Chapter 10: More Suited to Parliamentary Enactment: SO 327(2)(f)

It is well established that statutes should set out the policy and substance of the law. Conversely, regulations should be limited to technicalities and detail. This standing order ground is relevant when a regulation-making power is so wide that it authorises the making of regulations that contain matters of broad policy, principle or substance.

As a general rule, whether something is a matter of policy can be determined by its importance and its contestability. Take, for example, the Committee’s investigation into the Children, Young Persons, and Their Families (Residential Care) Regulations 1996.²⁸³ The regulations gave staff powers of search and seizure over children and young persons placed in a residential facility. Whether children living in a residential facility should be subjected to such provisions was the subject of vigorous debate before the Committee. The Department of Social Welfare argued in favour of the regulations by pointing to the serious behavioural problems of the children, as well as the fact that some of them had either committed, or were suspected of committing, criminal offences. Conversely, the Commissioner for Children argued that such powers were wholly inappropriate given that the residences were required to foster a family-like environment. Ultimately, the Committee found that if such powers

were to be granted, they should be conferred by statute and not by regulation. This finding was echoed in the Committee’s investigation into the Road User Charges (Transitional Matters) Regulations 2012,²⁸⁴ where the Committee found that had Parliament been given the opportunity to consider the proposed change to the law, the regulations concerned may have been enacted differently; or at least provoked lengthy debate requiring submissions from interested parties, investigation and in-depth analysis. As a result, the Committee took the view that the matters dealt with in the regulations were more properly a matter for primary legislation.

The policy choices inherent in debates such as these mean that Parliament is the most appropriate body to decide what the substantive law should be. Regulations should only seek to implement policy and not establish it. Given the varied nature of law-making, there can be no definitive list of those matters that will be considered suitable for parliamentary enactment and those that may be dealt with by regulation. Other instances where the Committee has found a breach of this ground include:

• Regulations that had the effect of amending primary legislation so that it was no longer an offence to possess certain organisms. Only primary legislation should create or amend offence provisions.²⁸⁵
• Regulations that frustrate clear parliamentary intent, whether that intent is to do or not do something; or to have something occur on or by a certain date. The Committee has stated that any regulations that attempt to frustrate Parliament’s intent, even by maintaining the status quo, are in themselves matters more suited to parliamentary enactment, and breach this Standing Order.²⁸⁶
• Regulations that specified the level of accident compensation payments that were to be paid to claimants. The Committee stated that if the regulations were to maintain their subordinate nature, they should not prescribe the extent of financial obligations to be fulfilled under the principal Act.²⁸⁷
• Regulations that change the substantive law. The Committee has indicated two major reasons why regulations of this type breach this Standing Order. The first is that if there is no ability to read the desired policy change into the existing administrative framework, the matter is clearly outside existing law and is in itself a matter better suited for parliamentary action.²⁸⁸ Secondly, if an entity is actively and openly seeking change to substantive legislation, then regulations which seek to facilitate such change are clearly matters better suited for parliamentary enactment, even if plans exist to amend the relevant substantive law.²⁸⁹
• However, the Committee has recently reconfirmed that Parliament may expressly authorise regulations to change the substantive law within limits. For example, the Committee considered that the power granted in the Canterbury Earthquake (Building Act) Order 2011 to make substantive modifications to the Building Act 2004 was within the scope of the broad regulation-making power in the Canterbury Earthquake Recovery Act 2011.²⁹⁰ Such modifications were prima facie matters more appropriate for parliamentary enactment, but Parliament had explicitly delegated such powers to the executive in an emergency situation with a full understanding of how those powers might be used, and so this Standing Order ground was not breached.
• Another similar example is where statutes amend pre-existing regulations. Section 25 of the Interpretation Act 1999 allows regulations amended or substituted by an Act of Parliament to be amended, replaced or revoked as if the statutory changes had been made by regulation. The Committee confirmed that s 25 authorises the amendment of regulations regardless of whether those regulations contain amendments by statute in their analysis of a complaint about the Accident Compensation (Motor Vehicle Account Levies) Regulations 2015.²⁹¹ The passage of regulations in circumstances contemplated by s 25 is not likely to breach this ground.
• Regulations that established the Kiwifruit Marketing Board. The Board was given monopolistic trading rights over kiwifruit exports worth over $600 million a year. Such matters were considered matters of important policy that should have been subjected to the primary legislation.²⁹² Similarly, the Overseas Investment Amendment Regulations 2008 were found to add a significant new consideration to the Act (the concept of strategically important infrastructure).²⁹³ The Committee concluded the Regulations were objectionable under this ground (as well as being an unusual and unexpected use of a regulation-making power). It concluded that this significant policy change was better suited to parliamentary enactment because it introduced “such a broad and significant class of assets [that] it deserved a statutory class of its own.”²⁹⁴ In other words, the regulations introduced a third type of property, that of strategically important infrastructure, where the Act had previously only recognised two types, sensitive land and significant business assets.
• Rules for a statutory body that are inconsistent with either the purposes of the empowering Act or the rules of other similar bodies. In its report on the New Zealand Teachers’ Council (Conduct) Rules 2004, the Committee found that rules which forced a Disciplinary Tribunal’s hearings to be held in private and prevented the publication of details of those hearings breached this Standing Order.²⁹⁵ The Committee stated that for a body’s Rules to differ so markedly from the purposes of the empowering Act and from the Rules of other similar Disciplinary Tribunals was a matter that ought to be enacted specifically by Parliament.
• Regulations that appeared to allow the Reserve Bank to become involved in trading activities beyond the state sector. The empowering Act made it clear that the core function of the bank was to act for the government. If the bank was to act for private interests, then this should have been authorised by primary legislation and not by regulations.²⁹⁶
• Regulations setting fees exceeding the level needed to cover costs in order to either maintain a financial reserve or to provide goods or services to individuals. In the absence of approval by the empowering statute, the setting of fees above the level needed to cover costs will generally amount to the imposition of a tax without the authorisation of Parliament in contravention of section 22 of the Constitution Act 1986. The Committee has confirmed that any authority given to a public entity to charge a fee is implicitly capped at the level of cost recovery.²⁹⁷ The collection of fees above the level needed to cover costs is therefore considered a matter for parliamentary enactment.²⁹⁸

