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Regulatory Impact Statement:Regulatory Impact Statement: Increasing the Visibility of Legislative Quality Issues

Annex 4:  Matters Proposed for Disclosure about Bills  (included in all 3 Packages)

The objective of the proposed disclosure requirement for Government Bills is to focus more attention on whether a Bill has the attributes of good legislation. It would do this by providing members of Parliament and the public with information to help support their scrutiny of a Bill while it is being considered for enactment by Parliament.

The proposal is limited to Government Bills, because the intention is to legislate for the proposed disclosures and this is only appropriate where the obligations are to be imposed on persons or bodies that are not members of Parliament.

It would, however, be open to the House to agree through amendments to Standing Orders that the same or similar disclosure requirements should apply to Local Bills, Private Bills or Members Bills, which are not the responsibility of the government.

Desired characteristics of matters for disclosure

There are many matters that could be disclosed that might potentially help the reader assess the quality of a Bill. However, the more matters that must be routinely disclosed, or the more detailed the disclosure required, the greater the time and cost of its preparation, and the less accessible the material may become for the average reader. Some selectivity is therefore essential.

Consequently, the choice and form of matters proposed for disclosure has been influenced by a preference for disclosures that are:

  • significant for quality;
  • clear in concept;
  • easy to produce;
  • capable of concise expression; and
  • likely to minimise potential duplication.

On the whole, this favours legislative characteristics that are well understood, and quality assurance processes built on established government expectations.

The sources we have drawn upon

For the proposed matters for disclosure we have drawn primarily on:

  • existing Cabinet requirements and expectations relating to the development of legislation, for disclosures relating to quality assurance products and processes
  • the Legislation Advisory Committee (LAC) guidelines, for disclosures of significant powers and other features warranting careful scrutiny; and
  • matters specified for inclusion in the explanatory notes accompanying Bills and delegated legislation in the United Kingdom and Australia.

The merits and risks of the different types of proposed disclosures

The matters suggested for disclosure below fall into seven different categories or types, with the following general merits and risks:

1:  A general policy statement for the legislation

A general policy statement provides a succinct statement of the legislation's policy objectives and the way in which it seeks to meet those objectives. It helps the reader interpret the intent of the provisions in the legislation, and is a good starting point for considering the merits and performance of the legislation.

This is a longstanding requirement for Bills, currently included in the explanatory note. Unlike the rest of the explanatory note, however, the prime responsibility for its drafting rests with the administering department rather than the legislative drafter. There is a risk that Parliament will not want the general policy statement moved into the disclosure statement.

2:  Established quality assurance products and associated background documents

Established quality assurance products, and other background documents that can inform the consideration of the merits of the legislation, make excellent disclosure requirements because they are easy to identify, usually take a standard form, and do not require the generation of new material.

The fact that they exist as established products tends to mean they cover issues with significant implications for legislative quality. Unfortunately this does not guarantee the product itself is of a high standard. But particularly where it concerns the underlying policy, a poor QA product is usually obvious enough that the reader can use that to form a judgement on the quality of the policy work undertaken, which in turn may inform their view of the likely quality of the legislation on which it is based.

3:  Established quality assurance processes, lacking a specific product

Established quality assurance processes, involving consultation with a mandated expert agency, can make good disclosure requirements because it is usually easy to identify whether consultation was required and undertaken, and this generates a pretty simple and concise disclosure.

The disadvantage of not having a specific product to disclose is that the reader will not know what the process threw up, at least without new information having to be generated, and must otherwise rely on the confidence the reader has in the care, expertise and influence of the expert agency consulted.

4:  Existing quality assurance expectations, lacking a specific process or product

Existing quality assurance expectations without a standard process or product do not make ideal disclosure requirements because the only informative disclosure involves outlining the process gone through to identify any potential problems. The more specific the expectation the better, as it reduces the length of the disclosure, and is more amenable to the reporting of quite specific actions taken.

