Chapter 3: Regulations, Disallowable Instruments and Other Delegated Legislation

I Introduction

Much of the jurisdiction of the Regulations Review Committee relates to examination of “regulations”, namely any delegated legislation, including secondary legislation within the meaning of the Legislation Act 2019.⁷⁶ Similarly, key consequences that may flow from the Committee’s examination, such as disallowance, can only be applied in relation to particular instruments.

The definitions of “regulations”, “delegated legislation”, “legislative instruments” and “disallowance instruments” are therefore relevant to the work of the committee. This chapter explains these terms, some of which are in states of transition and subject to reform.

II Delegated legislation generally

There is a hierarchy of legislative instruments. When Parliament passes a bill it becomes an Act of Parliament, also known as a statute or primary legislation. Parliament is, however, not the only institution that produces legislation; Parliament may delegate the power to make laws to another body or individual. Laws made pursuant to such a power are known as delegated or secondary legislation.⁷⁷ Instruments by the Executive, commonly called regulations, are one form of delegated legislation. Regulations are sometimes also called secondary or subordinate legislation.

It is a well-established principle that statutes should set out the substantive policy of a law, while regulations may provide the detail necessary for the implementation of that law, without, for example, purporting to levy taxes, amend Acts of Parliament or have retrospective effect.⁷⁸ These are matters of such importance that they are properly the domain of an Act of Parliament. Regulations may, however, contain key factors that guide the implementation of policy enacted by Parliament, give effect to New Zealand’s international obligations or ensure prompt response to emergencies. Regulations are also commonly used where the area of law concerned needs to be updated or replaced regularly.⁷⁹

Regulations therefore deal with a vast array of subject matter, often in a detailed or technical manner. For instance, regulations may, amongst other things, provide for the issuing of licences or permits, govern the use of harbours and reserves, set levels of fees for government services, and establish laws relating to aviation and transport.

Delegation of law-making is usually justified for the following reasons:⁸⁰

• the pressure of parliamentary time;
• the technicality of the subject matter;
• any unforeseen contingencies that may arise during the introduction of large and complex schemes of reform;
• the need for flexibility;
• an opportunity for experiment; and
• emergency conditions requiring speedy or instant action.

The New Zealand Parliament generally has insufficient time to legislate on all matters that are potentially relevant to the implementation of a new law. The House devotes considerable time debating the substantive policies of bills during reading debates, within select committees, and at the committee of the whole House stage.⁸¹ To ask it to go through a similar process in order to legislate on all technical matters relating to the implementation of the law would be impractical.⁸²

Delegated legislation can overcome Parliament’s ‘limitation of aptitude’ to deal with technical matters. This included “detailed technical knowledge, for example, of trademarks, designs, diseases, poisons, legal procedure and so on, upon which the Minister can and does consult experts”.⁸³ Using regulations to pass laws on such matters has two advantages. First, regulations can be amended relatively quickly when compared to an Act of Parliament. This allows rapid movements in technical development and knowledge to be provided for in the law. Secondly, it overcomes the problem of having Acts overburdened with provisions dealing with matters of great complexity and detail.

In addition, Acts that introduce large-scale reform of an area of law may bring about certain difficulties and, in the words of the Regulations Review Committee, “it is inevitable that in the case of lengthy and complex reform that anomalies, discrepancies and mistakes will become apparent from time to time and that these will need to be rectified promptly”.⁸⁴ Although generally discouraged, one way of dealing with unforeseen difficulties is through the making of regulations that amend the principal Act in order to correct any anomalies that become apparent.⁸⁵ Regulations can usually be made considerably faster than can an Act of Parliament. By contrast, a bill that seeks to amend the provisions of an Act must compete with other bills on Parliament’s agenda, and then must pass through the various stages of the parliamentary process before it becomes law.⁸⁶

As noted earlier, policy is a matter for Parliament. By delegating its law-making powers, however, there is a risk that the executive will use those powers to legislate on matters of substantive policy. The key issue is to what extent Parliament should delegate its regulation- making power to another body. If precise limits are set down in the principal Act specifying the exact matters that may be contained in a regulation, the body to whom the power is granted must legislate within those confined limits. If it does not, the regulation is liable to be struck down by the courts as being ultra vires (“outside the powers”). In this way, Parliament can retain control over those matters that should properly be dealt with by statute. In contrast, if a regulation-making power contained in an Act is broad and allows legislation to be made for very general and non-specific purposes, the likelihood of delegated legislation dealing with matters more appropriate for parliamentary enactment increases. In short, the broader the regulation-making power, the greater the possibility that it is an inappropriate delegation of law making power to the executive.

