MBIE s Regulatory Stewardship Strategy 2017/2018

Transcription

1 MBIE s Regulatory Stewardship Strategy 2017/2018

2 ISBN (online) August, 2017 Crown Copyright 2017 The material contained in this report is subject to Crown copyright protection unless otherwise indicated. The Crown copyright protected material may be reproduced free of charge in any format or media without requiring specific permission. This is subject to the material being reproduced accurately and not being used in a derogatory manner or in a misleading context. Where the material is being published or issued to others, the source and copyright status should be acknowledged. The permission to reproduce Crown copyright protected material does not extend to any material in this report that is identified as being the copyright of a third party. Authorisation to reproduce such material should be obtained from the copyright holders.

3 Contents FOREWORD 1 EXECUTIVE SUMMARY 2 WHY HAVE A REGULATORY STEWARDSHIP STRATEGY? 5 THE GOVERNMENT S UPDATED EXPECTATION FOR GOOD REGULATORY PRACTICES 6 MBIE S STEWARDSHIP RESPONSIBILITIES, GOAL AND OBJECTIVES 7 MBIE has extensive regulatory stewardship responsibilities... 7 MBIE s goal is to be a world-leading regulatory steward A regulatory stewardship approach will enhance MBIE s policy advice MBIE has six important objectives HOW MBIE MEETS ITS STEWARDSHIP RESPONSIBILITIES 14 MBIE is building expertise in its regulatory functions MBIE leads cross-government initiatives to raise capability and performance...17 MBIE has tools for on-going maintenance of its regulatory systems REGULATORY STEWARDSHIP STRATEGY: EMPLOYMENT FEATURE 22 MBIE S REGULATORY MANAGEMENT PRIORITIES FOR 2017/18 23 MBIE-Wide Priorities: Responding to the Performance Improvement Framework Review...23 Cross-regulatory system ( Horizontal ) Priorities...23 Regulatory system-specific ( Vertical ) Priorities...24 MBIE S REGULATORY SYSTEMS 32 Accident Compensation...33 Building...35 Communications markets Competition...43 Consumer and Commercial Corporate Governance Employment relations and standards...54 Energy markets...57 Financial markets Health and safety at work...63 Housing and tenancy Immigration...70 Innovation, science and economic development Intellectual property...75 Petroleum and minerals...79 Trade, international and standards... 81

4 ANNEX 1: TRACKING PERFORMANCE AGAINST OBJECTIVES 82 ANNEX 2: EMERGING REGULATORY ISSUES AND TRENDS 84 Technological change International dimension to regulation Demographic change Principles-based primary legislation Expectations on regulators Adopting a regulatory stewardship approach...87 ANNEX 3: HOW MBIE S REGULATORY SYSTEMS WORK IS ORGANISED 88

5 Foreword 1 It is pleasing to be asked to introduce MBIE s second regulatory strategy, and to share the maturing of our regulatory stewardship role. Simply, the regulatory environment enables business to thrive and keeps people safe this is key to Growing New Zealand for All. The regulatory environment is where we can have a real impact: we can empower and enable the actions that grow our economy and improve our standard of living. It is especially pleasing to see the progress that has been made in one year since the release of the previous strategy. MBIE is investing in skills for our people working with regulation, with over 400 enrolled in the government-wide, New Zealand Qualifications Authority (NZQA) approved regulator competence qualification. We are communicating more clearly about our regulation for those regulated and the beneficiaries of regulation, through overhauls of resources like business.govt.nz. MBIE is also making more timely technical improvements to legislation, with the passage of the first MBIE Regulatory Systems Bill in March this year amending 20 different MBIE statutes. While these are significant achievements and we must be proud of the progress that has been made, it is important to remember our aim is to take this enabling regulatory environment further. Our intent is for MBIE to achieve a best-in-class regulatory environment so our relative geographic isolation and our challenges of scale can be overcome in order to make this a great place for business. At the same time, we need to keep New Zealanders safe and well the regulatory environment must also support the needs of individuals and families. In some opinions, New Zealand regulation is too relaxed, others the opposite. MBIE s job then is to provide the best possible advice to Ministers to help them make informed decisions. The environment is constantly changing. MBIE needs to remain on alert to the impacts of regulation that isn t well-functioning or is no longer fit for purpose. We need to have an eye on the future so we are ready to provide advice on what regulation is required and might be in the future often with incomplete information. This is where regulatory stewardship comes in MBIE takes a leadership role to connect and lead other agencies. While we cannot remove the risk of regulatory failure, we can significantly reduce it. The progress we have made and are making was noted in the Performance Improvement Framework (PIF) review earlier this year. We have made a good start, but we still have our work cut out if we are to deliver the transformative, agile regulatory policy and practice demanded by the rapidly changing environment. We remain committed to the goal of world-leading regulatory stewardship, and this strategy explains how we are pursuing this goal. Carolyn Tremain Acting Chief Executive Ministry of Business, Innovation and Employment

