Act of Parliament

An Act is a law passed by Parliament. Public access to all Acts of Parliament is available at www.legislation.govt.nz. The meaning of an Act is ascertained from its text in light of its purpose (s 5(1) Interpretation Act 1999).

  • Petra Butler "When is an Act of Parliament an Appropriate Form of Regulation?"in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). This chapter identifies a number of principles to bear in mind when deciding to regulate a matter through an Act of Parliament, or through secondary or tertiary legislation: (1) A matter that so significantly infringes a right in the Bill of Rights Act 1990 that it subverts the scheme of the Bill of Rights Act has to be regulated by Parliament (2) A matter that significantly infringes a right should be regulated by an Act of Parliament. However, Parliament can, in certain circumstances, give wider discretion to the Executive to regulate the matter (3) The subject, content, purpose and scope of subsidies and benefits have to at least be tied to a budget (passed through by Parliament) (4) The powers of any autonomous body need to be carefully circumscribed by an Act of Parliament 

  • John Prebble and Rebecca Prebble “Does the Use of General Anti-Avoidance Rules to Combat Tax Avoidance Breach Principles of the Rule of Law? A Comparative Study” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). The preceding sections of this chapter have demonstrated that general anti-avoidance rules are vague. However, all legislation is vague to some extent. The most specific of rules will always have borderline cases. Why, then, do some people single general anti-avoidance rules out as particularly egregious breaches of the rule of law?[42] Drafters of most laws cannot foresee all relevant fact situations. As Hart pointed out, all laws admit of “core” situations, where the law will definitely apply, and “penumbra”, where it is less certain whether the law will apply.[43] To criticise general anti-avoidance rules because it is not clear whether they apply in some situations appears to subject them to a higher standard than we demand of law in general.

  • Susy Frankel, Meredith Kolsky Lewis, Chris Nixon and John Yeabsley “The Web of Trade Agreements and Alliances, and Impacts on Regulatory Autonomy” in Susy Frankel (ed) Recalibrating Behaviour: Smarter Regulation in a Global World In New Zealand, RIAs are for all cabinet decisions, including those that relate to primary legislation, such as patent law.

  • Petra Butler “When is an Act of Parliament an Appropriate Form of Regulation?” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World [4] Abraham Lincoln (speech at Gettysburg, 19 November 1863) cited in Mario Martini "Normsetzungsdelegation zwischen parlamentarischer Steuerung und legislative Effizienz" (2008) 133 Archiv des öffentlichen Rechts 157 at 159. Compare s 15(1) of the New Zealand Constitution Act 1986: Parliament has full law making power. Parliament usually exercises this power to pass primary legislation. However, Parliament also has the power to confer its law making power on another person or body, thus enabling that person or body to make laws; see also Legislative Advisory Committee Guidelines on Process and Content of Legislation (May 2001) at [10.1.2].

  • Graeme Austin “The Regulation of Consumer Credit Products – Interrogating Assumptions about the Objects of Regulation” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World Aspects of New Zealand’s regulation of civil aviation are, as might be expected, also focused directly on issues of safety. The Civil Aviation Act 1990 includes a number of public welfare regulatory offences[26] against, for instance, causing “unnecessary danger”,[27] careless operation of an aircraft,[28] acting without necessary aviation documents,[29] and failing to comply with requests for inspection or monitoring.[30]

