Free Press

ACT’s regular bulletin

The Regulatory State

Free Press often points out how much of our money is wasted by Government, because the waste is there for all to see. What’s less obvious is all the time spent complying with stupid regulations and the opportunities lost because Government over regulates activities with little justification and little concern for the costs imposed.

An Obvious Example

The Regulatory Impact Statement on the Government’s oil and gas exploration ban shows the Government expects to lose $8 billion and private firms $2 billion (in today’s dollars).* It also says that ‘the transfer of production to other countries that have higher emissions footprints may result in an increase in global greenhouse gas emissions.’ In other words, the net result of our impoverishment may be greater environmental harm.

An ACT Achievement

What hasn’t been reported is where this story came from. Over the past decade ACT has nurtured the regulatory reform agenda with Rodney Hide being the first Minister for Regulatory Reform, followed in the portfolio by John Banks then David Seymour. The previous Government’s statement Less Regulation Better Regulation was an ACT initiative. The Regulatory Impact Statement that told us cancelling Oil and Gas exploration will cost $8 billion was designed by Under-Secretary Seymour. The little party that can.

Principled Regulation

What does good regulation look like? The blueprint is in ACT’s Regulatory Responsibility Bill. Good regulation should define the problem to be solved, consider all options including doing nothing, state the costs and benefits of the regulation and identify the winners and losers, and justify any impacts on common law principles and freedom to contract.

Earthquake Regulations

Building owners face multimillion-dollar bills to upgrade, in some cases exacerbated by Heritage protections that mean they can’t change the building let alone demolish it and start again. But what was the problem? People know buildings can fall down in earthquakes, they know what it costs to strengthen them. It’s a trade off with all of the other risks and costs people face, such as dying of cancer or a car crash. How does the Government know how much people should spend on Earthquake protection? Of course it does not.

A Better Solution

As ACT suggested at the time, the only problem to be solved is that people may not know how safe a building is. The real market failure is a lack of information. The solution was simple, public buildings should tell people the chance of dying from an earthquake in that building based on the building type and age and the likelihood of an earthquake in the region, so they can compare it with other risks they face. Of course most people would decide that cancer, car crashes, and criminals on the loose are much bigger threats to their safety.

Harmful Digital Communications

When the Harmful Digital Communications Act was passed, ACT was alone in opposing it, predicting it would lead to censorship. Three years later we were vindicated by Sir Ray Avery complaining under the act that Newsroom has harmfully digitally communicated with their inconvenient questions about his enterprises. Journalists will now have to prove in court that their journalism is not harmful to Sir Ray’s feelings.

Lolly Laws

It turns out that classic kiwi $2 mix of assorted lollies is illegal. Every type of lolly in the mix should be labelled with its ingredients. The authorities have confirmed that $2 mixes have been illegal since 2002, then said they won’t be enforcing the law. Why do we have such laws? The fact that people have been safely enjoying $2 mixes including from the parliamentary cafeteria for the last 16 years shows what a silly law this is.

A Santa Parade

The organizer of a small-town Santa parade tells Free Press that it takes two weeks to organize but four weeks to get permission. There are traffic plans, food stall permits, health and safety plans, and fees for all the permissions they need. We live in a regulatory state.

A Petrol Pump

A Four Square with two petrol pumps on the Northland coast reports that four different people make the trek out to inspect his petrol pump. We wish we were making this up. We hope the inspectors like fishing, because we’re starting to understand why stuff costs so much in New Zealand.

The Housing Market

We won’t go over the problems with the housing market, except to say that letting planners decide how much land we need to build homes is the single stupidest and most expensive regulation ever made. The costs of declining home ownership, diversion of capital into housing, transient students, wages going to mortgage debt, and so on, are literally impossible to estimate.

The Solution

We need a regulatory constitution. Parliament clearly can’t be trusted not to make stupid laws. The problem at its heart is constitutional, and we need to give citizens the right to challenge poorly made laws in court, as in most countries. All of the silly regulations mentioned in this edition of Free Press would be gone if the courts could strike down bad laws solving no real problem whose costs outweigh their benefits.

A Word from Our Founder

ACT co-founder Sir Roger Douglas is in the Herald with his usual clarity about New Zealanders’ challenges and choices. He is right as usual, the Welfare state is a ponzi scheme and we would all be much better off if we could keep our own money rather than hope for bribes in the next advance auction in stolen goods known as an election.

What a Contrast

Asked what he thought about climate change taxes and regulations, the National leader said he ‘wouldn’t go for that Rogernomics shock and awe.’ Where to start? Sir Roger was not introducing new regulations, he was deregulating the economy. Is New Zealand’s free market reform period now the National Party’s go-to example of bad policy making? Somewhere up there, Muldoon is smiling. Down here we’re screwed.

*The losses take place after 2027 when newly discovered fields might have come on stream, and the RIS discounts Government costs at 3 per cent and private sector costs at 10 per cent.

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