Double Aspect

A couple of months ago, I blogged here about the proposed Regulatory Standards Bill that will be introduced in the New Zealand Parliament later this year. In a nutshell, the idea is to set out certain libertarian standards, emphasising the importance of personal liberty, property rights, and the rule of law in statutory form, and to require future governments to explain any existing or proposed departures from these standards, while also setting up an adjudicative board that could flag the existence of such departures where the government does not recognise them. The project, I thought, was worthwhile, though perhaps doomed given the weakness of the constraints the bill as outlined in the government’s discussion document would actually impose on future regulation.

I eventually decided to write a submission to the New Zealand government to outline some of the things I like about the bill, but also makes some suggestion for improving both the principles the bill would codify and the implementation mechanisms it would contain. The bulk of the submission follows, in case you would like to take a look. I hope that, along with the post linked to above and the one I have contributed to the Verfassungsblog it can stand in contrast to some of the more unhinged takes the proposal has generated so far.

…

Summary

4. The Proposed Bill is a promising initiative that deserves to be supported. If enacted and implemented in accordance with the intention of the consultation document, it will improve the quality of regulation in New Zealand by focusing attention on the all-too-frequently hidden costs regulation imposes on citizens. It could also serve as a model for other jurisdictions.
5. However, it is an open question whether the proposed Bill can live up to its promise. This is partly because of the institutional mechanisms it relies on, and partly because of the way in which it seems likely to be drafted. Both these factors risk creating vulnerabilities when a government that is not committed to the Proposed Bill’s principles takes office.
6. Taking the Proposed Bill’s choice of non-judicial implementation mechanisms as a given, this submission therefore focuses on the ways in which the Proposed Bill can nevertheless be strengthened so as to give it the best possible chance of achieving its laudable aims. It also addresses some concerns regarding the proposed Bill’s constitutional status.
7. The submission proceeds as follows:
   • A discussion of constitutional concerns
   • A discussion of the principles to be set out in the Proposed Bill, including:
     • Suggestions for clarification;
     • A discussion of property rights;
     • A suggestion to limit the role of secondary legislation;
   • A discussion of the consistency assessment and certification procedure;
   • A discussion of the Regulatory Standards Board; and
   • A summary of recommendations

Constitutional Issues

8. The Proposed Bill would of course be of constitutional significance. It would create a new government institution (the Regulatory Standards Board), reframe the values that existing institutions are to pursue, and set up new ways in which citizens can check the action of government. The Proposed Bill would join laws such as the New Zealand Bill of Rights Act 1990 (“the Bill of Rights”), the Treaty of Waitangi Act 1975, and others in defining what New Zealand’s government is, and what it is for.
9. At the same time, it is important to understand how the Proposed Bill fits within New Zealand’s constitutional landscape. In particular, it respects the principle of parliamentary sovereignty, embodied in s 15(1) of the Constitution Act 1986. While the Proposed Bill will set out a number of principles which regulation will be expected to respect (“the Principles”), it leaves to Parliament and the executive the ultimate decisions as to whether a given regulatory scheme should fully comply with the Principles or depart from them in some respects.
10. At least some, and perhaps many, of the Principles are, regrettably, controversial to a greater or lesser extent. The question therefore arises whether they should be stated in law: would it not be more appropriate for the proposed Bill to confine itself to what is the subject of a broad, cross-partisan consensus?
11. Ultimately, this is a political judgment that will be for Parliament to make. There may, of course, be a trade-off between the degree of consensus around the proposed Bill and its odds of long-term success. Nonetheless, in my view, it would be a mistake to conclude that the constitutional nature of the proposed Bill means that it must avoid controversy. The Bill of Rights itself was not uncontroversial, yet it was enacted on a party-line vote and became law.
12. Under New Zealand’s constitution, including the principle of Parliamentary sovereignty, the safeguard from undesirable constitutional change does not reside in any legal or even conventional requirement for broad agreement at the point constitutional change is enacted. Rather, such a safeguard is to be found in the need for long-term consensus for that change to take hold in the constitutional culture. Absent such consensus, the Proposed Bill risks becoming an empty statement of good intentions, or indeed being repealed through the same simple-majority procedure through which it can be enacted. But such consensus can develop over time.
13. This is what happened with the Bill of Rights. However, it is worth noting that the Proposed Bill changes New Zealand’s constitution less than the Bill of Rights, which constrained the decision-making powers of the executive and the courts. The Proposed Bill would not do that: if it succeeds, it will succeed through persuasion, rather than constraint.