  • Petra Butler “When is an Act of Parliament an Appropriate Form of Regulation?” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World The LAC Guidelines stipulate that principle and policy should be regulated by an Act of Parliament, whereas regulation is adequate for detail and implementation. However, the LAC also recognises that the distinction between principle and detail, and policy and implementation can be both confusing and circular, not least because there is a significant overlap between those general descriptions.[82] The 2012 LAC Guidelines state:[83] provisions which affect fundamental human rights and freedoms should always be included in primary legislation. Examples of these rights and freedoms include— freedom from search and seizure. the right to demand and receive information. rights under the New Zealand Bill of Rights Act 1990 generally. provisions which expropriate property (namely, the taking of property for public use). social and economic rights (which include welfare and ACC rights and the corresponding rates of entitlement). On the face of it, the LAC Guidelines go further than the German reservation of law principle – stating that every matter that affects fundamental human rights and freedoms should always be included in primary legislation. However, that threshold would mean that every policy would have to be regulated by an Act of Parliament. It is hardly conceivable that a matter regulated will not (at least tangentially) impact on a fundamental human right, especially since the LAC Guidelines do not refer to civil and political rights but only to social and economic rights. Therefore, questions of threshold arise: At what point is an infringement of human rights so significant that the matter has to be regulated by statute? What is the sphere in which the executive can operate without Parliament’s authorisation (that is, still has the royal prerogative)?[84]

Secondary Legislation

Secondary legislation consists of statutory regulations drafted by the Parliamentary Counsel Office and subsequently passed by the Governor General through an Order in Council while the Executive Council sits. The power to make such regulations is conferred by an Act of Parliament. Such regulations tend to deal with technical rules or rules subjected to frequent change. Statutory regulations are printed and published in the Statutory Regulations series, and can be found at www.legislation.govt.nz. Statutory regulations are interpreted in light of their parent Act of Parliament. Any word in a statutory regulation takes on the same meaning as the word in its empowering statute (s 34 Interpretation Act).

  • Petra Butler “Rights and Regulation” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). The Cabinet Manual 2008’s section on “Regulations” provides that the guidance for “Development and Approval of Bills” applies equally to the development of regulations.[31] Regulations once drafted require authorisation from the Cabinet Legislation Committee before they are submitted to the Executive Council. The Guide to Cabinet and Cabinet Committee Processes recommends that cabinet papers seeking such approval should include a statement about any inconsistencies with the rights and freedoms contained in the BORA and the HRA, and should also indicate whether there may be grounds upon which the Regulations Review Committee might draw the regulations to the attention of Parliament.[32] The Regulations Review Committee is the Parliamentary Select Committee tasked with examining regulations to determine whether they are an appropriate use of delegated lawmaking power. The Standing Orders empower the committee to draw the special attention of the House to regulations which trespass unduly on personal rights and liberties, or unduly make the rights and liberties of persons dependent upon administrative decisions which are not subject to judicial review.[33] This is an important check on delegated lawmaking power, as regulations are not subject to the Attorney-General’s vetting process under the BORA.

  • Kate Tokeley “Consumer Law and Paternalism: A Framework for Policy Decision–making” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). The third paternalistic provision that forms part of the Consumer Law Reform Bill is an amendment to the Fair Trading Act 1986 which would allow the Minister of Consumer Affairs to declare goods to be unsafe if the Minister considers that a reasonably foreseeable use or misuse of the goods will, or may, cause injury to any person.[29] The Minister may then prohibit the supply of these goods. The new provision is an extension of the current rule which allows only a consideration of the “ordinary use” of the goods rather than a “reasonably foreseeable use or misuse” of the goods.[30] The provision covers goods that are considered to have the potential to injure “any person”, not just people other than the consumer. It therefore covers situations where there is a potential for the good to injure the consumer who has acquired the good. Consequently the provision has an element of paternalism because it allows the government to severely restrict consumers’ choice by banning a product in order to protect consumers from themselves. Consumers would not be able to choose to buy the potentially unsafe product and use it in a safe manner or assume the risks of using it in an unsafe manner.

  • Graeme Austin “The Regulation of Consumer Credit Products: An Examination of Baseline Assumptions” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). The regulation of children’s nightwear is contained within the Product Safety Standards (Children’s Nightwear and Limited Daywear Having Reduced Fire Hazard) Regulations 2008, which are issued under the Fair Trading Act 1986, s 29. The Regulations are enforceable by the Commerce Commission. They require those who supply the relevant products to meet certain standards for product testing and labelling as required by the Australia and New Zealand Safety Standard AS/NZS 1249:2003: Product Safety Standards (Children’s Nightwear and Limited Daywear Having Reduced Fire Hazard) Regulations 2008, sch 2.

