Double Aspect

The New Zealand government says it is concerned by the quality of its regulation (writ large) and wants to improve matters. To this end, it has launched a consultation on an eventual Regulatory Standards Bill. This will involve setting out, partly in legislation and partly in regulations, a range of principles to which regulatory endeavours should conform, and creating a sort-of-but-not-really adjudicative mechanism for identifying those that do not.

The idea is an interesting one, well worth thinking about ― not only for New Zealanders. While I have my doubts as to what these proposals, in their current form, can achieve, I do hope they get implemented so we can see how they work out. The objections I have seen so far do not persuade me at all.

The consultation document starts from the premise that

Done poorly … regulation can impose costs, limit freedoms, stifle innovation, and give rise to other unintended consequences – or it can simply fail to achieve its intended objectives.

Governments should therefore make careful choices about when they regulate, and any resulting regulation should be designed, implemented, and monitored so that it achieves its objectives, and its benefits outweigh its negative impacts. (9)

The question, then, is how to avoid regulation being done poorly. Intuitive though it may be, however, the question is not an especially clear one. Doing regulation well or badly might mean any number of different things. It might, for example, refer to a comparison of economic costs and benefits (as, indeed, the second paragraph quoted above suggests). But that’s not what the document is mostly about. Its concerns, as I will explain, are primarily libertarian rather than utilitarian. It’s good to have libertarian concerns! Indeed, that’s why I find this whole thing so interesting and am writing about it. But perhaps packaging these issues as being about the quality of regulation is both bit misleading, or at least not as transparent as one might wish, and frankly sells short the ambition of the proposals.

The consultation document argues that New Zealand’s current arrangements for ensuring regulatory quality are insufficient. Among other issues, legislation and regulations can be badly drafted and rushed, or indeed unnecessary, and once enacted, stay on the books despite doing more harm than good. Moreover, there is no single, coherent framework that would provide guidance both to the regulators and to the subjects of regulation. A Regulatory Standards Bill would seek to ameliorate both these problems.

To this end,

[T]he Bill would set out a set of principles that the Government would
consider when developing legislative proposals or exercising stewardship over regulatory systems. The principles would be in primary legislation … to give the principles sufficient weight. These principles of responsible regulation would act as a set of criteria against which new regulatory proposals or existing regulation could be assessed.

The principles would be broad and expressed at a high level. The Bill would require the Minister for Regulation to release guidelines that would set out in more detail how the principles should be interpreted and applied. (20; paragraph break removed)

That’s a bit ironic, isn’t it? People who think governments regulate too much and badly often complain about legislation being vague and Parliament abdicating its law-making responsibilities to the executive. Yet it sounds like the Regulatory Standards Bill would do something similar. Beyond hoary separation-of-powers reasons for such complaints, the practical concerns are that such regulation is more likely to produce unintended consequences and, relatedly, that even if it works tolerably well when the executive shares the general outlook of the Parliament that enacted the statute, this will not always be the case. An executive that doesn’t believe the law is a good idea but doesn’t want to go to the trouble of procuring its repeal can use its powers to render it ineffective. This is one reason I’m a bit sceptical about how well the Regulatory Standards Bill would actually work.

That said, the principles set out in the consultation document aren’t that vague. I think they could have some real bite, depending on how implementation works and, in particular, on the degree to which the ministerial guidelines constrain the adjudicative process envisioned in the consultation document (on which more below). There are quite a few of these principles, but I will highlight some.

First, there is “[t]he importance of maintaining consistency with [certain] aspects of the rule of law”, including that “every person is equal before the law” and that “issues of legal right and liability should be resolved by the application of law, rather than the exercise of administrative discretion”. (21) As Dean Knight has noted, this is a throwback to A.V. Dicey’s understanding of the rule of law, as are the further principles that “[l]egislation should preserve the courtsʼ constitutional role of ascertaining the meaning of legislation” and that “[l]egislation should make rights and liberties, or obligations, dependent on administrative power only if the power is sufficiently defined and subject to appropriate review”. (22)

Unlike, perhaps, Professor Knight, I believe these things are very good. How realistic is it to really get of administrative discretion, I am not so sure. Not, mind you, because ― as pro-administrativist thinkers have been saying for 150 years ― doing so is actually impossible in the modern world, but because people may lack the political imagination, not to mention the political will. But if a Regulatory Standards Bill can at least nudge New Zealand in that direction, it would have accomplished something important.

