Published in Insights, The New Zealand Initiative’s newsletter, 26 August 2016
A penny saved is a penny earned. This should be the motto of regulatory reform.
When it comes to regulatory burdens, it is not necessarily the cost of a specific regulation that matters. It is the fact that many such seemingly trivial regulations taken together impose substantial costs on businesses.
And so Matt Doocey’s private member’s bill drawn from the ballot this week is most welcome.
What is this bill about? Well, under section 209 of the Companies Act 1993 companies must send their shareholders either a hard copy of their annual report or a written notice asking them if they would like to receive it.
At first, this provision sounds plausible. Of course shareholders have a right to be informed about the performance of their companies.
The question is whether the procedure prescribed by the Act is still appropriate in today’s digital age.
Last year, the Initiative published the report Reducing Unnecessary Regulatory Costs. It collected recommendations from our members for regulatory reform. Abolishing section 209 of the Companies Act was one of them.
The report noted that, for example, one of our members had to post more than 22,540 notices to their shareholders of whom only 378 then requested a hard copy of the annual report. Most new Zealand companies experience the same lack of demand for printed material.
Shareholders would not need to miss out by going paperless. Any relevant information can be provided, virtually costless, on companies’ websites.
Postage and administration costs can easily add up to tens of thousands of dollars for large companies. Across the economy, we are talking about a few million dollars of unnecessary costs – not to mention hundreds of thousands of pages of printed paper.
Despite this financial and environmental waste, Labour’s Chris Hipkins slammed Doocey’s bill. Hipkins said it only amounted to “more time set to be wasted debating nothing”.
Not quite. It only shows why the likes of Hipkins should never be put in charge of regulatory reform. They do not even recognise wasteful spending when it is bleeding obvious. And they do not care about the regulatory costs they impose on others.
Matt Doocey, meanwhile, ought to be congratulated. If only more parliamentarians paid attention to such details, the effect on regulatory efficiency could be substantial. His penny saved is a penny earned.
For Chris Hipkins, meanwhile, that penny still needs to drop.