One of the clearest examples of a broad regulation-making power was contained in the Economic Stabilisation Act 1948. The purpose of the Act was to “promote the economic stability of New Zealand”. Section 11 of the Act allowed the Governor-General to make regulations “as appear to him to be necessary or expedient for the general purposes of this Act”. Given that this regulation-making power lacked any specificity, the executive was able to use it to put through controversial measures such as wage, price and rent freezes. Indeed, then-Prime Minister Robert Muldoon was recorded as saying that the government could “do anything provided you can hang your hat on economic stabilisation”.⁸⁷ Given the impact of the regulations on individuals and businesses, many commentators argued that the freezes were of such importance that only Parliament should have had the power to bring them into force.⁸⁸

III Key definitions: regulations, disallowable instruments and secondary legislation

Over time, the different categories of delegated legislation have been defined by several instruments, statutory and otherwise. For present purposes, there are five important definitions:

• First, the definition of the term “regulations” in the Standing Orders of the House of Representatives.
• Secondly, the definition of “disallowable instrument” in section 38 of the Legislation Act 2012.
• Thirdly, the definition of “regulations” in section 29 of the Interpretation Act 1999.
• Fourthly, the definition of “regulations” in section 2 of the Regulations (Disallowance) Act 1989 (this definition ceased to have legal force on 5 August 2013 but is still useful for comparative purposes).
• Fifthly, the definition of “secondary legislation” under the (soon to be in force) Legislation Act 2019.

Before the coming into force of the Legislation Act 2012, the primary definition of these instruments, then officially known as “regulations”, was contained in the Regulations (Disallowance) Act 1989. This form of delegated legislation is now known as “disallowable instruments”, the definition of which is provided by the Legislation Act 2012. However, the term “regulations” remains commonly used to refer to these instruments, and at the time of writing, the term remains defined in the Interpretation Act. Once the Interpretation Act 2019 comes into force (see below), a new term – “secondary legislation” – and definition will adopted.

A “Regulations” under the Standing Orders

Standing orders define regulation as “any delegated legislation, including secondary legislation within the meaning of the Legislation Act 2019”.⁸⁹ The definition of regulations has been updated in response to the Legislation Act 2012 and Legislation Act 2019. The changes ensure that the Regulations Review Committee’s jurisdiction is consistent with the statutory language used in the Legislation Act 2012 and Legislation Act 2019, while also continuing to use the term “regulations” to describe the instruments the Committee may scrutinise. For this reason, the Digest continues to use the term “regulations” to refer to all instruments subject to scrutiny by the Regulations Review Committee, except where the context otherwise requires.

B “Disallowable Instruments” under the Legislation Act 2012

The legislative regime managing the classification, management and disallowance of delegated legislation was significantly changed on 5 August 2013, with the coming into force of relevant parts of the Legislation Act 2012.

The Act does not define the term “regulations”, nor does it use this term to refer to specific types of delegated legislation. Instead, the Act defines two new terms, “disallowable instruments” and “legislative instruments”. “Disallowable instrument” is defined in section 38:

The Regulations Review Committee has noted that this definition may be slightly broader than the definition of “regulations” contained in the 1989 Act.⁹⁰ Subsection (1) of the definition sets out three key categories of instruments which are treated as disallowable instruments (unless one of the exceptions applies).

