Triggers for action: an explanation

Broadly, a trigger for regulation is whatever prompts the real or perceived need for regulation. Triggers come from a variety of sources including crises, political responses, political commitments in manifestos or coalition agreements, and international agreements or pressures. Regardless of the source of a trigger the outcome may be quite different from what the trigger pointed to or suggested. Additional factors which are likely to be relevant include:    

  • Introducing regulation can be difficult because of competing priorities. For an Act of Parliament time on the legislative programme is required, which is often scarce.
  • A contested prioritisation process could make a new initiative a priority or otherwise.
  • Policy development generally involves actors competing to frame the problem in particular ways that each actor sees as amenable (and these may vary between actors) to address the trigger.
  • The making of all new or changed regulation is political in the sense that all final decision makers are politicians. Legitimacy for decision making is derived from Parliament as the ultimate law maker and it is also the scene of a political contest.

Crisis regulation has not worked

'Never let a good crisis go to waste' is an old maxim in politics. The crisis brings the status quo into question, can lend credence to the trigger for change and can provide a window of opportunity to put an issue on the agenda. A crisis often triggers a process in which actors struggle to make sense of events and compete to frame the problem and any resulting regulatory measures.

  • 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) As a brief background, the leaky homes crisis is often attributed to the 1991 switch from prescriptive building codes to performance-based regulation that allowed innovation in building techniques. While the change in regulation permitted more rapid innovation, there were also several other factors that 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, loss of institutional memory about past cladding failures, and a slow response to evidence that new designs were not meeting regulatory performance objectives. The aim of the 1991 building reforms was to: encourage innovation in the building industry through the adoption of a performance-based building code; drive improvement in the service provided by local authorities; and provide a more coherent building regime.[58] One of the innovations was to construct houses in a Mediterranean style with untreated framing timber. The choices of Mediterranean-style design (including monolithic cladding) and untreated framing timber were made at separate times as independent decisions for different reasons. Rather, than a single clear-cut change, building design and practice drifted through a series of gradual changes that progressively eliminated the lines of defence that made conventional houses resistant to moisture damage and delivered the standard of weathertightness that stakeholders had come to expect. These decisions seem to have been based on expectations rather than evidence of their potential effects on weathertightness. The leaky homes crisis developed from a result of a series of decisions that were affected by the factors listed above. A high-level timeline of the evolution of the crisis is shown in the following table.

  • See also Peter Mumford Enhancing Performance-Based Regulation: Lessons from New Zealand’s building control system (Institute of Policy Studies, Wellington, 2011) at 11–12, available at

Political Initiative

Political initiatives can occur at any time and are key triggers for regulation. Debate in Parliament can place an issue on the political agenda, and the solution to the issue may be regulation. Sometimes politicians make commitments in order to become the government, such as in manifestos or coalition agreements. Also, the government of the day may have developed commitments when it was in opposition. In some instances this means that the policy was developed without access to the bureaucratic expertise and without any rigorous policy process, including any evidence-based policy analysis. Policy commitments may also emerge at the beginning of a government’s second or subsequent term based on policy development within the bureaucracy.

  • 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) The profile of regulatory management has been raised with a series of proposals, leading to the introduction of the Regulatory Standards Bill to the New Zealand Parliament in 2011.[3] This public profile was raised further following the 2011 General Election. Regulatory management became a key plank of the Coalition Agreement[4] between the National Party and the ACT coalition partner and the Treasury's Regulatory Impact Statement (RIS) was highlighted in that agreement. The new government agreed to proceed with Treasury's Option 5 from the RIS on the Bill.[5]

  • 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) All actions have consequences, however. The greater transparency required by a regulatory management regime will raise the political tariff of a regulation, if that regulatory action has no credible link to the root cause of the original problem or more effective regulatory interventions are available.[37] Option 5 in the Treasury RIS on the Regulatory Standards Bill is based on the optimistic premise that, with more disclosure of information in the Explanatory Notes, and the risk of more demanding scrutiny in the House,[38] Parliament may raise the political cost to the government of introducing poor quality regulation.[39] This line of reasoning raises a number of questions about the theory of change. If the objective is improved consultation and public governance, why require a RIA? It would seem more sensible to mandate notice and consultation requirements before legislation is considered by Cabinet and introduced into the House, procedural requirements based on the Generic Policy Development Process,[40] or include statutory consultation requirements like the Administrative Procedure Act 1946 (US). It is to the theory of change therefore that this chapter now turns.

  • 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). Despite his errors he was persuasive. Parliament enacted his suggested reforms in 1990 and removed much of the teeth from section 29. The reform befuddled courts, the Commerce Commission and practitioners. In Tui Foods Ltd v New Zealand Milk Corp Ltd, Gault J, with admirable candour, commented on the amended section 29 as follows:[41] I admit to difficulty in seeing just what the section is intended to target. In its terms, where traders who happen to compete are involved, it appears to extend to arrangements that may well enhance competition and involve reasonable competitive activity. I envisage for example graduated discounts for volume trading that clearly are intended to capture business from competitors (although falling short of predatory pricing). The difficulty I have in distinguishing between what reasonable competitive activity that presumably is intended not to be prohibited and activities that are targeted by the section leaves me in some doubt as to the appropriate approach to the substantive issue that arises in this case. The reform was so befuddling that, as Pengilley and Hampton noted,[42] it caused the Commerce Commission to fail to plead section 29 in the open and shut section 29 case of Commerce Commission v Ophthalmological Society of New Zealand Inc.[43] As mentioned in the Stage One chapter, in the first part of this project, section 29 became a dead letter.[44] However, business groups were persuasive in leading Parliament to enact a defence to section 29. It is now a defence to an exclusionary provision if a defendant shows it does not have the purpose, effect or likely effect of substantially lessening competition.[45] This has the effect of turning section 29 cases into section 27 cases – albeit with the burden of proof reversed.

International pressure/experience

New Zealand often adopts regulation from other countries. This can be resource saving but can also cause difficulties where the adopted regulation was designed for another place with different circumstances. That said, New Zealand can benefit from world experience and there are trading relationships to consider, such as with Australia and with Asia. Additionally, there is growing internationalisation of policy through the growth of policy transfer between countries, increased attempts to co-ordinate policy development and pressure to adopt international practice and standards.

  • Susy Frankel, Meredith Kolsky Lewis, Chris Nixon and John Yeabsley “The Web of Trade Agreements and Alliances, and Impacts on Regulatory Autonomy” in Susy Frankel (ed) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). This research proposes that New Zealand needs to ‘up its game’ as far as trade policy negotiations are concerned. With the increased complexities that a global world has placed on domestic policy settings, New Zealand needs to develop a range of strategies and tactics to ensure the best possible outcomes when partaking in trade deals. The paper navigates the challenge of regulatory autonomy and new trade issues within this dynamic trade environment, via patent law, the ASEAN + 6 and the Trans-Tasman Partnership negotiations. It explores what approaches might be appropriate to ensure that any costs New Zealanders may have to ‘swallow’ on these complex trade deals, are subsequently offset by potential benefits.

  • 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). This chapter explains how New Zealand’s regulatory autonomy is constrained through trade agreements. The authors contrast the top-down, predominantly negative integration approach of multilateral trade agreements and some aspects of free trade agreements (FTAs), with the bottom up harmonisation approach. The chapter also looks at how the FTAs of which New Zealand is party directly affect our regulatory autonomy and associated national interest. The chapter explains the indirect effects of the FTAs of New Zealand’s trading partners, particularly Australia, where New Zealand is not a party. The chapter draws together the ways in which national regulatory autonomy is constrained and assesses that constraining effect using two case studies: food safety; and aspects of pharmaceutical regulation. Using these case studies the chapter lays the foundation for analysing in what circumstances one approach may be more favourable than the other for New Zealand.