The more broadly framed the expectations, such as assuring consistency with NZ's international obligations or with the principles of the Treaty of Waitangi, the greater the risk of idiosyncratic interpretations and levels of disclosure, or alternatively of routine resort to very carefully worded, standardised responses designed to minimise reputational risk rather than to inform a reader.

We do support a disclosure for the two cited expectations above, based solely on their potential significance for legislative quality, but this is a marginal call overall. We have, however, rejected a disclosure for the even more general Cabinet expectation that legislation will be "consistent with the LAC guidelines", as we believe the advisory nature and wide scope of the LAC guidelines means there is no prospect of receiving either a meaningful Yes/No answer or a meaningful description of the process gone through to assess consistency.

5:  Significant powers conferred by the legislation

Significant powers conferred by a piece of legislation make a good disclosure because they highlight features that have huge potential to affect the rights and freedoms of individuals. Explicitly acknowledging the relevant powers not only prompts the reader to think about whether the extent of the power is appropriate and necessary, but also think about the nature of the safeguards that should apply to the exercise of the power.

The challenges with this type of disclosure are, first, to set criteria that will consistently capture the most significant powers, and second, to extend the disclosure to include useful explanations without significantly adding to disclosure length or cost.

6:  Unusual features of the legislation warranting careful scrutiny

Unusual features make a good disclosure if they indicate a potentially significant risk to individual rights and can be clearly and readily defined and identified. Most such features are "unusual" because they depart from well-established legal presumptions.

A disadvantage of this type of disclosure is precisely that the feature occurs infrequently and so leads to a huge number of "No" disclosures. Another challenge is targeting the feature of most interest, because the underlying legal principles cannot be easily reduced to a simple and stable rule.

7:  Potential key impacts of the policy being given effect by the legislation

Singling out potential key impacts of the proposed legislation does not provide an ideal disclosure because impacts are a matter of judgement, and their relative significance a matter of values. Our strong preference would be to refer readers to any RIS provided, which ought to identify all the key policy impacts.

Unfortunately, not all legislative proposals have RISs, the policy may have changed or the policy further fleshed out since the RIS was prepared, and the RIS itself may be based on poor or inadequate analysis. In these circumstances it may be worth asking whether subsequent analysis has occurred that further illuminates key impacts such as costs, any potential significant economic losses, and levels of expected compliance and enforcement.

Specific Matters Proposed for Disclosure

The tables below identify the specific matters for which a disclosure could be sought under one of the seven different types of disclosures identified above.

Basic and extended disclosures

For some of the seven types of disclosures, there are choices to be made between:

  • a "basic" disclosure, which is relatively concise, low cost and easy to answer, but may only hint at a possible issue (requiring the reader to investigate further); and
  • an "extended" disclosure, which provides additional information useful to the interested reader, but requires more time and effort to produce, and might be difficult to frame in a way that is simple or universally applicable.

As a general rule, we believe:

  • the "basic" disclosures will be workable in almost all Bills, and hence are suitable for inclusion in legislation;
  • the "extended" disclosures will further lift the attention to good practice, but really need to be trialled or tested for a period to give confidence that each matter is framed in an appropriate and cost-effective way, before any consideration is given to their incorporation in legislation.

At the bottom right hand side of each table below we indicate which requirements we think could be included in the proposed legislation, and which we think should be tested further.

1:  A general statement of the policy that the Bill seeks to achieve

General nature of proposed disclosure:

  • Describe the policy objectives that the Bill seeks to achieve and the way in which it seeks to meet those objectives

Legislate for this?

Yes

2:  Established Quality Assurance Products (plus Supporting Information)

Products/Information Proposed for Disclosure

Published Reviews or Evaluations (Background Information)

Policy proposals may be driven or significantly informed by earlier policy reviews or evaluations conducted by other parties (e.g. Commissions of inquiry, Law Commission or Productivity Commission reports, government-appointed taskforce's, etc), which are usually published.  Reference will often be made to these in a RIS, if a RIS has been prepared (see below).

Regulatory Impact Statement (QA Product)

Regulatory impact analysis is a systematic and evidence-based assessment of the case for government intervention to address a specified problem, and of the likely impacts and risks of different policy options, which may require legislation. 