Then come some principles that could, and perhaps ought to, be entrenched in a bill of rights, but are rather pointedly missing from the New Zealand Bill of Rights Act 1990. The most obviously and explicitly libertarian one insists that

[l]egislation should not unduly diminish a personʼs liberty, personal security, freedom of choice or action, or rights to own, use, and dispose of property, except as is necessary to provide for, or protect, any such liberty, freedom, or right of another person. (21)

Again, this is great stuff (though “personal security” can be vague)… and staggeringly difficult to reconcile with much of what regulation has in fact done for the last 100 or even 150 years. The following principle proscribes expropriation without compensation, though ― disappointingly ― it does not seem to actually prevent expropriation for non-public uses.

The next principle or group of principles has to do with taxes and government fees. Among other things it seeks to ensure something like proportionality between any fees levied and the benefits the fee-payers derive from the service they pay for. Had the UK government had something like this in mind, it may have avoided the disaster of disproportionately high fees for access to employment tribunals that ultimately led to the Supreme Court’s decision in R (Unison) v Lord Chancellor [2017] UKSC 51, [2020] AC 869.

Then there are principles related to law-making, which include something like cost-benefit analysis and proportionality, as well as desirability of consultation and, most fundamentally, “the importance of carefully evaluating” “whether the public interest requires that the issue be addressed”. (23) Here too, the possibility that government might just decide to let things be instead of doing something might be too good to be true, but even baby steps would be valuable. And lastly, the principles refer to “regulatory stewardship” ― that is, the obvious but all too frequently forgotten that regulation, even if it was at one point necessary and justified, might cease being so. Regulation needs to be subject to ongoing evaluation and review ― and reformed or eliminated once no longer warranted.

All this sounds pretty great, but the real difficulty, as my comments above suggest, is how to make these principles stick. What can be done to ensure they are not just pieties? The approach, as I understand it, will have two tracks, somewhat similar to how the New Zealand Bill of Rights Act works, though with a crucial difference. I will refer to these tracks as “internal” and “adjudicative”.

The former would require ministers and agencies both “to ensure that new
regulatory proposals are assessed for consistency with relevant principles, and any inconsistencies identified” (25) and to similarly review existing regulation from time to time. If inconsistencies are identified, amendments can be implemented or proposed to Parliament. Alternatively, “the responsible Minister could make a statement justifying why they are proceeding with the proposal despite” or “why they are choosing not to remedy these inconsistencies”. (26) This is reminiscent of s 7 of the Bill of Rights Act, which requires the Attorney-General “bring to the attention of the House of Representatives any provision in [a] Bill that appears to be inconsistent with any of the rights and freedoms contained in this Bill of Rights”, though here the duty is placed on each minister within his or her domain, rather than on the Attorney-General.

How well this will operate will depend above all on the seriousness with which future ministers will take these duties. The s 7 system has worked pretty well, at least in the sense that New Zealand Attorneys-General have not been shy about making inconsistency reports; though Parliament has often enact offending legislation regardless. But in Canada, the provisions of the Canadian Bill of Rights and the Canadian Charter of Rights and Freedoms Examination Regulations which inspired s 7 have failed miserably. The difference has a lot to do with the fact that in New Zealand, Attorneys-General will make a s 7 report if they actually think a bill is inconsistent with rights, whereas the Canadian ministers interpreted their reporting duty as only triggered when no plausible argument to defend potentially rights-infringing legislation is available, regardless of their own considered view as to whether such arguments are compelling. And this, in turn, presumably has a lot to with the fact that, as the New Zealand Cabinet Manual explains, the New Zealand Attorney-General “[b]y convention … is not influenced by party political considerations, and should avoid appearing to be so influenced”. By contrast, the Canadian justice ministers are unabashed partisans. Since the duty to report on inconsistency with regulatory principles is imposed on partisan ministers rather than the Attorney-General, I would not count on it being discharged as seriously as the s 7 one ― least of all when these partisans aren’t committed to the objectives of the Regulatory Standards Bill.

The consultation document shows at least some awareness of the problem by suggesting that “the Minister for Regulation would be required to
issue guidelines in relation to the assessment of consistency of proposed and existing regulation”. (26) Again, though, I’m not sure that this is good enough. At least making the reporting threshold explicit ― something like “the responsible minister’s considered opinion” rather than “a non-laughably arguable case to believe” would help some, and can be done in the Regulatory Standards Bill even without turning it into a detailed code.

