Possible guidelines for New Zealand

Canadian guidelines could be applicable in New Zealand.

The Canadian draft discussion document (Government, Canada, 2001)[17] outlines 11 guiding principles that are consistent with good regulatory practice and could be applicable in New Zealand. These principles have been developed in the context of a risk management framework and require the precautionary principle to be consistent, integrated and weighed against other relevant principles.

Canadian guidelines are useful from an operational perspective.

There are many areas of agreement between the draft Canadian guidelines and those surveyed (ie, the European Commission, United States, United Kingdom and Project guidelines). However, the Canadian guidelines are more useful from an operational perspective because they provide more explicit guidance on the steps leading up to invocation of the precautionary principle.

Canadian guidelines

The draft Canadian guidelines are summarised as follows:

General decision-making principles

The precautionary approach is a legitimate and distinctive decision-making tool within risk management. In addition:

• It is legitimate for decisions to be guided by society’s chosen level of protection against risk – this should be established in advance.
• Sound scientific information and its evaluation must be the basis for applying the precautionary approach, particularly with regard to the decision to act or not to act (ie, to implement precautionary measures or not) and the measures taken once a decision is made.
• The scientific evidence required should be established relative to the chosen level of protection. Further, the responsibility for producing the information base (burden of proof) may be assigned. It is recognised that the scientific information base and responsibility for producing it may shift as the knowledge evolves.
• There should be mechanisms for re-evaluating the basis for decisions and for providing a transparent process for further consultation.
• A greater degree of transparency, clearer accountability and increased public involvement are appropriate.

Principles for precautionary measures

These principles apply once a decision to implement such measures has been taken:

• Precautionary measures should be subject to reconsideration, on the basis of the evolution of science, technology and society’s chosen level of protection.
• Precautionary measures should be proportional to the potential severity of the risk being addressed and to society’s chosen level of protection.
• Precautionary measures should be non-discriminatory and consistent with measures taken in similar circumstances.
• Precautionary measures should be cost effective, with the goal of generating an overall net benefit to society at least cost, and efficiency in the choice of measures.
• Where more than one option reasonably meets the above characteristics, then the least trade-restrictive measure should be applied.

Some key features of the guidelines

A key feature of the draft Canadian guidelines is that they emphasise the need to establish in advance society’s chosen level of protection against risk. This implies the need for estimation of the ex ante value of risk in different contexts. These are issues that still need to be debated in New Zealand.

The Canadian guidelines legitimise the precautionary principle as part of the risk management process but do not go as far as advocating legal status. In comparison with the other guidelines, there is more flexibility in allocating the burden of proof, with potential for review as new information comes to light.

Modified cost-benefit – an interpretation

The principle referred to as “cost effectiveness” indicates that some form of modified cost-benefit is required, which balances costs, benefits and risks. While the other guidelines discuss this in broad terms, the draft Canadian guidelines provide the following interpretation:

• The real and potential impacts of making a precautionary decision (whether to act or not to act), including social, economic and other relevant factors, should be assessed. Moreover, consideration of risk–risk tradeoffs or comparative assessments of different risks would generally be appropriate (although this may not be possible in circumstances where urgent action is needed). This can ensure that society receives net benefits from decision-making, and that the precautionary approach is not used as an unnecessary or unintentional barrier to innovation or technological change.
• Assessing the efficiency of precautionary measures generally involves comparing various policy instruments to determine which options could most efficiently address the risk at least overall cost. The outcome of this process should result in any measures taken imposing the least cost or other negative impact, while reducing risks to an acceptable level.
• As the precautionary approach is, by definition, an evolutionary process, precautionary measures should be monitored on an ongoing basis so that new scientific data that alters cost-effectiveness considerations can be incorporated (including performance monitoring results).

Implementation issues

Consideration needs to be given to implementation in the New Zealand context.

While there could be benefit in applying a more generic risk management framework and clear guidelines based on the Canadian approach, consideration needs to be given to how this could be implemented in the New Zealand context. This could require approaching and gaining support from central and local government agencies to implement guidelines at an overarching level to provide some direction and consistency for viewing different types of risk.

Establish society’s “accepted” level of risk protection.

This process could stimulate debate in New Zealand and contribute towards testing and establishing society’s “accepted” level of protection against risk in different contexts. This could help guide policy development at a generic level (eg, the development of sector strategies and New Zealand’s stance on international agreements) but below this, guidelines may need to be tailored to specific regulatory regimes[18].

Variations in capability within central and local government.

There could be variations in the capability of central government agencies to apply a more generic risk management framework. Capability is also likely to be an issue within local government, especially the capacity of small jurisdictions to interpret and use the guidelines in a way appropriate to their circumstances.

Institutional features that could be required to implement a more generic risk management framework and guidelines within New Zealand include[19]:

• a broader, more consultative approach and the ability to synthesise a wide range of viewpoints to establish society’s accepted level of risk in different situations
• lateral thinking about the range of possible options consistent with the “accepted” level of risk
• the capacity to obtain and evaluate information relating to the scientific, economic and legal implications of potential options
• a transparent process that clearly identifies and balances costs, benefits and “risks” associated with options
• flexibility to adapt as new scientific information comes to hand over time
• sharing of best practice and lessons learned across central and local government.

Benefits and limitations

Application of a more generic framework and guidelines could foster economic development and innovation.

Application of a more generic risk management framework and guidelines could provide significant benefits to society. A key benefit of the approach is that it would provide support for activities that foster economic development and innovation (that may not proceed otherwise), through focusing on alternative ways of implementing the precautionary principle, while still aiming to minimise or mitigate risks. This could enable the greatest returns to be achieved with acceptable results, costs and risks.

Improvements in the current  process

There could also be significant improvements in the current risk management process:

• a wider, more participatory approach to establish “society’s accepted” risk level providing more clarity around application of the precautionary principle, increasing transparency and accountability
• increased consistency at both central and local government level with other relevant principles and international commitments (including the WTO Agreement) and across domestic legislation and regulatory regimes
• reduced likelihood of litigation of regulatory measures through the courts
• greater focus on opportunity costs and regulatory priorities helping to ensure a full range of risk management options are considered
• lower cost of gathering information to assess and compare options
• assignation of the burden of proof; this responsibility may change as scientific knowledge evolves
• increased flexibility to re-evaluate decisions as better information becomes available over time.

But there are some limitations.

While there are a number of benefits, the approach has some limitations. The proposed guidelines (based on the Canadian approach) have no legal standing. Successful implementation would therefore depend on support from government agencies, indicating that the benefits would need to be clearly articulated in a relevant way.

Gaining agreement on society’s “accepted” level of risk is likely to be challenging.

Interpretation of the precautionary principle is likely to remain open to wide interpretation and debate. The process of obtaining agreement in advance on society’s “accepted” level of risk is therefore likely to be challenging, and could potentially be time consuming and costly. However, if successful, this would be a significant step forward.

In contrast, legislating to introduce a risk management regime in the absence of wide participation runs the risk that if it is too stringent, firms may cease some activities and relocate offshore, reducing capability within New Zealand.

Documentation required – can be a slow process in the face of an imminent and irreversible threat.

While applying a more generic risk management framework is consistent with good regulatory practice, considerable effort is required to produce documentation, generally depending on what is quantifiable. This can be a slow process in the face of an imminent and irreversible threat. The precautionary principle can cut through this process, but careful consideration needs to be given to when and how the principle is applied.

While guidelines can assist, it is important that appropriate institutional arrangements are set in place. This would need to address current capability gaps within agencies.