APEC DEREGULATION REPORT 2000

Chapter 10 : Deregulation/ Regulatory Review

Objective

APEC Economies will facilitate free and open trade and investment in the Asia-Pacific Region by, inter alia:

(a) Improving the transparency of regulatory regimes; and

(b) Eliminating those distortions arising from domestic regulations that restrict trade or investment and are not necessary to achieve a legitimate objective.

Guidelines

Each APEC economy will:

(a) explore economy-wide processes for the transparent identification and review of those domestic regulations that may cause distortions that restrict trade or investment, ensuring that reviews consider whether identified distortions are necessary to achieve a legitimate objective; and

(b) consider the adoption of regulatory reform programs that seek to reduce the costs of regulation of particular industries or sectors whilst maintaining the achievement of legitimate objectives.

Collective Actions

APEC Economies have agreed to take collective actions to help achieve these goals. These actions are contained in Collective Action Plans (CAPs) which are updated annually. The current CAP relating to deregulation/regulatory review can be found in the Deregulation Collective Action Plan.

APEC Principles to Enhance Competition and Regulatory Reform

The APEC Leader’s Declaration of September 1999 endorsed the following Principles: Non Discrimination

^{(a) Application of competition and regulatory principles
in a manner that does not discriminate}

between or among economic entities in like circumstances, whether these entities are foreign or domestic.

Comprehensiveness

(b) Broad application of competition and regulatory principles to economic activity including goods and services, and private and public business activities.

(c) The recognition of the competition dimension of policy development and reform which affects the efficient functioning of markets.

(d) The protection of the competitive process and the creation and maintenance of an environment for free and fair competition.

(e) The recognition that competitive markets require a good overall legal framework, clear property rights, and non discriminatory, efficient and effective enforcement.

(g) Clear responsibility within domestic administrations for the implementation of the competition and efficiency dimension in the development of policies and rules, and their administration.

New Zealand considers that a stable economic policy framework will best achieve an economy that

will encourage sustained economic growth, increase business and employment opportunities, widen consumer choice and strengthen incentives for companies to become more adaptive to change, and meet the needs of consumers and society at large.

New Zealand supports the APEC Principles to Enhance Competition and Regulatory Reform and applies the core principles of Non Discrimination, Comprehensiveness, Transparency, and Accountability in designing its regulation.

A capacity for generating better information for regulatory decision-making is important. For instance, New Zealand imposes a requirement that every regulatory proposal submitted to Government be accompanied by a Regulatory Impact Statement to ensure that regulatory solutions are only used where:

- a clear problem has been identified which might need to be addressed through regulation;

- all the feasible options for addressing that problem have been identified and considered, including the possibility of retaining the status quo;

- on the basis of rigorous analysis, regulation has been identified as the most appropriate option;

- the regulatory option is clearly targeted to the problem and is not more restrictive than

- all those who are affected by the regulation have been consulted and their views taken into account; and

- mechanisms for monitoring and review of the effectiveness of the regulation have been considered.

New Zealand undertakes a number of initiatives to review and improve clarity, efficiency, and effectiveness of business law. It is also focussing on ensuring that domestic regulations meet their goals, and minimise compliance and other costs. New Zealand considers it desirable to promote

best regulatory practices in international fora. New Zealand will continue with dialogue in the APEC,

*New Zealand's Approach to Deregulation/Regulatory Review in 2000*
*Section*	*Improvements Implemented* *Since Last IAP*	*Current Regulatory Review Policies / Arrangements*	*Further Improvements* *Planned*
*General Policy* *Position*		New Zealand considers that a stable economic policy framework will best develop an economy which, among other things, encourages sustained economic growth, increases business and employment opportunities, and meets the needs of consumers and society at large. New Zealand applies the core APEC Competition & Regulatory Reform principles in designing its regulations and review processes. New Zealand’s policy goal for its regulatory environment is that of sustained economic development, taking into account economic, social and environmental objectives. New Zealand’s open and transparent regulatory review processes include consultation with affected parties and contestability of advice to Ministers. Every regulatory proposal is accompanied by a Regulatory Impact Statement and may be assessed against a Code of Good Regulatory Practice. New Zealand undertakes a regular program of monitoring and review of the effectiveness of domestic regulation to meet their goals, and minimise costs. New Zealand considers it desirable to promote best regulatory practices in international fora. We will continue with dialogue in the APEC, OECD, WTO and other multilateral fora.	New Zealand has not announced any further measures in the short term, but work is underway on further initiatives to improve the quality of regulatory processes.