The main product is a summary of analysis undertaken, in the form of a regulatory impact statement (RIS), which is attached to the Cabinet paper seeking relevant policy decisions.

Independent Assessment of RIS (QA Product)

Cabinet also requires a quality assessment of the RIS itself, which (for proposals expected to have significant regulatory impacts) is provided by an independent team based in the Treasury.

International Agreement (Treaty) Text (Background Information)

International agreements (treaties) are the most common and tangible source of New Zealand's international obligations that is relevant to legislation.  Around 20 percent of all current public Acts directly implement some aspect of NZ's treaty obligations.  Sometimes the text of the treaty will be appended to a Bill, but in other cases the source or text of the relevant international agreement can be hard to find.  Access will become easier when MFAT puts their Treaty register publicly online, with links to text included.

National Interest Analysis for Treaties (QA Product)

Before NZ takes any binding treaty action, the relevant treaty is presented to the House, along with a "national interest analysis" that explains the reasons for becoming a party, the nature of the obligations imposed, its expected impacts, and whether it requires any legislative measures.  Where a treaty is to be given effect through legislation, the national interest analysis should also incorporate the required elements of a RIS.

Advice on Consistency with the NZ Bill of Rights Act 1990 (QA Product)

The Ministry of Justice or Crown Law undertake an independent vetting process for Bills that results in advice to the Attorney-General on whether the Bill's provisions are consistent with the rights and freedoms affirmed in the NZBoRA and, if not, whether any inconsistency is justified.

General nature of proposed disclosure:

  • indicate whether QA product or support information exists
  • provide (or provide link to) QA product or support information

Legislate for this?

Yes

Yes

3:  Established Quality Assurance Processes (Lacking A Specific Product)

Processes proposed for Disclosure

Consultation with Ministry of Justice on offences, penalties and court jurisdictions

Cabinet requires that the Ministry of Justice be consulted on "all proposals to create new criminal offences and penalties or alter existing ones, to ensure that such provisions are consistent and appropriate".  The Ministry provides expert advice on the appropriateness of:

  • proposed criminal offences, infringement offences, and civil pecuniary penalty regimes;
  • proposed penalty levels;
  • the availability of appropriate defences and appeal rights;  and
  • proposals to create, amend or remove the jurisdiction of a court or tribunal.

Consultation with Privacy Commissioner on privacy issues

The Privacy Commissioner provides specialist advice on privacy issues relating to the collection, storage, use or disclosure of personal information, and has a statutory function to examine proposed legislation that provides for the collection of personal information by any public sector agency; or the disclosure of personal information by one public sector agency to any other public sector agency. 

When approval is sought to introduce a Bill, Cabinet requires advice on whether the Bill complies with the principles and guidelines set out in the Privacy Act 1993 and, if the Bill raises privacy issues, whether the Privacy Commissioner agrees that they comply with all relevant principles.

General nature of proposed disclosure:

  • indicate whether legislation has the particular features that would suggest consultation might be appropriate
  • indicate nature of consultation with mandated expert
  • indicate nature of any outstanding issues

Legislate for this?

Yes

Yes

No (needs testing)

4:  Existing QA Expectations (Lacking A Specific Process Or Product)

QA Response Proposed for Disclosure

Testing that Draft Legislation is Robust and Complete

The testing of legislative proposals seeks to ensure that legislation will work as intended, by identifying and avoiding unintended consequences, and by checking that legislation provides for all likely matters and circumstances that may arise. 

Parliamentary Counsel Office asks instructing departments to confirm that their proposals will work in all relevant practical scenarios, and to check the proposals with the operational people who will undertake the day-to-day administration of the legislation.  Trials, simulations, regulatory "pre-mortems", systematic risk assessment, business analysis and business process modelling are some of the possible approaches that may be appropriate.  

External Consultation

There are no set requirements for external consultation in advance of the introduction or making of most legislation, although Cabinet has a general expectation that consultation will be fit-for-purpose.  However, there appears to be a growing expectation among the public (both here and in other jurisdictions) that policy processes should be more open, allowing external parties to have earlier input before government policy positions start to get locked in.