6 2 Executive summary This Regulatory Management Strategy for 2017/18 explains how the Ministry of Business, Innovation and Employment (MBIE) will meet its regulatory stewardship responsibilities under the State Sector Act The quality of the regulatory environment is very important for New Zealand s long-term prosperity, and unlike some other important factors like size and distance, we have a good deal of control over it. Accordingly MBIE's goal is to set the highest standards for stewardship of regulation; to be a 'world-leading' regulatory steward. There are three dimensions to regulatory stewardship: An all-of-system view of each regulatory system and its context. High-quality regulation depends as much on capable participants and skilful implementation as it does on good policy analysis. A long-term view. This means ensuring our regulatory systems will remain fit-for-purpose over the longer term as well as today. A cross-regulatory systems view. Different regulatory systems have many functions in common, for example regulatory impact analysis, enforcement and dispute resolution. A stewardship approach looks across systems to see where innovation and best practice can be applied. A regulatory stewardship approach will enable MBIE to deliver more effectively on the Government s objectives for regulation. The Government has outlined its regulatory reform agenda in its response to the 2014 report of the Productivity Commission on Regulatory Institutions and Practices 2. This includes the publication earlier this year of the Government s Regulatory Management Strategy 3. MBIE and six other major regulatory departments are now required to each publish a Regulatory Management Strategy. The strategy will inform the public about the department s assessment of the fitness-for-purpose of the regulation it is responsible for, plans for regulatory change and emerging trends and issues with important implications for the department s regulatory systems. MBIE has extensive regulatory stewardship responsibilities. These responsibilities cover 16 distinct regulatory systems. A regulatory system includes the rules (e.g. statutes and regulations), institutions and practices working together to achieve desired behaviours and outcomes. Across these regulatory systems, MBIE, and a range of organisations associated with it, carries out a number of common regulatory functions: policy advice operational policy/service design service delivery compliance and enforcement monitoring and evaluation advice/education/information standard setting dispute resolution. 1 Section 32, as amended in New Zealand Productivity Commission, Regulatory Institutions and Practices, June inquiry-content/1788?stage=4 3 New Zealand Government s regulatory management strategy pdfs/reg-inst-practices.pdf

7 Good policy development is essential for high-quality regulation, and MBIE has a policy capability initiative aiming to raise the standard of policy work across the organisation. This work complements the regulatory impact analysis, quality assurance and external peer review systems already in place. 3 For regulation to work well though, all of the functions in a regulatory system need to be performed to a high standard. The scale and scope of MBIE s regulatory responsibilities helps it to develop expertise in these common functions. MBIE is enhancing its ability to identify and share best-practice across different regulatory systems, and targeting expertise at particular regulatory systems as issues arise. In addition to its business-as-usual quality assurance, monitoring and capability development systems, MBIE has introduced or developed advice on a number of work programmes and initiatives specifically aimed at enhancing its regulatory stewardship. These include: regulatory system assessments, intended to ensure each system is regularly scrutinised to ensure it is performing well and opportunities for improvement are being taken, even if it hasn t recently been subject to a major policy review regulatory charters, clearly describe roles and responsibilities in each regulatory system, and indicate how participants will work together to address gaps, overlaps and uncertainties Regulatory Systems Amendment Bills, which provide a vehicle for regular technical improvements to regulatory legislation leadership of a number of whole-of-government better regulation initiatives, notably the Government Regulatory Practice Initiative, which aims to improve the professional skills of regulators, the Government Centre for Dispute Resolution, which is working to develop a best-practice approach to dispute resolution across government to be more consistent and user-friendly, and the Better Public Services: Better for Business programme ( R9 ), which is working to improve the regulatory environment for business. A key priority for the latter in will be continuing the implementation of the New Zealand Business Number to make it easier for businesses to deal with multiple government agencies. Good progress towards all of the objectives below will be necessary if MBIE is to be recognised as a world-leading regulatory steward: MBIE collects the information it needs and uses this information to identify problems, vulnerabilities and opportunities for improvement. MBIE conducts high-quality regulatory impact analysis of proposed regulatory changes and ensures the burden of the rules and their enforcement is proportional to the expected benefits. MBIE targets its compliance and enforcement activity at those areas posing the greatest risk to regulatory system performance. MBIE provides clarity to all participants of a regulatory system as to their roles, responsibilities and legal obligations. MBIE s regulatory systems are flexible; (i) regulated entities can adopt least cost and innovative approaches to meeting their obligations, and (ii) they can evolve in response to changing circumstances. MBIE has the people and systems necessary to be an efficient and effective regulatory steward. MBIE has committed to reaching best practice standards for all six of these objectives by the end of This year s strategy provides more detail than on how we will measure our progress towards each of these goals.

