RR Bill: a short summary of recommendations

The Regulatory Responsibility Taskforce was set up so that it could assess the Regulatory Responsibility Bill (RR Bill) - which was reviewed by Parliament's Commerce Committee in 2007 and 2008 - to consider what amendments to the RR Bill and supporting arrangements might be useful, and, in addition, to produce a recommended draft Bill. The full report is available here.

In its report the Taskforce has recommended a substantially modified version of the Option 3 Bill, together with a range of associated measures and practices. The Taskforce's version of the Bill would:

1. state, in substantially modified terms, the principles of responsible regulation to be advanced by the Bill, which are designed to accord with and reflect broadly accepted principles of good legislation, incompatibility with which is justified only to the extent that it is reasonable and can be demonstrably justified in a free and democratic society;
2. require those proposing and creating legislation to certify whether the legislation is compatible with those principles, and whether any incompatibility is justified;
3. provide for a new role for the Courts to make declarations of incompatibility (DoI) with the specified principles of the Bill, but otherwise explicitly exclude any power to make injunctive or compensatory orders on the basis of the Bill’s specified principles;
4. require the Courts to interpret legislation consistently with the Bill’s specified principles if possible; and
5. require every public entity to use its best endeavours to regularly review all legislation that it administers for compatibility with the principles, and provide for the Minister with responsibility for the Bill to issue guidelines to public entities on criteria to be used and the steps to be taken in ensuring legislation is regularly reviewed.

The report summaries Option 3, referred to above, as

Option 3, which had only minor modifications from the initial Bill introduced in 2006, would legislate for specified principles of responsible regulatory management, and, in particular, require statements of responsible regulatory management for each proposal for a new Act or regulation, signed off by the relevant Minister, chief executive and control agency (Ministry of Economic Development for regulatory matters, Ministry of Justice – or Solicitor-General – for legal matters).

The Taskforce recommends a substantially modified version of the Option 3 Bill, together with a range of associated measures and practices. The Taskforce considered and substantially modified the principles of responsible regulation contained in the Option 3 Bill. The modified Bill continues to require those proposing and creating legislation to certify that the legislation is compatible with those principles, but supplements that procedure with a new power for Courts to declare legislation incompatible with one or more of those principles. This follows United Kingdom precedent,3 and is intended to have a major impact on legislative behaviour both before and subsequent to any Court decisions.

Note that the Taskforce's recommended Regulatory Responsibility Bill is reproduced in full as Part 3 of their report. and a commentary on the specific provisions of the RR Bill is included as Part 4 of the report.

The principles referred to in the preceding discussion, as recommended by the Taskforce, fall within six broad categories:

(a) Rule of law – legislation should be clear and accessible, not adversely affect rights, or impose obligations retrospectively, treat people equally before the law, and resolve issues of legal right and liability by application of law, rather than the exercise of administrative discretion;

(b) Liberties – legislation should not diminish a person’s liberty, personal security, freedom of choice or action, or rights to own, use or dispose of property, except as necessary to provide for any such liberty, freedom or right of another person;

(c) Taking of property – legislation should not take or impair, or authorise the taking or impairment of, property, without the consent of the owner, unless it is necessary in the public interest and full compensation is provided to the owner, such compensation to be provided, to the extent practicable, by or on behalf of the persons who obtain the benefit of the taking or impairment;

(d) Taxes and charges – legislation should not impose, or authorise the imposition of, taxes, except by or under an Act, nor should it impose or authorise charges that exceed the reasonable cost of providing the goods or services, or the benefit that payers are likely to obtain;

(e) Role of Courts – legislation should preserve the Courts’ role of authoritatively determining the meaning of legislation, and where legislation authorises a public entity to make decisions that may adversely affect any person or property, it should state appropriate criteria for making those decisions, and provide a right of appeal on the merits against those decisions to a Court or other independent body;

(f) Good law making – legislation should not be made unless those likely to be affected by the legislation have been consulted and there has been a careful evaluation of the need for legislation to address the issue concerned. Furthermore the benefits of any legislation should outweigh its costs, and any legislation should be the most effective, efficient and proportionate response to the issue available.

The question is, How would such a Bill alter the incentives faced by those proposing and creating legislation and what unintended consequences could this have?

The Regulatory Responsibility Act

Just last month the report of the Regulatory Responsibility Taskforce was released. Not that many people seem to have noticed. The taskforce was headed by former secretary of the Treasury Graham Scott and included Paul Baines, Hon David Caygill, Richard Clarke QC, Jack Hodder SC, Dr Don Turkington and Dr Bryce Wilkinson. The full report is available here.

One person who did notice is Roger Kerr, who had a piece on the report and the Regulatory Responsibility Act in the The Independent on the 26th of November 2009. He argues that,

The Taskforce report is an outstanding piece of legal and economic analysis. It should give the government comfort that the bill it proposes respects constitutional principles and the sovereignty of parliament. The bill would present no barriers to the adoption of sound regulations but should help to screen out bad ones.

And New Zealand has, unfortunately, much in the way of bad regulation.

Kerr goes on to explain that,

[t]he structure of the bill has three main elements.

First, it elaborates principles for responsible regulation, drawing on the RIS requirements and the LAC Guidelines, that are to apply to new legislation and, over time, to all legislation. These cover such things as the rule of law, personal liberties, taking of property, taxes and charges, and processes for good law-making.

Second, it requires those proposing new legislation (such as ministers and chief executives) to certify that the legislation is compatible with those principles and, if not, the reasons for the incompatibility.

Third, it grants courts the power to declare legislation to be incompatible with those principles.

Note that the,

[c]ourts are given no other powers: they would not be able to stop the passage of legislation by injunctions and would have no new ability to award compensation for regulatory takings. A declaration would only carry moral authority.

One wonders what would happen if a government did go against such a court declaration. Is moral authority enough?

Kerr makes the point that,

[t]here may be opposition to a ‘regulatory constitution’ by politicians who do not wish to tie their hands but rather be free to regulate for the benefit of some interest group rather than in the public interest.

But this seems to be the main reason for having such a bill, trying to stop politicians from regulating for the benefit of some interest group or another ... and themselves.

Kerr also makes another interesting point,

So far there has been minimal media coverage of a proposal that stands to rank with the earlier ‘economic constitutions’ and attract international interest.

Why? Is the media just not interested or do they just not realise the importance of such a bill? Given the woeful standard of economic reporting in this country, it may well be that journalists are just unable to understand the importance of the bill.

Kerr adds

It deserves wider public exposure and debate.

And so it does. So give it more!