First, “legislative instruments” are disallowable instruments. The instruments are defined in section 4:

This category of instruments includes most Orders in Council, instruments made by Ministers which amend an Act or defines a term in an Act, instruments required by their parent Act to be published, and some resolutions of the House relating to disallowable instruments.⁹¹

Secondly, disallowable instruments include instruments made under empowering provisions that, implicitly or explicitly, have the effect of making them disallowable. The Regulations Review Committee has begun to refer to this category of instruments as “disallowable instruments that are not legislative instruments” or “DINLIs” (although the use of this term has created some confusion, and its continued use is uncertain).⁹² DINLIs also include “instruments with significant legislative effect”, discussed further below. The Committee completed a report into the identification and oversight of these instruments in 2014, discussed further in Chapter 14.⁹³

This category of instruments is not identical to, but broadly overlaps with, the class of instrument that had, under the Regulations (Disallowance) Act 1989, come to be known as “deemed regulations” (although the term was never explicitly defined in legislation).⁹⁴ Historically, deemed regulations were instruments made pursuant to delegated authority that did not fall within the definition of “regulations” but were “deemed” to be regulations nonetheless. Generally, although not always, these instruments were designated as such by the text of their empowering Acts.⁹⁵ In other words, deemed regulations sat alongside “traditional” regulations as a form of secondary legislation.⁹⁶ As a consequence, the instrument in question was scrutinised by the Regulations Review Committee as well as being covered by the disallowance provisions of the 1989 Act. Nowadays, under s 38(1)(b) of the Legislation Act 2012, instruments that were once classed as “deemed regulations” may now be designated as disallowable instruments by their empowering Act, even if they are not legislative instruments.

Finally, “instruments with significant legislative effect” qualify as disallowable instruments. The meaning of this category of instruments is set out in section 39:⁹⁷

In its report on the Legislation Bill, the Regulations Review Committee commended the classification of instruments as disallowable based on their substance rather than their form or description, as was the approach in the 1989 Act.⁹⁸ Delegated legislation could no longer be excluded from the disallowance regime simply on the basis of how it was described.⁹⁹ Parliament, however, remains able to clearly indicate in the empowering Act that an instrument is not disallowable for the purposes of the Legislation Act.¹⁰⁰

While adopting a different style of definition and some different terms, the definition of “disallowable instrument” is generally similar in scope to the definition of “regulations” under the 1989 Act, other than some possible differences around the margins. The Committee’s jurisdiction therefore does not appear to have been significantly affected by the change in terminology, though if anything it has been slightly broadened. Most disallowable instruments must be presented to the House not later than the 16th sitting day after the day on which they are made and are subject to the Regulations Review Committee’s supervisory ambit and the parliamentary disallowance mechanisms discussed below.¹⁰¹

The Cabinet Manual provides that legislative instruments must not come into force until at least 28-days after notification in the Gazette. While this rule does not apply to disallowable instruments, the policy behind the rule, namely to ensure the law is publicly available and capable of being ascertained prior to coming into force, is arguably just as relevant to disallowable instruments. In 2016, the Committee wrote to three entities bring this issue to their attention and enquiring as to their opinion on whether the rule would have been good practice for their regulations.¹⁰² The Committee expressed particular concern with the amendments to the New Zealand Greyhound Racing Association Incorporated Rules. These amendments were notified in the Gazette on 1 December 2016, however, no detail was given as to the nature and substance of amendments. Further, while it appears that the amendments were incorporated in the rules on the Association’s website, information regarding the amendments was not readily available nor were previous versions of the rules available for comparison. The amendments rules were also presented to the House in this manner. The Committee recommended that an explanation of the amendments is included in the Gazette notification.¹⁰³

C “Regulations” under the Interpretation Act 1999

Section 29 of the Interpretation Act 1999 also defines “regulations”:

This definition is the same as that contained in section 2 of the Regulations (Disallowance) Act 1989, which was in force at the time at which the Interpretation Act was passed, except paragraph (e) of the definition has since been amended to include reference to the Legislation Act 2012. The effect of this amendment is that the concept of “regulations” under the Interpretation Act 1999 encapsulates all instruments falling within the relevant definitions contained in both the 1989 and 2012 Acts. The continued use of the term “regulations” in the Standing Orders to describe the instruments the Committee scrutinises therefore fits cleanly within the legislative scheme contained within both Acts.

