be better spent on improved monitoring and evaluation of existing laws.

Consultation paper proposals

The consultation proposes a Regulatory Standards Act that would do four things:
- Define some principles of good regulation;
- Establish a requirement for public servants and ministers to evaluate legislation and regulations against those principles, and justify any departure from them;
- Set up a Regulatory Standards Board for people to complain to about laws and regulations that they do not like. The Board would be able to assess legislation against the principles and issue a report with its findings; and
- Establish the Ministry of Regulation as a meta-regulator of other agencies’ regulatory stewardship and quality.

Set out like this, the proposals may sound reasonable. However, as with all law-making the devil is in the details, and the details here are fundamentally flawed.

This proposed new law is not good regulation

This proposal seeks to establish fundamental rights, focused on the property rights of people and corporations. However, as set out in the submissions of Emeritus Professor Jonathan Boston (an expert on public administration) and Emeritus Professor Jane Kelsey (an expert in regulation), it does so entirely divorced from either past work or the New Zealand context.² Good regulation would oppose duplication of effort and the establishment of an entirely new set of regulatory agencies to repeat work already being done.

Proposals based on flawed and deliberately limited analysis

The Council notes that the Interim Regulatory Impact Assessment of the proposals was analysed by a quality assurance panel with members from the Ministry for Regulation, Ministry of Justice, Ministry of Business, Innovation and Employment and the Treasury.³

The Quality Assurance Panel concluded:

The panel’s view is that the interim RIS does not provide sufficient analysis of the behavioural incentives and adequacy of current arrangements to make the case that the extent of legislative changes proposed (indicated in the RIS as being the discussion document proposal) are necessary to have an impact on lifting the quality of regulation.

In other words, the proposals are based on flawed analysis and reasoning, and do not show why the proposed legislation is needed. In our view, the flaws in the analysis and reasoning stem from the ideological motivation for the legislation, and are therefore insurmountable.

Proposals surrounded by secrecy

Good proposals for legislation would also be clear, open and transparent. We are very concerned that the Preliminary Treaty Impact Analysis and the Cabinet Paper approving the consultation on the proposals are both heavily redacted, especially when mentioning Te Tiriti o Waitangi.⁴ Most of the redactions are on the basis of protecting the privilege in legal advice. Annex 2 of the Cabinet paper, which sets out Crown Law’s view of the ‘legal risk and proposed solutions’ is entirely withheld from the public.⁵

The Council believes such redactions are unjustified and contrary to the public interest in the context of proposing new legislation. The redactions flout the section 4 purpose of the Official Information Act, of enabling people to effectively participate in the making and administration of laws and policies. Effective participation requires people being informed about the risks and potential mitigations stemming from proposals, so withholding the legal advice blocks effective participation. The secrecy is itself counter to the very notion of good regulation-making, which would enable the risks being adequately understood before proceeding.

Proposals add complexity and cost

The proposals blur lines of accountability for ministers and officials in a system where there is already a mix of regulatory gateways for proposed new legislation. The Legislation Design Advisory Committee (LDAC) Guidelines, Regulations Review Committee, and New Zealand Bill of Rights Act (BORA) reviews will have another layer put on top of them. This proposed layer will not adhere to international standards of human rights, but to a puerile conception of property rights being sovereign.

The mechanism of the proposed additional layer of bureaucracy will undermine the policy advisors and technical experts with deep domain expertise in other government departments and regulatory agencies. In doing so, they risk achievement of desired outcomes for other policy initiatives, particularly where these depart from the proposed principles’ fixation on property rights.

The proposals’ attempts to shut out judicial scrutiny in favour of a minister’s hand-picked Regulatory Standards Board will be futile and expensive, as well as constituting an attempt to undermine an independent judiciary’s role in upholding the rule of law.

The liberties of natural persons are often preserved best by not regulating, but we also appreciate that many liberties enjoyed by people individually cannot be secured except by well-designed regulation that may limit the rights of one segment of the population for the benefit of many others. Good regulation should involve an accurate assessment of the benefits of regulation against the costs, but (a) this is best done by the domain experts in the relevant ministries, not a Ministry of Regulation, and (b) by considering social and environmental issues, not just property rights.

