What does the bill seek to do?
The bill lays out a set of principles that should guide legislation. These can be summarized into three broad headings.
First, that new legislation should be consistent with existing laws. Second, legislation should be expected to produce benefits that exceed the costs; and finally, that “legislation should be the most effective, efficient, and proportionate response”.
Public resources (and tax revenue) are finite. Allocating resources to one use automatically implies not allocating them to another. This requires due consideration be given to the relative costs and benefits of legislation. Unfortunately, such cost benefit calculation is the exception rather than the rule.
The suitable compensation clause causing concern
It is hard to understand why this clause has caused significant consternation:
“legislation should not take or impair property without the owner’s consent unless certain requirements are met. The requirements include that there is a good justification for the taking or impairment and fair compensation is provided to the owner.”
This seems fairly standard. The 5th Amendment to the US Constitution ratified back in 1791 “requires the government to compensate citizens when it takes private property for public use.”
Nothing in this clause allows companies to sue for lost business as some have claimed. For instance, this does not allow tobacco companies to sue governments for passing anti-smoking legislation. Could a creative interpretation of the law allow this? Possibly but this bill is silent in this regard and does not create any extra provisions for allowing this.
The Bill does not engage with the Treaty of Waitangi
This is understandable because the Bill only provides guidelines for future legislation and has nothing to say about the Treat or treaty settlements.
In fact, the bill makes clear that it does not affect secondary legislation…made “under certain excluded Acts. An excluded Act is a Treaty settlement Act…” and as such the bill does not seek to nullify “any other Act that provides redress for Treaty of Waitangi claims.”
The bill does not prevent Parliament from passing legislation
The bill is non-binding. It does not compel future legislation to satisfy these criteria. Parliament is still free to pass any legislation it sees fit to pass except the bill asks those recommending new legislation to put forth a consistency accountability statement to outline the pros and cons. A “failure to comply with the Bill does not affect any power to make any legislation or the validity or operation of any legislation.”
One submitter opposed to the bill asks: “What constitutes a robust cost-benefit analysis, and should all proposed legislation be subject to such an analysis?”
My question is: why not? This is public money after all. Why should we not expect legislators to provide a compelling argument when asking to spend public money? PHARMAC uses a cost-utility analysis in deciding which drugs to fund and which not. The decision to not fund a drug typically consigns some people to death. Yet, PHARMAC uses this framework since this makes the most sense.
The bill is intended to send a message
The “anti-smacking” legislation introduced by Green MP Sue Bradford was deeply problematic. It seems to me that the primary way the bill can be enforced is via children providing testimony against parents, which is a recipe for family instability.
But I supported the bill for its “signalling” purposes. What is the signal? That, we, as a society, do not condone corporal punishment of children.
A similar signalling element is in play here.
In a recent article in the New York Times, Nathan Levine makes a point that about the US that is equally valid in New Zealand; that “our democracy has been usurped by a permanent ruling class of wholly unaccountable managers and bureaucrats.” Levine adds that increasingly we are seeing “an anti-managerial revolution attempting to roll back the expansion of overbearing bureaucratic control into more and more areas of life.”
Further, in recent times, much of our bureaucracy, like other sectors, has come to embrace ambiguous social justice goals to the exclusion of due consideration of the best use of public money. This bill aims to restore prudent decision-making by asking for a careful evaluation of the potential costs and benefits of proposed legislation.
My reservations against the bill
One reservation I have is that the bill suggests setting up a Regulatory Standards Board. This goes against the ideal of reducing the size of the bureaucracy. Such boards are often subject to ideological capture and often end up as venues for creating jobs for mates.
A better idea would be to have a non-partisan body to evaluate proposed legislation as done by the Congressional Budget Office in the US. Indeed, even the Treasury could be entrusted with this task.
The bill may well create extra paperwork for some legislation but equally it may not by preventing frivolous propositions such as the cycle path across the harbour bridge.
But ultimately the goal of this bill may be to put prudent cost benefit analysis rather than arbitrary social justice goals at the heart of policymaking. I doubt the bill will actually achieve this but there is no harm in trying.
