Chapter 15 - Applying the Logic of Regulatory Management to Regulatory Management in New Zealand

Derek Gill

Regulatory management is the regulation of the making of regulation. This paper focuses on applying the logic underlying a regulatory management scheme to regulatory management in New Zealand. The overall purpose of the paper is to show that regulatory management is not uniquely concerned with problems pertaining to policy design; it is also aimed at improving the quality of regulatory analysis, that in turn will better inform decision makers, and thus improve the design of regulations.

The paper suggests regulation deserves the special measure of a regulatory management regime because in its nature it is often contentious, the effect of it is often uncertain and regulatory analysis is difficult. Furthermore regulation imposes constraints on citizens and businesses posing a risk to human rights and liberty, it does not undergo as much political resistance as other forms of government intervention and regulations endure over time because the costs of compliance are hidden and are not subject to great scrutiny. The paper looks to specific features of New Zealand that might affect regulatory management. It notes that New Zealand’s small population size, high number of ministerial portfolios and large number of small public organisations means that policy advisors are spread across a wide range of areas, which prevents a critical mass of expertise in more advanced and complex areas of regulation. It concludes that the robustness and resilience of institutional arrangements such as active role of Cabinet Committees, Cabinet and Selective Committee review offset problems associated with New Zealand’s size.

The paper then considers how the special measures are meant to work. It starts with the assumption that a regulatory management system is trying to improve regulatory quality, and then illustrates the three competing theories for change necessitated by a management system (delegation, democratic governance and rational policymaking), each of which changes different actors behaviours in different ways. Delegation theory suggests that public servants’ agendas drive the majority of regulation and not ministerial priorities. Democratic governance theory suggests that making regulatory developments more transparent will result in greater public service and ministerial accountability. Rational policymaking promotes the use of economic analysis and the availability of alternative options. New Zealand utilises these logics differently to other jurisdictions.

The paper utilises a cost benefit analysis to show that the Regulatory Impact Analysis (RIA) process for regulatory management in New Zealand imposes low costs and has the potential to pay its way by identifying where effective interventions can be made. Another form of management, Regulatory Impact Statements (RIS), also has the potential to avoid significant harm. Regulatory management systems have the positive indirect effects of improving the quality of regulatory proposals and creating greater transparency improving the quality of regulation. The paper also highlights indirect effects at an international level and to the relationship between ministers and public servants.

The paper concludes that the next step forward is to focus on managing the stock of active regulations. This involves managing the flow of regulations, ensuring that departments know what regulations they have administrative responsibility for, identifying who should be responsible for those regulations, ensuring there is clarity in the responsibilities and roles of the department administering the legislation, increasing the capacities and skills within that department, incentivising the management of the stock of regulations, the collection of information pertinent to the administration of the stock, and the subsequent reporting of that information.