8 4 MBIE has assessed the current fitness-for-purpose of its regulatory systems. These are qualitative assessments based on the views of MBIE people involved in the systems policy, service delivery and enforcement. MBIE assessments are informed by feedback from other regulatory system stakeholders, including Crown Entities, those subject to regulations, and those benefitting from regulations. MBIE bases its assessments on four criteria: The extent the regulatory system is achieving the intended outcomes ( Effectiveness ). The extent the regulatory system s body of resources is being used cost effectively ( Efficiency ). The extent a regulatory system is able to adapt to emerging issues and trends to achieve the intended outcomes in the future ( Resilience ). The extent the regulatory system is transparent, and delivers good process ( fairness and accountability ). Each fitness-for-purpose assessment is accompanied by a summary of intended regulatory changes in 2017/18 and key service design and operational changes. MBIE has identified the following MBIE regulatory systems are priorities for 2017/18: building health and safety at work housing and tenancy immigration. The nature and extent of the issues varies from system to system. For some, such as health and safety at work, the emphasis is on ensuring successful implementation of major changes to the system, and doing the groundwork for evaluation of impact. For others, such as immigration, it is ensuring the system is resilient in the face of emerging pressures. Another important priority for MBIE is to improve how it collects, shares, and uses data and information. This will enhance MBIE s understanding of the performance of both regulatory systems as a whole and the specific organisations such as crown entities working with MBIE in its regulatory systems. In early 2017, MBIE established a position of Chief Data and Insights Officer (CDIO) to support the more effective use of data across MBIE.

9 Why have a regulatory stewardship strategy? 5 1. Government regulation is pervasive in modern societies like New Zealand, affecting many aspects of most people s lives. If they are well designed, the rules governments make help markets to work more effectively by defining rights and giving people confidence to trade and invest. Some regulation, such as employment standards and workplace health and safety, protects individuals from serious harm. 2. Poorly designed or implemented regulation has serious negative effects in New Zealand s recent experience with leaky buildings, failing finance companies, and the Pike River tragedy. Poor-quality regulation also has more subtle but important economic costs, inhibiting competition, innovation and investment. 3. Over the last 30 years, New Zealand and other Organisation for Economic Co-operation and Development (OECD) governments have imposed extensive disciplines on one major form of government intervention government spending. More recently, attention has turned to the design and implementation of regulation.

10 6 The Government s updated expectations for good regulatory practices 4. With some significant regulatory failures highlighting the risks of a set and forget approach, in 2013 the Government: asked the New Zealand Productivity Commission to investigate how to improve the design and operation of new and existing regulatory regimes; and set some initial expectations for departments to exercise more active regulatory stewardship The Government s regulatory management strategy is about building an effective and durable set of policies, tools, practices and capabilities for the design, delivery and maintenance of high quality regulation. Cabinet recently approved updated expectations for good regulatory practice. They comprise two sets of expectations: one for the design of regulatory systems and another for regulatory stewardship by government agencies. The expectations consolidate earlier statements of Government s expectations to more clearly include regulatory implementation and practice. 6. The two parts of Government s expectations can be summarised by the following: Part A: Expectations for the design of regulatory systems identifying the features of a good regulatory system. The Government expects any regulatory system to be an asset for New Zealanders, not a liability. This means a regulatory system should deliver, over time, a stream of benefits or positive outcomes in excess of its costs or negative outcomes. Part B: Expectations for regulatory stewardship that identify the actions regulatory agencies should take to carry out their regulatory stewardship obligations. These expectations include: robust analysis and implementation support for proposed changes to regulatory systems monitoring review and reporting on existing regulatory systems good regulator practice. 7. This Regulatory Stewardship Strategy shows how MBIE is responding to meeting the Government s expectations for good regulatory practice. 8. The full set of government expectations for good regulatory practice can found at: 4 See:

11 MBIE s stewardship responsibilities, goal and objectives 7 MBIE has extensive regulatory stewardship responsibilities 9. MBIE has extensive regulatory stewardship responsibilities, covering about 140 statutes. Based on these regulatory responsibilities, MBIE has identified 16 regulatory systems requiring a stewardship role. A regulatory system covers a combination of rules (e.g. statutes and regulations), institutions, and practices to achieve desired behaviours or outcomes. 10. Across these regulatory systems, MBIE carries out essential common regulatory functions: policy advice operational policy/service design service delivery compliance and enforcement monitoring and evaluation advice/ information/education standard setting dispute resolution. 11. Some functions may not be relevant or are carried out by another agency. Figure 1 on the next page shows which agency is responsible for each regulatory function across MBIE s regulatory systems. 12. MBIE also has an interest in other agencies' regulatory systems. This is because these other regulatory systems can impact on the outcomes of MBIE s regulatory systems, such as resource management and planning. MBIE will apply its regulatory stewardship principles and approach when dealing with these other agencies.