Action Taken to Assess Consistency with New Zealand's International Obligations

Cabinet requires that all papers seeking approval to introduce or make legislation include an assurance that it complies with relevant international standards and obligations.  The adviceprovided on consistency with NZ BoRA should cover off some key obligations in the areas of human rights, but this represents is only a very limited set of NZ's international obligations. 

Action Taken to Assess Consistency with the Principles of the Treaty of Waitangi

Cabinet requires that all papers seeking approval to introduce or make legislation include an assurance that the draft legislation complies with the principles of the Treaty of Waitangi. 

General nature of proposed disclosure:

  • describe the nature and extent of action taken, if any, by the government relating to the relevant QA expectation
  • (for external consultation only) describe the nature and extent of feedback received

Legislate for this?

Yes

No (needs testing)

5:  Disclosure of Significant Features or Powers Conferred by the Legislation

Features or Conferred Powers Proposed for Disclosure

Conferral of Powers to Make Delegated Legislation

The delegation of Parliament's legislative power is a very significant decision for Parliament to make, and the scrutiny of these powers in Bills is arguably the most important function performed by the Regulations Review Committee.

The delegation of legislative power is both inevitable and substantial, given pressure on parliamentary time, the increasing technicality of legislative subject matter, and the need of governments to be able to respond to rapidly changing circumstances.  However, if Parliament is to remain sovereign, it will want to ensure that it does not delegate substantive matters of policy or principle, and that there are appropriate safeguards on the exercise of the powers that it does choose to delegate.

The question of safeguards becomes particularly important when the power will not be exercised through Order-In-Council, which provides a built-in set of disciplines intended to support legislative quality that includes: Cabinet scrutiny; drafting by Parliamentary Counsel; a default rule of 28 days before it comes into force; and specific publication requirements.

Provision for Fees, Levies and Charges in the Nature of a Tax

While it is not lawful for the Crown to levy a tax except by or under an Act of Parliament, it is not always obvious when a fee or charge imposed for providing a service, or performing a regulatory function, is in the nature of a tax. 

For those that may have an obligation to pay, it is important to know what Parliament has authorised, which includes being clear whether the legislation would authorise a fee in excess of cost recovery or that may not bear a close relation to the service provided to an individual.

Conferral of Significant Decision-making Powers Affecting Individuals

Any decision-making powers or discretions that affect the rights, powers, privileges, immunities, duties or liabilities of individuals are potentially significant and should be carefully framed.  To quote from the LAC guidelines, "In general, the greater the potential for public powers to impact on individuals, the greater the protections there should be, in terms of the independence of the decision-maker, the procedure to be followed, the specificity of the criteria for the decision, and the rights of appeal and review available.".

General nature of proposed disclosure:

  • Indicate whether legislation includes this particular feature, and identify the relevant clauses
  • Explain the need for and extent of this power
  • Explain the nature of any safeguards that will apply to the power to ensure it is properly constrained and used with care

Legislate for this?

Yes (except for "significant decision-making powers")

No (needs testing)

No (needs testing)

6:  Disclosure of "Unusual" Features Warranting Careful Scrutiny

Features Proposed for Disclosure

Provisions Having Retrospective Effect

There is a general legal presumption that people should not be held responsible or liable for doing things that were not unlawful at the time it was done.  Further, people make decisions about their lives based on the law as it currently stands and retrospective changes can put them at a disadvantage, even where there is no criminal sanction.

Conferral of a Civil or Criminal Immunity

There is a general legal presumption that the law should apply equally to all persons.  Provisions that confer immunities on certain persons from civil and criminal liability are a departure from this expectation, which allows those persons to escape from punishment or the provision of redress for harms they may have caused. 

Compulsory Acquisition of Private Property

There is a strong legal presumption in NZ that when a government expropriates real property (land and buildings), except as a legal penalty, it will compensate the owners.  This presumption is likely to extend to literal expropriations of other kinds of property (e.g. vehicles, shares).  Government actions that serve to diminish the value of property (sometimes called regulatory takings) do not, however, attract any similar presumption.  

