New Zealand’s regulatory responsibility bill: a bill of economic rights

I’ve been watching the Regulatory Responsibility Bill for some time.  “What is the Regulatory Responsibility Bill?” I hear you cry. Well it’s one of the last gasps of the ideological fervour that grips our antipodean cousins across the trench in New Zealand.  As I observed in a couple of posts a couple of years ago, New Zealand seems to be a much more ideological place than the lucky country. We have our ideologues of both left and right hues, but the righties in NZ have had uncommon, and simple minded ascendency in their part of the ideological patch.  Where the Australian Business Council is a fairly traditional lobby group/peak body the NZ Roundtable is a right wing think tank which has been run by a single CEO for a long long time.  It functions like the CIS and IPA but where those august institutions have some CEOs barracking for them in the background the NZBR has CEOs centre stage – like the BCA.  The answers are always the same – lower tax generally and getting the top tax tax rate down.

But there’s been a strange reversal in the last decade or so.

NZ used to be held up as the model of deregulation.  Rogernomics was of the crash through or crash variety – it’s ideology of political practice was what John Quiggin calls a ‘Leninist’ ideology of political action (from memory John was speaking about the IPA’s dreams of a better future for Australia).  Anyway the idea is that you don’t want to be too democratic about things, you need to move fast and crash through a lot of political obstacles and then if you get enough time in office all those people who weren’t negotiated with, or compensated or even consulted much will come to see that It All Worked Out For the Best.  My Dad used to have a similar idea in the 1970s which he got from Chicago – I guess.  I remember him talking like that regarding the politics of the 25% tariff cut.  If you tried to talk it through to get consensus you’d never get anywhere. The tariff cut was regarded as being a disaster, but that was largely because any dramatic action which was looked at askance at the time and which preceded a savage recession ends up getting tarred with the brush of that recession. it’s an easy scapegoat.

In theory I don’t have an in principle objection to this way of operating, given that it ends in an election, but it does seem to be the case that it turns out disastrously quite a bit of the time. Perhaps that’s because we don’t know nearly as much as some people think we do. Muddling through might not be such a bad strategy in comparison. Anyway both the UK and NZ were nice test cases because of their unitary structure of govt.  The Lange Labour Govt and then the Nationals after them were able to put through some very strong medicine and it turned out not to do the patient a lot of good (though I suspect the main reason for that was that NZ was being marginalised in the international division of labour and I don’t know what would have arrested or reversed that trend). Intelligent mercantilist policies might have done the trick, but since when have antipodean democracies had any flair for that (NZ’s unitary govt enabled it to make some of the worst moves in the direction of unintelligent mercantilism with Muldoon’s  ‘Think Big’ fantasies)?

Anyway, John Key is a fairly middle of the road right leaning pollie it seems, but one throwback to the earlier traditions comes from what may be the ideologically ‘purest’ neoliberal party with parliamentary representation anywhere in the developed world – the ACT Party – is the Regulatory Responsibility Bill. (I am not using the word ‘neoliberal’ as a pejorative by the way though I’m not particularly enamoured of single ideas being taken to extremes which the ACT Party seems to me to do). I’ve kept an eye on the Reg Responsibility Bill since I first saw it a few years ago. As I’ve argued previously, as far as regulation review goes, the RRB is pretty much more of the same.  The sad fact is that whether or not one wants to see less regulation, or even (like me) just less stupid regulation, regulatory review mechanisms which have been with us since the mid 1980s have been a big disappointment.  They have done virtually nothing to stop politicians and bureaucrats regulating pretty much anything that it seems like a good idea on talkback radio to regulate. They can’t really do anything unless they are given teeth because politicians and bureaucrats find it too tempting to agree to the low regulation policy in principle and continually flout it in specific instances.

CIS NZ analyst Phil Rennie is a fan and describes the RRB as follows. “The bill would require the government to clearly explain the purpose of each new regulation, as well as its cost and what it will achieve. It would also involve regular reviews of the governments compliance with the law and the effectiveness of regulations. To some extent, the Productivity Commission in Australia serves this function.”  And in the post where I quoted this, I reported the RRB as “a harmless piece of red tape which cranks up the requirements on regulators to come up with even more paperwork than a regulatory impact statement.”

Anyway, the new government has had a Treasury taskforce working away on the Regulatory Reform Bill and I think I get why its progenitors are thinking of it as a new departure.  It is.  The reg review part of it is pretty business as usual and IMO won’t achieve anything much – but the Bill is actually a bill of a different sort. It’s a bill of rights, plain and simple. It’s an economic bill of rights – it’s constitutional structure is the same as Victoria’s new Charter of Human Rights and Responsibilities which became law on 25 July 2006. But it’s content is a bill of economic rights – essentially for property holders. (The classic bills of rights in France, the US and England back to the Magna Carta and the Bill of Rights following the Glorious Revolution were always partly about this).

