Parliament

Parliament is New Zealand’s statutory law making body. It consists of the elected members of the House of Representatives and the Sovereign. New Zealand’s Parliament is unicameral, meaning that there is only one house (the House of Representatives). The House of Representatives is made up of members of Parliament (usually 120 members) who the general public elect in the general election held every three years. These elected members are responsible for the passage of Bills through the House (this includes processes such as Select Committees, the Regulations Review committee and sittings of the House) while the Sovereign is responsible for opening and dissolving Parliament and giving assent to Bills that have successfully passed through the House. Parliamentary sovereignty is the overarching doctrine defining New Zealand’s legal system. This means that Parliament is supreme over all other law-making institutions. Examples of activities of Parliament are found in this part of the toolkit.

  • 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 sets out a detailed structure of how departments should develop Bills and who should be consulted.[24] Regulatory reform should involve the Legislation Advisory Committee, the Legislation Design Committee and officials of the Ministry of Justice’s Bill of Rights/Human Rights team, early in the policy process in order ensure human rights compliance.[25] An early involvement of the officials should also clarify what the policy-maker needs to establish if it is necessary to prove that any BORA infringement is justified in a free and democratic society.[26] This should avoid the Attorney-General having to report any inconsistency with the BORA to Parliament.

  • Petra Butler “Rights and Regulation” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). Under s 15(1) of the Constitution Act 1986, Parliament has full power to make laws. Parliament usually exercises this power to pass statutes, but it also has the ability to delegate its law-making power to other persons or bodies. It is widely acknowledged that in a modern state Parliament cannot meet the regulatory demands alone by enacting statutes and that, therefore, delegated legislation is necessary.[36] The Regulatory Standards Bill 2011 goes one step further and states that non-legislative options are available to deal with issues of public interest.[37] This raises the question of whether Parliament and the Executive are free to choose how to regulate an issue. Must all regulatory reform that impacts on human rights be dealt with by an Act of Parliament? Or, under certain circumstances, can such reform be dealt with as secondary or even tertiary regulation? The Legislative Advisory Committee in its Guidelines proposes a high threshold, stating that “provisions which affect fundamental human rights and freedoms should always be included in primary legislation”.[38] That suggests that measures which have an impact on BORA human rights must be regulated by statute.

  • Derek Gill “Regulatory Management in New Zealand: What, Why and How?” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). [6] The Regulation Review Committee (RRC) is a committee of Parliament that examines all regulations, and investigates complaints about regulations to ensure that regulations are subject to effective parliamentary scrutiny and control. The committee reports annually on the results of its review of regulation introduced in the course of the year. The report covers whether, for example, the regulations to introduce taxation without parliamentary scrutiny (a Henry VIII clause).

  • 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]

  • Petra Butler “When is an Act of Parliament an Appropriate Form of Regulation? − Regulating the Internet as an Example” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). The New Zealand Parliament can override any prerogative power by statute.[75] Parliament recognises that some matters are for it to decide by providing in SO 315(2)(f) that the Regulations Review Committee may draw a regulation to the special attention of the House, if the regulation "contains matter more appropriate for parliamentary enactment". The Regulations Review Committee had its beginnings in 1929 when Lord Hewart perceived that the Parliament's law making powers had been delegated extensively to the executive which "place[d] government departments above the sovereignty of Parliament and beyond the jurisdiction of the courts".[76] In 1932 the Donoughmore Report on Ministers' powers acknowledged Lord Hewart's concerns, but disagreed with the notion that the devise of delegated legislation was objectionable.[77] The report acknowledged that there was the risk of abuse and that safeguards had to be in place "if the country [was] to enjoy the advantages of the practice without suffering from its inherent dangers".[78] In New Zealand, the first step towards preserving Parliament's law making power over that of the executive was under the Regulations Act 1936, which stated that all regulations had to be made available to the public.[79] The next major step was the widening of the mandate of the Statutes Revision Committee in 1962 to draw the attention of the House to any regulation that: (a) trespassed unduly on personal rights and liberties; (b) appeared to make some unusual or unexpected use of the powers conferred by the statute under which it was made; and/or (c) required elucidation.[80] The Statutes Revision Committee scrutinising its own work in 1985, concluded that it did not have enough time to comprehensively scrutinise delegated legislation and recommended the establishment of a separate, specialised committee.[81] The Regulations Review Committee was constituted in July 1985.

  • 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]

  • Derek Gill “Regulatory Management in New Zealand: What, Why and How?” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). One area in which New Zealand does seem distinctive is in the role of Select Committees in reviewing all proposed new legislation. Commenting on the quality of Select Committee review in New Zealand, George Tanner, former Parliamentary Counsel observed,[29]“[a]t its best, it works well and is probably a more effective scrutiny process than many upper Houses around the world”.

  • Derek Gill “Regulatory Management in New Zealand: What, Why and How?” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). In the New Zealand context there are arguably a number of constitutional features that constrain the quality of law making. These include a unitary and extremely centralised state with one House, a three-year parliamentary term, and the relative paucity of checks and balances. This all leads to an imperative for legislative haste over quality –what Palmer described as “the fastest law in the west”.[65] The advent of MMP has meant legislating takes longer, Bills are less stable, and corrections to technical drafting issues or “little”policy design flaws are now considerably more difficult.

  • 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). In addition to the general considerations just mentioned, there is a specific constitutional concern. This concern is that Parliament has several times considered whether to concretise the general anti-avoidance rule by legislating in much more detail. Parliament has not done so, for good reason.[39] In short, the reason is that general anti-avoidance rules are not able to be the subject of effective detailed legislation. In addition, it appears curious, even substantially unconstitutional, that if Parliament has decided not to legislate in detail the Commissioner should step in to provide that detail. The considerations outlined mean that in the end a Commissioner's interpretation statement can amount to no more than some kind of instruction about the appropriate analytical technique to be brought to bear in interpreting the general anti-avoidance rule. This feature is particularly evident in the draft of 16 December 2011. It is more like a textbook or monograph than a kind of set of quasi-rules; albeit a textbook or monograph that is short on examples.

  • Paul Scott “Competition Law and Policy: Can a Generalist Law be an Effective Regulator?” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). The first possibility is that Parliament poorly drafted New Zealand's competition law, and that the Commerce Act 1986 did not cut the mustard. However, this does not seem valid. Trebilcock noted that "it is often claimed that Canada's Competition Act, 1986 is the most economically literate competition statue in force in any jurisdiction in the world".[20] I do not agree. At the time of drafting New Zealand's Act was at least as sophisticated, if not more so. For one thing Canada's Competition Act has a purpose clause which mentions four different and potentially conflicting goals. Section 1.1 provides:[21] The purpose of this Act is to maintain and encourage competition in Canada in order to promote the efficiency and adaptability of the Canadian economy, in order to expand opportunities for Canadian participation in world markets while at the same time recognizing the role of foreign competition in Canada, in order to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy, and in order to provide consumers with competitive prices and products choices. Breaking this down into four main parts one can see the following goals as being to: (1) promote efficiency and adaptability of the Canadian economy; (2) regulate foreign and domestic business inside and outside of Canada; (3) protect small- and medium-sized businesses; and (4) protect consumers. These goals do not provide for consistency and clarity. Goals (1) and (3) at least can starkly conflict. New Zealand has had two purpose statements, however, which while not free from controversy, are more helpful than Canada's. The long title of the Commerce Act 1986 originally provided it was "[a]n Act to promote, competition in markets within New Zealand". The Court of Appeal in Tru Tone Ltd v Festival Records Retail Marketing Ltd related this to efficiency. Richardson J observed:[22] In terms of the long title the Commerce Act is an Act to promote competition in markets in New Zealand. It is based on the premise that society's resources are best allocated in a competitive market where rivalry between firms ensures maximum efficiency in the use of resources. In 2001, Parliament amended the Act and introduced a new purpose section via section 1A which provides: The purpose of this Act is to promote competition in markets for the long-term benefit of consumers in New Zealand. Subsequent courts have interpreted this as continuing the efficiency focus of Tru Tone.[23] In any event the New Zealand purpose provision is clearer than Canada's. The key sections in the Commerce Act are sections 27, 29, 30, 36 and 47. Section 27 is the general prohibition section. It provides that no person may enter into or give effect to a provision of a contract, arrangement or understanding that has the purpose, effect or likely effect of substantially lessening competition in a market. Section 30 deems price fixing among rivals to be a breach of section 27. A plaintiff does not have to prove any competitive harm. Section 29 prohibits group boycotts. The Act terms these "exclusionary provisions". Section 37 prohibits resale price maintenance and makes it per se illegal – although it does not use this term and nor did sections 29 and 30. However, one can view those provisions as the Commerce Act's per se prohibitions. Section 36 is the Act's monopolisation provision. Section 47 deals with mergers. Initially it prohibited mergers which resulted in acquiring or strengthening a dominant position. Parliament later changed this to prohibiting acquisitions which would be likely to have the effect of substantially lessening competition in a market.[24] New Zealand based its Act on the Australian Trade Practices Act 1974 (Cth) (now renamed the Competition and Consumer Act 2010 (Cth)). However, New Zealand's Act was superior. New Zealand only had one general prohibition section (s 27), rather than individual sections which dealt with particular types of behaviour. The best example of the problems with the Australian legislation is the exclusive dealing provisions contained in section 47. Section 47 is not the finest model of the drafter's art. It has nearly 2,000 words in 14 subsections, 40 sub-subsections and 10 sub-subsections of subsections. In 1979, the High Court of Australia described it as "replete with double negatives and proliferating alternatives, [defying] accurate synopsis".[25] In 2003, Kirby J called the provisions '"obscure" and "a significant challenge for interpretation" requiring the Court to deal with "too many cross references, qualifications and statutory interrelationships" which imposed "an unreasonable burden" on those with the responsibility of assigning meaning to, and applying its provisions.[26] New Zealand has no equivalent section. Rather section 27 does the job all by itself and New Zealand has not suffered at all. Perhaps Pengilley put it best about section 47:[27] Australians are so garrulous that they need 2,000 words to describe that which does not need to be said. Well what about Canada? Canada is supposedly the home of the most sophisticated piece of competition legislation of them all. It too suffered from prolixity. Initially the Competition Act RSC 1986 had its own sections expressly dealing with predatory pricing. Under the old section 50(1)(c) of the Competition Act, predatory pricing was a criminal offence. Again this was in contrast to New Zealand which simply relied on section 36. How did these provisions work in Canada? Parliament repealed them in 2009 and now Canada, like New Zealand, relies on its general monopolisation provisions. Further, New Zealand (and Australia) also allow for private suits for monopolisation. Under section 79 of the Competition Act, Canadian victims of monopolisation have to go to the Competition Bureau and convince it to apply to the Competition Tribunal for a remedial order. Only the Commissioner of Competition can file an application to the Tribunal. This is true of all the civil provisions of the Competition Act including agreements or arrangements that prevent or lessen competition under section 90 of the Competition Act.[28] Given that private litigation has contributed much to the Australasian competition jurisprudence, New Zealand's position was, and is, superior. In any event, it allowed private parties to use competition law to police markets. Another positive feature of New Zealand's competition law is that lay members appointed to the High Court must be qualified by virtue of their knowledge or experience in industry, commerce, economics, law or accountancy.[29] When hearing appeals from the Commerce Commission, section 77(9) makes it compulsory that the High Court consist of a judge and at least one lay member. With other Commerce Act matters under sections 27–29, 36, 36A or 47, a High Court judge may choose to sit with one or more lay members.[30] Most cases involving lay members have involved economists sitting. Also in most cases where lay members are not mandatory, the High Court has included them. This is hugely beneficial as one of the complaints from overseas is that generalist judges lack the economic knowledge to deal with competition matters.[31] The presence of lay members removes this criticism and allows the High Court to deal with sophisticated and complex matters confidently. So, I am of the view that New Zealand's competition statute was, and is, in good shape. That is, not to say, all was and is perfect.