Principles

14. In general, the principles suggested for the Proposed Bill are praiseworthy, and their enactment in primary legislation is desirable for reasons both practical and philosophical.
15. At the practical level, the enactment of the Principles in the Proposed Bill in primary legislation means that future attempts to water them down or indeed repeal them would also require primary legislation to effect. This means that it cannot happen without opportunities for public debate about whether such a change is desirable.
16. At a more philosophical level, setting out these principles in law would serve as a reminder that regulation, no matter how attractive the objectives it is meant to pursue, can come at a price. Sometimes this is a financial price, which can (in theory) be quantified and compared with the benefits the regulation at issue is expected to produce.
17. But, often, the price of regulation is paid in restrictions on liberty and the limitation of private initiative. Such a price is no less deserving of notice because it cannot be expressed in dollar figures. The ability to pursue one’s own projects, to dispose of one’s own ideas, time, and property as one thinks best is key not only to creating individual and collective wealth, but also, and more importantly, to the ability of individuals and groups to give their lives purpose and meaning. They matter to ordinary men and women as well as to corporations; to non-profits and charities as well as to the largest businesses.  
18. One may well believe that these values are not absolute and can limited in the interests of the community or of its most vulnerable members, but nonetheless accept that such restrictions should not imposed unless they are truly worth it. Yet their cost cannot be quantified, and it is only by setting out the principles that protect these values and asking how a regulatory proposal comports with these values that it can be assessed at all.
19. With this in mind, I highlight some of the most important principles whose inclusion in the Proposed Bill I support:
    • The principle of the rule of law, understood not only as encompassing the courts’ constitutional right and duty to interpret legislation and ensure that administrative decision-makers comply with the law, but, more fundamentally, the limitation of administrative discretion. The ability of individuals and organisations (whether businesses or non-profits) to plan their affairs, which is central to their autonomy and self-fulfilment, is undermined when they are subject to administrative discretion and direction exercised ad hoc.
    • The principle that individual liberty, including the individual’s ability to use or dispose of his or her property, should not be limited except to protect the equal liberty of others. Consistently following this principle is the only way to ensure that government is impartial as between the citizens for the benefit of all of whom, not just some, it ought to exercise its powers.
    • The principle that fees and levies imposed by the government should “bear a proper relation” to both the cost of the good or service being paid for and the benefits the persons who pay the fee will derive from that good or service. It is not always possible or desirable to make the user pay for a public service: witness the collapse of employment tribunal adjudication in the United Kingdom when the government attempted to charge litigants high fees in order to bring claims that were, typically, of a low value.[1]
20. The recognition of the importance of property rights, in particular, deserves some additional discussion. Property rights are not protected by the Bill of Rights. Internationally, some rights-protecting laws and treaties omit them too, such as the Canadian Charter of Rights and Freedoms. This may lead to a perception that property rights are not human rights, or are lesser rights than those protected by the Bill of Rights.
21. This is a mistake. For one thing, some constitutions and treaties protect property rights to different degrees, including, for example, the Universal Declaration of Human Rights and the First Additional Protocol to the European Convention on Human Rights. As for those rights-protecting instrument that omit property rights, they often do so out of a concern with the propriety of having courts question legislatures’ economic and tax policies. But such concerns are inapposite with respect to the Proposed Bill, which does not involve judicial enforcement of any rights.
22. It is important to recall s 28 of the Bill of Rights, which serves as a reminder that rights already “existing” in New Zealand’s law are not “abrogated or restricted” due to their omission from the Bill of Rights. There can be no question that property rights, as a general category, were firmly established in the law of New Zealand. Among myriad other considerations, Article the Second of the Treaty of Waitangi makes no sense without their existence.
23. Even more importantly, however, the exercise of many, perhaps most, of the rights protected by the Bill of Rights presupposes the existence and continued protection by the law of property rights. Consider some examples:
    • Freedom of religion would be severely impeded if religious communities were unable to exercise property rights over their places of worship;