  • Brent Layton “Regulating the Building Industry – A Case of Regulatory Failure” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). Consideration of the costs and benefits is a core component of regulatory impact statements.[11] These are required for most papers to Cabinet, if they propose legislation or regulation.[12] Moreover, some consideration of costs and benefits is required to support most decisions by specialist regulators, such as the Commerce Commission, Gas Industry Company and the Electricity Authority.[13] In 2011, the Regulatory Standards Bill 2011 was introduced to Parliament with the support of the government. One of the requirements of its cl 7 is that responsible regulation should “produce benefits that outweigh the costs”.[14] If the Regulatory Standards Bill is passed into law, it will ensure that all regulatory decision makers – Parliament, the Executive Council and specialist regulators − will be careful to undertake and publish what economists refer to as a net public benefit (NPB) test of their proposals.[15] Failure to do so may mean that the regulatory decision could be declared by a court to be incompatible with this legislation.[16]

  • Daniel Kalderimis “Regulating Foreign Investment in New Zealand” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). Section 17(2)(g) of the OIA is therefore a form of “Henry VIII” clause, which permits amendment of the principal legislation (the s 17(2) test) by subsidiary regulation (reg 28). Such clauses increase flexibility, but also uncertainty.[42] They also possibly offend rule of law principles.[43] Since 2005, New Zealand Governments have twice relied upon s 17(2)(g) to expand by regulation the benefit test for investment in sensitive land. In both cases, the Government passed amendments in a charged political atmosphere and against the backdrop of specific applications from foreign investors. The first example is the 2008 bids by Dubai Aerospace Enterprise and the Canadian Pension Plan Investment Board (“CPPIB”), to purchase, respectively, between 51–60 per cent and 40 per cent of Auckland International Airport Ltd. Whilst the CPPIB bid was pending, Cabinet resolved to add by regulation promulgated on 4 March 2008 a further factor to reg 28(h) for consideration in assessing applications for sensitive land, namely: [w]hether the overseas investment will, or is likely to, assist New Zealand to maintain New Zealand control of strategically important infrastructure on sensitive land. After this regulatory change, the CCPIB revised its offer to state that it would restrict its voting rights to 24.9 per cent (while maintaining a 40 per cent ownership stake) to demonstrate that it would not control the airport. On this basis, it made an application for consent under the Act. The application was rejected as being unlikely to provide benefits to New Zealand based on a global assessment of nine factors specified in s 17 and reg 28. The new reg 28(h) was noted but not specifically relied upon.[44] The Ministerial decision expressly stated that the injection of funds coming into New Zealand was not, in and of itself, a relevant benefit as all overseas investments involve new capital. Auckland Airport remains a listed company on the NZSX with its shareholders including the Auckland Council, but also a range of overseas institutional investors. In September 2008, Parliament’s Regulations Review Committee considered a complaint about reg 28(h) brought by the New Zealand Business Roundtable and the Wellington Chamber of Commerce. The Committee concluded, with the assistance of an opinion provided by Professor Burrows, that reg 28(h) was an “unusual or unexpected use” of the regulation-making powers in the Act in terms of Standing Order 315(2)(b). The main reason is that CPPIB’s application only invoked the sensitive land criteria because of the coincidence that Auckland Airport is adjacent to Manukau harbour. The Government, it was argued, took advantage of this coincidence by inserting an additional criterion for strategically important infrastructure, which happens to be located on sensitive land, but not otherwise (which would have required a legislative change). The Committee also concluded that the matter was better suited to parliamentary enactment in terms of Standing Order 315(2)(f). This was because the Henry VIII clause in s 17(2)(g) “is an undesirable regulation-making power”. The Committee added that the “proliferation” of similar clauses is “a cause for concern”. The Committee recommended that the Government introduce legislation to either omit s 17(2)(g) from the Act, or add a requirement to consult with relevant parties before using it. Neither the incumbent Labour administration nor the subsequent National administration have followed the recommendation.