  • Richard Boast and Susy Frankel “Defining the Ambit of Regulatory Takings” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). Neither the Regulatory Standards Bill nor Option 5 would give rise to a constitutional right to property, which would be directly actionable before the courts. The Bill places the role of scrutiny on the legislative process and also, if not most dominantly, on the courts. Option 5 places the burden squarely on the parliamentary process.[30] These differences are important, but there are also some similarities. Both approaches require scrutiny over whether there has been an effect on property rights. Both approaches lead to the questions about the scope of property rights and how the owner's rights should be compensated or not because of regulatory effects. The difference is that under the explanatory notes approach, any effect on property rights is raised as a matter for parliamentary consideration rather than as a legally actionable matter, unless the right to legal action otherwise has force in law because it is recognised as a property right. Some would advocate that economic loss caused by regulation should be compensable (and consequently are not likely to support Option 5); we discuss this view further below.

  • Richard Boast and Susy Frankel “Defining the Ambit of Regulatory Takings” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). The entire foreshore and seabed saga illustrates the propensity of our legislators to play fast and loose with property rights and indeed with core concepts of property which is difficult to imagine happening in more conservative and more complicated jurisdictions like Australia and the United States. The legislation illustrates another tradition – apart from the tendency towards resource nationalisation – that is, a proneness to resolving complicated problems arising from our peculiar political, ethnic and historic make-up by erecting edifices of statute. The 2004 Act took away the ability of Māori to go to the Māori Land Court to obtain private freehold titles to areas of foreshore and seabed, and this ability has not been restored by the 2011 Act. (In fact the 2011 Act gives even fewer powers to the Māori Land Court than the 2004 Act.) Both Acts did indeed "impair" the property rights of iwi, and the enactment of the Regulatory Standards Bill into law might indeed caution against the state from embarking on a similar exercise in the future.

  • 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). Public hearings are already a very important mechanism within New Zealand government and law-making. Parliamentary Select Committees scrutinise both executive government activities and bills passing through the House of Representatives.[163] Select Committees play an important role in seeking and receiving written submissions from a number of participants, including the general public, businesses, industry groups, political interest groups, and other organisations. Committees will advertise for submissions on the bill or matter for inquiry, and will sometimes write to groups with an interest or to experts in the field to invite submissions.[164] Proceedings relating to the hearing of evidence are usually in public, and written submissions are usually released to the public. If the topic being considered is of great public interest, there may be thousands of written submissions; however, due to time pressure not all of those wishing to make an oral submission have a right to be heard, and the committee may determine how many people it hears and for how long they can appear.[165] Public hearings of a similar sort may also be conducted as part of ministerial inquiries, for example as happened in the inquiries into the telecommunications and electricity industries.[166] They are also used in the context of environmental regulation.

  • Mark Bennett and Joel Colón-Ríos “Public Participation in New Zealand’s Regulatory Context” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). Also, there are various stages of the regulatory cycle that the public can participate in. This is shown in the diagram below, from the House of Lords' The Regulatory State: Ensuring its Accountability report. Figure 6.1 The circle of accountability Source: House of Lords The Regulatory State: Ensuring its Accountability[52] The diagram shows that participation can occur in Parliament and government through the legislative reform of existing statutory regulatory frameworks, in the form of the usual processes of governmental and legislative consultation and lobbying; for example, in select committees. Once the basic regulatory framework is in place, day-to-day decisions will be taken within that framework, by ministers or by regulators. These decisions – applying the objectives, duties, and powers that have been laid down by statute or government policy – may include other forms of public participation.

  • Mark Bennett and Joel Colón-Ríos “Public Participation in New Zealand’s Regulatory Context” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). The other point that should be emphasised is that ordinary governmental and legislative processes may also be improved from the perspective of public participation. The policy and legislative decisions are usually the most important ways that the framework of regulatory decision making is created; and as the framework sets the institutions, procedures and objective/standards that subsequent regulatory decisions are made, the creation of this framework should occur by a process that engages as much public participation as possible, if it is to produce democratically legitimate results. While one view would be that any legislation Parliament passes is legitimate, there is another increasingly popular view that major changes to our socio-economic or political structure are only legitimate if there is more than a bare majority of support. This view has become more popular under MMP, where the political parties that form the government and can pass legislation will usually not individually gain a majority of the electoral vote. While they, of course, must find a majority in Parliament to legislate, there are clearly perceptions in a relatively evenly divided political landscape (that is, where the left and right blocs command only just over 50 per cent of votes at elections and support in Parliament) that further public participation is necessary from the perspective of democratic legitimacy.

  • Paul Scott and David de Joux “Uncertainty and Regulation: Insights from Two Network Industries” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). 11.7.2 Parliamentary uncertainty One of the issues Mladenovic identified as ripe for investigation was regulatory uncertainty.[221] It almost goes without saying it is a concern for regulated entities. However, it can mean different things in different contexts.[222] One type of regulatory uncertainty involves how Parliament has provided for regulation.[223] In New Zealand the path to regulation has, as Ahdar notes, been tortuous.[224] As Mladenovic shows, it has moved from a state-run affair to light-handed relying on general competition law and then on to regulation with specialist regulators.[225] This is not optimal. As Ahdar notes citing Joskow "a continuing stream of reforms rather than one comprehensive package is not conducive to the sort of large, long-term investment the sector needs."[226] This history of pragmatic piecemeal reform has done nothing to improve regulatory certainty. Indeed, the recent reform is the fifth Act of Parliament in the name of reforming industry since the Electricity Industry Reform Act 1998.[227] It does nothing to attract investment into the industry.

  • Rayner Thwaites and Dean R Knight “Administrative Law through a Regulatory Lens: Situating Judicial Adjudication within a Wider Accountability Framework” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). Accountability, as defined above, is a social relationship between an actor and a forum. In what follows, the Regulatory Standards Bill is characterised in terms of the three components of our integrated evaluative framework set out earlier: "information provision", "debate", and "consequences".[84] Under the Regulatory Standards Bill, the Minister and the chief executive are explicitly directed to provide the relevant information to Parliament.[85] As for any judicial declaration of incompatibility; the forum in which the court's declaration constitutes information is not specified under the Bill. In so far as the judiciary is conceptualised as "monitoring" the certification process, then the forum for a judicial declaration, understood in terms of Bovens' information provision is Parliament. Nonetheless, the true target of the Bill lies elsewhere. While falling outside the formal accountability framework provided under the Bill, the Taskforce clearly intended the Bill to influence the persons behind the legislation, the policy makers and drafters responsible for generating and drafting the relevant regulatory intervention.[86] The Bill is intended to indirectly influence these individuals by putting to justification those who have to certify a regulatory measure's compatibility with the principles, or those who have to defend a claim of compatibility in court.[87] The nature of the debate about those principles in Parliament takes its cue from the constitutional perspective, and concentrates on conformity of the legislation with the relevant principles, where that is given content by judicial rulings on the principles, or legal advice directed at anticipating those rulings.[88] As to consequences, there are no formal consequences as long as one confines oneself to the courts. The issuance of a declaration of incompatibility does not affect the legal validity of a measure.[89] The expectation is that a court ruling constitutes information to be fed into parliamentary and wider public debate, potentially generating a response in the legislature. The consequences are political. The intent is that this political response will in turn modify the behaviour of those developing and drafting legislation, bringing them into conformity with the nominated regulatory principles. There is an incomplete forum, the courts, nestled within the larger forum of Parliament, to complete the accountability relationship.

  • Derek Gill “Applying the Logic of Regulatory Management to Regulatory Management in New Zealand” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). While the system of officials committees is not nearly as strong as other comparable jurisdictions, the Cabinet and Cabinet Committee system is arguably the strongest of all Westminster countries as is the select committee review process. Commenting on the quality of select committee review in New Zealand, the late George Tanner, former Parliamentary Counsel, observed (in email correspondence): "[a]t its best, it works well and is probably a more effective scrutiny process than many upper Houses around the world." The introduction of MMP, while it has been successfully nested in the cabinet system, has also resulted in the growth in the use of urgency.[33] MMP requires minority governments to put together a parliamentary majority for each piece of legislation (other than confidence matters) before the Bill is introduced into the House.[34] Over time this imperative may undermine the role of the select committee as amending the legislation in committee risks unpicking the delicate balance of support for a Bill.

