Create a new institution or adapt an existing institution

It is sometimes thought that a regulatory need is so crucial or the issues are so new that a new and specialised institution is required in order for the matter to be satisfactorily regulated going forward. An example is the Law Commission’s proposal for a new tribunal to provide relief outside of the existing court system to address harmful cyber communications. See Law Commission "Harmful Digital Communications: The adequacy of the current sanctions and remedies" (Ministerial Briefing Paper, August 2012).

  • 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.

  • 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.

  • 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]

Consequences of institutional choice and structure

The choice of institution and the institution's structure and nature will have impacts on the effectiveness, or otherwise, of regulation at all stages of development, including regulatory design, implementation and enforcement. Below are extracts from the research of the NZ Law Foundation Regulatory Reform Project that discuss aspects of institutional choice and structure, including trans-Tasman shared organisations.

  • 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). Several other factors contributed to the severity of the leaky homes crisis. These factors included a lack of detailed evidence-based understanding about the vulnerability of building systems to moisture damage; low awareness of overseas experience from building innovation; a loss of institutional memory about past cladding failures; and a slow response to evidence that new designs were not meeting regulatory performance objectives.

  • 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). The lessons from the beginning of Closer Economic Relations (CER) and a multitude of other agreements developed over the past 20 years is that the political, economic and institutional arrangements matter and are likely to determine whether cooperation and or harmonisation are possible. Further, this can only be determined by a careful case-by-case assessment.

  • 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). Sovereignty over regulatory administration is not a one-size-fits all solution. Shared organisation can be very beneficial. As discussed above, the most successful trans-Tasman shared regulatory resource is perhaps FSANZ.[55] The, as yet, unformed Australian New Zealand Therapeutics Authority is an example where the benefits of regulatory cooperation have, at least on the New Zealand side, not yet outweighed the perceived ceding of New Zealand sovereignty.[56]

  • 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). Since the advent of the World Trade Organization (WTO), the number of free trade agreements (FTAs) has steadily increased.[1] All trade agreements limit national regulatory autonomy to some degree; however, since the formation of the WTO in 1995, FTAs have become broader in scope and increasingly address more and different types of "behind the border" regulation, including, for example, consumer safety regulation and public health measures. This new role of FTAs has led to concern about whether it is in a country's interest to allow such incursions into regulatory policy. The counterbalance to that concern is that greater global connectedness will improve world welfare in the long run. Moreover, there are typically direct gains accruing to citizens of countries that seek to take advantage of international standards and institutions.[2] Trade agreements operate on political, economic and institutional levels. Crucially, a trade agreement – to be durable – must be viable on all these levels. In other words, it has to be acceptable politically; institutions have to be able to interpret and apply trade rules consistently; and it has to be economically coherent over the long run. As trade agreements encompass new areas, the issues become more complicated. This chapter examines, from legal and economic perspectives, how some of the issues and challenges brought about by an increasingly complex web of trade agreements and alliances, impact on regulatory autonomy. The primary example we use to illustrate this phenomenon is the pursuit of the extension of the term of patents.

  • 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). While the concept of institutional quality is not new, there are many different definitions used to describe institutions. There is no single agreed definition of what institutional quality is and the terms "institutions", "institutional quality" and "governance" are used interchangeably. We have followed Kaufmann and his fellow authors in describing institutional quality as:[62] … the traditions and institutions by which authority in a country is exercised. This includes the process by which governments are selected, monitored and replaced; the capacity of the government to effectively formulate and implement sound policies; and the respect of citizens and the state for the institutions that govern economic and social interactions among them. Some views on the importance of institutional quality include that: institutions matter a great deal in economic performance;[63] institutions are difficult to change despite obvious benefits;[64] institutional change is rare and is usually the result of changes in the economic environment; and institutions are a source of comparative advantage in trade.[65] The connection between institutional strength and economic policy – domestic and external – is strong. For example, Rodrik argues that the growth benefits of trade liberalisation may not actually come from drops in tariffs or other restrictions, but through domestic institutional reform.[66] Complicating matters is that there are many possible indicators that can shed light on various elements of institutional strength, and the data is subjective. No one indicator or group of indicators can reveal all elements of institutional strength.