12 MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT REGULATORY STEWARDSHIP STRATEGY Figure 1: Who carries out each regulatory function across MBIE s regulatory systems? 8 POLICY OPERATIONAL POLICY/ SERVICE ADVICE/EDUCATION/ COMPLIANCE MONITORING STANDARD DISPUTE 9 SERVICE DESIGN DELIVERY INFORMATION AND ENFORCEMENT AND EVALUATION SETTING RESOLUTION ACCIDENT COMPENSATION ACCIDENT COMPENSATION CORPORATION TREASURY ACCIDENT COMPENSATION APPEAL AUTHORITY MBIE MBIE FAIRWAY RESOLUTION BUILDING COUNCILS/BUILDING CONSENT AUTHORITIES WEATHERTIGHT HOMES TRIBUNAL ADJUDICATORS UNDER CONSTRUCTION CONTRACTS ACT MBIE COMMUNICATIONS MARKETS MBIE TELECOMMUNICATIONS CARRIERS FORUM (TCF) COMMERCE COMMISSION TCF TELECOMMUNICATIONS DISPUTE RESOLUTION SERVICE COMPETITION MBIE COMMERCE COMMISSION MBIE CONSUMER AND COMMERCIAL COMMERCE COMMISSION MBIE MOTOR VEHICLE DISPUTES TRIBUNAL CORPORATE GOVERNANCE TAKEOVERS PANEL MBIE EXTERNAL REPORTING BOARD EXTERNAL REPORTING BOARD EMPLOYMENT RELATIONS AND STANDARDS EMPLOYMENT COURT EMPLOYMENT RELATIONS AUTHORITY EMPLOYMENT COURT EMPLOYMENT RELATIONS AUTHORITY MBIE ENERGY MARKETS ENERGY EFFICIENCY AND CONSERVATION AUTHORITY (EECA) ELECTRICITY AUTHORITY GAS INDUSTRY COMPANY EECA ELECTRICITY AND GAS COMPLAINTS COMMISSIONER MBIE COMMERCE COMMISSION COMMERCE COMMISSION MBIE ELECTRICITY AND GAS RULINGS PANEL FINANCIAL MARKETS MBIE COMMISSION FOR FINANCIAL CAPABILITY FINANCIAL MARKETS AUTHORITY MBIE FINANCIAL SERVICES DISPUTE RESOLUTION SCHEMES HEALTH AND SAFETY AT WORK MBIE WORKSAFE NEW ZEALAND MBIE HOUSING AND TENANCY HOUSING NEW ZEALAND MBIE TREASURY TENANCY TRIBUNAL IMMIGRATION IMMIGRATION AND PROTECTION TRIBUNAL IMMIGRATION AND PROTECTION TRIBUNAL MBIE IMMIGRATION ADVISERS COMPLAINTS AND DISCIPLINARY TRIBUNAL IMMIGRATION ADVISERS COMPLAINTS AND DISCIPLINARY TRIBUNAL INNOVATION, SCIENCE AND ECONOMIC DEVELOPMENT NEW ZEALAND TRADE AND ENTERPRISE CALLAGHAN INNOVATION MBIE TOURISM NEW ZEALAND MBIE INTELLECTUAL PROPERTY PETROLEUM AND MINERALS MBIE MBIE MBIE COPYRIGHT TRIBUNAL TRADE, INTERNATIONAL AND STANDARDS MBIE ACCREDITATION COUNCIL JOINT ACCREDITATION SYSTEM FOR AUSTRALIA AND NEW ZEALAND Notes: For presentational purposes this figure shows the most important institutions that have a role in each regulatory system and so is not a comprehensive picture of all institutions that are involved. For example, the courts have a role in all systems, particularly for dispute resolution. The agencies shaded in orange are contributing Crown Entities associated with MBIE, the agencies in blue are other bodies.

13 10 MBIE s goal is to be a world-leading regulatory steward 13. New Zealand faces unique challenges to the achievement of prosperity for all New Zealanders. These challenges stem from our combination of small size and geographic isolation. If we are to respond to these challenges effectively, New Zealand must have exceptional regulation and regulatory institutions by the standards of other OECD economies. New Zealand needs to be the best in the class, or close to it, when it comes to regulation. 14. MBIE s goal is therefore to be a world-leading regulatory steward. There are three dimensions to regulatory stewardship (see Figure 2 below): An all-of-system view of each of its regulatory systems and their context. This means understanding how all the parts of a regulatory system work together and are performing, and using this knowledge to inform MBIE s advice and activity to ensure regulatory systems achieve their desired outcomes. A long-term view. This means ensuring our regulatory systems are fit-for-purpose today and will remain so in the future. A cross-regulatory systems view based on the common regulatory functions outlined below. This means sharing knowledge, experience and best-practice across its regulatory systems. MBIE is well-placed to play a cross-government leadership role given the depth and breadth of its regulatory responsibilities. Figure 2: Dimensions to being a world-leading regulatory steward Time Cross-regulatory system view POLICY OPERATIONAL POLICY/SERVICE DESIGN All of system view Regulatory system 1 Regulatory system 2 SERVICE DELIVERY ADVICE/INFORMATION/EDUCATION COMPLIANCE AND ENFORCEMENT MONITORING AND EVALUATION Regulatory system 15 Regulatory system 16 STANDARD SETTING DISPUTE RESOLUTION

