Regulatory Standards Bill

The Regulatory Standards Bill is a reprehensible attack on ordinary Kiwi citizens, setting out to entrench property rights - disproportionately to the benefit of the wealthy who own lots of property - at the expense of all other rights such as human rights, consumer rights, and the right to quiet enjoyment of a residence. That it has got this far shows up a fundamental flaw in our MMP system, incentivizing mainstream parties to give excessive influence to fringe parties in the hope of maintaining power.

Traditionally the sometimes competing imperatives of these various rights are resolved by elected politicians. Under the new Act, property rights would automatically take precedence over all other considerations.

Among its many perverse effects it would make it extremely difficult to restructure our broken markets - groceries, banking and electricity - as was done in telecommunications.

My brief Submission, lodged a few days ago, follows:

-------------------------------------------------------------------------------------------------------------------------------------------------------------

SUBMISSION ON DRAFT REGULATORY STANDARDS BILL

Submitted by:                    Ernie Newman

Date:

Thank you for the opportunity to make this Submission.

The so-called “Regulatory Standards Bill” is a legislative wolf in sheep’s clothing. Its innocuous title implies a higher test to be applied to parliament’s day-to-day lawmaking. But the reality is an attack on society’s whole value system, elevating the rights of property owners above the human rights of the rest of society. It appears to start from a presumption that property rights should take priority over all else, including more general human rights. To avoid public complacency it should be given a more descriptive title – perhaps the “Monopoly Perpetuation Bill” (see below) or the “Rich Get Richer Bill.”

Of specific concern is Section 8c of the Draft. This prescribes that regulations must not interfere with any person’s property rights unless there is “good justification” and “fair compensation…provided by the persons…..who obtain the benefit.”

This invokes a massive rebalancing of property rights against other rights, including basic human rights, consumer rights and economic rights, opening the community to a vast range of unintended (or possibly intended) consequences.  Instead of future legislators being empowered to balance the competing claims of these various rights, they would be compelled to put property rights above all else.

Example 1 – Residential property

Homeowners could find that the property next door has been converted into high rise apartments, or a petrol station, or a vape shop, and that the only way they can stop this is to pay the property owner “fair compensation” for the loss of value arising from not being permitted to make that change. That’s because it places the property right of one householder to maximise the value of their property, above the human right of other householders to have quiet enjoyment of their own places of residence.

Likewise, homeowners could face a proliferation of helicopter pads, or similar enhancements which have a detrimental impact on the lives of many for the convenience of a few, without any legal redress except possibly the opportunity to stop the development if they pay the property owner “fair compensation” for whatever added value the helicopter pad would have delivered.

Example 2 – Monopolies and Market Failure

A key imperative for the current government is to respond to failed markets in our grocery, banking and electricity sectors. Any such move by this or a future government is likely to reduce the profitability, and therefore the value, of the incumbent providers in these sectors – our two supermarket chains, our four Australian banks, and our big electricity suppliers.

Again, Section 8c would elevate the property rights of these business owners above the rights of the wider community to benefit from fair and competitive market forces.          It would require that any action by the government to break down the barriers to competition, or to support a new entrant, must be accompanied by the payment of compensation for the lost earnings of the incumbent in the failed market.

That notion is dramatically opposed to the general global economic convention that profits attributed to monopoly power or market failure have no legitimacy and cannot be the subject of legal compensation if they are withdrawn.

A highly relevant illustration is the Telecom breakup of the 2000s. Telecom had a stranglehold over our telecommunications and Internet markets, arising from its history as a government agency. Successive governments – both Labour and National - acted to break the monopoly and successfully opened the market. In consequence Telecom’s share price dropped over time from around $5 to less than $2. Had the proposed Regulatory Standards Bill been in place at that time government simply could not have acted against Telecom because of the need to pay vast compensation, so Kiwis would still be paying twice the prevailing world price for our phones and Internet.

Likewise any hope of dealing with the failed markets that have trashed our cost of living – groceries, banking and electricity - would be gone if this highly objectionable Bill were passed. It should be withdrawn, or completely rewritten.

Duplication of Resources

At a time of much emphasis on containing public services such as health and education, this Bill would add and perpetuate an additional layer of administration – a Minister of Regulation, a Regulatory Standards Board, and associated Ministry. That is gross waste. If there is a perceived problem with the quality of legislation this should be resolved by better training and guidance of the core public service, not by adding a layer of bureaucracy over the top whose role seems more akin to that of a senate or upper house than a conventional Ministry.

In summary 

This is a fundamentally flawed piece of regulation that has no place in our statutes. It should be withdrawn for a complete rewrite, or abandoned.

Ernie Newman

About the author

Ernie Newman is a semiretired consultant with a long background as a business advocate. His 60-year career has included  deep involvement in the breakup of the Telecom monopoly in the 2000s, and working at a policy level in the grocery sector.