Regulatory institutions and practices inquirySummary presentation of draft report

March 2014

Terms of reference

• High-level map of regulatory regimes and regulators

• Guidance to inform the design of new regulators and regimes

• System-wide recommendations to improve the operation of regulatory regimes

• Specifically consider improvements to monitoring of regulator performance

2

Sources of information

• 53 submissions• 92 engagement meetings• A number of case studies• Surveys

– 1,526 NZ businesses– VUW/PSA survey of public servants– 23 regulator CEs

3

Key points

• It’s a big system

• It’s not broken but could be much better4

200+ DIFFERENT REGIMES

20 ACTS REPEALED IN 2013

NEW IN

2013

2,871ACTS CURRENTLY IN

FORCE

148

10,000+ WORKERS

Agencies with regulatory roles0.5 n Number of FTEs directly involved in regulatory implementation (approx) → 130 y

← Is the regulatory agency responsible for implementing regulations that overlap with those

implemented by other agencies?

Wa Atomic symbol → Cc

New Zealand Walking Access

Commission Regulator name →

New Zealand Commerce

CommissionEstablishment FTE count, whole organisation

4.9 180

3 y 7.8 y

0.45 y

Bs Ta Fl Broadcasting

Standards Authority

Takeovers PanelCommission for

Financial Literacy and Retirement

Income

5 7.8 15.5

8 n 18.3 n

14 y

Ga Pg

Pi Gas Industry

CompanyOffice of Film &

Literature Classification

Office of the Privacy Commissioner

16 22.7 30

36 y 60 y

Not available y 11 n 115 y 89.6 y 77 y 0.575 n

130 y

El Hd En Hi Fi Ep Ma Tr Cc Electricity Authority

Health and Disability

Commissioner

Energy Efficiency and Conservation

Authority

New Zealand Historic Places

TrustFinancial Markets

AuthorityEnvironmental

Protection AuthorityMaritime New

Zealand Ministry of TransportNew Zealand Commerce

Commission

66 68.54 98 107 134 146 148 155 180

129.9 y 28 y

122 n 283 y 280 n Not available y 122 y Not

available y

2,350 1 y

Ci Rb Qu La St Co In Ed Mb Civil Aviation

AuthorityReserve Bank of

New ZealandNew Zealand Qualifications

AuthorityLand Information

New ZealandStatistics New

ZealandDepartment of Conservation

Department of Internal Affairs Ministry of Education

Ministry of Business,

Innovation and Employment

214.4 258 447 475.8 1018 1861 2091 2660.5 3,255

Source: Table compiled using regulatory agency responses to a Productivity Commission information request.Notes:1. The Ministry of Business, Innovation and Employment include immigration officials in its estimate of staff directly involved in regulatory implementation.

Key points

• It’s neither flexible nor responsive to changing circumstances

• Bespoke – too many unjustified inconsistencies • Set and forget mentality

– Need more evaluation & review to improve regimes– Not a lot is known about it (compared to taxing and

spending)• More attention to skills and implementation (and

impacts of complexity) • The system needs stronger “ownership”/leadership

4

Our approach

• A focus on design elements

• How these shape regulator capability and behaviour

• To achieve good regulatory outcomes

7

The system isn’t flexible enough

• We have a ‘set and forget’ mentality until something goes badly wrong

• Need to evaluate the effectiveness of regulation more systematically

• Need mechanisms to update regimes more effectively– For example, delegating greater rule-making

power to regulators

8

Best practice regulations?

• Two-thirds of CEs surveyed didn’t think so.

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MORE THAN HALF OF PUBLIC SECTOR CHIEF EXECUTIVES* AGREE THAT AGENCIES

OFTEN HAVE TO WORK WITH

LEGISLATION THAT IS OUTDATED OR NOT FIT-FOR-PURPOSE

17% STRONGLY AGREE

26% NEITHER AGREE NOR DISAGREE

48% AGREE

DISAGREE

DO

N’T KN

OW

There are too many unjustifiedinconsistencies

• We have 200 bespoke regimes, with mixture of:– delegated legislation– organisational form and governance– Treaty clauses– obligations to consult

• A more principled approach will help:– make comparative performance evaluation easier– make it easier to set up new regimes– boost effectiveness of the overall system

10

We need to pay more attention toskills and how regulation is implemented

• Many businesses expressed low confidence in the skills and knowledge of regulatory staff

• There is a perception gap between chief executives and frontline staff about:– the size of skill gaps– the availability of training

• Need more focus on:– lifting skills– improving practice– sharing across the system

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The checks on regulationneed to be stronger

• More delegated rule-making will require stronger checks, including greater Parliamentary oversight (Regulations Review Committee)

• The courts play an important role, especially through judicial review

• The benefits and costs of appeals needs to be carefully thought through

• Independence matters – political intervention inevitable, but needs to be channelled in a way that maintains integrity of the regime

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Regulators’ performance could be better monitored and evaluated

• Expectations on monitoring departments are weak– Monitoring does not add value to regulators– Not meeting the needs of Ministers– Needs to be more active and valued– Respective role of monitoring departments and boards

confused• Treasury and SSC need to take a more active role

in setting expectations, and monitoring departmental regulators

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The regulatory system as a wholeneeds a leader

• Role of minister responsible for regulation should be more clearly defined

• Need to set strategic objectives for the regulatory system as a whole

• Will require better and better-resourced support from central agencies

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Next steps

• 13 March 2014: Public release of draft report• 8 May 2014: Final date for public submissions on

draft report• March-May 2014: Engagement with participants

and refinement of inquiry results• 30 June 2014: Final report delivered

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