Revolutionizing NZ Regulation: Mapping for Smarter Reform and Economic Growth

Good morning, thank you for coming along.

We’ve got you here to show you something that has never been done before by a New Zealand Government.

What we’re going to show you goes to the heart of one of the things that has been identified as holding New Zealand back economically.

I’m sure many of you will have noted the excellent speech in March by the Reserve Bank’s Chief Economist Paul Conway.

I’m pleased Paul has been able to join us here today.

That speech should be compulsory reading for an informed fourth estate and those who offer commentary on the state of our economy.

Titled Purchasing power and the real cost of living in New Zealand, it told a rather bleak story, the short version of which is that our cost-of-living crisis is partly about being expensive, but mainly about poor wage growth due to poor productivity growth.

A key element of this sorry scenario is our regulatory environment.

In it Paul said: Cross-country evidence points to scope to improve New Zealand’s structural policy settings. The OECD’s indicators of Product Market Regulation show that New Zealand was a global leader in pro-competition regulation in the early 2000s. Since then, regulatory reform has been much weaker than most other countries, and our regulatory settings are now rated below the OECD average. This pattern suggests a ‘one and done’ approach to regulation here, in contrast to continuous regulatory upgrading elsewhere.

This insight was timely, because it’s the area the Ministry for Regulation has begun some important work we’ve gathered you here to see.

They’ve undertaken a special project to map New Zealand’s regulatory environment.

Before we reveal the scope of their work, I think it’s important not to throw around phrases like the regulatory environment without making it clear what interaction with regulators means for everyday people who want to do some of the simplest everyday things.

If you want to dig a drain, fly a drone, own a dog, or build an apartment block, the cycle is pretty much the same.

You need to identify your regulator, gather a whole lot of information, apply, usually involving some sort of non-refundable fee, have your application reviewed, wait – remembering that time is money – interact with the regulator in any number of ways – inspections, testing, requests for further information –  then you will hopefully get a decision in your favour, after which there could be ongoing compliance and maintenance elements as part of your right to continue doing what you applied for in the first place.

There are myriad examples of this across numerous sectors, such as building and health.

That being the case, it’s important that we establish from first principles whether a clear market failure or significant enough risk to the public interest exists for the regulator, or their form of regulation, to exist in the first place.

As Mr Conway made clear, we haven’t been doing that effectively in New Zealand for over two decades.

There has essentially been no meaningful regulatory reform.

In fact, rather than review, refine or remove regulations, or even regulators altogether, because they don’t meet rational cost benefit analysis, we just keep adding more regulations and regulators, on the basis that if any risk exists it’s safest just to add a layer of regulation.

I can say this stuff till I’m blue in the face, but sometimes it’s actually more helpful to quantify the state of things if you can see it, which is what the team at the Ministry for Regulation has done.

For the first time they’ve mapped New Zealand’s regulatory system.

What you’re looking at here isn’t the map of a distant galaxy with a giant planet at its centre, it’s New Zealand, with Parliament at its centre and concentric rings of regulatory bodies spreading out through our society, touching every element of our daily lives.

Closest to Parliament are 95 Government departments and Crown entities.

Next are 79 local government entities, including territorial authorities and regional councils.

Outside of them are 57 statutory bodies, committees and tribunals.

Then, at the periphery of this constellation of red tape, are another 28 incorporated societies, Crown-owned companies and even charities that we’ve decided should have regulatory oversight of how New Zealanders go about their lives.

What’s more, within most of these regulators exists a cluster of regulatory systems.

Some regulatory systems, like resource consenting, are spread over dozens of regulators.

Now, you might say all this is warranted. Rules are important. Reducing regulations or regulators would lead to chaos.

And you’d be right – I’m not advocating some sort of laissez faire wild west.

Putting to one side the fact that we haven’t actually been critically reviewing this regulatory environment for about 25 years, this sort of exercise gives you a sense of why New Zealanders get frustrated by a lack of change and accountability in things that mean a lot to them.

One salient example which has been in the news a lot recently – and it comes up every few years – is stray dogs attacking members of the public, and how to ensure this doesn’t happen.