Defining Liberties and the obsession with property

Before getting into the failures with the proposal’s definition of ‘Liberties’, the Council points out that this proposal’s duplication of effort would be moot if we chose to stay with the well-established definitions in BORA. The Council has long maintained that we need a written constitution in a single document, and that this constitution must incorporate the rights presently found in BORA.⁶

The Council also notes that the consultation paper states: “it is not proposed that the Bill would include a principle relating to the Treaty of Waitangi/Te Tiriti o Waitangi”.⁷ Combined with the Treaty Principles Bill currently before the Justice select committee, it is clear that the government is intent on circumventing the Crown’s obligations under Te Tiriti at every possible opportunity. These are not the actions of an honourable kāwanatanga, and the Council opposes this aspect of the consultation paper as well.

Liberties

The proposed definition of Liberties is:⁸

Legislation should not unduly 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.

First and foremost, if we are to legislate a definition of Liberty, it must include a reference to the rights of people under the New Zealand Bill of Rights Act.

Second, it is clear that the proposals’ references to ‘person’ and ‘persons’ are not limited to natural persons, i.e. human beings. The proposals also mean these terms to cover legal persons, i.e. companies and other incorporated entities. When this is understood, the proposed definition of Liberties might be read as follows:

Legislation should not unduly diminish a company’s liberty, a company’s 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 human or company.

When seen in this light, the ideological origin of the definition’s bar for regulatory proposals to surmount, that of ‘necessity’, becomes clear. It means that the property rights of a company cannot be limited or overridden if it is socially or environmentally desirable for the benefit of the public, only if it can be proven to be necessary.

Third, the definition also extends the notion of personal liberties beyond the normal freedom from state interference. It does this when it extends the liberal principle to incorporate not just limits on behaviour but also into personal property rights. The proposal views an infringement on a property right as a curtailment of liberty, and this is at the heart of the ideological motivation for these proposals. It is how they arrive at the position that all regulation is, at its deepest level, an intervention on the ‘use and dispos[al] of property’ and therefore needs to be justified as an infringement on liberty.

The Council opposes the proposals’ conflation of the liberties of natural persons with the limited set of rights and privileges that society has, for the time being, granted to legal persons such as companies. This conflation is entirely deliberate, both in an effort to make the proposals sound more reasonable than they are, and to try and elevate the power and privileges of legal persons to those of natural persons. This is dangerous and should not be proceeded with.

Property

The Council cannot support the section on the taking of property.⁹ It states:

Legislation should not take or impair, or authorise the taking or impairing of, property without the consent of the owner unless:

there is good justification for the taking or impairment

fair compensation for the taking or impairment is provided to the owner

compensation is provided to the extent practicable, by or on behalf of the persons who obtain the benefit of the taking or impairment.

This sounds reasonable when we think about a person’s land being compulsorily purchased by local or central government in order to do something like build houses, a school, hospital or a road.

It sounds far less reasonable when you consider that the profits a company makes from selling its products are its property, and the state can take a portion of that property/profit as taxes. According to the definition set out in the proposal, the state would have to provide ‘fair compensation for the taking’ of a portion of the profits in taxes. Again, the ideological roots of these proposals are visible – they come from a tiny minority of people who view tax as theft, rather than the price to be paid for living in a civilised society.

However, the definition is not just limited to the ‘taking’ of property: it also includes the ‘impairment’ of property.

There are many examples of the government impairing property. A company may have patented a product that uses a new technology, but if the government proposes to adopt safety standards to protect the public from harm, that would have the effect of preventing the company from selling its product and the government would be impairing the company’s property. Under these proposals, the government would have to pay compensation to the company.

An obvious example of this would be the regulation of what cladding can be used on the outside of buildings. Under these proposals, a government that restricted the type of cladding material used on the outside of the Grenfell Towers in London (and many other buildings elsewhere) would have to pay compensation to the companies that developed that kind of cladding, regardless of the evidence of how dangerous it was in a fire. When we consider this proposal against the government’s other proposals for deregulation, it becomes apparent that the proposed Bill is an attempt to try and prevent a future government regulating safety standards without paying ‘compensation’ to companies whose products are affected.