Tertiary Legislation

Tertiary legislation refers to regulations that are not made by the Governor General in Council but instead by a Minister, an official, an agency, a professional body, a university or other tertiary institutions that has the power to make its own rules. The power to make such regulations is still delegated by an Act of Parliament. A large amount of tertiary legislation falls under the category of deemed regulations. These are instruments that are treated as regulations for the purposes of the Regulations (Disallowance Act) Act 1989 but are not drafted by the Parliamentary Counsel Office or published in the Statutory Regulations Series. Deemed regulations can also be found at www.legislation.govt.nz.

  • Mark Bennett and Joel Colón-Ríos “Public Participation and Regulation” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). Although there is no consensus about what participation exactly requires from particular decision-making processes, most proponents of an increase in public participation in different areas of policy making operate under the assumption that “society is plural, differentiated, that there is no monopoly on knowledge, or even no single vantage point from which the whole can be observed”.[12] In such circumstances legitimacy is often seen as dependent on whether those regulated can see themselves as having played a meaningful role in the making of the rules that affect them.[13] Roughly put, the idea is that those affected by regulatory decisions should have the opportunity to influence those decisions, “in proportion to their stake in the outcome”.[14] This derives from the basic idea of democratic self-government, with a focus on participatory ideals. Institutionally, this view points towards an increase of citizen involvement and deliberation in the making of regulations and other types of rules.[15] This is especially so where the power to make regulations is delegated by the government to independent (or relatively independent) decision-makers and institutions, since these bodies have not been directly authorised by the electorate to engage in the adoption of rules and policies. In New Zealand, the traditional Westminster institutions of indirect democracy (where members of Parliament and the Executive are directly elected by the people) are in many instances sufficient to defend the legitimacy of regulatory decisions made by elected officials. This legitimacy may be strained if decision-making power is delegated to unelected officials or regulatory institutions.

  • John Prebble and Rebecca Prebble “Does the Use of General Anti-Avoidance Rules to Combat Tax Avoidance Breach Principles of the Rule of Law? A Comparative Study” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). 4.5.6 Private binding rulings on avoidance issues By statutory authority, the Commissioner of Inland Revenue provides rulings as to the tax effect of proposed transactions. These rulings are binding on the Commissioner even if they are later found to be mistaken. Tax authorities in a number of countries issue such rulings, the conditions of issue varying somewhat from one country to another. In the present context, a particular variation is significant: some jurisdictions will not issue rulings on questions of avoidance. In New Zealand, most, if not all, rulings on avoidance have taken the form of private rulings. That is, they are not published. There is, however, enough information in the public domain to suggest that some private rulings have been questionable. An issue is whether the New Zealand rulings regime should be modified to provide that rulings will not be available on avoidance questions. 4.5.7 Publicity of rulings The original proposal for binding rulings was that rulings should all be published, with names and identifying details of taxpayers deleted. Provision for publication was omitted from the regime that was enacted. The result is that there is now a large body of quasi-law that is secret. Though this quasi-law is secret as far as the general body of taxpayers is concerned, parts of it become known to experts in the area, leading to a two-tier profession of tax advisers: an in-group and an out-group. An issue is whether publication of rulings should be revisited.

  • Mark Bennett and Joel Colón-Ríos “Public Participation in New Zealand’s Regulatory Context” in Susy Frankel (ed) Recalibrating Behaviour: Smarter Regulation in a Global World There is a “macro” level of choosing the appropriate statutory framework to achieve the goals of regulation, including the choice of those goals; this is regulatory decision making by the government and Parliament. There is the implementation of the regulation within the statutory framework, which may include the exercise of discretion or interpretive powers by ministers or independent regulators, and can even include the drafting of tertiary legislation[335] such as rules or codes.