14 A regulatory stewardship approach will enhance MBIE s policy advice Awareness and understanding of these three dimensions will help MBIE s policy advice to Ministers to be well informed. It is essential policy advice includes a high-quality analysis of the case for regulation and there are disciplines in place, notably regulatory impact analysis, to support this. 16. A regulatory stewardship approach focusses attention on the importance of implementation and capability of working with regulation over time, even if there is a good analytical case for regulation. In doing so it drives MBIE to provide expert advice to meet Ministers expectations. 17. There are elements required for a high performing regulatory system (Figure 3, p21) and MBIE needs to address all of these to keep its systems fit-for-purpose. How MBIE puts these elements into practice is illustrated in Figure 4, p30. MBIE has six important objectives 18. MBIE s Regulatory Stewardship Strategy identified six key objectives to achieve to become a world-leading regulatory steward. These objectives are derived from the Treasury s Principles for Best-Practice Regulation 5 and Cabinet s Initial Expectations for Regulatory Stewardship (2013). 19. The six key objectives are: i. MBIE collects the information it needs and uses this information to identify problems, vulnerabilities and opportunities for improvement. Activities and metrics used to measure our progress include: ii. ȓȓ ȓȓ ȓȓ ȓȓ ȓȓ Individual regulatory system level feedback such as INZ s System Health programme and Market Services Group Client Surveys. Formal evaluations of individual systems. The MBIE evaluation of the health and safety at work reforms will be an important benchmark. Use of national surveys informs MBIE s assessment of multiple regulatory systems. Examples include the National Consumer Survey, Business Operations Survey, Better Public Service Result 9 Business Reference Group Survey. International assessments of Regulatory System quality such as the World Bank Ease of Doing Business Survey and the OECD s Product Regulation Indicators. These will be completed again in Systematic use of expert and stakeholder advice through, e.g. the Building Advisory Panel. MBIE conducts high-quality regulatory impact analysis of proposed regulatory changes and ensures the burden of rules and their enforcement is proportional to the expected benefits. Activities and metrics used to measure our progress include: 5 The Treasury, Best-practice Regulation: Principles and Assessments, February See Annex A.

15 12 ȓȓ ȓȓ ȓȓ ȓȓ MBIE s formal internal peer review system ( Te Ara Poutama ) feedback from the Treasury and external reviewers on the quality of our Regulatory Impact Statements and policy advice evaluations of individual systems, such as the Health and Safety at Work evaluation customer feedback such as Market Services Group Client Surveys and the Better Public Service Result 9 Business Reference Group Survey. iii. MBIE targets its compliance and enforcement activity at those areas posing the greatest risk to regulatory system outcomes. Activities and metrics used to measure our progress include: ȓȓ formal and transparent enforcement strategies for MBIE and MBIE-associated regulators e.g. the Labour Inspectorate priorities Addressing Holidays Act non-compliance and Employers who have breached minimum employment standards the Commerce Commission Enforcement Response Guidelines, the Financial Markets Authority Enforcement Policy, and WorkSafe Enforcement and Prosecution Policies ȓȓ use of MBIE s whole of organization intelligence resource. iv. MBIE provides clarity to all participants of a regulatory system as to their roles, responsibilities and legal obligations. Activities and metrics used to measure our progress include: ȓȓ ȓȓ ȓȓ Use of Regulatory System Charters Guidance on complying with MBIE regulatory systems e.g. business.govt.nz, Employment Agreement Builder, MBIE Guide to Compliance Use of formally constituted policy/operations forums such as the Financial Regulators Council and the Council of Energy Regulators. v. MBIE s regulatory systems are flexible (i) regulated entities can adopt least cost and innovative approaches to meeting their obligations, and (ii) they can evolve in response to changing circumstances. Activities and metrics used to measure our progress include: ȓȓ ȓȓ Use of Regulatory Systems Bills Evidence of regulatory design driven by performance and outcomes, including being able to demonstrate that they take account of differing levels of risk. vi. MBIE has the people and systems necessary to be an efficient and effective regulatory steward. Activities and metrics used to measure our progress include: ȓȓ ȓȓ ȓȓ ȓȓ ȓȓ ISO 9001 certifications (a number of MBIE teams are already ISO 9001 certified) progress of MBIE s Policy Capability Programme progress of MBIE uptake of the Government Regulatory Competence Qualification use of Regulatory Systems Bills development and performance of centres of functional expertise to support the work of individual regulatory systems in areas such as intelligence, dispute resolution and data analysis.

16 ƨƨmeasuring Progress In addition to the activities and metrics set out in paragraph 19 above, MBIE has a wide range of measures for the performance of its regulation and regulatory systems. Some of these are set out in Annex 1. This is because measuring the performance of complex regulatory systems cannot be reduced to a single metric, and cannot always be inferred from the performance of their component parts. 21. For these reasons MBIE Senior Leadership Team (SLT) has created a Regulatory Governance Board, to give SLT clear sight of the full range of significant issues arising from MBIE s regulatory work. Annex 3 sets out the basic architecture for MBIE s regulatory systems work. 22. MBIE will also use the six regulatory stewardship objectives as key points of reference in its regulatory system assessments. 23. The 2017 PIF review recommends MBIE set some clear targets and timeframes for the achievement of these objectives. To do this well, we need to: Establish bench marks and measures for each objective Make judgements about where MBIE currently stands in relation to each objective Decide what is a challenging but achievable timeframe for each objective Decide how we will measure progress. 24. MBIE is already at, or close to, best practice for some of the objectives for some regulatory systems. MBIE has committed itself to reaching best practice for all six objectives, for its regulatory systems, by 2022.