  • Dean R Knight and Rayner Thwaites “Administrative Law through a Regulatory Lens: Situating Judicial Adjudication within a Wider Accountability Framework” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). The closest analogue in terms of a parliamentary certification mechanism in the New Zealand political context is the section 7 process under the New Zealand Bill of Rights. Geddis has concluded that the parliamentary certification mechanism "appears to be at its weakest when it comes to protecting those rights most likely to be overlooked in the legislative process".[109] In contrast, "the situations in which it may actually have some effect" are those in which the public was already disposed to accept the necessary discipline required to adhere to the rights, without the intervention of the Attorney-General's section 7 certificate.[110] The question is whether the Regulatory Standards Bill is likely to suffer from the same weakness.

The Cabinet

The Cabinet of New Zealand is the decision making body of the Executive. Its membership consists of the Prime Minister (who chairs Cabinet) and Ministers of the Crown. It is the forum where significant government policy is debated and discussed. There is no reference to Cabinet in an Act; instead it owes its existence to constitutional convention. Often Acts of Parliament will delegate to Cabinet the law-making power to pass regulations. The Executive Council is the formal legal body which confirms Cabinet decisions, including the passage of regulations. All members of Cabinet are also members of the Executive Council, along with Ministers outside Cabinet and the Governor General. Examples of some activities of Cabinet are found in this part of the toolkit.

  • Derek Gill “Applying the Logic of Regulatory Management to Regulatory Management in New Zealand” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). A different logic is evident is the current regulatory management regime in New Zealand. The current regime requires that the cabinet paper (a minister's document), is augmented by a RIS, which is an independent assessment prepared by the department. In essence, this lifts the veil on the department's advice to its minister and allows the Cabinet collectively greater control over individual ministers and their portfolios.

  • 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). An important part of developing any regulatory reform is to conduct a cost-benefit analysis.[77] New Zealand policy-makers are currently required to provide Regulatory Impact Statements (RIS) for submission with their Cabinet papers when policy decisions are sought from Cabinet. The RIS ought to list the feasible options (including the status quo) and explain how the preferred option was decided. It should include a cost-benefit analysis.[78] The Regulatory Standards Bill 2011 also places a significant emphasis on cost-benefit analysis. One of its “principles of responsible regulation” is that legislation should produce benefits that outweigh its costs.[79]

  • 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). On 22 September 2010, Cabinet decided to conclude the review of the Act by adding – again using s 17(2)(g) – two additional factors to reg 28. These are a new “economic interests” factor and a “mitigating factor”. Treasury was not in support of these changes and, in its final advice to Cabinet, stated that if the government did add these factors it should, at the very least, remove reg 28(h).[47] Cabinet rejected this advice and reg 28(h) was retained.[48] The new factors, now regs 28(i) and 28(j), came into force on 13 January 2011.[49] On 22 December 2010, the Ministers rejected all of Natural Dairy’s applications. As with the CPPIB bid, the last-minute regulatory change was not decisive (and indeed had not yet come into effect). The ground relied upon was that the Ministers were not satisfied that all of the individuals with control of Natural Dairy were of good character.

  • 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). On 8 December 2010, the government issued a Ministerial Directive letter stating that: The Government’s overall policy approach to overseas investment in sensitive New Zealand assets is to achieve a balance between ensuring those assets are adequately protected while facilitating investment that provides benefit to New Zealand. While the Government acknowledges the purpose of the Act and the consent regime it establishes, the Government wishes to minimise, any unnecessary delays or administrative costs in the consent process. The Government’s general policy approach is to enable those investments that meet the statutory criteria for consent to proceed, by ensuring that they are not hindered by administrative issues and that the regulator’s resources are used efficiently. The first sentence of this statement – which relates solely to “sensitive New Zealand assets” – captures an important dimension of what might be called the “implied objective” of New Zealand’s FDI screening policy. In short, New Zealand wants to: attract and admit any business-only FDI it can; with regard to sensitive assets, attract and admit only productive FDI which provides a benefit to New Zealand; and in either case, avoid undue administrative delays and costs.

  • 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). • for investments in sensitive land, the relevant Ministers must determine that either: a. the relevant overseas person, or all individuals with control of that person, are ordinarily resident in New Zealand or intending to reside in New Zealand indefinitely (s 16(1)(e)(i)); or b. the overseas investment will, or is likely to, benefit New Zealand and, if the land is non-urban land, that the benefit will or is likely to be substantial and identifiable (ss 16(1)(e)(ii) and (iii)).

  • 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.

  • Derek Gill “Regulatory Management in New Zealand: What, Why and How?” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). Cabinet government is stronger in New Zealand – Cabinet is more active in New Zealand with more “big”policy going to Cabinet (rather than by policy approval letters) and no equivalent in the Australian system to the Cabinet Legislation Committee in New Zealand.

  • Derek Gill “Applying the Logic of Regulatory Management to Regulatory Management in New Zealand” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). In the original Diceyian[70] version of ministerial responsibility, in principle, virtually every action by a department was treated as if it were the ac on of the minister. In theory, the minister was accountable for their decisions and the actions of the department to the public through Parliament and the election process. In this simple version ministers set the policy and are responsible for the running of the department. The public service has no personality; it is loyal, neutral (in the sense of non-partisan) and anonymous. While the Diceyian doctrine might be a useful fiction when government is small and, in New Zealand's case when it fitted into the Old Government Buildings, this clearly is not sustainable for a modern state. New Zealand public sector reforms of the late 1980s modified the Diceyian doctrine somewhat. The operation of the Official Information Act 1982 (OIA) ensures that virtually all policy advice is potentially available after the government has made the policy decision. There is a growing practice for the Cabinet papers themselves to be posted on the government website so, other than in a few areas like defence, officials draft papers on the basis that these will become publicly available. The Cabinet Manual states:[71] Ministers decide both the direction and the priorities for their departments. They should not be involved in their departments' day-to-day operations. In general terms, Ministers are responsible for determining and promoting policy, defending policy decisions, and answering in the House [of Representatives] on both policy and operational matters. Thus, ministers are politically responsible (answerable) for the actions of their department, while the chief executive is managerially responsible. A public servant's duty is to advise the minister and then to implement his or her policy decisions. The Cabinet Manual states:[72] Advice given to Ministers must be honest, impartial, and comprehensive. It must also reflect the priorities determined by the government of the day. During the policy development process, the advice given by officials should be free and frank, so that Ministers can take decisions based on all the facts and appreciation of all the options. Once policy is determined, departments are responsible for its effective implementation.

Executive and Regulatory Agencies

Executive Agencies (or Departmental Agencies) are agencies located within a government department and are accountable to the Chief Executive of that department. They are used to deliver non-commercial operational and regulatory functions within the host department. Examples of the activities of some executive and regulatory agencies are found in this part of the toolkit.

  • 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). In addition to the general considerations just mentioned, there is a specific constitutional concern. This concern is that Parliament has several times considered whether to concretise the general anti-avoidance rule by legislating in much more detail. Parliament has not done so, for good reason.[39] In short, the reason is that general anti-avoidance rules are not able to be the subject of effective detailed legislation. In addition, it appears curious, even substantially unconstitutional, that if Parliament has decided not to legislate in detail the Commissioner should step in to provide that detail. The considerations outlined mean that in the end a Commissioner's interpretation statement can amount to no more than some kind of instruction about the appropriate analytical technique to be brought to bear in interpreting the general anti-avoidance rule. This feature is particularly evident in the draft of 16 December 2011. It is more like a textbook or monograph than a kind of set of quasi-rules; albeit a textbook or monograph that is short on examples.

  • 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). One issue addressed in Advance Rulings on Tax Liability was the question of whether the Commissioner should rule on questions relating to the general anti-avoidance rule.[31] Some countries with rulings procedures exclude rulings on avoidance, but Advance Rulings on Tax Liability[32] had recommended that the Commissioner should be empowered to grant binding rulings on avoidance.[33] Experience suggests that this power is probably undesirable. The problem is that the general anti-avoidance rule is extremely imprecise. It is very difficult for tax officials to give rulings on avoidance questions unless the questions reveal transactions that are clearly unacceptable. As a result there have been a number of rulings that have later been discovered to be incorrect. One of the most significant was in respect of one of the bank structured finance cases of the 1990s.[34] These cases led eventually to a very major series of cases where it was eventually held that the actions of the banks were void as involving avoidance arrangements.[35] Since rulings are secret, such problems are likely to go undetected, at least for a long time. The recommendation therefore is that the rulings regime should be amended so that at least private rulings should not be available in respect of the operation of section BG1.

  • Richard Boast and Susy Frankel “Defining the Ambit of Regulatory Takings” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). New Zealand's historic commitment to an inclusive economy[76] has meant also that the state did not nationalise resources in order to profit from this directly, still less to grant away formerly privately-owned resources to the relatives and cronies of politicians (as has happened in so many places), but rather with the fairly innocuous aim of creating a platform for licensing and regulation. The geothermal resource is not, for instance, closed off to private developers. Rather, such developers need to obtain a permit to exploit it, the permitting system now controlled by the resource consent system of the Resource Management Act 1991, administered not by central government but regional councils. Without the resource being nationalised there could be no legal foundation for a system of regulatory consents. But a key difference with Britain – although not the United States or Australia – is that so much land is in Crown direct ownership, in fact about one-half of the land area of the country. As a landowner, the Crown owns the subsurface mineral estate under ordinary rules of common law. Perhaps what is most surprising is the complete absence of any tradition of legal scholarship on public lands and rights of access to them such as would be readily found in jurisdictions such as Arizona or New Mexico where similarly large areas are held directly by state and federal governments.

  • Mark Bennett and Joel Colón-Ríos “Public Participation in New Zealand’s Regulatory Context” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). By environmental regulation, we mean any rule that seeks to balance competing demands on natural resources.[194] In New Zealand, the main legal framework for the regulation of environmental use is the Resource Management Act 1991 (the RMA). The purpose of the Act is that of promoting the sustainable management of the country's natural and physical resources.[195] The Act defines "sustainable management" as "managing the use, development, and protection of natural and physical resources in a way, or at a rate, which enables people and communities to provide for their social, economic, and cultural well-being and for their health and safety", while at the same time:[196] (a) sustaining the potential of natural and physical resources (excluding minerals) to meet the reasonably foreseeable needs of future generations; (b) safeguarding the life-supporting capacity of air, water, soil, and ecosystems; and (c) avoiding, remedying, or mitigating any adverse effects of activities on the environment. Specific functions under the Act are divided among the central government, regional councils and territorial authorities.[197] The Ministers of the Environment and Conservation are responsible for the functions of the central government. The Minister of the Environment, for instance, has the power to issue national environmental standards through the making of regulations, the power to recommend the promulgation of national policy statements with a binding effect at regional and territorial levels and a "call-in power" for applications or proposals of national significance.[198] The Minister of Conservation is responsible, among other things, for the coastal marine area, the approval of regional coastal plans and for deciding applications for permits for any restricted coastal activity.[199] Regional councils' responsibilities include water quality, biodiversity conservation, allocating natural resources and preparing policies on the integrated management of resources and on the "regionally significant effects of the use, development or protection of land".[200] The responsibilities of territorial authorities include the control of natural hazards and of "the effects of the use, development and protection of land (and surface of lakes and rivers), and the control of subdivision and noise".[201]

  • Paul Scott and David de Joux “Uncertainty and Regulation: Insights from Two Network Industries” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). A new industry specific regulator was created: the Telecommunications Commissioner. While the Ministerial Inquiry report advised a stand-alone basis, the legislative reform established the Commissioner as a member of the Commerce Commission. The Commissioner received regulatory powers and was helped by new information disclosure requirements.

  • 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). The audio-visual section of New Zealand’s GATS schedule reserves the right for the New Zealand Broadcasting Commission to allocate six per cent of its budget to Māori programming, as well as to restrict governmental assistance to the film industry to New Zealand films. It does not, however, permit domestic preferences through local television content support.

  • Alec Mladenovic “Networked Industries: Electricity and Telecommunications” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). 13.4.1 Electricity-specific regulation Part 4 of the Commerce Act provides for “the regulation of the price and quality of goods or services in markets where there is little or no competition and little or no likelihood of a substantial increase in competition”.[43] This includes the regulation of “electricity lines services” (Transpower and ELBs) – the natural monopoly elements of the electricity industry. The purpose of Part 4 is to:[44] … promote the long-term benefit of consumers in markets ... by promoting outcomes that are consistent with outcomes produced in competitive markets such that suppliers of regulated goods or services— (a) have incentives to innovate and to invest, including in replacement, upgraded, and new assets; and (b) have incentives to improve efficiency and provide services at a quality that reflects consumer demands; and (c) share with consumers the benefits of efficiency gains in the supply of the regulated goods or services, including through lower prices; and (d) are limited in their ability to extract excessive profits. There are two types of regulation applicable to electricity lines services:[45] • all suppliers of electricity lines services are subject to information disclosure regulation; and • suppliers of electricity lines services that are not consumer-owned (around 12 of the 28 ELBs) are also subject to price-quality regulation (of which there are two types – default/customised price-quality regulation and individual price-quality regulation). The Commerce Commission must develop input methodologies, which involve setting upfront regulatory methodologies, rules, processes, requirements and evaluation criteria for services, and for undertaking related inquiries.[46] The purpose of input methodologies is to promote certainty for suppliers and consumers in relation to the rules, requirements and processes applying to the regulation, or proposed regulation, of electricity lines services.[47] The purpose of the Electricity Industry Act is to “provide a framework for the regulation of the electricity industry”.[48] The Act: • disestablished the Electricity Commission and replaced it with the Electricity Authority as an independent Crown entity on 1 November 2010 (the Commission was not an independent Crown entity but was governed by a Board appointed by and accountable to the Minister of Energy and Resources); • required the three SOE generators (Genesis Energy, Meridian Energy and Mighty River Power) to exchange specific generation assets they own amongst themselves in order to facilitate more effective competition in the generation market; and • permits ELBs to retail electricity and construct new thermal generation, subject to strict controls, in order to increase competition in the retail and generation markets. The objective of the Electricity Authority is “to promote competition in, reliable supply by, and efficient operation of, the electricity industry for the long-term benefit of consumers”.[49] The Authority’s objectives and functions, however, are significantly less than those formerly under the Electricity Commission, including responsibility for approving new transmission investments, which now falls to the Commerce Commission.[50] 13.4.2 Telecommunications-specific regulation The Telecommunications Act states: “The main purpose of this Act is to regulate the supply of telecommunications services”.[51] The Act regulates the supply of certain telecommunication services (designated services and specified services).[52] The purpose of this regulation is to:[53] … promote competition in telecommunications markets for the long-term benefit of end-users of telecommunications services within New Zealand by regulating, and providing for the regulation of, the supply of certain telecommunications services between service providers. The Act emphasises the importance of efficiencies in the Commerce Commission’s determinations:[54] In determining whether or not, or the extent to which, any act or omission will result, or will be likely to result, in competition in telecommunications markets for the long-term benefit of end-users of telecommunications services within New Zealand, the efficiencies that will result, or will be likely to result, from that act or omission must be considered. And the Act specifically provides for the consideration of dynamic efficiency in the Commerce Commission’s determinations:[55] To avoid doubt, in determining whether or not, or the extent to which, competition in telecommunications markets for the long-term benefit of end-users of telecommunications services within New Zealand is promoted, consideration must be given to the incentives to innovate that exist for, and the risks faced by, investors in new telecommunications services that involve significant capital investment and that offer capabilities not available from established services.

  • Susy Frankel and Meredith Kolsky Lewis “Trade Agreements and Regulatory Autonomy: The Effect on National Interests” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). The Food Standards Treaty established the first trans-Tasman bi-national regulatory agency, the Australia New Zealand Food Authority (“ANZFA”), to develop joint food standards for Australia and New Zealand.[90] In 2002 the Food Standards Treaty was amended and the ANZFA was renamed Food Standards Australia and New Zealand (“FSANZ”).[91] The FSANZ is an independent statutory agency,[92] whose powers and functions are governed by the Food Standards Australia New Zealand Act 1991 (Australia).[93] In New Zealand, the Parliamentary Secretary to the Minister for Health has executive responsibility for FSANZ.[94] FSANZ has offices in Canberra and Wellington, and all employees are members of the Australian public service, including those employed in New Zealand.[95] The governing Act provides that the primary objective of the FSANZ, in developing or reviewing food standards and variations of food standards, is to protect public health and safety.[96] Other objectives include the provision of adequate information relating to food to enable consumers to make informed choices[97] and the prevention of misleading or deceptive conduct.[98] Although not stated in the Act, another promoted aim of FSANZ is the reduction of barriers to trade.[99] (c) Joint Food Standards Code The FSANZ is authorised to make food standards for both Australia and New Zealand called the Australia New Zealand Food Standards Code (joint code).[100] FSANZ developed the joint code based on a review of the Australian Food Standards Code.[101] The Health Ministers of New Zealand and Australia agreed to the joint code in November 2000.[102] The joint code deals with issues such as production, composition, contaminants and labelling.[103]

  • Susy Frankel and Meredith Kolsky Lewis “Trade Agreements and Regulatory Autonomy: The Effect on National Interests” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). The New Zealand Food Safety Authority (NZFSA) is an independent statutory agency that co-exists alongside the FSANZ. The NZFSA has the primary responsibility for developing food safety standards for New Zealand (for example, food additives, artificial sweeteners, contaminants in food, food premises registration, food labelling and food complaints).[108] The primary responsibility of FSANZ is to develop food standards (for example, composition, labelling and contaminants) for Australia and New Zealand.[109] These food standards are developed with advice from NZFSA and input from stakeholders and consistent with food regulatory policies issued by the Australian and New Zealand Food Regulation Ministerial Council.[110]

  • Susy Frankel and Megan Richardson “Trans-Tasman Intellectual Property Coordination” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). The difficulties of harmonisation may very well be why in the field of patents the SEM programme only contemplates shared examination and not a shared regime. However, some key differences between New Zealand and Australian law relate to the patentability criteria that will be part of the examination process, such as inventive step. In a joint statement issued by IP Australia and IPONZ it was stated that shared examination will retain enough flexibility to ensure each country’s policy interests can be met:[72]

  • 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). In practice, 69 councils are accredited and registered as BCAs. There are currently no private organisations accredited and registered.[35] Between them BCAs process approximately 70,000 building consents per year and conduct inspections on roughly the same number of buildings. This is approximately 1,000 per council on average. Since the major metropolitan councils handle many more than 1,000, the average number of applicants for a non-metropolitan council is usually well less than 1,000 per year.

  • Derek Gill “Regulatory Management in New Zealand: What, Why and How?” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). The key features of the New Zealand regime include: the reach includes all central government primary and delegated or secondary regulation, but does not necessarily include tertiary regulations, and local government is excluded; the locus is predominantly on managing the flow of new regulations, but more recently emphasis has been placed on more intensively reviewing the existing stock; the scope has expanded recently beyond ex ante policy review to include ex post implementation; the coverage of the regime covers material going to Cabinet so it would apply to new arms’-length public bodies (so called “independent agencies”) as well as private sector regulatory bodies but not necessarily to their existing activities; the focus is primarily on the front-end big policy phase;and the desired impact is primarily improving the quality of supply from the bureaucracy of individual new regulatory policy proposals and to a lesser extent on increasing the demand from stakeholders, ministers or parliamentarians. The Regulatory Standards Bill, which at the time of writing (mid 2011) is before Parliament, would make some major additions to the regulatory management regime in New Zealand. One of the novel proposals is the requirement for the Minister and the agency responsible to separately publish a certificate on whether legislation is consistent with the principles of “responsible regulation.”This would appear to place the public service in the difficult position where they did not support the legislation of either “white-anting”the Minister by undermining their position or misleading the legislature with a poor certificate. Box 3 below lists the possible implications of the Regulatory Standards Bill. Of particular note is the requirement to explicitly balance cost and benefits in introducing new regulations, the introduction of “principles of responsible regulation”and the enhanced role for the courts to declare regulation incompatible with those principles.

  • Derek Gill “Regulatory Management in New Zealand: What, Why and How?” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). A key tension in public management implementation is the balance between rules and discretion. Across the OECD, for example, so-called “independent regulators”are set up by statute with lofty goals and relatively little prescription about how or what they do.[103]

  • Dean Knight and Rayner Thwaites “Review and Appeal of Regulatory Decisions: The Tension between Supervision and Performance” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). The plurality of regulatory decisions is matched by the plurality of decision-makers. The body or official charged with making a regulatory decision varies widely. Here we exclude from our project those regulatory decisions ultimately made by Parliament through legislation, which are not capable of being reviewed or appealed. Our focus is on those regulatory functions delegated by Parliament to a Minister, public body, regulatory agency, or official. Or, in some cases, self-regulation undertaken by private bodies, where Parliament has chosen not to impose a public form of regulation.[17] Some illustrative examples include: • Ministers and public service officials; • local authorities; • other public bodies such as the Commerce Commission, the Electricity Commission,[18] the Environmental Risk Management Authority, the Office of Film and Literature Classification, the Overseas Investment Office, the Civil Aviation Authority, the Legal Services Agency, the Takeovers Panel, the Pharmaceutical Management Agency,[19] the Liquor Licensing Authority, the Broadcasting Standard Authority, and the Immigration and Protection Tribunal; and • professional bodies such as the law societies, the Medical Council, and the Plumbers, Gasfitters and Drainlayers Board.

  • 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). One thing the Bill will not change is the central role of councils as BCAs. In this role they will be responsible for:[42] • checking to ensure that an application for a building consent complies with the Building Code; • checking to ensure that building work has been carried out in accordance with the building consent for that work; and • issuing building consents and certificates.

  • 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). New Zealand local authorities have provided building consents and undertaken building inspections for a very long time. The Building Act 1991 introduced contestability into providing building consents and inspections; it allowed for them to be carried out by both local authorities and private sector building certifiers.[31] Under the Building Act 2004, territorial and regional authorities carrying out building consent, inspection and approval work must be accredited by a building consent accreditation body against standards and criteria laid down in regulations. The council must also be registered by the Department of Building and Housing (DBH). International Accreditation New Zealand (IANZ) has been appointed as the building consent accreditation body. A council which does not wish to be accredited or registered as a Building Consent Authority (BCA) can transfer these functions to another council which is accredited and registered.[32]

  • 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]

  • Mark Bennett and Joel Colón-Ríos “Public Participation in New Zealand’s Regulatory Context” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). (i) Electricity Authority The Electricity Authority has the main responsibility for the regulation of New Zealand's wholesale and retail electricity markets. Its objective is set out in section 15 of the Electricity Industry Act 2010, which states that "[t]he objective of the Authority is to promote competition in, reliable supply by, and the efficient operation of, the electricity industry for the long-term benefit of consumers."[27] As discussed below, the interpretation of this objective is crucial to the regulator's understanding of its function and the considerations that are relevant to making regulatory decisions that serve that purpose. Although there is room for different interpretive approaches to this objective, there has been a clear decision to limit the Electricity Authority's regulatory concerns compared with the more wide ranging aim that the previous regulator, the Electricity Commission, was charged with achieving: "to ensure that electricity is produced and delivered to all classes of consumers in an efficient, fair, reliable, and environmentally sustainable manner".[28] Key regulatory concerns relating to consumer protection[29] and energy efficiency are now dealt with by other agencies.[30] As the Electricity Authority is an Independent Crown Entity (ICE), the Minister of Energy does not have the power to direct the Electricity Authority on its functions and objectives except as set out in section 17, which provides that "[i]n performing its functions, the Authority must have regard to any statements of government policy concerning the electricity industry that are issued by the Minister".[31] This independence contrasts with the previous regulator, the Electricity Commission, which was a Crown Agent and was thus required to give effect to government policy if the responsible minister directed it to do so.[32]

  • 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.

  • 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). There is no doubt that a good textbook on the general anti-avoidance rule would be helpful, but in the opinion of the author it is not useful to present what amounts to a kind of textbook as a Commissioner's interpretation statement. A Commissioner's interpretation statement on the general anti-avoidance rule can have no more authority than an interpretation statement published by a legal scholar. However, because it is the Commissioner that has published the document people are apt to rely on it and officials within the Inland Revenue Department have a strong incentive to follow the statement when they are dealing with an anti-avoidance case, even if the statement is misleading in the particular case.

  • 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 and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013) [40] Patents Act 1953, s 31(1) (repealed) provided "if upon application made by a patentee in accordance with this section the Court or Commissioner is satisfied that the patentee has not been adequately remunerated by the patent, the Court or Commissioner may by order extend the term of the patent, subject to such restrictions, conditions, and provisions, if any, as may be specified in the order, for such period (not exceeding 5 years or, in an exceptional case, 10 years) as may be so specified; and any such order may be made notwithstanding that the term of the patent has previously expired."

  • Mark Bennett and Joel Colón-Ríos “Public Participation in New Zealand’s Regulatory Context” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). The particular regulatory decisions made by the Electricity Authority are: (1) amendments to the Code; (2) decisions about grid reliability standards and transmission pricing methodology;[34] (3) monitoring of competition, supply, and efficiency in the electricity market, including producing and publishing "wholesale and retail market reports and statistics, information on system performance, a dataset that includes half-hourly metering data, bids and offers, prices, hydro inflows, lake levels, and half-hourly network configuration data";[35] (4) administering the vulnerable and medically dependent consumers' guidelines and monitoring compliance; (5) undertaking market-facilitation measures such as providing education, information, guidelines and model arrangements; (6) promotion of consumer switching between retailers; and (7) establishing advisory groups and a Rulings Panel that considers allegations that a company has breached the Code, or disputes between industry participants and about certain Electricity Authority code decisions.[36] (ii) Commerce Commission The Commerce Commission, also an Independent Crown Entity, has played a role in the regulation of electricity since 2001,[37] specifically in price and quality regulation of electricity distribution (except where the electricity distribution company is "consumer owned").[38] It also makes decisions about price-quality control of electricity lines services.[39] It sets default price-quality paths that state maximum prices and the required quality of service, and these apply for a specified period, usually five years.[40] The Commission must also develop and publish the input methodologies it uses to calculate the levels of price control, for example the valuation of assets and cost of capital.[41] A draft methodology is produced, and submissions and a conference held before the input methodology is finalised. The Commerce Commission also makes determinations concerning how price regulation applies to particular companies, most importantly the application of the input methodologies noted above to lines companies in order to create their individual price-quality path.[42] These are known as "section 52P determinations". After these determinations are set, the Commission monitors and enforces the price-quality path.[43] Additionally, the Commerce Commission regulates the costs Transpower can recover from investment in upgrading the national grid, by putting in place an input methodology for any proposals for capital expenditure.[44]

  • Susy Frankel and Megan Richardson “The Challenges of Trans-Tasman Intellectual Property Co-ordination” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). There is a precedent for such an opt-out facility, which is found in New Zealand and Australia's most integrated regulatory body: Food Standards Australia New Zealand (FSANZ).[38] FSANZ has offices in both Canberra and Wellington, and all employees are members of the Australian public service, including those employed in New Zealand.[39] FSANZ's primary statutory objective is to develop and review food standards and variations of food standards, in order to protect public health and safety.[40] Alongside this regime New Zealand retains a New Zealand-based Food Safety Authority, which has the main function of developing safety standards for New Zealand, around matters such as additives and contaminants, as well as complaints about premises.[41]

  • Mark Bennett and Joel Colón-Ríos “Public Participation in New Zealand’s Regulatory Context” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). It is often argued that limiting a regulator to one or two key economic objectives is the only way to allow coherent regulation to occur, and to mitigate concerns about the discretionary power and exercises of judgment that the regulator must wield. As the House of Lords report observed, "where regulators are required to take account of wider issues, these objectives should be defined clearly and carefully by Government and Parliament".[96] This links with the idea that the regulator should be taking a purely technocratic means-end approach in order to achieve the objectives that Parliament has set it; the democratically elected Parliament determines the objectives, and the regulator uses its expertise to achieve them. Where that goal is the maximisation of economic efficiency, it "provides a means by which the regulator's decisions can be non-arbitrary; the technical expertise of the economic regulator becomes his or her source of legitimacy".[97] This "means-end" instrumental rationality is said to allow the regulator to act according to the value judgments made by the legislator, by merely giving effect to the standards previously debated and agreed on, and set down in law.[98] By splitting off questions of economic efficiency and competition from other goals, we can leave the latter to governments to resolve. This also prevents "an incoherence where it becomes progressively harder for a regulator to defend what he is doing without contradiction".[99]

  • Kate Tokeley “Consumer Law and Paternalism: A framework for policy decision making - Further Analysis” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). Unfair terms legislation hands the job of determining the acceptability and fairness of contractual terms from the consumer to a third party (either a court or government agency). An anti-paternalist might argue that there is too great a danger that a third party decision maker will make false assumptions about consumer preferences and consumer welfare. Perhaps some consumers would prefer harsher terms at a cheaper price. However, the above analysis has shown that consumers have information-processing weaknesses that preclude them from making informed choices in these kinds of cases. While leaving the decision as to fairness to an external decision-maker might not be perfect, it might be an improvement on leaving the decision to consumers, because consumers simply do not make that decision. Without some form of paternalistic legal control, the content of these terms will be determined only by suppliers.

  • James Zuccollo, Mike Hensen and John Yeabsley “Weathertight Buildings and Performance-based Regulation: What Lessons can be Drawn from a Complicated and Evolving Situation?” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). Accountability provides an ex ante incentive for people to perform to a standard provided they can be "reasonably" expected to know or discover how to achieve that standard with the knowledge and resources they have available. These relationships drive the system performance that is sought. The allocation of accountabilities, particularly with respect to accountability for monitoring and control of the regulatory system, changed before implementation.[39] The Building Industry Council (BIC) envisaged a central authority: · responsible for monitoring the building control regime including the performance of the territorial local authorities; and · a decision maker on interpretation approval and monitoring of the control system. However, the decision making role for the central authority was not carried through into implementation and the monitoring role was narrowed. On implementation effectively: (1) Designers and builders were responsible for ensuring that their work was consistent with the standards required by the code both on construction and through the life of the building. (2) Territorial authorities were responsible for the administration of the Act and the Building Code and to judge whether designs would meet the performance standards within the code and confirm that the building matched the design. (3) The Building Industry Authority (BIA) (the central authority) limited its role to an oversight of the system and did not accept responsibility for the administration of the Building Code. This configuration of accountability meant there was no strong central accountability for quality control of the regulatory system for two reasons: (a) Monitoring and feedback loops to check the ongoing achievement of performance standards for innovative solutions were not designed into the system. Instead, achievement of the performance standard was assumed to follow on from the approval of the design and construction of the building in line with the design. (b) The central authority did not accept a role in aggregating and analysing the results of feedback. If the accountability of the central authority had included administration and monitoring of the regulatory system it is likely that there would have been a faster response to the evidence of leaks. However, it is unlikely that changing the accountability of the central authority would have automatically filled key gaps in building science knowledge or triggered a system rather than a component based analysis of innovations.

  • Chris Nixon and John Yeabsley “Australia New Zealand Therapeutic Products Authority. Lessons from the Deep End of trans-Tasman Integration” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). New Zealand and Australia signed the ANZTPA arrangement in 2003. It set out the wish of both countries to jointly regulate therapeutic products. While New Zealand and Australia have had other joint arrangements none went as far as the ANZTPA in proposing a joint regulator in both jurisdictions. The move to the ANZTPA would have established a world-class regulator for the trans-Tasman market whose aim was to improve public health and safety, reduce trade barriers, and encourage trade; all at least cost. The ANZTPA was an attempt to replace the Australian Therapeutics Goods Administration (“TGA”) and the New Zealand Medical Devices Authority (“Medsafe”). It was designed as a single regulatory agency for the two jurisdictions. It was much more ambitious than other forms of trans-Tasman integration. Currently, the therapeutics regime covers: • pharmaceuticals that do not require a prescription (so called “over the counter” pharmaceuticals) and prescription-based pharmaceuticals;[22] • medical devices in New Zealand that are not subject to pre-market regulation − Medsafe’s role is one of post-market monitoring; and • complementary health care products which are currently regulated as dietary supplements under the Food Act 1981[23] (and the Dietary Supplements Regulations 1985).[24]

  • Chris Nixon and John Yeabsley “Australia New Zealand Therapeutic Products Authority. Lessons from the Deep End of trans-Tasman Integration” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). (a) Structure The structure of the ANZTPA was designed to be set up under the 2003 Treaty and once ratified would have been implemented through Acts of Parliament in each country.[25] Importantly, a single set of rules made by the Ministerial Council and technical orders by the Managing Director would direct the operations of the ANZTPA. This meant that there would be complete harmonisation between Australia and New Zealand in therapeutics regulation. This was a step further than the FSANZ approach whose scope was confined to a standards writing body. Also, unlike the FSANZ, the ANZTPA was to be overseen by a two member Ministerial Council comprising the Minister of Health in New Zealand and the Australian Minister of Health. According to ANZSOG,[26] the ANZTPA was also designed to have a five-member board. At the time, this was seen (in New Zealand) as an advance over FSANZ because New Zealand would have an equal voice when it came to developing policy. As a legal entity, the ANZTPA would have been enshrined in legislation of both countries. It would have been directly accountable to the New Zealand and Australian ministers and to each Parliament. The aim was to have common regulatory outcomes and have authority to set regulations in both countries regarding reviews and appeals. The importance of the ability to exercise a ministerial “voice” meant that there was a focus on “accountability” mechanisms within the ANZTPA regulatory regime. These included parliamentary scrutiny of the rules and orders developed within the ANZTPA, and the procedures for the review of regulatory decisions. Both Parliaments had access to planning, financial and corporate information with the aim of this relatively full disclosure to enable each Parliament to determine how the organisation was performing.

  • Chris Nixon and John Yeabsley “Australia New Zealand Therapeutic Products Authority. Lessons from the Deep End of trans-Tasman Integration” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). (b) Important issues The unique features of ANZTPA, described above, have a bearing on the attitudes and stances taken by various stakeholders in the process. From a New Zealand perspective, a New Zealand-only regulator would require significantly more investment than is currently undertaken to function effectively over the long term. There are a number of reasons for this. First, the nature of the job is highly specialised and skills are in short supply. The ability of Medsafe to attract these types of people is diminishing.[27] This is likely to have serious consequences for New Zealand’s ability to provide consistent regulation in this area. Secondly, the risks to the general public from therapeutics products are also increasing. In the past such products have been seen as low risk. The risks are increasing, however, with more information available (of varying quality) on the internet, the ability for children to buy these products when they are typically not suitable for children, and the types of reactions that could potentially occur when mixed with alcohol.[28] And thirdly, the increased possibility of the Crown being sued when products are approved that should not be.[29] The increased risks associated with therapeutic products also meant that equal voice at a ministerial level was seen as important for New Zealand. At the time, this was seen as a major advance over FSANZ because New Zealand would not have been disadvantaged when it came to developing policy. This equal standing at the policy table would, the designers hoped, mitigate any loss in voice or accountability.

  • 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 (LexisNexis 2013). The Department of Labour prosecution system offers an example of a regime that is directly trained on safety issues. This is a complex regime; the source of the Department's authority (specifically through the Labour Group – one of six groups within its current organisational structure) to regulate safety issues is derived from some 23 statutes and 67 sets of regulations.[38] Some of these powers reflect key international commitments reflected in international labour rights treaties.[39] The scope of the Department of Labour's initiatives in the area of workplace safety is suggested by its 2011 Report, New Zealand Thriving Through People and Work.[40] Many of the Department of Labour's goals are of course tied closely to New Zealand's no-fault accident compensation regime.[41] The Report refers, for example, to the goal of achieving a comprehensive 24/7-no-fault coverage system designed to support injury prevention, effective rehabilitation and appropriate compensation.[42] An experience rating system, which alters the amount businesses pay to ACC based on their claims history, is characterised as "rewarding those with good safety records".[43] Incentives are also put in place to encourage businesses to engage with health providers.[44]

  • 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.

Courts

The Courts are the judicial arm of government. They are responsible for the development of the common law and the interpretation of Acts of Parliament. The New Zealand judiciary are independent from the other parts of government. In New Zealand, the Courts cannot declare laws of Parliament to be invalid because Parliament is supreme. That means that if Parliament disagrees with a court’s interpretation of legislation, it can amend the relevant legislation. In some instances this can in effect overrule the court’s interpretation so that future cases are decided differently. The following extracts discuss a variety of aspects of courts.

  • Paul Scott “Competition Law and Policy: Can a Generalist Law be an Effective Regulator?” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). New Zealand courts did not help things. In Port Nelson Ltd v Commerce Commission,[97] the High Court found a breach of section 36 for tying – but not for bundled discounting or predatory pricing. These practices fell under section 27, despite being unilateral conduct. Gault J did not advance things, apart from grumbling about the counterfactual test saying:[98] While it is not easy to see why use … should not be determined simply as a question of fact without the need to postulate artificial scenarios, we are content in this case to adopt that approach…. He essentially said the defendant had not shown the High Court was wrong in its analysis. He said much the same thing in Carter Holt Harvey Building Products Group Ltd v Commerce Commission in upholding liability under section 36 for predatory pricing.[99]

  • Paul Scott “Competition Law and Policy: Can a Generalist Law be an Effective Regulator?” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). So, in my view, one of the reasons for section 36 not being as effective as it should have been is the failure of New Zealand courts to engage in analysing and adapting section 36. They appeared to eschew economic reasoning. No New Zealand court showed the imagination and legal and economic reasoning of Heerey J.

  • Paul Scott “Competition Law and Policy: Can a Generalist Law be an Effective Regulator?” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). While the High Court showed it could act as a de facto regulator, it did not discuss previous authority that courts could not, and should not, act as regulators. Nor did it mention academic writing. A plethora of academic writing exists on price squeezes.[225] The High Court did not refer to it. This directly contrasts with the above mentioned treatment of recoupment and predatory pricing. If United States law was not relevant, why did the Court not cite European law which commonly holds firms liable from price squeezes as an act of monopolisation?[226] This is so even if there is an applicable regulatory framework. This European situation of overlapping control, that is, competition law and direct regulation has been subject to much criticism.[227] Whatever one's view of the decision, a lot more was involved than simply asking whether Telecom offended against section 36 by breaching the ECPR for its inputs. Similarly, a lot more is involved in predatory pricing cases than did the defendant breach section 36 by charging below cost. By relying on statutory interpretation and eschewing overseas case law and literature, the High Court did not properly become involved. This reluctance to refer to overseas case law and literature does harm to New Zealand's competition law. It leaves us, in Heydon J's words, as a lonely island lost in the middle of a foggy sea.[228]

  • Richard Boast and Susy Frankel “Defining the Ambit of Regulatory Takings” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). A focus on the protection of title to property has allowed the courts to retreat to the comfortable position of providing compensation where title is confiscated, or where regulatory takings are so extreme as to cause loss equivalent to takings of title to property. The problem with this approach is threefold.