  • Mark Bennett and Joel Colón-Ríos “Public Participation and Regulation” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). A further problem that may arise in regulatory decision and rule-making from the perspective of democratic self-government exists in situations where these decisions are delegated to “external” institutions outside the ordinary political governmental and legislative institutions.[69] This is often done through framework legislation setting up and empowering these regulatory institutions, allowing them to make certain kinds of decisions in the service of generally specified aims and principles, and insulating them to some degree from political control and influence. The problem that then arises is one of discretion:[70] Insofar as statutes do not effectively dictate agency actions, individual autonomy is vulnerable to the imposition of sanctions at the unruled will of executive officials, major questions of social and economic policy are determined by officials who are not formally accountable to the electorate, and both the checking and validating functions of the traditional model are impaired. Because these kinds of decision-makers are often not directly accountable through the institutions of Westminster constitutional democracy (while there is usually still some Ministerial influence, there is often little actual control except for the possibility of legislative changes), it is more difficult to see their decisions as validated from the perspective of input legitimacy. Of course, their decisions may be better from the perspective of output legitimacy, for freedom from political interference, the ability to develop policy long term beyond the usual electoral cycle, and greater transparency than executive decision-making, are key reasons for creating independent regulators.[71] But despite this there is a continuing search for forms of participation beyond voting that would legitimate such regulatory decisions from the perspective of democratic government.[72]

  • Mark Bennett and Joel Colón-Ríos “Public Participation and Regulation” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). However, unless the regulatory approaches or values that are being implemented have been the subject of debate in the election campaign, it cannot be said that one approach to the regulatory question was chosen over another by voters. As law and regulation scholar Stephen Croley observes, “voters vote for political candidates with very little information about those candidates’ positions on regulatory issues, and must moreover vote for a mixed package of such policies at once.”[74] Likewise, Tony Prosser states that “where regulatory decisions are clearly social in nature and are taken by government, there is no direct electoral legitimacy for any particular solution to them. Elections form the basis for selection of personalities and of broad approaches to social issues whereas regulatory decisions are much more specific and unpredictable.”[75] If this is the case, the standard legitimation of the power of the government to rule and legislate in key policy areas cannot simply be carried over to relatively obscure regulatory decisions that have not been the subject of political debate. Similar questions of democratic legitimacy arise where relatively independent regulators are given discretion to achieve vaguely stated aims or principles through the creation of rules or determinations; there is a question as to how far the usual channels of legitimation can run.[76] Prosser explains these reservations about democratic legitimacy:[77] Once we accept that regulatory decisions involve values, and values which are often conflicting, we have to find other sources for their legitimation. One way of claiming such legitimation would be to say that the role of the regulator is to implement the mandate given to it by Parliament. This is also too simplistic. The whole point of establishing a regulator is to give it discretion based on its own expertise. The extent of such discretion may vary ... The discretion may be limited largely to matters of implementation, or may involve substantial freedom to determine matters of policy[.] ... [I]n either case, regulation is best thought of not as the application of rules laid down by a principal for the regulatory agent to enforce, but as a part of a regulatory enterprise which will involve collaboration between different levels of government, including the regulator.