    • Freedom of association would similarly be impeded if groups were unable to own or rent meeting places;
    • Freedom of expression requires not only the legal freedom from punishment for expressing one’s views, but also the ability to own the means (physical or virtual) to convey one’s views to others;
    • Freedom of movement would be near-meaningless without the ability to own or contract with the owners of means of transportation.
24. None of this means the state either has a responsibility to provide the property needed to exercise such rights to citizens, or even that the ownership of such property cannot be regulated. It is to prevent judicial interference with regulation that laws such as the Bill of Rights sometimes fail to recognise property rights explicitly. But, regardless, property rights are fundamentally important for a free society.
25. While I thus support most of the Principles outlined in the discussion document, some would benefit from further clarification. In particular:
    • The principle that, in addition to liberty, “personal security” is not to be unduly limited is vague. This is concerning because appeals to a sense psychological security could be invoked to justify restrictions on individual rights, especially the freedom of expression, and more broadly to demand intrusive regulation.
    • The requirement of a “good justification” for the taking of property should be clarified to ensure that only a public use for the property to be taken is acceptable.
26. I would also suggest an additional principle of good law-making to be added to the Proposed Bill, to limit the delegation of rule-making power to ministers and other administrative entities. This would completement the principle already set out according to which “issues of legal right and liability should be resolved by the application of law, rather than the exercise of administrative discretion”. The same logic can and should be applied to the formulation of rules, and not only to their application in individual cases. The suggested additional principle would insist that rules of general application should, to the extent possible, be laid down in Acts of Parliament rather than through secondary legislation.
27. To be sure, the existence of secondary legislation is not necessarily inimical to the objective of quality regulation. For example, secondary legislation can be an efficient means for the executive to engage in, essentially, fact-finding to ascertain which instances among a broad category meet criteria laid down by Parliament.
28. However, the delegation of general policy-making authority to the executive undermines democracy by reducing the opportunities available for policy choices to be scrutinised during the legislative process. It also undermines the rule of law, in that it effectively enables the executive to be a law unto itself instead of being subject to Parliament’s will. While the conformity of secondary legislation to the enabling statutory provisions that authorise its making is subject to judicial review, the more broadly worded these provisions are, the less effective judicial review can be as a check on the executive’s potential abuse of power.
29. In New Zealand, these issues were perhaps most eloquently illustrated by the Economic Stabilisation Act 1948. Although its name might suggest an emergency measure, the Act remained in force for almost 40 years, during which it authorised the government to make regulations “for the general purpose of this Act and for giving full effect to the provisions of this Act and for the due administration of this Act”, including “for the stabilisation, control, and adjustment of prices of goods and services, rents, other costs, and rates of wages, salaries, and other incomes”.[2] Among other things, this power was used to impose wage and price controls and to prevent citizens from using their cars on certain days. For the most part, judicial review proved no obstacle to these regulatory schemes, due to the breadth of the Economic Stabilisation Act’s wording.
30. That said, no matter how well-intentioned, legislation setting out these principles will only be as effective as the implementation mechanisms it provides. Important as the Principles themselves are, it is the implementation mechanisms that will determine whether the proposed Bill is a success.
31. As with the rights protected by the Bill of Rights, judicial enforcement would ensure that the principles set out in the Proposed Bill cannot be evaded. However, the Proposed Bill takes a different approach, relying on political rather than legal constraints.
32. Admittedly, this has its advantages too: notably, the Principles are sometimes too vague for judicial enforcement, but workable and desirable as political considerations. The principle that “the law should be clear” is an example. The proposed principle against delegation of legislative power may be another one, as the difficulty encountered by courts in the United States, which have sometimes tried to enforce such a principle, illustrate.
33. Yet the absence of a judicial enforcement backstop makes it all the more important to design the Proposed Bill’s compliance mechanisms to be as effective as possible. As outlined in the discussion document, these mechanisms fall short of what should be possible.

