Why the Ministry for Regulation will be treble the size of the Productivity Commission

Minister for Regulation David Seymour needs a ministry to be established before he can get cracking. Photo / Michael Cunningham

OPINION

The Public Purse is a fortnightly Herald column focused on the public sector and how taxpayer money is spent.

The coalition agreement between the Act and National parties fused the fate of the old Productivity Commission, shuttered February 29, with that of the new Ministry for Regulation, opened March 1.

The latter will be funded by disestablishing the former, and by “consolidating some regulatory quality work across the public sector where appropriate”, the agreement says.

But it’s now clear the new ministry, while relatively small, will have treble the staff of the old ProdCom, and it is likely to be considerably more well-funded.

The job of the ministry, which actually needs to deliver improved regulation, is clearly bigger than that of the commission, which needed only to provide independent advice to the Government. But the optics are uncomfortable for Act Party leader and new Minister for Regulation David Seymour, whose election message emphasised cutting Government spending.

Last week, it emerged the new ministry’s headcount is expected to sit around 60. Seymour put it this way to the Herald: “Given the current understanding of the scope of the ministry’s remit, the final establishment FTE number is expected to be well below 100.”

When it closed its doors, the ProdCom had 22 permanent staff. None were transferred across.

So far, the ministry is, at least officially, living on the ProdCom budget: $5.9 million annually, $1.9m in the current fiscal year. The money only became available once the commission closed.

But additional funds in the region of $3m annually are likely coming the ministry’s way, attached to the redeployment of staff from Treasury and the Ministry of Business, Innovation and Employment (MBIE).

A modest number will move across from MBIE’s “regulatory stewardship branch” - perhaps half a dozen, the Herald understands, though the decision is not yet final. The group has 25 fulltime equivalent staff (FTE) in total and oversees regulatory systems across MBIE and the wider public service.

James Soligo, MBIE’s acting general manager of regulatory stewardship, said he expects “a limited number of roles” to transfer to the new ministry.

In addition, Treasury’s Regulatory Strategy Team (11 FTEs) will also move across.

Seymour wouldn’t confirm a Budget bid for additional money, saying “any information on budget bids, including what is being considered during the budget process, remains budget-sensitive”. But one is likely.

So far, however, actual staff ranks are very thin, and take up just a few desks, temporarily, at the Public Service Commission.

A key hire was Grainne Moss, who was pushed out of her job as the boss of Oranga Tamariki in 2021. She led the Public Service’s pay equity work in the intervening years.

It’s now her job as the Ministry for Regulation’s establishment chief executive - her title is Acting Secretary for Regulation - to get the agency up and running by May 1 and, with direction from Seymour, to put together a work programme.

Grainne Moss resigned as chief executive of Oranga Tamariki in 2021. She's now been tasked with establishing the Ministry for Regulation. Photo / Stephen Parker

Moss will tackle a slew of administrative tasks – from leasing office space to establishing IT systems – but a permanent chief executive still needs to be found.

It is this person who will be key to delivering a product that matches Seymour’s ideas. Considerable gaps remain.

As yet, there is scant flesh on the bones of Seymour’s plan that sector reviews of “primary legislation as well as secondary and tertiary regulations” will lead to meaningful change, bundled into omnibus bills.

Act’s related policy document anticipates these reviews will take six months, including consultation with affected parties.

There are certainly narrow areas that can be reviewed in six months, but it is hard to imagine whole areas of business are among them.

Before the election, Seymour said his priority areas for review were the primary sector, the health workforce, early childhood education and financial services. Last week, he said priority areas have not yet been determined.

Neither is it clear what kind of review is anticipated. One option is the sort of work the ProdCom often produced: applied research that drew on the expertise of a range of specialists and resulted in reports that distilled recommendations.

Otherwise, narrow reviews could be undertaken, possibly relying on the ministry responsible for the relevant sector to articulate the purpose of its existing rules; recommendations could be distilled from there.

What’s clear is politics will require Seymour to find some quick wins, while longer-term sector reviews grind on.

It would be useful to have a permanent chief executive to help work through a plan. Ideally, it would be someone with considerable knowledge of related subjects, in regulation directly or in an area like administrative law or economics. But that job has not yet been “scoped”, as Government parlance has it, much less advertised.

One area where work did start early is in advancing the Regulatory Standards Bill. Treasury’s Regulatory Strategy Team ordinarily oversees and provides quality checks for the process whereby agencies produce “regulatory impact analysis” to advise their ministers of the likely effects of policy change.

Ironically, this regulatory review work was temporarily lightened by the new Government to help it crack though its initial 100-day plan. And, though not yet officially redeployed to the new ministry, the Treasury team has been working for Seymour on the draft bill since the coalition Government’s formation. He plans to introduce it later this year.

The bill’s contents won’t surprise anyone who’s been paying attention. Its antecedents have been knocking around for decades, and in 2021, Act introduced the bill to Parliament. It was immediately shot down by Labour’s commanding majority.

It sets out key principles – the rule of law, protection of basic individual freedoms, and property rights, for example – and requires ministers who sponsor new legislation to ensure their bills are compatible with them (it would also be applied to existing law over time).

The idea is the principles act as a guideline for good law-making. But they are not absolute. The bill, aiming for transparency and debate, requires only that where inconsistencies exist, the reasons are explained.

There’s plenty to quarrel with. Are we to require Act deputy leader Brooke van Velden to explain to Parliament why, as Minister of Workplace Relations and Safety, she has just hiked the minimum wage, in clear conflict with a person’s right to sell his or her own labour? It might make us better citizens, but surely there is an opportunity cost. And is there really a net benefit?

The knack, for the new ministry and ultimately for Seymour, will be to retain measured, justifiable regulation, while dispensing with the rest. Delivery will best answer the critics, including this one.

Kate MacNamara is a South Island-based journalist with a focus on policy, public spending and investigations. She spent a decade at the Canadian Broadcasting Corporation before moving to New Zealand. She joined the Herald in 2020.