It is notable that Parliament has retained reference to “regulations” in this Act while not yet including such reference in the Legislation Act 2012. The Regulations Review Committee has indicated that it will continue to use the term “regulations” to refer to delegated legislation generally, as it did prior to 2013.¹⁰⁴ As noted above, the term “regulations” also continues to be used in the Standings Orders.

D “Regulations” under the Regulations (Disallowance) Act 1989

In previous editions of this publication, regulations were primarily defined by section 2 of the Regulations (Disallowance) Act 1989 as follows:

This definition ceased to have force of law since 2013, but it is still relevant for historical reasons. This definition is illustrative of the types of instruments still commonly called “regulations”. Importantly, many of the older Committee reports and other publications cited in this Digest rely on this older definition, the substance of which is captured within the definition of “regulations” that remains in the Interpretation Act 1999.

E “Secondary legislation” under the (soon to be in force) Legislation Act 2019

The definition of secondary legislation that must be published and presented to the House of Representatives or that is subject to disallowance through parliamentary procedures has been vexing and confusing, as the myriad of definitions discussed earlier testifies. The Legislation Act 2019 (enacted but not yet fully in force) and the Secondary Legislation Bill 2019 (soon to be passed companion bill) seek to address this.¹⁰⁵ The Legislation Act 2019 rewrites and updates both the Legislation Act 2012 and Interpretation Act 1999, re-enacting the two into one Act. Notably, the Legislation Act 2019 tackles the definition of secondary legislation. Rather than relying on woolly and complicated definitions, the new regime relies on specification of secondary legislation as such in all legislation empowering secondary legislation – thereby requiring a massive project to amend almost every Act on the statute book.

The Legislation Act 2019, when it comes into force after its companion bill is passed, establishes a single category of ‘secondary legislation’, namely:

Thus, once in force, the definition of secondary legislation for the purpose of presentation to the House and disallowance is clear and certain. The definition also clarifies the extent of the obligation to publish secondary legislation.¹⁰⁶ Significantly, the Legislation (Repeals and Amendments) Act 2019 will, at some time in the future, amend the Legislation Act 2019 to provide that, subject to a few exceptions, secondary legislation does not commence until published electronically on a central legislation website.¹⁰⁷

The new specification approach has necessitated a massive revision project for the Parliamentary Counsel Office, who have examined all the empowering provisions in each and every statute to determine whether or not instruments made under those provisions should be specified as secondary legislation. When making that assessment, a test of whether instruments are likely to have legislative effect has been applied; in other words, in general terms, whether the instruments “make legal rules that apply generally”, “apply to the public or class of the public” or “create a framework to be applied again and again.

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76 Standing Orders of the House of Representatives 2020, SO 2.

77 Delegated legislation is also known as “subordinate legislation” or “statutory instruments”. For further discussion regarding delegated legislation in New Zealand, see Morris and Malone, above n 3, at 7-31; Palmer and Palmer, above n 2, at 202-209; David McGee Parliamentary Practice in New Zealand (3rd ed, Dunmore Publishing Ltd, Wellington, 2005) at 396-423 and Ross Carter, Jason McHerron and Ryan Malone Subordinate Legislation in New Zealand (LexisNexis, Wellington, 2013).

78 Cabinet Office, Cabinet Manual 2017 at [7.82].

79 For further discussion of the constitutional divide between primary and secondary legislation, see Ross Carter, Jason McHerron and Ryan Malone Subordinate Legislation in New Zealand (LexisNexis, 2013) at 23–42.

80 Report of the Committee on Ministers’ Powers 1932, Cmnd 4060 [The Donoughmore Report]; adopted in Report of the Delegated Legislation Committee [1962] AJHR I18 [Algie Committee].

81 For an outline of the parliamentary legislative process, see McGee, above n 77, at 341-390.

82 For example, at the time of writing there were 28 different sets of regulations in force made pursuant to the Resource Management Act 1991.