Consistency Assessment and Certification

34. This section addresses the first of the Proposed Bill’s main mechanisms for ensuring compliance with the Principles: the assessment and certification of new and existing legislation.
35. This arrangement is reminiscent of the assessment of proposed primary legislation for compliance with the Bill of Rights by the Attorney-General, pursuant to s 7 of the Bill of Rights, as well as of similar provisions in Canada and the United Kingdom. Section 7 of the Bill of Rights requires the Attorney-General to notify the House of Representatives when a bill is inconsistent with the rights protected by the Bill of Rights. This does not prevent the enactment of the bill, but may trigger Parliamentary debate and, sometimes, amendment of the bill to remove or ameliorate the inconsistency.
36. The operation of s 7 of the Bill of Rights, its relative success, and its limitations are instructive for an assessment of the Proposed Bill. In one sense, the s 7 requirement has been fairly effective: there have been ca. 100 Attorney-General’s reports. Seen another way, admittedly, the success is rather mitigated by the fact that government bills in relation to which the Attorney-General makes a s 7 report are usually enacted regardless.
37. Nevertheless, the New Zealand situation compares favourably to Canada and the United Kingdom, where similar provisions[3] have effectively remained a dead letter. In Canada, no report equivalent to a s 7 one has ever been made,[4] while in the United Kingdom only one statute was ever accompanied by statement that it did not comply with human rights requirements.
38. Arguably, this was not, in either case, for want of legislative proposals whose compliance with rights standards should have been called into question. Rather, important differences exist between the New Zealand procedures and those in Canada and the United Kingdom, which hold a lesson that ought to be taken into account in framing the Proposed Bill.
39. The first of these concerns the office whose responsibility it is to verify compliance with rights standards. In New Zealand, the Attorney-General’s discharge of his or her responsibilities, including under s 7 of the Bill of Rights, is subject to a convention of non-partisanship.[5] This means that the Attorney-General can be expected to issue a report regardless of any potential embarrassment it may cause to the government generally or to his or her party specifically.
40. In both Canada and the United Kingdom, by contrast, the equivalents of the s 7 duty are placed on partisan actors. In Canada, it is the Attorney-General, who, in that country, is also the Minister of Justice and is as partisan as any other minister. In the United Kingdom, the duty falls on each minister who introduces legislation.
41. Second, and relatedly, in New Zealand, the practice of successive Attorneys-General has been to issue s 7 reports if, in their view, it is more likely than not that the bill they examine is inconsistent with the Bill of Rights. In Canada, the practice has been to ask whether a credible argument for consistency with rights can be made, not whether it would be likely to succeed. This is a much lower standard: the Attorney General may believe that proposed legislation does comply with constitutional rights, yet fail to alert Parliament to this problem because it can credibly be defended.
42. As things stand, there is a real danger that the Proposed Bill’s assessment and certification mechanism will be ineffective in the same way as the Canadian and UK equivalents of s 7 of the Bill of Rights. Like the UK provision, it relies on each minister to assess the compliance of the legislation he or she promotes or exercises stewardship over with the Principles. And nothing prevents these ministers from adopting something akin to the Canadian approach to the test they apply before identifying and alerting Parliament to an inconsistency with the Principles, only doing so if no credible argument for consistency could be made. These problems should be averted by changes to the Proposed Bill.
43. One option may be to adopt the approach already used in the Bill of Rights, relying on the Attorney-General’s independent judgment. However, given the nature of many of the Principles, it is, in my view, not advisable to do so. While the Attorney-General’s views on the rule of law-related principles would often be instructive, he or she would not necessarily be best placed to apply principles with a heavier policy component. Indeed, doing so may undermine the reality or at least the perception of independence that is necessary for the discharge of the Attorney-General’s other responsibilities, including in relation to the Bill of Rights.    
44. A better alternative would be to make consistency assessment and certification the responsibility of the Minister for Regulation. While not independent of partisan concerns like the Attorney-General, the Minister for Regulation may, it is to be hoped, bring a somewhat detached perspective to bear on legislative schemes championed or administered by colleagues, contributing to a more objective assessment of their consistency with the Principles. That said, the Proposed Bill should make provision for consultation with the Attorney-General on issues related to the rule of law.
45. In addition, instead the rules for assessing the consistency of regulation with the Principles being mere ministerial guidelines, they should, to the extent possible, be codified in the Proposed Bill itself. In particular, the Proposed Bill should explicitly require the Minister for Regulation (or the minister responsible for a given legislative scheme, if the above suggestion is not adopted) to apply a more-likely-than-not standard for alerting Parliament to inconsistencies with the Principles. If the Minister is of the view that, on balance, an inconsistency exists, Parliament is to be made aware of this fact, on which it remains entirely free to act or not.

