The politics of legal sausage-making

Published in the New Zealand Herald, 13 April 2021

My first job after my law doctorate was as an assistant to a Liberal Democrats peer in the UK House of Lords. It was a helpful lesson on the difference between the theory and practice of law-making.

I remember a sitting of the Lords’ Grand Committee. A Labour baroness had just delivered a speech opposed to the Liberal Democrats’ position. Notwithstanding, my Lord rose and declared his enthusiastic support. As he finished his speech, he sat down, turned around to me and explained: “That was a whole lot of nonsense, but we need her later.”

Anyone who has ever worked in politics would not be surprised by this anecdote. The business of legislation is murky. As the saying goes, “Laws are like sausages: Better not to see them being made”.

However, at least for sausage-making, there are rules. There is a standard under the Australia New Zealand Food Standards Code requiring no less than half of a sausage to contain fat free meat flesh. Which probably still makes you wonder about the rest.

With legislation there is much less certainty that its ingredients are of good quality.

Yes, there are Regulatory Impact Statements, Legislative Statements and Departmental Disclosure Statements. But what was once meant to lift standards has become a box-ticking exercise. At times, the Government has even allowed itself the liberty to suspend regulatory impact analysis altogether.

This is the background of David Seymour’s new private members’ Bill. The ACT leader had his Regulatory Standards Bill, recycled from a previous yet unsuccessful Bill, drawn from the ballot last week.

After the success of passing his previous End of Life Choice Bill, Seymour’s new undertaking is a different beast. Regulatory standards rarely provoke emotional debates. They are not life-and-death questions – or at least not directly.

Still, the quality of our laws and regulations matters a great deal. If we needed examples, the past years delivered plenty.

Take the Government’s decision to stop oil and gas explorations. It was announced in early 2018, with no prior public consultation. That meant there was no chance to debate the pros and cons of this policy.

Thanks to a request under the Official Information Act, it was only later when we learned MBIE had recommended against the ban. One reason was MBIE’s concerns about energy supplies and upwards pressures on domestic gas prices.

Fast forward three years, and we can see how justified MBIE’s position was. Dry years are a challenge for our electricity sector, but there is no doubt the scaling down of the gas industry is compounding the problem. As a result, wholesale electricity prices are skyrocketing, which leads to companies scaling down their business.

None of this should come as any surprise. The problems with the oil and gas ban were predictable in 2018, and they were predicted by MBIE. Still, the policy was enacted without the public consultation it deserved, which might have prevented future damage.

The implications of the hastily implemented oil and gas ban are irreversible. For who would ever want to invest in New Zealand oil and gas again now that the sector is subject to political mood swings? More worryingly still, energy minister Megan Woods now thinks aloud about government intervention in the electricity market. With higher electricity prices, the Government might also feel encouraged to double-down on costly pumped hydro schemes. The oil and gas ban may have triggered a cascade of policy decisions. Talk of interventions can also become self-fulfilling.

Unfortunately, the Government repeated the oil and gas ban practice with their recent housing package.

No one would disagree with the stated goal of making housing more affordable. Yet there was no chance to discuss whether the introduced measures would lead us there. Increasing the ‘bright-line test’ acts as a capital gains tax on an investment property. Removing interest deductibility makes investment in housing less attractive. Neither leads to more housebuilding.

Once again, it turned out that the ministerial bureaucracy had advised against the changes. And once again, the public did not have a chance to discuss the policies in advance.

It remains to be seen what unintended consequences the housing package will have. Many economists expect that rents will rise. The Government does not rule out rent controls should it come to that. It would be another government intervention to fix the outcomes of a previous one. We call this progressive interventionism.

Policy development should not happen like that. At least not generally. It is understandable that natural disasters or a pandemic call for emergency measures to be taken quickly.

But for most policymaking, it is wise to invest some time upfront and consider both the measures and their likely results.

Seymour’s Regulatory Standards Bill would help with that. Effectively, it is a checklist of good policymaking. Lawmakers would be bound to certify that their policies are justified and that they work.

Thus, the Bill asks whether the proposed measures are good law: Are the rules clear? Do they avoid retrospectivity? Is everybody equal before the new law?

The Bill then asks if the measures are proportionate:  Are they necessary to achieve the stated goal in the least intrusive way?

The next question is if the measures respect property rights and, where they impinge on them, if they provide compensation.

Crucially, the Bill also requires proper consultation and cost-benefit analysis.

None of these considerations are novel. The law-making principles can be found in the writings of legal theorists and philosophers like John Locke (1632-1704), Montesquieu (1689-1755) or William Blackstone (1723-1780). The economic analysis of political measures goes back to economists like Jules Dupuit (1804-1866) and Alfred Marshall (1842-1924).

Seymour’s Bill, in that sense, does not reinvent the wheel. Indeed, it is also based on a previous Bill tabled (and later withdrawn) more than a decade ago.

But Seymour’s Bill is still helpful. It forces anyone proposing a new law to certify that it complies with all the requirements of good law-making. That would apply to the Government just as it would to individual Members of Parliament in their private members’ bills. It would also apply to the bureaucracy when it issues new regulations.

Once certified that a new law complies with the criteria for good law-making, anyone could challenge this (self-)certification in court. A court declaring a new law deficient would be embarrassing for whoever introduced it.

But the court could not declare the law void. There will be no practical consequences for not legislating properly. There will be no penalties, just red faces. In this way, the procedure in the Bill is similar to the courts declaring that legislation is inconsistent with the rights protected under the New Zealand Bill of Rights Act 1990.

Ultimately, it will be a matter for us all as citizens to demand compliance with a future Regulatory Standards Act.

It is here where we may have doubts about the Bill’s potency.

Take the oil and gas ban in 2018 as an example. A public that demands quick fixes and symbolic action to tackle climate change might not object to lower regulatory standards.

Just as there was a collective shrugging of shoulders when the High Court ruled that the early stages of the Level  4 lockdown were unlawful. No law can protect a public that does not care.

Seymour’s Bill could help establish a better regulatory culture than the one to which we have become accustomed. But this culture will take root unless we demand better policymaking.

Ironically, for the Bill to pass would require parliamentary support from parties on both sides of the aisle. And that is the same parties whose frequent contempt of the principles of good law-making made Seymour’s Bill necessary.

Indeed, bipartisanship would be appropriate because rushed law-making is not an exclusive Labour habit. When the boot was on the other foot, we heard Labour complaining about National’s undue haste. The Bill is about an evolution of how all parties make laws, regardless who is in Government.

If only Seymour had something to offer the Government against his deeply held beliefs. Because he would need the Government later to pass his Regulatory Standards Bill.

Unfortunately, that is how politics works. In the House of Lords. And probably in New Zealand, too.

%d bloggers like this: