Guiding NZ out of recession and building an economy for the future

 Hon Rodney Hide - Minister of Local Government; Minister for Regulatory Reform; Associate Minister of Commerce.
Speech to Simpson Grierson Insight Series
Lumley Centre, Shortland Street, Auckland

Tuesday 9 June 2009

Good morning and thank you for the invitation to join you today.
The world is experiencing the deepest recession since the 1930s, and as an open, trading country New Zealand is being significantly affected by global events.

The recession has also highlighted problems already evident in the New Zealand economy that have been limiting our future growth prospects.

Two key problems are excessive government spending and excessive, poor quality regulation. My particular concern as Minister of Regulatory Reform is excessive and poor quality regulation.

According to international surveys, the quality of New Zealand’s regulation has been getting worse, while the quantity of our regulation has been increasing.

My aim is to reverse that trend.

Improving the regulatory environment will deliver overall benefits to our economy and will help businesses recover from the recession.

At present New Zealand does not have a systematic approach to reviewing regulation, and there are weaknesses in how we assess new regulatory proposals. As Minister for Regulatory Reform, I am committed to ensuring that the government improves our regulatory performance.

We’re well underway already.

We are now reviewing 11 major regulations - including:

» the Building Act
» electricity institutional arrangements
» the Employment Relations Act
» the Foreshore and Seabed Act
» the Holidays Act
» the Overseas Investment Act
» the Resource Management Act
» the Telecommunications Act
» the Weathertight Homes Resolution Services Act
» the Climate Change Response Act, and
» the Dairy Restructuring (Raw Milk) Regulations.

Given the importance of these pieces of legislation, the Minister of Finance and I have an oversight of the reviews to ensure that they deliver the outcomes we are after.

As well as these reviews of major legislation, we have what I call the "low-hanging fruit" - the infuriating laws that people have been writing to me about in droves, such as pool fencing laws and shop trading hours regulation.

The fixes to these laws are usually quite straightforward - it is just a case of getting a commitment to make regular changes.

It is my intention to pass an annual Regulatory Reform Bill to tidy up these "low-hanging fruit".

While many of these types of changes may seem small compared to the major reviews, I think that together they will make a real difference. I want them to impose an important discipline on regulators and drive continual regulatory improvement.

I have also established a Regulatory Responsibility Task Force to recommend changes to the Regulatory Responsibility Bill that aimed to increase accountability and transparency around law making.

This bill can make a real difference in the same way that the Fiscal Responsibility Bill made a real difference to the transparency and accountability around fiscal decisions.

While this is a good start, my ambitions do not end here.

This is what I would like to see done over the next couple of years:

The Government needs to be clear about what we expect from the regulatory environment.
The quality of new regulation is important, and officials are working on a set of quality assurance measures that can be established within government. This includes a Government Policy Statement on regulation.
We also need to have a systematic approach to continually reviewing existing regulations, to make sure that they are still relevant and implemented in the most efficient way. Again, officials are working on proposals for us to consider.
Additionally, as part of the ACT-National confidence and supply agreement, we are working on the establishment of a 2025 Commission to investigate a number of important matters, including:
the reasons for the recent decline in New Zealand's productivity performance,
identifying superior institutions and policies in Australia and other more successful countries, and
making credible recommendations on the steps needed to fulfil National's and ACT's aspirations of closing the income gap with Australia by 2025.
We will also explore the concept of a New Zealand Productivity Commission associated with Australia’s Productivity Commission, in order to support the goals of higher productivity growth and improvements in the quality of regulation.
I met recently with Gary Banks, the chairman of the Australian Productivity Commission. He is very willing to assist in any way possible to develop links between our two countries.

I believe that New Zealand produces some of the best business people in the world, and I consider it my responsibility to help deliver a regulatory environment that encourages business rather than hinders it.

But you too have an important role to play in improving the regulatory environment.

I need to know what problems businesses face with regulations and regulators, and how we can make things easier for business to operate.

In the Regulatory Reform Bill, there will be an annual opportunity to make positive changes to regulation.

There will be no excuses for any of us if this opportunity is not taken.

In my role as Minister of Local Government, the reform of local government is one of my priorities.

Cabinet has authorised a review of the Local Government Act 2002 to improve the transparency, accountability and fiscal management of local government.
I am proposing that the Act be reviewed to ensure ratepayers and citizens have better tools for controlling council costs, rates and activities, and I will be looking at ways of ensuring local government operates within a defined fiscal envelope and focuses on core activities.

The reforms underway for the Auckland region aren’t just important for Auckland - it’s important for all New Zealanders because the whole country will benefit from a well-functioning Auckland.

Submissions are now being received by the select committee set up to consider the legislation that will enact the Auckland governance changes.

We are keen to hear Aucklanders’ views on the composition of the Auckland Council, and on the role of the 20 - 30 Local Boards. I invite you all to share your thinking with the Select Committee.

I am very pleased with the calibre of the board of the Auckland Transition Agency, headed by Mark Ford.

They have a huge challenge ahead of them, but also a very exciting one.

I too have a lot on at present, but I am very well supported by the outstanding officials I work with at the Department of Internal Affairs. The Department’s people impress me at every turn. It’s marvellous to have the support of the best brains and the hardest workers I could hope to find in either the public or private sectors.

As I travel around the country a lot of people are asking me if the new Auckland governance structure is going to be a model for the rest of New Zealand.

It could be. It depends on how well it goes in Auckland, and how well we go in implementing it.

If it works well, then other areas may want to build something for themselves on the basis of what we’re creating in Auckland.

I have worked hard at developing proposals for Auckland that could be replicated around the country.

What the Royal Commission originally proposed for Auckland was unique, and could only be applied to Auckland. I didn’t think that was a particularly good model.

In setting up the structure we have proposed, we have tried to break the parochialism that has dogged good governance in Auckland.

We’re in a time of real change that is going to deliver positive results for everyone.

I’m thoroughly enjoying my role in driving that change, and enjoying the wide engagement I’m having in the process.

But enough from me. I’d appreciate hearing your comments, and I’m happy to answer any questions you have.

Thank you.