This paper provides a good summary to the rights that are enshrined in the RRB which it calls ‘principles’.

(a)  Rule of law – legislation should not adversely affect rights or impose obligations retrospectively, and should treat people equally;

(b)  Liberties – legislation should not diminish a persons liberty, personal security, freedom of choice or action, or rights to own, use or dispose of property, except as necessary to provide for any such liberty, freedom or right of another person;

(c)   Taking of property – legislation should not authorise the impairment or taking of property rights without consent, unless it is necessary in the public interest and full compensation is provided;

(d)  Taxes and charges – taxes should only be imposed by an Act of Parliament, and charges should not exceed the reasonable cost of providing the relevant goods or services;

(e)  Role of courts – legislation should preserve the courts role of determining the meaning of legislation, and where legislation authorises a public entity to make decisions that may adversely affect any person or property, appropriate criteria for decision-making should be stated with a right of appeal on the merits to a court or other independent body;

(f)   Good law making – legislation should not be made unless those likely to be affected have been consulted and there has been careful evaluation of the need for legislation to address the issue concerned. Benefits of legislation should outweigh the costs, and it should be the most effective, efficient and proportionate response to the issue.

As the document goes on to say “The key accountability mechanism will be certification to the House of Representatives that proposed legislation is compatible with the principles, or that any incompatibility can be demonstrably justified in a free and democratic society.”  Courts would then be instructed to interpret legislation consistent with the principles if possible, and if not to issue a declaration of incompatibility. I presume that as a legal matter it stops there but the NZ Treasury site has been down so I’ve not been able to have a closer look.  <irony>I expect all those people who oppose a bill of rights in Australia on the ground that it usurps the rights of the democratically elected parliament will oppose this kind of thing with the same vigour that they do a bill of human rights. </irony>

Whatever  . . .  The lofty constitutional principles enshrining economic rights will do bugger all to reduce regulation. But it will be interesting to watch what happens.

Oh and one final thing . . . don’t be too sure they’ll do anything about anything else. Don’t underestimate the Lord Acton factor – alive and well in regulation review and I fear, not far behind in charters of rights.

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[…] a comment » Nicholas Gruen reviews the NZ Regulatory Responsibility Bill.

derrida derider
derrida derider
11 years ago

For those interested in the broader history and issues behind regulation and central planning, don’t miss reading “Seeing like a state” by James Scott. It’s a profound, erudite and beautifully written book by a crazy left wing anarchist that might remind Hayekians just how easily their hero’s ideas can be turned to impeccably left-wing, rather than right wing, conclusions.

Peter T
Peter T
11 years ago

Like most NZ policy of the last 3 decades, best decribed as a day late and a dollar short. They will be wrestling over the next 30 years with redistribution and regulation to cope with climate change and other challenges of the global commons, and have just saddled themselves with a huge burden of litigation, delay and rent-seeking. And if they try to unwind this, that will be just as messy.

Rafe Champion
11 years ago

This is an interesting experiment that has come out of left field, so to speak!

Are there precedents for this kind of legislation? Is it a variation on the theme that there should be a kind of socio-economic “impact statement” attached to legislation, like the impact statement for developments on the natural environment?

Tel_
Tel_
11 years ago

From New Hampshire:

http://www.nhteapartycoalition.org/tea/aboutjoin/

The principles set forth in this document echo the First Principles that were drafted by our Founding Fathers. We believe that tinkering with this wisdom by successive generations has brought about our present calamity. It is our firm intent to restore those principles.

In seeking this goal, we call upon your assistance to join us in our demand that our Constitutional republic be rightfully restored to us.

We Believe;

1] That all powers not expressly delegated to the Federal government are the sole domain of the states, as set forth by the Founding Fathers in Article 10 of the U. S. Constitution.

2] In fiscal responsibility and the prudent use of public funds.

3] In limited government as envisioned by the Founding Fathers and for the reasons that they stated.

4] In the rule of law and its uniform application at all levels of government and society.

5] In the national sovereignty of the United States, its proper defense and security, to include her borders.

6] In the personal rights and responsibilities of every U.S. citizen, as expressed by the Founding Fathers.

7] In the free market as the basis of all business conducted within our borders.

It is the duty of every U.S. citizen to hold every candidate of every political party to these standards and to vote accordingly.

Or if that’s too complicated:

http://teapartypatriots.ning.com/

Core Values
Fiscal Responsibility
Constitutionally Limited Government
Free Markets

http://commonsensecitizens.dallasteaparty.org/

If you believe, as we do, in limited government, fiscal responsibility, personal responsibility, the rule of law and national sovereignty are encouraged to SIGN UP so that we can help you find like-minded citizens in your same area.

There’s many more quotes out there, no doubt everyone gets the point by now.

Is this a “throwback” to primitive idealistic thinking? Probably yes.

Then again, a whole lot of Americans are sitting solidly disappointed by both parties, and steadily getting solidly stone faced about their disappointment watching yet another month of job losses, blank closures and home repossessions. They know something has gone wrong, they just aren’t completely sure when and where it did go wrong so the logical course of action is backtrack to the last point where the system did work.

Don’t be quick to write these people off. Large numbers of out-of-work idle hands who feel disenfranchised are what revolutions are made of, and make no bones about it, the “founding fathers” of the USA had very revolutionary ideas.

Peter T
Peter T
11 years ago

Interesting that “free markets” are now supposed to be part of the doctrines of the founding fathers. While I have never looked at the period in detail, I was under the assumption that this came along quite a bit later. The Wealth of Nations was first published in 1776.

Tel_
Tel_
11 years ago

Adam Smith invented commerce? Yikes, that shakes up my view of history.

Of course you are asking for more quotes :-)

Harmony, liberal intercourse with all nations are recommended by policy, humanity, and interest. But even our commercial policy should hold an equal and impartial hand, neither seeking nor granting exclusive favors or preferences; consulting the natural course of things; diffusing and diversifying by gentle means the streams of commerce, but forcing nothing; establishing with powers so disposed, in order to give trade a stable course, to define the rights of our merchants, and to enable the Government to support them, conventional rules of intercourse, the best that present circumstances and mutual opinion will permit, but temporary and liable to be from time to time abandoned or varied as experience and circumstances shall dictate;

George Washington‘s Farewell Address September 17, 1796.

I’ve cut him short a bit but George was a man of long sentences. Can’t be having such things in this day and age.

A wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.

Thomas Jefferson, 1801

It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man, who knows what the law is to-day, can guess what it will be to-morrow.

James Madison, couldn’t find a date for this one, but after Thomas Jefferson.

I’m sure there are more quotes around. These are enough to at least demonstrate that the ideas contained in the RRB were broadly popular 200 years ago and at least in the case of the early United States they were broadly successful ideas too (not terribly supportive of the native population, but progress inevitably has its casualties).

Such ideas were not by any means restricted to America.

I have declared that the port of Singapore is a free port and the trade thereof open to ships and vessels of every nation, free of duty, equally and alike to all.

Sir Stamford Raffles, also couldn’t find a date for this one, probably around 1800.

I think it’s also fair to point out that the US Constitution defines Liberty by saying that anything not explicitly stated as regulated by the Constitution is automatically a matter for either the states, or individuals and their local communities to deal with. It never bothered making a long list of the matters that were not supposed to be regulated by the federal government. Maybe this was not the best approach, but it’s the design they went with at the time.

In addition, 200 years ago there was not the same careful segregation into fine-tuned categories: economic freedom, religious freedom, personal freedom, free speech, freedom of travel/migration, etc. Liberty was more of a holistic concept, and trade was just presumed to be an emergent result of general liberty.

Today we isolate economic rights from other rights, as if there was a fundamental difference.

Peter T
Peter T
11 years ago

Tel

The quotes you give are perfectly apposite, but I was focussing on Point 7 – “In the free market as the basis of all business conducted within our borders.”. ALL business?? The Washington quote is about foreign commerce, and the others about the virtues of small government. It’s also worth noting that the course of conduct by these people did not always – in some areas ever – match their rhetoric, and they were prepared to be pragmatic about means (eg conscription and massive debt financing if that was what it took to win the war with Britain).

Tel_
Tel_
11 years ago

The “Tea Party” movement are somewhat of a minority in the USA (but growing on the swell of overall dissatisfaction) and I believe that the ACT Party are only a fringe component of the NZ government. It’s a lot easier to have purist ideals when you are a small bunch of guys out of mainstream power, and it tends to be much easier to make pragmatic compromises once you are sitting in a position of genuine power.

Some say that aiming the arrow higher than the target is a good way to hit where you intended.

Anyhow, the thing I’m actually trying to point out is that Nick’s description of “a bill of economic rights essentially for property holders” does not accurately portray the foundation of the RRB which is more correctly linked via the modern “Tea Party” movement back to American Revolutionary ideas of Liberty, small government and free trade (approx 200 years ago). You can no doubt find mutations along that lineage (and probably links back to the French Revolution as well) but it tends to go as an overall package.

From a practical sense, I would judge the RRB as a bill trying to do the work of a Constitution, whereas the “Tea Party” movement are attempting to make a Constitution do the work of a Constitution. But people will tend to use the tools they can reach for at the time, and the USA has a whole lot more work that needs doing.

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