In part, this is where the adjudicative enforcement track comes in. It is, I suppose, meant to supply these deficiencies of the internal one. But, unlike an earlier proposal, this does not involve adjudication by actual courts. Instead,

a Regulatory Standards Board [would] be established to consider the consistency of regulation with the principles in response to complaints. The proposed Board would aim to offer a relatively low-cost, agile way to consider and respond to complaints quickly. … The proposed Board … would make non-binding recommendations independent of Ministers and agencies. It would be made up of members appointed by the Minister for Regulation, and … would likely be made up of members with a range of skills, including legal and economic expertise. (31; paragraph breaks removed)

In addition to hearing complaints, the Board would also be empowered to undertake its own investigations. It could propose changes to regulations or further inquiry by the relevant agency. Most importantly,

[i]f the Board found any inconsistency with the principles, the responsible Minister would be required to respond to that finding, including justifying any decision not to address identified inconsistencies.

At the risk of committing lèse-majesté, the approach here seems similar to the Waitangi Tribunal, which inquires into alleged breaches of the principles of the Treaty of Waitangi (between the Crown and the Māori) and formulates recommendations but, for the most part, cannot make legally binding orders. The system has some advantages over adjudication by the courts: beyond cost, agility, and speed, there is the fact that a non-judicial body is not constrained by the niceties of Parliamentary privilege, and could, for example, comment on failures of consultation that occurred in the legislative process. The biggest advantage, though, is presumably political ― unlike a court order, a recommendation of the Regulatory Standards Board can be safely ignored.

Needless to say, this is also the arrangement’s biggest drawback. A naming-and-shaming system can only ever work if the people being named will actually feel shame about this. If they don’t care, or indeed if they will instead take this is a badge of honour, the process will be ineffective, or worse. With the Waitangi Tribunal, the New Zealand Court of Appeal held that if it

finds merit in a claim and recommends redress, the Crown should grant at least some form of redress, unless there are grounds justifying a reasonable Treaty partner in withholding it—which would be only in very special circumstances, if ever.

New Zealand Maori Council v Attorney-General [1987] 1 NZLR 641 (NZCA) at 664-65

But I wouldn’t expect the courts to give the recommendations of the Regulatory Standards Board such exalted status. The proposed system, then, relies entirely on the commitment to it of future governments, including ones of different partisan and ideological persuasions than the one designing it. Good luck!

Indeed, future governments can fatally undermine the system even without making a show of defiance simply by appointing the “right” sort of people to the Regulatory Standards Board. The consultation document does not specify would their tenure will be, but presumably, like any administrative agency, it will lack the kind of independence courts enjoy, and the members’ term will be short enough for each new government to be able to replace most if not all of them in relatively short order. A board packed with progressive lawyers, tariff-loving economists, and NIMBY activists would be useless at best, and quite possibly a nuisance to any genuinely deregulatory government. And while the Regulatory Standards Bill could make some provision at least for the board’s independence, I have a hard time seeing how the issue of hack appointments can be overcome.

There is more in the consultation document, about keeping regulatory systems up to date and fit for purpose, but I have gone on for long enough. It will be apparent that, while I share the sentiments that seem to motivate the consultation document ― indeed I am pretty thrilled that a government is even thinking along these lines ―, I am not optimistic about their working out. Nonetheless, the attempt may be worth making. Perhaps it can succeed at least to some extent, and that would be good. And if it fails, the failure itself may provide the justification for a beefed-up version, with proper judicial enforcement, in the future.

I am especially unpersuaded by Professor Knight’s objection that “many of [the] legislative design principles” proposed by the consultation document “are not above politics or universally agreed ― and therefore unsuitable for the type of constitutional blueprint this bill contemplates”. Of course these principles are political in the sense that they shape the exercise of public power. And of course they are not uncontroversial. But why exactly does that make them “unsuitable” for a “constitutional blueprint”? Do the rights codified in the New Zealand Bill of Rights Act, for instance, not shape how power can and cannot be exercised? Are they really uncontroversial, especially in their specific applications, but even in broad terms? As Andrew Geddis and Marcelo Rodriguez Ferrere note, they only passed “by
way of a bare majority vote cast along party lines”. If that was acceptable, why not this proposal?

I certainly understand disagreeing with the substance of the principles it sets out ― but that’s very different matter from claiming that a proposal of this kind if constitutionally unsound. A constitution that explicitly or implicitly authorises Parliament to restrict personal freedom of choice, to take property without compensation, or to have people’s rights adjudicated ― and perhaps taken away ― by bureaucrats serving at the politicians’ pleasure rather than by independent courts, as New Zealand’s constitution now does, is no less “political” or “ideological” than one that does not. It is also a worse constitution. Unlike most places in the world, New Zealand is at least looking for a way to move towards more rather than less liberty, greater rather than lesser respect for individual agency, as well as the Rule of Law properly understood. I do not really expect it to succeed, but I sure hope it does.