  • Dean Knight and Rayner Thwaites “Administrative Law through a Regulatory Lens: Situating Judicial Adjudication within a Wider Accountability Framework” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). A similar dichotomy is sometimes expressed in the terms of the red and green lights – the emblems devised by Harlow and Rawlings to depict differing conceptions about the role of judicial review.[41] The red light theory is driven by the desire to uphold the rule of law and to protect the rights, interests and expectations of citizens. The courts are not shy about intervention in administrative affairs and are more likely to substitute their view for the view of the decision maker. Preventing abuses of power is the catch-cry of redlight theorists. In contrast, the green light theory emphasises the separation (or, rather, division) of powers principle and recognises the limits of judicial function. Democratic action, particularly collective expression of the public interest, is to be facilitated and supported by the courts; judicial deference is accorded to decisions which are better held to account through the political process.

  • Dean Knight and Rayner Thwaites “Administrative Law through a Regulatory Lens: Situating Judicial Adjudication within a Wider Accountability Framework” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). Second, the Court expressed doubts about its relative institutional competence to engage in a strict supervisory process. Rejecting the unsuccessful tenderer's submission that it should take a "hard look" at the district health board's assessment of the bids' value for money, Arnold J said:[55] … we do not think that a court is well placed to assess on a judicial review application the medical, economic and other complexities raised by an evaluation process such as that undertaken in the present case. Moreover, the judges also expressed concern about the extent of the material placed before the Court, the length of the original hearing and the length of the judgment required to dispose of the allegation on appeal:[56] The factual and other subtleties are too great to be dealt with in what is supposed to be "a relatively simple, untechnical and prompt procedure" …, which normally does not involve cross-examination.[57]

  • Dean Knight and Rayner Thwaites “Administrative Law through a Regulatory Lens: Situating Judicial Adjudication within a Wider Accountability Framework” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). For present purposes, the Regulatory Standards Bill has two key, related features: (a) a certification process, requiring the relevant Minister and chief executive to sign a certificate addressing the legislation's compatibility with nominated principles of responsible regulation;[76] and (b) provision for an individual to challenge legislation in court on the basis of the nominated regulatory principles. The relevant remedial outcomes of such a court challenge are two-fold. First, in their interpretive role, the courts must give an enactment a meaning compatible with the principles (if such an interpretation "can" be accorded).[77] Second, the courts may issue a declaration that a provision is incompatible with one or more of the principles[78] where this declaration has no effect on legal validity.[79] The power to make judicial declarations of incompatibility was explained as providing for "monitoring of the certification process, and accordingly incentives for accurate certification".[80]

  • Dean Knight and Rayner Thwaites “Review and Appeal of Regulatory Decisions: The Tension between Supervision and Performance” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). (b) Appellate review Appellate review is often treated, erroneously, as representing a singular form of judicial supervision.[39] The reality of appellate review, however, is that it involves variable intensity of review. As Sir Kenneth Keith said over forty years ago, appellate review amounts to a continuum of different methodologies: from “a limited ‘wrong principle’ conception” at one end, to full review at “the other extreme” where the court “will substitute its own discretion”.[40] The degree of intensity bought to the supervision task depends predominantly on how Parliament has conferred jurisdiction to review on the relevant court, particularly the identification of the type or form of appellate review in the statute and other procedural and evidential rules which influence the reviewing task. The type or form of review varies and mandates judicial intervention in different circumstances. The different types or forms of appeal have been described in different ways.[41] At one extreme is a de novo appeal or hearing,[42] sometimes described as merits review.[43] In de novo appeals, the appellate body stands in the shoes of the primary decision-maker and hears the matter afresh, which may include the provision of fresh evidence.[44] This is the most vigilant form of judicial supervision, generally allowing the supervising court to form its own view on the law, fact and policy engaged in the regulatory decision. This form of appeal can be seen in, for example, some resource management appeals,[45] appeals relating to the regulation of charities,[46] and some transport licensing appeals.[47] At the other extreme is a grouping of appeals with a more restricted mandate. Appeals of questions of law or appeal by way of case stated only allow the supervising court to intervene to correct an error of law or to determine a legal question.[48] Sometimes, though, an unreasonable factual error may amount to an error of law.[49] It is relatively common for appeals from inferior courts and tribunals to the superior courts to be restricted to questions of law.[50] Where an appeal is restricted to points of law, it has been recognised that the approach adopted in appellate review tends to mimic the approach adopted in judicial review. As Sir Kenneth Keith notes, “the distinction between appeals, especially appeals on law alone, on the one hand, and judicial review on the other can and often does disappear”.[51] A vivid example of this fusion is Wild J’s decision in Wolf v Minister of Immigration, where the Judge resolved the case according to judicial review principles, even though the matter came before the High Court as a statutory appeal.[52] Pure appeals or appeal stricto sensu are not restricted to errors of law. An appellate body can overturn the judgment or factual finding of the primary decision-maker, but only based on the evidence that was actually provided in the first instance – no new evidence is permitted.[53] The restrictive nature of the permissible evidence on this type of appeal means it is now unfashionable.[54] In between the extremes of an appeal de novo and an appeal stricto sensu lie appeals by way of re-hearing. These appeals are usually heard on the record of evidence before the primary decision-maker.[55] However, there is often an ability to re-hear or receive more evidence.[56] The appellate court may also reach its own independent findings on the evidence (but there are some presumptions about the circumstances in which the appellate court can differ from the decision-maker under review).[57]

  • Dean Knight and Rayner Thwaites “Review and Appeal of Regulatory Decisions: The Tension between Supervision and Performance” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). The supervisory methodology and intensity of review applied is determined by more than the form or type of the appeal right. There may also be procedural restrictions which affect the material an appeal court can consider (some of which have been alluded to above). In some circumstances, the legislation may present barriers to considering certain matters afresh or require the appellate body to have particular regard to the decision or findings of the primary decision-maker.[61] These procedural restrictions also influence the reviewing court’s disposition to interfere with or second-guess the decision of the primary decision-maker. In other words, these restrictions affect the intensity of review on appeal. While the types or forms of appeals outlined above represent the commonly referred to approaches, these categories are not necessarily exhaustive or definitive. As Beck notes, “the courts have not always used the terminology in exactly the same way” and the question of “what the [appeal] court is actually expected to do” ultimately depends on the interpretation of the statute conferring the right of appeal.[62] This is consistent with Sir Kenneth Keith’s conclusion that there is “no single precise answer to the extent of appellate review”. He also suggests the statutory formula may not be definitive and that “more precise articulation” about the appropriate scope of review will normally need to come from the courts.[63]

  • Dean Knight and Rayner Thwaites “Review and Appeal of Regulatory Decisions: The Tension between Supervision and Performance” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). The courts are warned against the “forbidden substitutionary approach”, namely the idea that the courts “will not intervene as if matter for the public body’s judgment were for the Court’s judgment”.[66] Indeed, the powers of the courts on judicial review are often labelled its “supervisory jurisdiction”.[67] One of the ways that the forbidden substitutionary approach is expressed is to say that judicial review “is not concerned with the merits of a decision”.[68] Judicial review is often contrasted with statutory appellate review (although the contradistinction is generally overstated):[69] The courts proclaim an essential difference between appeal and review. Review is concerned with the legality of the decision, whether it was reached “in accordance with law, fairly and reasonably”. A reviewing court must address the process and procedures of decision-making and ask whether the decision should be allowed to stand. Appeal, in contrast, entails adjudication on the merits and may involve the court substituting its own decision for that of the decision-maker. While the various guidance promoting judicial restraint is a useful starting point or presumption, it is clear that the approach to review is nowadays more diverse. The extent to which the courts engage in a review of the merits varies according to context. The approach to review no longer depends merely on the classification of the nature of the alleged error or the mechanism selected to attack it.

  • Dean Knight and Rayner Thwaites “Review and Appeal of Regulatory Decisions: The Tension between Supervision and Performance” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). An appeal by way of rehearing, or an appeal de novo, and judicial review, are alternative ways in which a person can seek to address a grievance, and careful consideration needs to be given to which is the more appropriate in a given context. More fundamentally, the issue of improving regulatory quality is arguably distinct from the issue of addressing a grievance.[118] Insofar as the Bill is centrally concerned with improving regulatory quality, it needs to engage with the prospect that strengthening grievance procedures may not be a particularly effective or efficient way to do so.[119] We are aware that the Bill provides for an appeal on the merits to a court “or other independent body”. This addition is a welcome broadening of the institutional possibilities beyond the courts. That said, we would expect some discussion of the thinking behind the phrase to accompany a proposal with such wide-ranging effects.[120] The Bill as a whole remains strongly “court-centric” in orientation. And whatever the institution, it is not apparent why an appeal on the merits should always, or even almost always, be appropriate. The Taskforce does not discuss the costs involved in the wide-scale extension of provision for an appeal by way of rehearing or an appeal de novo. There are issues of duplication when decisions made prior to an appeal on the merits can be revisited. Secondly, the Bill carries the clear potential to upset the more context-sensitive juridical mechanisms currently available. Our analysis in this chapter has sought to emphasise the flexible and context-sensitive nature of the full suite of judicial methodologies available when supervising decisions. Against that backdrop, the move to strongly favour the more intrusive modes of appeal is simply too blunt and ignores the pluralism that has developed in this area. We do not discount the arguments made for simplicity of approach in the New Zealand context.[121] The many and varied legal contexts in which judicial supervision operates, however, lead us to a very different assessment from its promoters of the complications to which the Bill would give rise.[122] Most fundamentally, the Bill contemplates a renegotiation of the administrative-judicial relationship that is underappreciated, and we will argue undesirable. It risks the juridification of the policy calculus, with the expertise and experience of specialist decision-makers being dominated by the more legalistic values associated with adjudication. In doing so it undermines the deliberate choice of the legislature to delegate, for a variety of reasons, that decision-making function to non-judicial bodies.