  • Chris Nixon and John Yeabsley in “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). This paper examines the negotiations to set up a therapeutics agency (ANZTPA) as a supranational regulator of medicines in New Zealand and Australia, which started in 2003. The proposed agency (that did not come into being), was intended to ensure that alternative medicines, over-the-counter, and some prescription medicines, and food supplements met safety standards that consumers could rely on. This chapter examines the course of the ANZPTA initiative in the light of other more successful integration efforts and examines the factors that contributed to the failure to establish the agency. Using the ANZTPA example, the chapter looks toward developing a set of approaches that could be applied more generally to trans-Tasman integration. This is particularly pertinent as the ANZTPA negotiations have at the time of writing begun again. The next stage of the project will test those suggested set of approaches further.

  • Susy Frankel and John Yeabsley “Features of the Uniqueness of New Zealand and their Role in Regulation” (Cross-cutting theme paper prepared for the NZ Law Foundation Regulatory Reform Project, 2013). A provision in legislation, for example, may be based on an English or Australian statute but have been changed sufficiently that extensive testing via local courts (which may not happen) is required before anyone can be clear about whether specific aspects of practice or case law from those other jurisdictions are relevant in New Zealand.[5] That cost and the associated uncertainty is not necessarily a bad thing, although, if a different (even novel) practice was precisely the point of the change from the overseas law. After all, the advantage of being behind others in time and experience is sometimes precisely to be positioned to see their faults and take a different path. One example might be the unique way in which copyright law in New Zealand protects technological protection mechanisms from being circumvented.[6] The New Zealand approach is unique and was deliberately devised to avoid difficulties that had arisen under United Kingdom and United States law.[7] However, we sometimes adopt overseas regimes even though they have been strongly criticised in the country or region from which the regulation originated. As discussed further below, New Zealand has started to get itself out of a cycle of over-eagerly taking on overseas regimes that are not useful, or fit for purpose locally[8]. But the answer is not necessarily to always create entirely new domestically-sourced regimes that cannot be maintained and which, because their lack of global connectedness, can create costs and uncertainty.[9]

Review or evaluation

In theory a review or evaluation, if the findings are adverse, should trigger the need for new regulation. In practice this is extremely rare, both because few regulations are actually reviewed or evaluated, and even if they are reviewed, evidence that existing regulations are ineffective is usually not enough to trigger the necessary political agenda.

  • Derek Gill and Susy Frankel “Learning the Way Forward? The Role of Monitoring, Evaluation and Review” (Cross-cutting theme paper prepared for the NZ Law Foundation Regulatory Reform Project, 2013). New Zealand, like other OECD countries, has been active in developing a regulatory management system since the mid-1980s but the prime focus has been posing ‘big policy’ questions to review the flow of new regulations rather that reviewing how the stock of existing regulations is implemented, enforced, monitored, evaluated and reviewed. This paper is concerned with the review of existing regulations – through monitoring, evaluation or ad hoc or programmed review. This paper discusses the existing formal requirements for review of central government regulations and how these requirements compare with practice. The research finds that the formal requirements for review of existing regulations are limited relative to other comparable jurisdictions and underdeveloped relative to the provisions which apply to new regulations. The paucity of monitoring, evaluation or programmed review is paradoxical, particularly in the face of uncertainty about the effectiveness of regulation. The paper concludes with a discussion of the policy implications and the lessons for the overall regulatory reform project. A consistent finding from this project is that regulation can be characterised as a process of learning and experimentation. The very uncertainty about the impact and effectiveness of regulation creates an imperative to actively manage the stock of regulation. It suggests the need for more regulation of meta-regulation by introducing compulsory new requirements for all proposals for new regulations proportionate to their significance. These requirements should include a monitoring and measurement plan, a discussion of review options as well as an evaluation plan.