17 14 How MBIE meets its stewardship responsibilities 25. A high performing regulatory system has many components (see figure 3, p 21) and MBIE needs to address all of these to keep its systems fit-for-purpose. 26. Figure 4 on page 30 shows how these different initiatives map onto MBIE s regulatory functions and work together to be a comprehensive regulatory stewardship approach. 27. MBIE has these issues in common with many other government agencies, so we are extensively involved in efforts to build capability across government as well as across MBIE. MBIE is building expertise in its regulatory functions 28. Previously, regulatory systems were designed and developed mostly by people with specialist expertise in the subject area being regulated, e.g. workplace health and safety. Yet each specialist regulator has many issues in common with other specialist regulators e.g. approaches to education, enforcement and dispute resolution. There are significant benefits to be gained from developing expertise in these functions, particularly for low profile functions such as dispute resolution. 29. The scale and scope of MBIE s regulatory responsibilities helps it to develop expertise in these common regulatory functions. It also provides opportunities for us to identify and adopt best-practice across our various systems, leading to a better and more consistent experience for stakeholders. 30. Greater functional expertise can improve the performance both of these particular functions and of the regulatory system as a whole. Over time this also increases MBIE s effectiveness and flexibility by allowing it to target expertise at particular regulatory systems as issues arise. 31. To take advantage of these opportunities MBIE needs to become better at working across its different systems and organisational boundaries. One of the key roles for MBIE s recently established Regulatory Governance Board is to champion the working across agenda in MBIE. Examples of where MBIE is building functional expertise are outlined below. ƨƨpolicy capability 32. MBIE is undertaking a project to support the development of its policy advisors and improve the quality of policy advice. The project has a broad work programme, and to date has: provided a range of tools, guidance and training to support policy advisors introduced a process to enable policy advisors within MBIE to rotate into different roles. This supports more efficient resource allocation within MBIE and career development introduced a MBIE-wide process to independently review our policy papers. 33. This project compliments the Department of the Prime Minister and Cabinet s Policy Project, the aim of which is to increase the quality of policy advice across government (see

18 ƨƨoperational policy/service design The functions of service design and operational policy are critical to the health of regulatory systems. Together, these functions work to implement new regulation, improve the delivery of existing services and coordinate regulatory systems as a whole. It is important these functions bring a whole-of-system perspective to ensure policy intent is carried through into service delivery, and operational experience informs further policy development. 35. MBIE is committed to carrying out these roles with the customer or end user in mind. An in-depth understanding of user characteristics is essential to ensuring regulatory services are designed and delivered in an effective and fair way to encourage compliance. A range of innovative approaches are used to develop a customer perspective, including design methodologies. 36. An example of this is MBIE s programme of rapid innovation challenges aiming to improve regulatory services. The challenges take mid-sized problems or opportunities relating to service delivery, and develop potential solutions in just eight days. Teams of multi-disciplined members from across MBIE come together on the challenges to collaborate and work on developing workable solutions. ƨƨinformation and Education 37. MBIE aims to provide individuals and businesses with the information they need to meet their regulatory requirements and to participate effectively in the market place. Information and education programmes support the functioning of regulatory systems more broadly by ensuring that participants can act confidently and those wishing to comply are able to do so. 38. MBIE regulatory systems utilise a wide range of channels to maximise their reach, including partnering with community organisations and industry groups where appropriate. As part of its information provision, MBIE has continued its programme of modernising its websites. 39. In the last year this has included numerous improvements to the business.govt.nz website, a new Consumer Protection website, a refreshed website for the Electrical Workers Registration Board, tools for employment regulation and Immigration Online. Each of these has been favourably received and seen a jump in traffic as a result. 40. Business.govt.nz launched its revamped website in September 2016, focussing on better tailoring its information for its small business customers. In April 2017 business.govt.nz also launched the WorkPlace Policy Builder and a refreshed version of Compliance Matters. In 2016 there were a total of two million visits to business.govt.nz, a 45 per cent increase on In June 2016, MBIE s redeveloped Consumer Protection website went live. This provides New Zealand consumers with better access to consumer information to help them make informed and confident purchase decisions. It packages content from across government, exposing consumers to the breadth of information available. The refreshed website saw the launch of a new Resolve It tool to help consumers navigate the steps they can take in the event of post-purchase problems. 42. A number of tools for employers and employees have been introduced to support their understanding. In addition to the Employment Agreement Builder, released in April 2016 on business.govt.nz, MBIE has released other web tools to help New Zealanders navigate particular aspects of employment law.