Immediately people call for harsher penalties for those responsible for these animals.

But who polices the issue, and ensures the public safety we all seek?

My colleague the Minister for Local Government has ordered a review of the Dog Control Act 1996 after a number of recent dog attacks.

This won’t be a simple exercise, given the tangle of regulatory ivy that’s grown across the dog control system over the years.

As you can see here, the dog control system actually has five regulators – the Department of Internal Affairs, the Ministry for Primary Industries, the Ministry of Health, the Department of Conservation, and the Ministry of Justice.

What’s more, those five regulatory agencies govern dog registration and control with 11 Acts of Parliament, so not just the Dog Control Act.

Day-to-day, the task of carrying out dog control, split between central and local government, is delegated to at least a dozen different groups of people, depending on where you are and what dogs are doing, from various types of rangers, authorised officers, the Police, the SPCA, DOC staff and public health.

Now, replicate that system 259 times, with the roles and powers of those closer to the centre of the concentric circle being even broader and more complex, and you start to get a sense of the opportunity cost of compliance in New Zealand, let alone the reason why no one has yet gotten to the nub of effectively stopping dangerous dogs from attacking people.

The moment you start talking about reform everyone responsible starts pointing at someone else in the regulatory food chain.

Next I’ll show you a bigger example.

Without wanting to cast doubt on what I believe should end up being a useful piece of government reform, let’s look at the anatomy of what is going to need to be taken into account when the new Ministry for Cities, Environment, Regions and Transport – otherwise known as MCERT – comes into being.

Merging the Ministry for the Environment, the Ministry of Housing and Urban Development, the Ministry of Transport, and the local government functions in the Department of Internal Affairs will see one entity responsible for 134 principal Acts of Parliament and a further 389 pieces of secondary legislation.

Over 300 people in the new MCERT will be responsible for carrying out its regulatory functions – regulations that took in over $320 million in revenue from fees and charges in the 2024/25 year across the four agencies that are coming together.

In there somewhere is the Dog Control Act, which comes from the DIA local government functions that are going into MCERT.

I’ve already made clear that there are actually five Ministries with responsibility for dog control – but four of them aren’t in MCERT.

As a result of all this detail, extrapolated across the Government with a capital G and its 259 regulators, it would be easy to get overawed and not know where to start with the sort of regulatory reform Paul Conway made clear we so desperately need if we’re going to improve New Zealand’s productivity and standard of living.

However, the sheer detail that this work reveals is actually its great benefit.

This is where the Ministry for Regulation’s evolving data mapping work can help us do government better.

Finally – in part through the use of AI – we can start identifying areas of overlap and duplication in New Zealand’s regulatory landscape.

We can also undertake some back to basics cost benefit analysis on regulations and regulatory bodies that may not have been subject to review for some time.

I’m particularly pleased to have so many public service Chief Executives and other public service leaders in the room, because over time I’m confident this evolving regulatory mapping work will help inform the regulatory stewardship you have a duty to carry out.

As you’ll be aware, the Regulatory Standards Act requires all agencies to produce a plan to review the stock of legislation for which it is responsible.

Therefore, I encourage public sector leaders to work with the Ministry for Regulation to identify regulatory overlap, and work with overlapping agencies to begin the process of reforming and consolidating it.

I think a fair and logical goal should be that any New Zealander wanting to undertake an activity should only ever have to knock on one regulator’s door.

This needs to be a process of ongoing reform if New Zealand is to become competitive again, and the Ministry for Regulation is primed to help make that happen.

I’m confident this will be able to help the work being undertaken by the Public Service Commission to reduce the size and complexity of government.

Its goals are simplification and greater technology adoption by the public service.

To say more about the approach the Ministry for Regulation will be taking to its regulatory mapping project, and how they can help Ministers and the public service begin meaningful regulatory reform, I’ll hand over now to the Ministry for Regulation’s Grainne Moss.

Grainne will reveal some more of this fascinating work programme; she’ll explain a bit more the Ministry’s role as the public service’s regulatory steward, and how they can work across the public service to identify potential fixes to help reduce regulatory drag.