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

Annex 6: Outline of Administrative Support Measures

Package 1: Direct Support for the Disclosure Mechanism

Support for Preparation and Publication of Disclosure Statement from PCO and Treasury

To facilitate the timely production by departments of accurate and well-presented disclosure statements, they will need some support, in the form of general templates and guidance for completing the required disclosures, and administrative processes to ensure that the statements are completed, checked and provided to the right people at the right times.

Treasury can assist with initial guidance material and monitoring, but the practical day-to-day administrative oversight would be best provided from PCO. They know the legislation involved, they can advise on legislative principles, they administer the official legislation website where we propose that the disclosure statement be published, and they have the systems to help coordinate the production, presentation and publication of the statement alongside the relevant legislation. There are some additional resource implications for PCO arising from this role, which may be able to be absorbed initially but could potentially impact on the timelines to complete legislative drafting.

Draft Disclosure Statement Accompanies Bill or Regulation to LEG

Provision should be made in the requirements for the Cabinet LEG committee that a draft of the disclosure statement is completed and attached, along with the relevant draft Bill or legislative instrument, to the LEG paper when it is sent to LEG for examination.

More Explicit Select Committee Role

To take advantage of the additional information available to select committees in the disclosure statement, and reinforce the importance Parliament attaches to its legislative scrutiny role, Standing Orders could be amended to require or encourage select committees to report back to Parliament on legislative quality issues. This should mean that select committees would be better primed to consider, and hence more likely to identify and address, legislative quality issues during the select committee process.

The Clerk of the House supported this approach in her submission to the Commerce Committee on the current Regulatory Standards Bill.

Support for Select Committees from Office of the Clerk

To back up this expanded select committee role, the Office of the Clerk could increase the support it provides to committees, including the Regulations Review Committee, on the application of legislative principles to the legislation before them for scrutiny.

This would be in line with the stated intention of the Clerk of the House to build further the support provided by her staff on constitutional and administrative law issues in Bills. It is likely, however, that the Office would need to allocate some additional resource to sustain an appropriate level of support.

Package 2: Other Support Measures for the Disclosure Mechanism

As for Package 1 but also including:

Testing Extra Disclosures for Bills and Extended Coverage of Disallowable Instruments

This would require extra guidance, support, and ongoing monitoring from PCO and Treasury.

Tightening of the RIA expectations in weak areas

Setting some stronger RIA expectations in certain weak areas could increase the value provided by regulatory impact analysis for the scrutiny of legislative proposals. These beefed-up expectations could also reinforce some of the other QA processes for which a disclosure is now proposed, and in a sufficiently timely way that the matter is more likely to get departmental attention before the disclosure statement needs to be provided.

For example, raising expectations about reporting on implementation plans and risks might get departments thinking earlier about how they are going to test any legislative proposals to ensure they work in all relevant scenarios. More explicit expectations around identifying costs, possible economic losses, and likely levels of compliance and enforcement, would usefully anticipate the proposed disclosures of potential key impacts. The RIA requirements could also be used to explicitly ask whether any of the legislative proposals have features that might require consultation with experts like the Ministry of Justice or the Privacy Commissioner.

Revive the Legislation Design Committee, with a more proactive role

The Legislation Design Committee (LDC) was established in 2006 to provide high level input on design, instrument choice and implementation issues for significant or complicated legislative projects, at an early stage of development. It was chaired by Sir Geoffrey Palmer, supported by the Law Commission, and included representatives from the Ministry of Justice, Crown Law, DPMC, Treasury and PCO. Its role was purely advisory, and did not cover policy.

A positive review in early 2008 led Cabinet to agree to give it a more proactive role. LDC was to identify a few Bills on the government’s annual legislation programme that might benefit from LDC’s expertise, and approach the administering department to offer assistance. However a change of government saw this approach abandoned and LDC fell into abeyance.

Reviving the LDC, with that more proactive role, provides another good way to have design issues important to legislative quality raised in a timely manner with departments through early engagement. Limiting its membership to officials, supported by a department, might make this proactive role more acceptable. Key members might also play a role akin to that of an officials committee for a revamped Cabinet Legislation Committee (see below).

Revamp the Cabinet Legislation Committee (LEG), with a focus on legislative quality

In theory LEG exists to ensure that the policy content of draft Bills is consistent with Cabinet approvals, and meets all Cabinet’s requirements for the development of legislation. In practice LEG papers are largely a tick-box exercise and LEG does not provide a substantive check on legislative quality. The requirement to produce a disclosure statement to assist external scrutiny of the accompanying legislation provides the ideal opportunity to change that.

A revamped LEG committee would test the standard of the legislation and legislative development process, based on what the disclosure statement reveals, and could recommend further work if not satisfied. It should also take the opportunity to consider other matters, such as possible Crown legal risk, and to test the adequacy of the implementation plans.

Package 3; Increase Attention to the Existing Stock of Legislation

As for Package 2 but also including:

Introducing an Asset Management Perspective to the Administration of Legislation

The former Chief Parliamentary Counsel and Law Commissioner George Tanner has been quoted as saying “The lack of any systematic process for post-enactment scrutiny means that routine maintenance of some very major pieces of legislation rarely happens. We paint our houses and service our cars, but we don’t look after our laws in the same way.”

One key to shifting the level of attention to the performance of the existing stock of legislation is to adopt an asset management perspective. Regulatory regimes have asset-like characteristics, in the sense that they are designed to deliver a stream of net benefits to New Zealand over time. An asset management perspective implies that administering agencies will not only hold up-to-date registers of all legislation administered, and have assigned particular people to have oversight of that legislation, but they should also be looking to introduce the regulatory equivalent of some basic asset management practices such as:

  • Regular monitoring and reporting on the condition of a significant regulatory regime
  • Identification of risks to regime performance, and of risks the regime may pose to others
  • Explicit planning for future regime maintenance and investment work

Progressively Develop Expectations for the rest of the Regulatory Management Cycle

The proposed disclosure statement is focussed primarily on the development of legislation. Yet we recognise that good legislation ultimately depends as much, if not more, on the quality of its implementation, administration, enforcement, monitoring and review.

We are now starting to see other governments create general expectations for their agencies in these different areas of the regulatory life-cycle, which they expect their agencies will apply as appropriate to their circumstances. An early example was the UK Hampton principles to guide effective inspection and enforcement. In NZ, the action plans to deliver on Result 9 of the Better Public Services agenda are likely to lead to some clear standards on how government should inform and interact with businesses around their regulatory obligations.

Develop Reporting Requirements for Regulators and Administrators of Legislation

Current reporting requirements for government agencies are framed in a way that suggests they are merely providers of services and stewards of financial resources. They tend to miss the point that these “services” are usually regulatory roles, and that departments also act as stewards of the legislation assigned to them. Formal requirements for reporting on agency performance should be developed to better acknowledge this regulatory perspective.

Investigate a New Review Role for an Office of Parliament

The Tanner quote above acknowledges the lack of any systematic approach to post-enactment scrutiny. It reflects deficits in responsibility, will and resources for monitoring and review of legislation. Without some external pressure, this is likely to remain a major challenge.

One catalyst for change might be a new review role for an Office of Parliament. The financial and performance auditing responsibilities of the Auditor-General ensures ongoing government attention to the efficient and effective use of the resources voted to it by Parliament. Given the significance of the regulatory powers that Parliament confers or delegates to the government, there is a case for asking if similar independent attention should be given, on Parliament’s behalf, to how well different regulatory regimes might be performing against their stated policy objectives. The US Government Accounting Office may provide a possible precedent.

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