19 16 ƨƨintelligence capability 43. The MBIE Intelligence Unit (MIU) has been established in response to a recommendation of the 2014 PIF Review, to provide specialist intelligence capabilities across MBIE s regulatory systems supporting an all-of-system and a cross-regulatory systems view. 44. The MIU is in its early days and is still developing its approach to working across MBIE. Over time, it aims to: reduce duplication and consolidates expertise across MBIE, promoting the development of expert intelligence capability across the agency assess cross cutting risks and supports the identification of potential solutions to utilise the entire regulatory toolbox across MBIE and external regulators (where appropriate) develop the ability to identify emerging risks not necessarily addressed by current regulatory frameworks. ƨƨcompliance and enforcement 45. MBIE delivers an array of regulatory services designed to promote compliance. These services range from information provision, to a variety of auditing and investigation activities, to enforcement activity where appropriate. MBIE aims to maximise compliance without unnecessarily burdening regulated entities, and applies risk-based and responsive frameworks to ensure this is the case. 46. MBIE is working across its regulatory systems to make compliance and enforcement more effective in a number of ways, including: coordination of investigations. MBIE is well positioned to coordinate its regulatory services in areas where mandates or affected parties overlap. Where successful, cooperation can both improve compliance and minimise administrative burden for the government and regulated parties. An early example of cooperation is the joint work on the Canterbury labour market following the Christchurch earthquake, involving the Labour Inspectorate, WorkSafe, Immigration, and Inland Revenue detection of noncompliance due to the greater reach multiple regulatory systems offer. Many noncompliant parties contravene rules across different regulatory systems and better sharing of knowledge can improve the extent to which issues are efficiently addressed by the relevant officers professionalisation of its regulatory workforce. MBIE is adopting the Regulatory (Core Knowledge) Qualifications across its workforce (see below). These qualifications will improve the delivery of its regulatory services and foster a common language and set of practices enabling cross-system coordination. 47. To make the most of this cross-system coordination, MBIE s Integrated Regulatory Enforcement branch works to align compliance and enforcement activities across MBIE s (and other agencies ) regulatory systems where an integrated approach is sensible, such as across the immigration, employment standards and workplace health and safety regulatory systems. This includes the identification and coordination of joint operations to better respond to risks, particularly in circumstances where there are overlaps with regulated parties

20 ƨƨoccupational regulation MBIE is responsible for almost half of New Zealand s occupational regulation regimes. While there is often inconsistency in the approach taken to various issues across these regimes, previous attempts at a general approach to occupational regulation reform shows they are not capable of simple analysis or reform. MBIE has established a cross-mbie occupational regulation experts group to identify and contribute bestpractice knowledge to these policy reviews. 49. The experts group is developing best-practice guidance on core aspects of the design and implementation of occupational regulation regimes for use across MBIE. The group is looking at opportunities for standardisation across regimes. The group is focussed on ensuring the issues of reducing barriers to competition and facilitating the movement of skilled people across borders are carefully considered when occupational regulation regimes are being developed or reviewed. MBIE leads cross-government initiatives to raise capability and performance 50. MBIE s extensive regulatory responsibilities make it well placed to play a leadership role in multi-agency collaboration on better regulation. In addition to this, MBIE is leading the following multi-agency initiatives. ƨƨgovernment regulatory practice initiative 51. Regulatory practice refers to the implementation and delivery of regulatory services the day-to-day business of regulators. High-quality regulatory practice is critical to realising regulatory outcomes, taking a proportional approach, avoiding unintended consequences, and to ensuring the regulator s experience and perspective is incorporated into any changes to regulation. 52. In response to the growing recognition of the importance of regulatory practice, a group of central and local government regulators established the Government Regulatory Practice Initiative (G-Reg). The initiative is a multi-agency network collaborating on regulatory practice and capability activities where collective action is likely to be beneficial. This includes activities to improve leadership, culture, regulatory practice and workforce capability in regulatory agencies and systems. MBIE chairs a Chief Executives group and a steering group, and houses the secretariat for the initiative. 53. The Government acknowledged the importance of improving regulatory practice in its response to the Productivity Commission s inquiry Regulatory Institutions and Practices 6. The response includes a professionalisation work programme focussed on improving regulator capability. The initiative has been tasked with leading this work. 54. The initiative oversees the implementation of the New Zealand Qualifications Authority listed Regulatory Core Knowledge Qualifications. Four qualification levels are planned. Training and assessment materials for the first level, the level 3 certificate, were completed in early 2017 and the first cohort has now graduated. The level 3 qualification provides foundation knowledge for all people working in regulatory systems. The levels 4 to 6 qualifications will be developed and delivered over the coming year and will build on the level 3 certificate. Over 400 MBIE people are completing the Regulatory Core Knowledge qualifications. MBIE intends to extend uptake of the qualification beyond the mostly operational people undertaking it at present to policy people. 6