  • Mark Bennett and Joel Colón-Ríos “Public Participation and Regulation” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). Technocracy is also often justified by what Henry Richardson calls “agency instrumentalism”, an idea that is related to the discussion above concerning the legitimation of democratically-elected legislatures and executive governments contrasted with the legitimacy of relatively independent regulatory decision-makers.[132] Agency instrumentalism legitimises expert decision-making by regulatory agencies and decision-makers through the ordinary Westminster democratic processes of legislative enactment and executive government. The basic idea is that the legislature is meant to set down the ends of regulation, and the regulatory agency is meant to select the most efficient means to those ends.[133] This is based on the assumption that technical (economic and scientific) experts can make judgments about means in an “impartial” and non-evaluative way, leaving it to the legislature to make any necessary value judgments in the course of specifying the ends of regulation.[134] The democratic legitimacy of regulation stems from the value judgments of the legislature, mandated and affirmed by regular elections. There are moral or social questions that must be answered through normative/evaluative argument, but once they are answered we can call in the experts to translate those answers into regulatory rules and decisions.

Codes of Conduct

A code of conduct contains a set of standards of behaviour and certain obligations that are binding on a particular group of people who belong to a sector or industry. Failure to observe those obligations and standards could result in a disciplinary action.  Sometimes a code will complement legal obligations that the group must observe under an Act of Parliament.  A code is often an example of self-regulation.

  • Mark Bennett and Joel Colón-Ríos “Public Participation in New Zealand’s Regulatory Context” in Susy Frankel (ed) Recalibrating Behaviour: Smarter Regulation in a Global World One of the Electricity Authority’s main functions is to develop, administer, and enforce compliance with the Electricity Industry Participation Code (EIPC), which is a regulatory code relating to the basic objectives of competition, efficiency, and reliability of supply.[33]

  • Paul Scott and David de Joux “Uncertainty and Regulation: Insights form Two Industries” in Susy Frankel (ed) Recalibrating Behaviour: Smarter Regulation in a Global World In relation to social welfare obligations in the electricity sector, distribution companies are obliged to maintain connections to customers in isolated areas even if this is not economically viable for them.[217] Also, the Electricity Authority is bound by the Electricity Industry Act 2010 and the administering of the Electricity Industry Participation Code (EIPC) to administer vulnerable and medically dependent consumer’s guidelines and monitoring compliance.[218] The strengthening of guidelines and the monitoring of them by the Electricity Authority came about after the death of a Mercury Energy customer in 2007 who was reliant on power for her oxygen machine and did not survive when the power was disconnected due to non payment of $168.40.[219] If vulnerable and medically dependant customers cannot pay their power accounts they are now encouraged to let their power retailer know so they can be considered for official “vulnerable consumer” status. They are then advised to follow a process for assistance including being referred to Work and Income.[220] This came about with Parliament passing the Electricity (Disconnection and Low Fixed Charges) Amendment Act 2008.

  • Graeme Austin “The Regulation of Consumer Credit Products – Interrogating Assumptions about the Objects of Regulation” in Susy Frankel (ed) Recalibrating Behaviour: Smarter Regulation in a Global World New Zealand’s maritime safety regime provides a useful starting point. The underlying statutory basis for the regulation is the Maritime Transport Act 1994, s 430 of which specifies the functions of Maritime New Zealand as including “undertak[ing] its safety, security, marine protection, and other functions in a way that contributes to the aim of achieving an integrated, safe, responsive, and sustainable transport system.” These aims are realised through a number of mechanisms, including the Standards of Training and Certification for Watchkeepers.[22] Maritime New Zealand’s Code of Safe Working Practices for Seafarers[23] reflects both information disclosure and safety concerns. As an example of the former, the Code makes specific provision for good practice in hazard identification, making detailed stipulations with the aim of enabling hazards to be identified by both employers and employees. Its emphasis is not, however, on identifying specific hazardous substances that should not be present on a vessel. Instead, the document lists various “factors” that enable people to assess the risks associated with carrying different kinds of things on vessels.[24] For the most part, the regime is concerned with mandating the provision of information so that seafarers are able to make the best decisions relating to safety. Once a hazard has been identified and the extent of the hazard is assessed, however, the required action is much more proscriptive.[25] For example, once a risk is deemed to be intolerable, work must stop or, if relevant, may not commence until the risk has been abated. If a risk cannot be reduced work must remain prohibited.