  • Derek Gill “Regulatory Management in New Zealand: What, Why and How?” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). The profile of regulatory management has been raised from an esoteric public law issue in New Zealand with the introduction to the New Zealand Parliament of the Regulatory Standards Bill.[2] This Bill, if enacted as introduced, would bring a number of new components to the regulatory management regime, including a major expansion in the role of the courts to review regulation on the grounds of merit, rather than the traditional focus on compliance with good process.[3]

  • 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). 11.3.3 Power to reopen “oppressive contracts” Like its 1981 predecessor,[39] the CCCFA provides a judicial power to reopen “oppressive” contracts.[40] A court is able to consider whether non-credit terms (warranty disclaimers, other clauses excluding liability) as well as credit terms (terms relating to interest, fees, defaults) are oppressive. The court can also reopen a contract if it considers the contract itself to be oppressive or if a party to the transaction has exercised or intends to exercise a contractual power in an oppressive manner or if a party has induced another party to enter into the arrangement by oppressive means.[41] The Act defines “oppressive” as: “harsh, unjustly burdensome, unconscionable, or in breach of reasonable standards of commercial practice”.[42] A court will consider the following factors in determining whether or not to re-open a contract on the grounds of oppression:[43] 1. all the surrounding circumstances; 2. whether the amounts payable by the debtor are oppressive; 3. whether the time allowed to remedy any default is oppressive, given the likelihood of loss to the creditor; 4. whether a refusal to release a security is oppressive in terms of obligations secured and the extent of any security remaining after the release; 5. whether an amount charged on full prepayment is oppressive, bearing in mind the creditor’s expenses and the likelihood the amount repaid could be re-invested on similar terms; and 6. any other matters the court thinks fit. Ostensibly, it is a broad power – but there is a high threshold for judicial intervention. Tipping J has said that it is necessary to compare the actions of a defendant with “reasonable standards of commercial practice”.[44] Accordingly, “[s]omething which is in accordance with … such standards could hardly be held to be oppressive”.[45]

  • 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). Courts always have difficulty with general anti-avoidance rules. One result is that judgments are often inconsistent with precedents, although purporting to follow those precedents. Another is that judgments are often inconsistent within themselves. If these kinds of issues could be resolved there would be at least a better chance of effective and uniform application of the gaar. A full study of the jurisprudence of the New Zealand gaar is beyond the scope of the Regulatory Reform Project, but a study of five or six issues and lines of reasoning that are currently to be causing difficulty would be of considerable utility.

  • Richard Boast and Neil Quigley “Regulatory Reform and Property Rights in New Zealand” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). A key issue in New Zealand property law has long been the scope of the jurisdiction of the Māori Land Court. The Māori Land Court had as its principal original function the conversion of land held under customary title to a freehold Crown-granted title, which is what Māori freehold land essentially is: it is land that has always been in continuous Māori ownership but now held under Crown grant and as such registrable under the Land Transfer Act. Issues about whether the Court has jurisdiction over areas such as lakebeds, river beds and the foreshore have long troubled the legal system. If the Court does have such jurisdiction then – and this is the pivotal point – property rights held under Native title become liable to conversion into freehold grants. That was precisely the issue with respect to the foreshore and seabed.[14]

  • Richard Boast and Neil Quigley “Regulatory Reform and Property Rights in New Zealand” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). Most theories of the origins of property rights rest on the argument that these rights are shaped by the norms of society that facilitate low-cost coordination where there is scarcity, potential conflict, and external effects of actions. They recognise that property rights are not static but evolve over time with changes in society, economy and technology, and are honed over time by judicial and legislative decisions. In particular, it is the independence of the courts in resolving disputes about the ownership of or compensation for taking of existing property rights, and for defining and allocating ownership of new property rights as they emerge from social or technical change, that is important for economic progress.

Specialised Tribunals

Tribunals have many functions, including the settling of disputes between two individuals or an individual and the state, review of administrative actions, disciplining members of a particular profession, appealing other tribunal decisions, licensing activities, conducting investigations and the application of Parliament’s broad policy to individual situations. From these various functions it is clear that tribunals often straddle the line between carrying out executive and judicial actions. See Law Commission’s Issue Paper number 6 “Tribunals in New Zealand”.

  • 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). A recent Law Commission Ministerial Briefing regarding the regulation of cyber-bullying recommended the creation of a Communications Tribunal. Of central importance here is the recommendation that the Tribunal have some coercive powers, including the ability to issue "take down" orders to both individuals and content hosts (such as ISPs).[164] Such orders, that seek to remove offending materials from websites, would clearly constitute a prima facie breach of section 14 of BORA by suppressing speech. Suppressing such content is not a concern, as there are several examples where such content is appropriately regulated.[165] Rather, the main issue is the ability of the Tribunal to regulate the behaviour of third parties (like ISPs) for the offensive content created by users. This kind of rights-infringing regulation is more unique, and arises from the unique nature of Internet communication.[166]

  • 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). In 2009, the French Parliament enacted the HADOPI legislation which gave a government agency the power to cut Internet connectivity for repeated copyright infringement.[188] Shortly thereafter, the Conseil Constitutionnel (the Constitutional Council) found this particular power to be an unconstitutional hampering of the freedoms of expression and communication.[189] As Penney discusses, this resulted in legislation being amended for constitutionality.[190] This could be considered an example of where a failure to circumscribe powers devolved to a government agency (where Internet as a right is concerned), resulted in an unconstitutional rights breach.[191] While there was legislative action creating the agency, Parliament did not appropriately circumscribe regulatory powers that infringed protected human rights. The HADOPI law was eventually amended to require judicial oversight of any disconnection orders.[192] One might examine the Law Commission's recommended Communications Tribunal in New Zealand in light of this. The proposed orders in the case of the Tribunal fall short of full disconnection, but do include various actions that constitute freedom of expression and other rights breaches (including, inter alia: "take down" orders, orders to cease further publishing, and identification orders.)[193] As discussed, the "take down" orders at least are direct infringements on section 14 of BORA. However, an important difference lies in clause 12(1) of the Communications (New Media) Bill, which establishes that the Tribunal will always consist of one District Court judge. This mandatory judicial oversight would indicate that the powers are, at the very least, better circumscribed than the maligned first HADOPI law.

  • Dean Knight and Rayner Thwaites “Review and Appeal of Regulatory Decisions: The Tension between Supervision and Performance” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). While we do not directly address the methodology of non-judicial appellate bodies, some of our analysis readily translates across to supervision of regulatory decisions by tribunals. We recognise that such bodies are a key component of New Zealand’s regulatory structure.[23] In many respects, tribunals mimic the formal, external, and legalised review of court-based supervision. In other respects, tribunals may bring some different character to the supervision task, through things like expertise, specialisation, and tailored procedural rules. These different characteristics may ameliorate (or, indeed, exacerbate) some of the tensions in the performance–supervision dynamic. However, the different nature of tribunals make it practically difficult to engage in a comprehensive study of their supervision methodologies. Instead, we leave review by tribunals to be addressed by way of extrapolation, based on the (varying) extent of their analogy with independent review undertaken by the courts.

  • Paul G Scott “Competition Law and Policy” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). In assessing whether a merger results in an SLC, New Zealand tribunals engage in counterfactual analysis. They compare the likely state of competition in a market if the merger proceeds (the factual) with the likely state of competition if the merger does not proceed (the counterfactual).

  • Paul G Scott “Competition Law and Policy” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). The project also examines the utility of the SLC test under s 27. A tribunal may determine that a contract does not create an SLC. It accordingly leaves the contract in place. Subsequent events should provide a case study of whether that determination was correct, that is, whether there eventually was an SLC. This raises the issue of how to measure whether there has been an SLC.

  • Richard Boast and Neil Quigley “Regulatory Reform and Property Rights in New Zealand” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). Rights and interests protected by the Treaty are enquired into by the Waitangi Tribunal acting under its special statutory jurisdiction under the Treaty of Waitangi Act 1975, but its core powers are recommendatory only. Claims are negotiated by the Crown and iwi leaders outside any formal statutory framework, resulting in a deed of settlement and then a claims settlement Act. These enactments can relate to national issues, such as the fisheries settlement acts of 1989 and 1992, or, more typically, to particular iwi, such as the enactments settling the historic grievances of Waikato-Tainui, Ngai Tahu or North Island groups with interests in the central North Island forests. These settlement acts do not impact on land owned privately, and it is also government policy not to use Crown land held as part of the conservation estate as a means of redress.

Non-Governmental Organisations

Non-Governmental Organizations (NGOs) are independent of government and include non-profit organisations, private voluntary organisations, international non-governmental organisations, grassroots support organisations and representative trade or professional associations. NGOs usually have a mandate based on their members' common aims and purposes.

  • 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). Non-governmental groups, including InternetNZ, have identified the need to ensure broad legislative change is based on consistent principles.[168] However, InternetNZ has critiqued the Tribunal in particular as being ill-conceived. The requirements for the making of order under clause 16 (including "take downs") are two-fold: that the complainant suffers, or was likely to suffer harm; and that the defendant breached one of the Communications Principles.[169] InternetNZ suggests that this threshold is too low, and could lead to decisions that establish an undue limit on freedom of speech.[170] Instead, it recommends that the threshold be similar to that of the new offence that the Bill creates in the Summary Offences Act 1981, requiring actions that are: (a) grossly offensive; or (b) indecent, obscene or menacing; or (c) knowingly false.[171] This new frontier of regulation brings with it several challenges, and as a result, there is a need for a robust statutory basis. Despite corporations such as Google and Facebook touting the effectiveness of self-regulation,[172] the Law Commission has identified that it is not sufficient, as there are several gaps in the law that require statutory action.[173] The inherent power imbalances the large volume of data, the rigidity of existing law and the complexity of regulating (including the difficulty in identifying culprits) means that allowing the industry to self-regulate (in the Law Commission's view) is ineffective.

  • 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). The legislation also enables private organisations to seek accreditation and registration as BCAs, but places considerable emphasis on ensuring consumer protection arrangements are in place before a price organisation may be registered.[34]