*New Zealand's Approach to Deregulation/Regulatory Review in 2000*
*Section*	*Improvements Implemented* *Since Last IAP*	*Current Regulatory Review Policies / Arrangements*	*Further Improvements* *Planned*
*Identification and Review of Proposed Regulations*	New Zealand has implemented the first stage of its quality of regulation package. This includes: - developing a code of good regulatory practice; - making regulatory impact statements mandatory; and - using small business test panels in the review process. In addition, New Zealand has developed a number of guidelines for developing policy and regulatory proposals that take into account trade and investment issues. These provide benchmarks for best practice for regulatory reviews. The guidelines include: - Cabinet Office Manual www.dpmc.govt.nz; - Legislative Advisory Committee guidelines; - The Human Rights Act 1993: guidelines for government policy advisers www.justice.govt.nz; - Guidelines for setting	New Zealand has implemented the first stage of measures aimed at improving the quality of regulation. The themes which underpin this package include greater accountability, transparency, and incentives for regulatory responsibility. The package also looks to build a capacity into the system to generate better information for regulatory decision making and greater scrutiny and contestability in the provision of policy advice. The package includes: - a Code of Good Regulatory Practice – provides a framework for making regulation based on the principles of effectiveness, efficiency, equity, transparency, and clarity; - Regulatory Impact Statements – an effective way of communicating key information to decision-makers on the basis for, and impact of, policy proposals. New Zealand is currently trialing the use of test panels. Test panels are used to audit the compliance costs and workability of existing or proposed laws. The test panels comprise a representative sample of those businesses affected or likely to be affected by the law (or their representatives). The purpose of the panels is to identify and make recommendations to government on reducing compliance costs through: - greater co-ordination and	New Zealand has not announced any further measures in the short term, but work is underway on further initiatives to improve the quality of regulatory processes.

*New Zealand's Approach to Deregulation/Regulatory Review in 2000*
*Section*	*Improvements Implemented* *Since Last IAP*	*Current Regulatory Review Policies / Arrangements*	*Further Improvements* *Planned*
	charges in the public sector www.treasury.govt.nz	collaboration between agencies; - changes to the operating procedures of Government agencies; and - legislative amendments. A further benefit is considered to be enhanced compliance from greater industry understanding and acceptance of the legislation under review. More information is available on www.med.govt.nz or from the quality of regulation team at the Ministry of Economic Development.
*Identification and Review of Existing Regulations*	The quality of regulation package outlined above applies to new proposals and reviews of existing regulations. In 1999, the Ministry of Economic Development (then Commerce) and the Department of Labour undertook a regulatory stocktake. Twenty-two regulations were revoked as a consequence.	The Government maintains an ongoing policy of reviewing existing regulation against objectives, and assessing the impact of regulation on trade and investment. Review bodies are set up as appropriate for each review and may include any or all of the following external experts, representatives of interest groups, and relevant government officials. Criteria for review will be specified in the terms of reference. There is a presumption that review findings will be available for public comment before Government takes decisions. In 1999, the Ministry of Economic Development and the Department of Labour undertook a regulatory stocktake of existing regulation. Criteria used in the stocktake were:	New Zealand has not announced any further measures in the short term, but work is underway on further initiatives to improve the quality of regulatory processes.

*New Zealand's Approach to Deregulation/Regulatory Review in 2000*
*Section*	*Improvements Implemented* *Since Last IAP*	*Current Regulatory Review Policies / Arrangements*	*Further Improvements* *Planned*
		- obviously redundant regulations requiring revocation; - seemingly redundant regulations where there appears to be reasonable cause to revoke the regulation; and - uncertain/unnecessarily complex regulations requiring substantive review and possible revocation or amendment. Consultation with interested external parties was carried out and the review resulted in 22 regulations being revoked.
*Reform of Industry/Sector Specific Regulation*	Industry or sector specific reforms implemented that may eliminate distortions that restrict trade or investment include: - Accident Insurance From 1 July 2000, the provision of workers’ accident and rehabilitation insurance has been provided by a state- owned corporation with incentives to maintain cost- savings for business. Previous reforms were considered to impose risks to the quality of the service.	AGRICULTURAL PRODUCER BOARDS In 1999, the Government enacted legislation to convert the New Zealand Apple and Pear Marketing Board and the New Zealand Kiwifruit Marketing Board into two commercial marketing companies, ENZA Limited and ZESPRI Group Limited respectively. The companies are subject to certain regulatory measures (non-diversification rule, non- discrimination rule, information disclosure requirements, minimum shareholder rights and, arms-length rules for ENZA Limited’s onshore logistics activities) to protect growers and to minimise distortions in the operation of markets. The new regulations create two new regulatory boards, the New Zealand Apple and Pear Board and the New Zealand Kiwifruit Board, to monitor and enforce compliance with these regulatory measures.	FOOD ADMINISTRATION Government announced in July 1999 ‘in principle’ plans to establish a single, separate Ministry to handle all food regulatory and administration issues from 1 July 2000. Food administration is currently split between the Ministry of Agriculture and Forestry and the Ministry of Health. The new Government (elected in November 1999) is re-evaluating a number of options. BORDER CONTROL Options for improving the effectiveness and efficiency of New Zealand border control arrangements are being considered. The Ministry of Agriculture and Forestry and New

