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Code of Regulatory Practice

Generic
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Code of Good Regulatory Practice

[ Last Updated 28 August 2006 ]

Short Description
The Code of Good Regulatory Practice
discusses efficiency, effectiveness, transparency, clarity and equality in
regards to Regulation.

Author Quality of Regulation Team, Competition and Enterprise
Branch

Within this page …

Efficiency

Effectiveness

Transparency

Clarity

Equity

Efficiency

Adopt and maintain only regulations for which the costs on
society are justified by the benefits to society, and that achieve objectives at
lowest cost, taking into account alternative approaches to regulation.

Efficiency Guidelines

Consideration of alternatives to regulation: regulatory design
should include an identification and assessment of the most feasible
regulatory and non-regulatory alternative(s) to addressing the problem.

Minimum necessary regulation: when government intervention is
desirable, regulatory measures should be the minimum required, and least
distorting, in achieving desired outcomes.

Regulatory benefits outweigh costs: in general, proposals with
the greatest net benefit to society should be selected and implemented.

Reasonable compliance cost: the compliance burden imposed on
society by regulation should be reasonable and fair compared to the expected
regulatory benefit.

Minimal fiscal impact: regulators should develop regulatory
measures in a way that minimises the financial impact of administration and
enforcement.

Minimal adverse impact on competition: regulation should be
designed to have a minimal negative impact on competition.

International compatibility: where appropriate, regulatory
measures or standards should be compatible with relevant international or
internationally accepted standards or practices, in order to maximise the
benefits of trade.

Effectiveness

Regulation should be designed to achieve the desired policy
outcome.

Effectiveness Guidelines

Reasonable compliance rate: A regulation is neither efficient nor
effective if it is not complied with or cannot be effectively enforced.
Regulatory measures should contain compliance strategies which ensure the
greatest degree of compliance at the lowest possible cost to all parties.
Incentive effects should be made explicit in any regulatory proposal.

Compatibility with the general body of law, including the statute
which it amends, statutes which apply to it, and the general body of the law
of statutory interpretation.

Compliance with basic principles of our legal and constitutional
system, including the Treaty of Waitangi, and with New Zealand's international
obligations.

Flexibility of regulation and standards: regulatory measures
should be capable of revision to enable them to be adjusted and updated as
circumstances change.

Performance-based requirements that specify outcomes rather than
inputs should be used, unless prescriptive requirements are unavoidable. This
will help ensure predictability of regulatory outcomes and facilitate
innovation.

Review regulations systematically to ensure they continue to meet
their intended objectives efficiently and effectively.

Transparency

The regulation making process should be transparent to both
the decision-makers and those affected by regulation.

Transparency Guidelines

Problem adequately defined: identifying the nature and extent of
the problem is a key step in the process of evaluating the need for government
action. Properly done, problem definition will itself suggest potential
solutions and eliminate others clearly not suitable.

Clear identification of the objective of regulation: the policy
goal should be clearly specified against the problem and have a clear link to
government policy.

Cost benefit analysis: regulatory proposals should be subject to
a systematic review of the costs and benefit. Resources invested in cost
benefit estimation should increase as the potential impact of the regulation
increases.

Risk assessment: regulatory proposals should be subject to a risk
assessment which should be as detailed as is appropriate in the circumstances.

Public consultation should occur as widely as possible, given the
circumstances, in the policy development process. A well-designed and
implemented consultation programme can contribute to better quality
regulations, identification of the more effective alternatives, lower costs to
business and administration, ensure better compliance, and promote faster
regulatory responses to changing conditions.

Direct approaches to problem: In general, adopting a direct
approach aimed at the root cause of an identified problem will ensure that a
more effective and efficient outcome is achieved, compared to an indirect
response.

Clarity

Regulatory processes and requirements should be as
understandable and accessible as practicable.

Clarity Guidelines

make things as simple as possible, but not simpler, in achieving the
regulatory objective.

Plain language drafting: where possible, regulatory instruments
should be drafted in plain language to improve clarity and simplicity, reduce
uncertainty, and to enable those affected to better understand the
implications of regulatory measures.

Discretion should be kept to a minimum, but be consistent with
the need for the system to be fair. Good regulation should attempt to both
minimise and standardise the exercise of bureaucratic discretion, in order to
reduce discrepancies between government regulators, reduce uncertainty, and
lower compliance costs.

Educating the public as to their regulatory obligations is
fundamental in ensuring compliance.

Equity

Regulation should be fair and treat those affected
equitably.

Equity Guidelines

Obligations, standards, and sanctions should be designed in such
a way that they can be imposed impartially and consistently.

Regulation should be consistent with the principles of the New
Zealand Bill of Rights Act 1990, and the Human Rights Act 1993, and the
expectations of those affected by regulation, as to their legal rights, should
be meet.

People in like situations should be treated in a similar manner,
similarly, people in disparate positions may be treated differently.

Reliance should be able to placed on processes and procedures of the
regulatory system: a regulatory system is regarded as fair or equitable
when individuals agree on the rules of that system, and any outcome of the
system is considered just.

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Printed: 21/01/2009