However, probably the best example is tobacco advertising control. Many countries have now passed laws that prohibit the use of branding on cigarette packaging, and in public. The tobacco industry fought hard against this arguing that it was expropriation of their trademark rights (a type of property right), and a limitation of the companies’ freedom of speech. Under these proposals, governments would be expected to compensate tobacco companies for the “impairment” of their intellectual property and freedom of speech, regardless of the benefits to public wellbeing and public finances of reducing the harm caused by smoking.

Legislation that prevented property owners from mining land that is important for conservation of biodiversity (and thereby a liveable planet) would also require the state to pay compensation, regardless of whether a resource consent to undertake mining had been granted. A District Plan that protects neighbours’ property amenities like daylight would be impairing the right of a neighbour to replace their bungalow with a multi-storey tower block.

Property rights are not human rights, but these proposals would elevate them to the same level.

Regulatory Standards Board

The Council opposes the creation of the proposed Regulatory Standards Board.

The proposed procedures of operation and standards of conduct for the regulatory standards board are inappropriate.

First, it appears possible that the proposal’s drafters have a fundamental misunderstanding of our judicial system. It is not possible for an act of parliament to preclude judicial involvement. Judicial review and other cases may still be brought. It is clear that these proposals would result in more litigation about regulation rather than less, thereby increasing the costs for businesses and the public (via government and the businesses themselves), and having additional costs such as delaying consideration by the courts of other legal action or requiring additional public funding of the court system to deal with the added workload.

Second, Board members would owe their position and loyalty to the Minister of Regulation, rather than to the government or the public. This would inevitably bias their consideration of proposals, as well as undermining the role of our elected representatives in making judgments on what is appropriate regulation.

Finally, it is inappropriate for the Minister to appoint a quasi-judicial body. If we are to avoid corruption in the Regulatory Standards Board as it is proposed, then its members should be appointed by the Officers of Parliament Committee.

Conclusion

Good quality law-making, that protects people’s rights, is a desirable goal to have. The proposals in this paper will not achieve that goal. Instead, by privileging property rights and seeking to protect the ‘liberties’ of companies, it will result in poor quality law making that undermines people’s rights in order to benefit the wealthy. Environmental and health and safety regulation will be particularly at risk under these proposals. The attempt to circumvent judicial scrutiny will be futile and expensive, and the proposed Regulatory Standards Board is a glaring nexus for corruption and lobbying by vested interests. The proposals are fundamentally undemocratic and should not be taken any further.

1
Have your say on the proposed Regulatory Standards Bill, Ministry for Regulation, November 2024. Accessed from: https://www.regulation.govt.nz/assets/Publication-Documents/Have-your-say-on-the-proposed-Regulatory-Standards-Bill-final.pdf
2
Emeritus Professor Jonathan Boston, Comments on the Proposed Regulatory Standards Bill, accessed from: https://melanienelson.substack.com/p/regulatory-bill-emeritus-professor and Professor Emeritus Jane Kelsey, Submission on the Proposed Regulatory Standards Bill, accessed from: https://melanienelson.substack.com/p/jane-kelsey-submission-on-the-proposed
3
Interim Regulatory Impact Statement: Legislating to improve transparency of the quality of regulation, Ministry of Regulation, 30 October 2024. Accessed from: https://www.regulation.govt.nz/assets/RIS-Documents/Interim-Regulatory-Impact-Statement-Legislating-to-improve-transparency-of-the-quality-of-regulation-v2.pdf
4
Preliminary Treaty Impact Analysis for the proposed Regulatory Standards Bill, Ministry of Regulation, November 2024. Accessed from: https://www.regulation.govt.nz/assets/Publication-Documents/Preliminary-Treaty-Impact-Analysis-for-the-proposed-Regulatory-Standards-Bill.pdf
Approval To Consult On A Proposed Approach To The Regulatory Standards Bill, Cabinet Paper from the Minister of Regulation, CAB-24-SUB-0437, no date. Accessed from: https://www.regulation.govt.nz/assets/Publication-Documents/Cabinet-Paper-Approval-to-consult-on-a-proposed-approach-to-the-Regulatory-Standards-Bill-COMBINED.pdf
5
See paragraph 42 of the Cabinet paper
6
Submission to the Constitutional Advisory Panel, New Zealand Council for Civil Liberties, 11 July 2013. https://nzccl.org.nz/nzccl-submission-constitutional-advisory-panel/
7
Consultation document, page 21
8
Consultation document, page 21
9
Consultation document, pages 21-22

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