*New Zealand's Approach to Deregulation/Regulatory Review in 2000*
*Section*	*Improvements Implemented* *Since Last IAP*	*Current Regulatory Review Policies / Arrangements*	*Further Improvements* *Planned*
	- Apple and Pear Industry and Kiwifruit Industry Producer Boards Statutory producer boards are converted to private companies subject to industry specific competition regulation, including information disclosure regime. - Personal Properties Securities Act 1999 A comprehensive register is established to record and prioritise security interests in personal property. - Electricity and Telecommunications Information disclosure regimes are strengthened for electricity and telecommunications sectors.	In 1999, the Raspberry Marketing Regulations were revoked. As a result, the Raspberry Marketing Council’s statutory powers, as the single desk to regulate and control the purchase and sale of raspberries, were removed and the Council disestablished. Legislative change to the New Zealand Dairy Board is being considered. BUSINESS LAW The Government has implemented a number of initiatives in reviewing and reforming business laws. These include: · amendments to the application of securities law (fundraising) requirements for small and medium enterprises, resulting in recommendations to the Government that will reduce the regulatory burden on SMEs; · introduction of the Business Law Reform Bill as a vehicle for improving business law statutes, with the aim of reducing compliance costs and improving the environment for business; and · Implementing a takeovers code to improve fairness for investors and assist capital flows that could contribute to business investment.	Zealand Customs, in consultation with other relevant agencies and border users, are currently examining strategic and operation coordination, information management and risk management. ELECTRICITY In 1999, a Ministerial Inquiry into the Electricity Industry assessed whether current regulatory arrangements are best suited to the Government’s objectives for the industry, ie to ensure that electricity is delivered in an efficient, reliable and environmentally sustainable manner to all consumers. The Inquiry’s recommendations build on existing self-regulatory arrangements, strengthened regulation on transmission and distribution, and enhancements to competition in generation and retailing are proposed. The recommendations are currently under consideration by Government. electricityinquiry@med.govt.nz TELECOMMUNICATIONS A telecommunications industry inquiry, aimed at ensuring consumers obtain the maximum

*New Zealand's Approach to Deregulation/Regulatory Review in 2000*
*Section*	*Improvements Implemented* *Since Last IAP*	*Current Regulatory Review Policies / Arrangements*	*Further Improvements* *Planned*
		ELECTRICITY The New Zealand Government introduced wide-ranging structural reforms in the electricity industry in 1998/99, which included: · Splitting the dominant electricity company into three competing SOEs; and · Requiring ownership separation of lines businesses from retailing and generation.	benefit from competition was instituted by the Government in February 2000. The final report from the inquiry is due to be presented to the Government in late September 2000. teleinquiry@med.govt.nz BUSINESS LAW -- A review of insider trading legislation, aimed at enhancing the robustness of the regime and encouraging investor confidence; -- a targeted review of insolvency law, including consideration of the UNCITRAL model for cross border insolvency; -- a review of securities regulations, aimed at reducing compliance costs for businesses wanting to raise capital, and to improve the quality of information available to investors; -- a review of the financial reporting regime for small and medium enterprises, with a view to reducing their compliance costs; -- A review of health and safety in employment is underway with the key aim being to reduce the compliance costs to business.

*Improvements in New Zealand's Approach to Deregulation/Regulatory Review since 1996*
*Section*	*Position at Base Year (1996)*	*Cumulative Improvements* *Implemented to Date*
*General Policy* *Position*	New Zealand will supply base year information in its 2001 IAP
*Identification and Review of* *Proposed Regulations*
*Identification and Review of* *Existing Regulations*
*Reform of Industry/Sector* *Specific Regulation*

APEC Agreements and Declarations

APEC DEREGULATION REPORT 2000 - NEW ZEALAND