Brian Fallow: Legislative clarity bill clear as mud

Rodney Hide's office says the Government is considering its response to the taskforce's report. Photo / Mark Mitchell

Beware. There is a risk that radical legislation, gravid with constitutional danger, will be smuggled into the statute book disguised as a measure to relieve business of vexatious red tape.

Its innocuous-sounding title is the Regulatory Responsibility Bill and in its most recent iteration was drafted by a taskforce headed by Graham Scott, who was Treasury Secretary at the time of the sweeping economic reforms of the 1980s. It would redefine the relationship between Parliament and the courts in a way neither is likely to welcome. And it would tend to entrench the current distribution of wealth by setting a high hurdle for any legislated redistribution of resources.

Rodney Hide's office says the Government is considering its response to the taskforce's report. "It is anticipated that the issues will be considered by Cabinet in April."

One might hope, rather against hope, that the Cabinet's consideration of the issues will be illuminated by the views a string of lawyers and economists presented to a symposium on the bill held by the the Institute of Policy Studies on Tuesday. Almost without exception they were critical of the draft bill.

Its proponents would argue that it is only intended to introduce timely reflection and transparency into the lawmaking process, and means no offence to the supremacy of Parliament. They promote it as the missing third leg of a stool that includes the Reserve Bank Act and the Fiscal Responsibility Act.

But whereas they were enacted to govern monetary and fiscal policy respectively, the Regulatory Responsibility Bill is much wider in scope. It seeks to discipline lawmaking generally, particularly as it affects anything that might be regarded as property rights.

The examples the taskforce cites of measures which would have benefited from more extensive public scrutiny in light of its suggested principles are the foreshore and seabed legislation, local-loop unbundling and intervention in the Canadian takeover bid for Auckland airport.

One of the draft bill's central principles is that legislation "should not take or impair ... . property without the consent of the owner, unless the taking or impairment is in the public interest and full compensation ... is provided to the owner."

That sounds fair enough. But how do you define "property" or "taking" or "public interest"? How would "full compensation" differ from the "just compensation" enshrined in the US Bill of Rights? How would you calculate it? Are the taxes we pay to support the welfare state, for example, uncompensated expropriation?

As the draft bill stands it would be for the courts to decide such questions if called upon to issue a declaration that some act of Parliament or regulation is incompatible with the principles expressed in the bill. If the court did find incompatibility and that the incompatibility is not "justified to the extent that it is reasonable and can be demonstrably justified in a free and democratic society" - whatever that might mean - it would still be up to Parliament to repeal or amend them. But the assumption is the court's view would have moral and political force.

"It raises the possibility of having a second go at the politics and disputed policy," said Richard Ekins of Auckland University's law school.

It is intended to reduce the risk of unintended consequences, but could have plenty of its own.

"If you want to ban weapons, you will have to buy them. If you want bars to close earlier, or brothels to close altogether, you would have to compensate the owners," Ekins said.

Sir Geoffrey Palmer, constitutional scholar and former Prime Minister, said he had heard enough ministers fulminating about it to know they did not like judicial review of administrative actions.

"I wonder if ministers will welcome these proposals, which cut across their responsibilities and inhibit their freedom of action. Ministers are often responding to public calls for action. But the implied message [of the draft bill] is that ministers often make bad choices and must be prevented from making them."

Three-year parliamentary terms were the greatest enemy of good legislation, Sir Geoffrey said.

That is also the view of George Tanner QC, a member of the Law Commission who for 11 years as chief parliamentary counsel was the country's senior legal draughtsman.

Many of the 1900 or so statutes and thousands of regulations are pretty low-grade, he admits. But this bill is not the answer. Indeed it does not measure up to its own principles of good lawmaking, he said. It calls for clarity but in key respects it is itself far from clear. It breaches its own injunction against retrospectivity. The requirements it lays down apply not only to new legislation and regulation but also - after a 10-year grace period to clean them up - to all the existing ones as well.

Nor is it, to invoke another of the draft bill's own tests, a "proportionate" response to the issues it seeks to address, in Tanner's view.

Another of the bill's principles is that the legislation produces benefits that outweigh its costs.

But a lot of the things that count can't be counted. The taskforce assures us that it does not think that formal cost-benefit analysis is always possible, but if this provision means no more than that you should not legislate or regulate unless you think it will do more good than harm, it is hard to imagine any measure that would fall at that hurdle. The benefits and costs of the Regulatory Responsibility Bill itself, are not, the taskforce concedes, easily quantifiable.

"The taskforce is convinced, however, that the potential benefit to the New Zealand economy of a step-change in the quality of legislation significantly outweighs the additional compliance costs placed on the Government by the bill."

Economist Brian Easton doubts that the draft bill's regime would have prevented the most costly regulatory failure of recent times, leaky homes, estimated to cost between $11 billion and $23 billion.

Seldom, if ever, he suggests, do officials and lawmakers confront the possibility the policy they have in mind will completely fail to do what it was intended to do. He calls it the Murphy Gap after the original version of Murphy's law, which is not that whatever can go wrong will, but that you should allow for that possibility.

A central feature of the draft bill is to require ministers putting up legislation to certify that it complies with the principles in the bill. But how much comfort can we take from that? There is already a process of regulatory impact assessments.

Late last year the Treasury, for the first time anyone could remember, expressly withheld that rubber stamp from the bill amending the emissions trading scheme. It made not a blind bit of difference. That bill is now law.