Executive Powers to amend the effect of an Act

The power to amend an Act (a Henry VIII clause), to define the meaning of a term in an Act, or grant an exemption from an Act effectively allows the Executive to replace or override the intent of Parliament, and hence is expected to be granted only rarely, in very limited terms, and with strict controls.

Creation of Strict Liability Offences, or Reversal of the Usual Onus of Proof

These represent two significant aspects of criminal offences that depart from usual legal presumptions relating to intent, and the burden of proof required.  The Senate Scrutiny of Bills Committee has a similar disclosure expectation in place for Australian Commonwealth Bills.

Catch-all for Other Unusual Provisions, or Features that Call for Special Comment

While this must necessarily rely on subjective judgement, it provides a useful generic prompt that is fully aligned with the purpose of a disclosure statement.  A similar catch-all provision exists in the Legislative Instruments Act 2003 of the Australian Commonwealth.

General nature of proposed disclosure:

  • Indicate whether legislation includes this particular feature, and identify the relevant clauses
  • Explain the rationale for this feature
  • Explain the nature of any features that might mitigate any potential disadvantages

Legislate for this?

Yes

Yes

No (needs testing)

7:  Disclosures of Key Impacts of the Policy being Legislated

Features Proposed for Disclosure

Estimates of the Major Categories of Cost, Cost Savings, or Benefits

While the challenges in estimating the likely levels of costs and benefits of a legislative change are greater than some advocates of regulatory impact analysis appreciate, it is nonetheless expected that the different categories of expected cost and benefit will be identified during the policy development process, and estimates will be attempted where this is reasonably feasible.

The Potential to Cause Material Economic Loss to an External Party

It is generally expected that attention will be drawn to the potential for a piece of legislation to impose material economic losses on particular parties arising directly from any restrictions introduced on the use of assets that they hold.  While there should be no presumption of compensation for such losses, it is important that these effects are clearly identified, especially when they are material and may fall disproportionately on a particular person or group.

Estimates of Expected Levels of Compliance, and Levels of Enforcement Activity

Where proposed legislation will impose substantive obligations on external parties, the question of securing compliance is likely to arise.  Any analysis of likely costs and benefits would be expected to explicitly consider likely levels of compliance and discuss the level and nature of any enforcement activity that may be required to secure that level of compliance.

General nature of proposed disclosure:

  • If there is a RIS, indicate whether the RIS includes information on this potential impact of the legislation
  • Indicate whether there is new or more information now available on this potential impact of the legislation
  • Provide (or provide link to) this additional information on potential impacts

Legislate for this?

No (needs testing)

No (needs testing)

No (needs testing)

Government Changes to Government Bills

Bills are frequently changed to a greater or lesser extent after they have been introduced to Parliament. The select committee process is a major source of changes. Another is amendments presented in the form of Supplementary Order Papers (SOPs), which may be introduced by either government or non-government Members.

Since changes post-introduction can have a significant impact on the content and effect of legislation, it makes sense in principle to also expect a government agency to flag and explain the relevant features of any government amendments proposed outside of the select committee process - just as it would have been required to do if the amendments had been included within the relevant Government Bill on introduction.

However, many changes made by government SOPs are very minor, for example they might correct cross-references and definitions. Requiring disclosures for minor or technical SOPs would result in little useful information for the effort and time involved. This could be overcome by imposing a supplementary disclosure obligation only when the amendments would have materially changed the original disclosure statement.

There are two potential approaches to presenting such a disclosure. One is to provide a supplementary disclosure statement to the original, and the other is to provide a new revised version of the full disclosure statement. The best option may depend on the nature of the proposed changes, which suggests allowing for some flexibility in the approach that may be adopted to presenting the effect of the changes.

Application to Government Supplementary Order Papers

General nature of proposed disclosure:

  • Indicate whether the proposed government amendments would have materially changed the disclosures that were provided on introduction
  • If so, describe how the original disclosures would have been different

Legislate for this?

Yes

Yes

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