Thus, the matters which can be considered more appropriate for parliamentary enactment are extensive in nature. A common thread that links the above examples is that they represent attempts to implement policies that in reality deserve the full attention of the parliamentary legislative process. In situations where an existing Act does authorise the making of regulations that contain matters of policy, the Committee has encouraged the government to legislate via statute and not through regulation:²⁹⁹

We consider that when the government proposes to exercise [a regulation-making] power in a way that goes beyond what is reasonable or acceptable, then it is preferable that the action be tested by being placed before Parliament, rather than being imposed through regulation.

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283 Regulations Review Committee “Investigation into Children, Young Persons, and Their Families (Residential Care) Regulations 1996” [1997] AJHR I16B.

284  Regulations Review Committee “Investigation into the Road User Charges (Transitional Matters) Regulations 2012” (13 November 2012).

285 Regulations Review Committee “Investigation into the Biosecurity (Rabbit Calicivirus) Regulations 1997”, above n 208.

286 Regulations Review Committee “Investigation into the Road User Charges (Transitional Matters) Regulations 2012”, above n 284.

287 Regulations Review Committee “Complaints Relating to the Accident Rehabilitation and Compensation Insurance (Social Rehabilitation) Regulations 1992” [1993] AJHR I16H.

288 Regulations Review Committee “Investigation into the Road User Charges (Transitional Matters) Regulations 2012”, above n 284.

289 Regulations Review Committee “Investigation into the Road User Charges (Transitional Matters) Regulations 2012,” above n 284.

290 Regulations Review Committee “Complaint regarding the Canterbury Earthquake (Building Act) Order 2011” (24 April 2014) at 12–13.

291 Regulations Review Committee "Complaint about Accident Compensation (Motor Vehicle Account Levies) Regulations 2015" [2015] AJHR I16A.

292 Regulations Review Committee “Report of the Inquiry into the Appropriateness of Establishing the Kiwifruit Marketing Board Through Regulations[1988] AJHR I16. (It is worth noting that the Committee repeated these same concerns five years later in a separate report on regulations involving the Kiwifruit Marketing Board: Regulations Review Committee “Inquiry into the Kiwifruit Marketing Regulations 1977, Amendment No 10”, above n 281.)

293 Regulations Review Committee “Complaint Regarding the Overseas Investment Amendment Regulations 2008”, above n 203.

294 Regulations Review Committee “Complaint Regarding the Overseas Investment Amendment Regulations 2008”, above n 203, at 10.

295 Regulations Review Committee “Complaint Regarding the New Zealand Teachers’ Council (Conduct) Rules 2004” (12 August 2013).

296 Regulations Review Committee “Report on the Inquiry into the Reserve Bank of New Zealand Order 1988”, above n 202.

297 Regulations Review Committee “Complaint about two notices made by the Plumbers, Gasfitters and Drainlayers Board relating to an offences fee and the Complaint regarding the Offences Fee contained in the Amendment to the Plumbers, Gasfitters and Drainlayers Board (Fees) Notice 2010” (30 September 2013).

298 Regulations Review Committee “Complaint regarding the Midwifery (Fees) Notice 2005”, above n 180. See also the Regulations Review Committee “Complaint Regarding SR 2008/327 Marine Safety Charges Amendment Regulations 2008”, above n 255; and Regulations Review Committee “Complaint about two notices made by the Plumbers, Gasfitters and Drainlayers Board relating to an offences fee and the Complaint regarding the Offences Fee contained in the Amendment to the Plumbers, Gasfitters and Drainlayers Board (Fees) Notice 2010” (30 September 2013). In those reports, the Committee took the view that levying powers are more akin to taxation powers than fee setting powers. In support of that view, it cited the Office of the Auditor-General’s “Good Practice Guide: Charging Fees for Public Sector Goods and Services”, above n 181 at [1.10], which states that a levy “differs from a fee for a specific good or service; it is more akin to a tax, but one that is charged to a specific group. It is usually compulsory to pay a levy. Levies charged to a certain group or industry are usually used for a particular purpose, rather than relating to specific goods or services provided to an individual.” For further discussion of levies see Chapters 7 and 14.

299 Regulations Review Committee “Report on the Government’s Response to the Report on the Complaint Relating to Staffing Orders, Promulgated under Section 91H of the Education Act 1989, Affecting Area, Primary, Intermediate, and Secondary Schools” [1996] AJHR I16L at 7.