Soft Law

Soft law refers to documents and rules that have no legally binding force because they have not been enacted by Parliament into statute, do not owe their existence to a statutory instrument and are not part of the common law. Nevertheless they are important in ensuring compliance with primary, secondary and tertiary legislation. Examples of soft law include government circulars, systems of self-regulation and codes of practice.  

  • Daniel Kalderimis “Regulating Foreign Investment in New Zealand” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). As well as the instruments mentioned above, there are also less formal instruments such as the OECD Code of Liberalisation on Capital Movements. Under this Code, OECD countries undertake not to make their investment policies more restrictive, and to permit inward FDI subject to stated reservations – which in New Zealand’s case incorporates investment screening as it stood in the now-repealed Overseas Investment Act 1973. This Code has no enforcement mechanism, including any provision for countervailing measures. APEC countries have, through the 1994 Bogor Declaration, also committed to a process of individual action plans for liberalising investment. Neither of these instruments (yet) imposes any material restrictions on New Zealand’s policy space.

  • Mark Bennett and Joel Colón-Ríos “Public Participation and Regulation” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). The key benefit of restricting participation to key “stakeholders” is to secure more “output” legitimacy through drawing on the expertise of those directly involved.[216] Self-regulation is increasingly seen as a key aspect of “better regulation” in the OECD, often as a second-best to goals of de-regulation or “less regulation”.[217] It was promoted by the United Kingdom’s Better Regulation Task Force as an alternative to state regulation,[218] and was legislated for in the Communication Act 2003 (UK), requiring the telecommunications regulator to have regard to the “desirability of promoting and facilitating the development and use of effective forms of self-regulation”.[219] The basic idea is that the particular profession, economic actor or industry regulates its own conduct, through codes of conduct or rules, and enforces those norms itself[220] “without formal oversight from government”.[221] Beyond this, there are different levels of state involvement that might be characterised as consistent with self-regulation, for example where the government mandates or approves independently-created regulation, where it threatens to regulate, or where it simply does not concern itself with the regulation of the particular area.[222] An example in New Zealand is the regulation of the legal profession, which began as self-regulating and later took on aspects of co-regulation with the Lawyers and Conveyancers Act 2006. Co-regulation is another mechanism of regulation that involves industry or economic actors, but it is distinguished from self-regulation by significant government involvement. Bartle and Vaas observe that many regulatory areas that are thought of as self-regulation are really better characterised as co-regulation:[223] Many of the new forms of self-regulation thus involve close and nuanced relationships between the state and the regulated organisations and self regulatory bodies and few if any can be described as voluntary in the sense of there being no role for the state. The state’s role is crucial because it has legislated for and actively promoted self-regulation and many new self-regulatory schemes derive from state regulation. The state often plays an explicit facilitating role which might involve active promotion, support and oversight. Alternatively, the state’s role might be limited to such action as the commissioning of studies or tacit monitoring, but even these actions can have a significant impact on the nature of the regime. Often implicit within the tacit monitoring is a threat of the introduction of state-led regulation if the industry does not make significant changes. “Voluntary” action of self-regulators, though important, is conditioned and constrained by action (often implicit) of the state.