83 Algie Committee, above n 80, at 6.

84 Regulations Review Committee “Inquiry into the Resource Management (Transitional) Regulations 1994 and the Principles that Should Apply to the Use of Empowering Provisions Allowing Regulations to Override Primary Legislation During a Transitional Period” [1995] AJHR I16C at 15.

85 This kind of regulation-making power is known as a “Henry VIII clause”. These are further discussed in Chapter 14(IV).

86 It should be noted, however, that Parliament can pass laws under urgency which can facilitate the rapid enactment of a bill. See generally McGee, above n 77, at 153-157.

87 Palmer, above n 6, at 12.

88 Doug Kidd Legislature v Executive: The Struggle Continues (New Zealand Centre for Public Law, Victoria University of Wellington, Occasional Paper No 3, 2001) at 2-3.

89 Standing Orders of the House of Representatives 2020, SO 3.

90 Legislation Bill 2012 (162–2) (select committee report) at 7.

91 A few Orders in Council are not legislative instruments: see for example the Tariff (ANZTEC) Amendment Order 2013 and the Minerals Programme for Minerals (Excluding Petroleum) 2013 Order 2013. An example of a provision which declares instruments to be legislative instruments is section 571(2) of the Financial Markets Conduct Act 2013.

92 The Parliamentary Counsel Office currently refers to these instruments as “other instruments”. The Office maintains a list of other instruments (www.pco.parliament.govt.nz/other- instruments) and the instruments can also be found through the New Zealand Legislation website at www.legislation.govt.nz.

93 Regulations Review Committee “Inquiry into the oversight of disallowable instruments that are not legislative instruments” (11 July 2014), see also Chapter 14.

94 For further discussion of deemed regulations, see Chapter 14(III).

95 This was generally achieved by expressly designating that instruments made under the empowering Act were to be treated as regulations for the purpose of the Regulations (Disallowance) Act 1989 but not for the purposes of the Acts and Regulations Publications Act 1989.

96 There also exists a further category of legislation known as tertiary legislation. Tertiary legislation is delegated legislation that does not take the form of traditional regulations, deemed regulations, or any other form of secondary legislation. It includes such things as manuals, instructions, and some codes.

97 Empowering provisions for this category of instruments were not covered by the definition of “regulations” in the Regulations (Disallowance) Act 1989, but SO314(3)(b) of the 2011 Standing Orders stated that the Regulations Review Committee could scrutinise “any provision that contains a delegated power to make instruments of a legislative character.” This Standing Order was deleted in the 2014 revisions, because the inclusion of this type of instrument in the definition of “disallowable instrument” renders it unnecessary.

98 Legislation Bill 2012 (162–2) (select committee report) at 7.

99  Legislation Bill 2012 (162–2) (select committee report) at 7.

100 Legislation Act 2012, s 38(4). This power to expressly exclude instruments from the disallowance scheme can be seen in, for example: Section 12B(9) of the Remuneration Authority Act 1977 excluding determinations of judicial salaries from disallowance; Section 17(3) of the Members of Parliament (Remuneration and Services) Act 2013 excluding orders setting the privileges available to Members of Parliament from the scheme; and Section 32(6) of the Telecommunications (Interception Capability and Security) Act 2013 excluding exemptions given to telecommunications networks from the interception capability requirements of that Act, from disallowance.

101 See Chapters 3.

102 Regulations Review Committee “Activities of the Regulations Review Committee in 2016” [2017] AJHR I.16C at 14.

103 Regulations Review Committee “Activities of the Regulations Review Committee in 2017” [2017] AJHR I.16D at 13 – 14.

104 Regulations Review Committee “Activities of the Regulations Review Committee in 2013” (27 June 2014) at 6.

105 For background, see Dean R Knight “Specifying the corpus of secondary legislation subject to publication, presentation and disallowance” [2020] Public Law 585 and Attorney-General, Access to secondary legislation: policy approvals for the Secondary Legislation (Access) Bill (Paper for Cabinet Legislation Committee, March 2019).

106 Legislation Act 2019, Part 3.

107 Legislation (Repeals and Amendments) Act 2019, sch 2, which will amend Legislation Act 2019, s 73.