Regulatory Standards Board

46. The proposed Bill’s second mechanism for ensuring compliance with the Principles is the Regulatory Standards Board (“the Board”). In addition to being empowered to undertake investigations, similar to ombudsmen, it will serve as a non-judicial but adversarial forum where complaints about non-respect of the Principles can be brought and decided upon. Ministers will be required to respond to findings of inconsistency.
47. The availability of an adversarial process through which complaints about the inconsistency of existing regulations with the Principles can be assessed properly reflects the fact the enactment or continued existence of regulations contrary to the Principles is not only a matter of maladministration or ineffective governance. It is, as the Proposed Bill rightly recognises, an imposition on individuals and, often, a violation of their rights (whether or not these rights are recorded in the Bill of Rights or elsewhere).
48. For this reason, it is quite right that individuals be able to challenge regulations in violation of the Principles through a process that recognises their right to be heard and to confront the government for its failure to respect their autonomy. Admittedly, in my view, a more robust approach to adjudicating complaints would have been preferrable, involving the courts along the lines of earlier proposals. However, the Board may prove a meaningful alternative by providing an accessible forum where people affected by regulation can be heard and obtain, not a binding remedy to be sure, but a response directed to their particular complaint, and not only systemic issues.
49. Whether the Board in fact serves this intended purpose will depend to a great extent on the qualifications and disposition of its members, as well as their independence from the executive of the day. While it is difficult to provide for such matters by statute, several suggestions may be made:
    • Short terms of office that result in the Board’s membership board being subject to full renewal during a single Parliamentary term (e.g. a maximum of three years similar to the members of the Waitangi Tribunal) would make the Board’s composition entirely contingent on the wishes of the government of the day. A term of five to seven years would be preferable.
    • For similar reasons, while no specific recommendation is made regarding the number of members the Board ought to have, its membership should be fixed within a narrow band (e.g. seven to nine members) and capped. An incoming government should not be able to swamp the Board with new appointments.
    • Both because of the Board’s adversarial nature and because many of the Principles concern compliance with the rule of law, a requirement that at least a third of the Board’s members should be legally qualified should be specified in the Proposed Bill. Similarly to the sittings of the Waitangi tribunal, a legally qualified member of the Board should be required to preside when complaints brought by members of the public are heard.

Summary of Recommended Changes

50. It is suggested that the following changes be made to the proposal outlined in the discussion document before the Proposed Bill is introduced:
    • The principle that “Legislation should not unduly diminish a personʼs … personal security” should be removed;
    • The principles relating to the taking of property should be reframed so that only takings for public use could considered justified (provided other conditions are met);
    • An additional principle of good law-making should be added so that rules of general application should, to the extent possible, be laid down in Acts of Parliament rather than through secondary legislation;
    • The Minister for Regulation should be tasked with assessing the compliance of legislation with the Proposed Bill’s principles, rather than the ministers responsible for any given legislative scheme. The Minister for Regulation should be given the opportunity to seek the Attorney-General’s views regarding compliance with those principles that directly concern the rule of law;
    • The Minister for Regulation (or the minister responsible for a given legislative scheme, if the [previous] suggestion is not adopted) should be required to apply a more-likely-than-not standard for alerting Parliament to inconsistencies with the Principles;
    • The Regulatory Standards Board should have a fixed or narrowly constrained number of members serving terms that exceed the duration of a single Parliament;
    • There should be a requirement that at least a third of the Regulatory Standards Board’s members be legally qualified, and that legally qualified members are to preside over hearings of complaints.

[1] See R (Unison) v Lord Chancellor [2017] UKSC 51, [2020] AC 869.

[2] Economic Stabilisation Act 1948, ss 11 and 4(2).

[3] Canadian Bill of Rights, SC 1960, c 44, s 3(1); Department of Justice Act, RSC 1985, c J-2, s 4.1(1); Human Rights Act 1998, s 19.

[4] Schmidt v Canada (Attorney General), 2016 FC 269, [2016] 3 FCR 477 at [260].

[5] Cabinet Manual 2023, s 4.4.