  • John Prebble and Rebecca Prebble “Does the Use of General Anti-Avoidance Rules to Combat Tax Avoidance Breach Principles of the Rule of Law? A Comparative Study” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). 4.5.5 Interpretation statement from Commissioner Since 1974, when the general anti-avoidance rule took what is substantially its current form, the Commissioner of Inland Revenue has on several occasions published statements that contain an exegesis of his view of the effect of the section. These statements do not purport to be law, but they have more or less the effect of law, since it is likely that the Commissioner will follow his interpretation statements in applying the law. The reason for interpretation statements is similar to the reason for an enumerated rule. That is, it is thought that greater detail will offer greater certainty to taxpayers. The history of interpretation statements is decidedly mixed. Some examples given in past statements have been wrong, or at least arguably so. Other examples or passages in interpretation statements have led taxpayers to persuade themselves of points of law later found to be untenable or given taxpayers a foundation to argue for decidedly doubtful interpretations. Another question is whether the Commissioner should issue interpretation statements at all. Parliament has declined numerous opportunities to flesh out the general anti-avoidance rule. Is it appropriate for the Commissioner in effect to legislate where Parliament has decided not to tread? An issue, therefore, is whether the Commissioner should issue interpretation statements in respect of s BG 1. If one of the strengths of the statutory rule is its indeterminacy, it would be strange for the Commissioner to dilute that strength by attempting to make the rule more detailed. If, contrary to the burden of the preceding paragraphs, the government should issue guidance on the operation of the gaar, further questions arise: Should the guidance be by regulation, ruling, or interpretation statement? And whatever the form, should the guidance include examples?

  • Graeme Austin “The Regulation of Consumer Credit Products: An Examination of Baseline Assumptions” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). 4. Fourthly, it may be important to consider how the codification of soft law self-regulation fits within the regulatory scheme. Currently, this self-regulation is contained within the Code of Banking Practice.[71] The members of the New Zealand Bankers’ Association have committed themselves to considering whether they believe that anyone seeking credit “will be able to meet the terms of the Credit Facility,”[72] and only providing credit when that consideration is answered in the affirmative. In the absence of such regulation, creditors may simply assess their own riskof not being repaid, rather than the risks undertaken by the purchasers of credit products.

  • Graeme Austin “The Regulation of Consumer Credit Products: An Examination of Baseline Assumptions” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). Section 41 of the CCCFA prohibits a creditor from charging an “unreasonable credit or default fee”, a provision that the Commerce Commission has described as “fundamental”.[25] The reasonableness of fees (other than “establishment fees”[26]) charged by a credit provider (such as “credit fees” and “default fees”) is to be assessed according to criteria that reference both the costs associated with, and reasonable compensation for, both the provision of the service and “reasonable standards of commercial practice”.[27] The Commerce Commission has said that in order for recovery to be both reasonable, and in compensation for service provided, there must be a causal nexus, broadly in line with the common law standard of “remoteness”, connecting the fee to the cost incurred.[28] But, quite understandably, the Commission is only able to provide very general guidance as to what “reasonable standards of commercial practice” means. It does, however, stipulate that the credit provider must be able to justify the fee.[29] The Commission says only that it “is not in a position to stipulate in advance what will be a reasonable standard of commercial practice, and in every case it will depend upon the evidence available”.[30] This point seems especially applicable in the case of default fees. The Commission’s approach is understandable. Even if courts are the final arbiters,[31] the inclusion of “reasonable standards of commercial practice” ties scrutiny of the reasonableness of the fee to the provider’s assessment of what the market will bear. The CCCFA seems to anticipate that the charging of fees is a legitimate part of a credit provider’s business − which suggests that the reasonableness criteria are drafted by the market’s invisible hand,[32] animated by providers’ profit motives. Commercial imperatives might, quite legitimately, account for a significant portion of the fee charged, making it difficult to tether the actual fee to the more objective criteria in s 44 that are grounded in the causal nexus between the fee charged and compensating for the service provided. Accordingly, the reference to commercial practice in the statutory criteria may provide creditors with an important buffer against rigorous judicial scrutiny.

  • John Prebble “General Anti-avoidance Rules as Regulatory Rules of the Fiscal System: Suggestions for Improvements to the New Zealand General Anti-avoidance Rule” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). Interpretation statements are statements published by the Commissioner on the law in respect of a particular area of tax legislation. These statements are prepared by the Public Rulings Unit of the Office of the Chief Tax Counsel within the Inland Revenue Department. They are issued under the Commissioner’s inherent power rather than under power conferred by legislation.