Public resources (and tax revenue) are finite. Allocating resources to one use automatically implies not allocating them to another. This requires due consideration be given to the relative costs and benefits of legislation. Unfortunately, such cost benefit calculation is the exception rather than the rule.
The suitable compensation clause causing concern
It is hard to understand why this clause has caused significant consternation:
“legislation should not take or impair property without the owner’s consent unless certain requirements are met. The requirements include that there is a good justification for the taking or impairment and fair compensation is provided to the owner.”
This seems fairly standard. The 5th Amendment to the US Constitution ratified back in 1791 “requires the government to compensate citizens when it takes private property for public use.”
Nothing in this clause allows companies to sue for lost business as some have claimed. For instance, this does not allow tobacco companies to sue governments for passing anti-smoking legislation. Could a creative interpretation of the law allow this? Possibly but this bill is silent in this regard and does not create any extra provisions for allowing this.
The Bill does not engage with the Treaty of Waitangi
This is understandable because the Bill only provides guidelines for future legislation and has nothing to say about the Treat or treaty settlements.
In fact, the bill makes clear that it does not affect secondary legislation…made “under certain excluded Acts. An excluded Act is a Treaty settlement Act…” and as such the bill does not seek to nullify “any other Act that provides redress for Treaty of Waitangi claims.”
The bill does not prevent Parliament from passing legislation
The bill is non-binding. It does not compel future legislation to satisfy these criteria. Parliament is still free to pass any legislation it sees fit to pass except the bill asks those recommending new legislation to put forth a consistency accountability statement to outline the pros and cons. A “failure to comply with the Bill does not affect any power to make any legislation or the validity or operation of any legislation.”
One submitter opposed to the bill asks: “What constitutes a robust cost-benefit analysis, and should all proposed legislation be subject to such an analysis?”
My question is: why not? This is public money after all. Why should we not expect legislators to provide a compelling argument when asking to spend public money? PHARMAC uses a cost-utility analysis in deciding which drugs to fund and which not. The decision to not fund a drug typically consigns some people to death. Yet, PHARMAC uses this framework since this makes the most sense.
The bill is intended to send a message
The “anti-smacking” legislation introduced by Green MP Sue Bradford was deeply problematic. It seems to me that the primary way the bill can be enforced is via children providing testimony against parents, which is a recipe for family instability.
But I supported the bill for its “signalling” purposes. What is the signal? That, we, as a society, do not condone corporal punishment of children.
A similar signalling element is in play here.
In a recent article in the New York Times, Nathan Levine makes a point that about the US that is equally valid in New Zealand; that “our democracy has been usurped by a permanent ruling class of wholly unaccountable managers and bureaucrats.” Levine adds that increasingly we are seeing “an anti-managerial revolution attempting to roll back the expansion of overbearing bureaucratic control into more and more areas of life.”
Further, in recent times, much of our bureaucracy, like other sectors, has come to embrace ambiguous social justice goals to the exclusion of due consideration of the best use of public money. This bill aims to restore prudent decision-making by asking for a careful evaluation of the potential costs and benefits of proposed legislation.
My reservations against the bill
One reservation I have is that the bill suggests setting up a Regulatory Standards Board. This goes against the ideal of reducing the size of the bureaucracy. Such boards are often subject to ideological capture and often end up as venues for creating jobs for mates.
A better idea would be to have a non-partisan body to evaluate proposed legislation as done by the Congressional Budget Office in the US. Indeed, even the Treasury could be entrusted with this task.
The bill may well create extra paperwork for some legislation but equally it may not by preventing frivolous propositions such as the cycle path across the harbour bridge.
But ultimately the goal of this bill may be to put prudent cost benefit analysis rather than arbitrary social justice goals at the heart of policymaking. I doubt the bill will actually achieve this but there is no harm in trying.
Ananish Chaudhuri is Professor of Experimental Economics at the University of Auckland. Besides Auckland, he has taught at Harvard Kennedy School, Rutgers University, Washington State University and Wellesley College. This article was first published HERE
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