21 18 ƨƨdelivering better public services to business customers 55. One of the most important goals of any regulatory strategy is to make regulation easy to deal with for those using it and subject to it. MBIE leads a multi-government agency partnership, under the R9, focussed on making it easier for business to deal with government 7. The Government has set the partnership two challenging targets: Business costs from dealing with government will reduce by 25 per cent by 2020, through a year-on-year reduction in effort required to work with agencies. Government services to business will have similar key performance ratings as leading private sector firms by Reaching our two targets is an important part of making it easier for business to work with government, but they are not the whole story. Our vision for the future is that Business gains value from easy and seamless dealings with government. The R9 Better For Business Programme has a Result Action Plan, a commitment by government and a plan to achieve the targets and vision. Insight into the business customer experience of government has emphasised the impact of new regulation on business can create a lot of effort. Our focus has moved to ensuring new and/or changed regulation is designed with business impact as a key consideration. 57. At the time of writing, the R9 team is working with three large regulatory systems, which significantly impact businesses (Workplace Health and Safety, Food Act, and Anti Money Laundering Phase II). Reviews and monitoring of how regulatory co-design was used in those regulations will provide learnings for government to apply system wide into the future, to lead to less impact on business. ƨƨdispute resolution 58. The Government Centre for Dispute Resolution (GCDR) was established through Budget 2016 to provide leadership and stewardship to the function of dispute resolution across government. Disputes that are unresolved or resolved badly cause paralysis in people s lives and can be a brake on New Zealand s productivity and economic prosperity. 59. The government dispute resolution system encompasses more than 50 dispute resolution schemes run by government or operating in the private sector. Government has an interest in ensuring that all dispute resolution schemes meet the needs of users and resolve disputes effectively. Dispute resolution also contributes to quality regulatory stewardship. Best practice dispute resolution schemes generate important information about pain points and emerging issues in regulatory systems and can assist agencies to get ahead of regulatory failure. 60. In its first year of operation the GCDR has worked with policy teams in MBIE and across government to address disputes in diverse areas including building and construction, telecommunications and financial markets, fire and emergency services, retirement villages, tertiary education, pay equity and ACC. The GCDR continues to develop its expertise in best practice resolution systems and its understanding of dispute resolution approaches across government. Future priorities include building agencies levels of dispute resolution capability and identifying opportunities for standardisation and consolidation across the government dispute resolution system. 7 For further information see:

22 MBIE has tools for on-going maintenance of its regulatory systems As well as building greater expertise in each regulatory function, MBIE must maintain and enhance the quality of each regulatory system. Much of this is achieved through investment in policy and operational capability in each system. Quality assurance and stakeholder feedback processes are in place for each system. These include governmentwide mechanisms, such as regulatory impact analysis, and following the guidance developed by the Legislative Design and Advisory Council. 62. In adopting a regulatory stewardship approach, MBIE has introduced some mechanisms aiming to reinforce existing disciplines on designing, implementing and maintaining high-quality regulation for individual regulatory systems. Three of the more significant of these are: regulatory system assessments regulatory charters Regulatory Systems Amendment Bill. ƨƨregulatory system assessments 63. Regulatory system assessments provide an insight into how well a regulatory system is working at a particular point in time within the existing policy and institutional framework. These assessments are not an analysis of what the rules should be that is the role of policy reviews. Neither are they a full assessment of the strategies and capabilities of a government agency involved in a system that is the role of a Performance Improvement Framework (PIF) review. These assessments are conducted by a small team of MBIE people not directly involved in the system, sometimes supplemented by a member from another agency. 64. MBIE has conducted regulatory system assessments for the following systems: employment relations and standards immigration building competition corporate. 65. The first two of these assessments were used to trial and develop the approach. Summaries of the findings of the building and competition and subsequent assessments are available on MBIE s website 8. MBIE has developed action plans in response to assessments identifying regulatory system-specific and cross-mbie actions. 66. A number of common themes and issues have emerged across these assessments to date. These are outlined in Annex An assessment of the Petroleum and Minerals regulatory system is in progress and the assessment of the consumer and commercial regulatory system will take place in the latter half of

23 20 ƨƨregulatory charters 68. The purpose of a regulatory charter is to clearly explain the roles of the various participants in each regulatory system, the relationships between them, and how the participants will work together to address gaps, overlaps and uncertainties. Although this might seem to be obvious for most regulatory systems, research into the causes of regulatory failure has identified lack of clarity about roles as a significant contributor to failures. 69. The Productivity Commission has recognised the potential benefits of regulatory charters for individual regulatory regimes in its report, Regulatory Institutions and Practices. It also recommends that once MBIE has completed the development of a significant number of charters, the Treasury and MBIE should evaluate the process to identify any areas for improvement and provide guidance about the model to other government agencies MBIE has completed regulatory charters for the following regulatory systems: Financial markets regulatory system Employment Relations and Standards Building Competition Consumer and commercial. 71. Charters are under development for the immigration, corporate and energy markets systems. ƨƨregulatory Systems Amendment Bill 72. A recent innovation has been the development of a Regulatory Systems Amendment Bill. This is omnibus legislation where small regulatory fixes can be made to many statutes administered by MBIE at the same time. This allows changes to be made to regulatory systems in a timely and cost-effective manner. 73. This Bill has been developed in response to the Productivity Commission report, Regulatory Institutions and Practices, and noted it is hard to find time in the Parliamentary calendar for repairs and maintenance of existing legislation 10. Consequently, agencies have to work with out-of-date legislation, causing unnecessary cost for regulators and the public. 74. The first Regulatory Systems Amendment Bill was made law in 2017, amending twenty different MBIE statutes. In late 2017, MBIE expects to release the exposure draft for the second Regulatory Systems Amendment Bill. 75. MBIE also uses other legislative tools to repair or maintain legislation. For example, the Statutes Amendment Bills can be used to make minor and non-controversial changes to legislation. MBIE also takes advantage of the opportunity to repair and maintain legislation when the Government makes amendments to legislation for policy reasons June Finding 16.2.

24 Figure 3: Elements required for a high-performing regulatory system 21