What is wrong with our regulatory institutions?

Roger Partridge
Insights Newsletter
1 September, 2017

To get the right answers you have to ask the right questions. If you do not, chances are you will not discover everything you need to know.

This precisely captures a problem with the terms of reference set for the Productivity Commission’s review of New Zealand’s regulatory regimes and regulatory institutions in 2014.

The resulting report identified a litany of problems with our regulators. Some, it said, placed significant weight on managing risks to the organisation at the expense of efficiently managing social harm.

Others had poor internal communication, with employees feeling unable to challenge flawed practices. contributing to a perception that the regulators were unwilling to learn from their past mistakes.

More generally the Commission found that regulatory workers in central government did not perceive that senior managers communicated a clear organisational mission.
Sound familiar? If it does, you might be tempted to treat the report like a crossword and try to fill in the names of the regulators against the clues given in the criticism. Unfortunately, attempting to do this would be futile. For many of the clues there is more than one right answer.

Yet the Commission’s report itself contains no “official” answers – neither in the text nor cleverly concealed upside-down on the last page.

This is because the Commission was not asked to review individual regulators. Instead it was tasked with identiying system-wide improvements. So its report left only cryptic clues to the failings of individual regulators.

There is nevertheless much of value in the Commission’s report. And some of its recommendations have been implemented by government.

But the report only goes so far. While it concluded that the various governance arrangements in our regulators appeared ad hoc rather than based on sound governance principles, it did not say which regulators had the wrong governance arrangements, and what changes were necessary.

And though it found the appointment and reappointment processes for regulators were of variable quality, it did not comment on which were good and which were bad.

The shortcomings of the report reflect no failing on the part of the Commission. It can only answer the questions it is asked. But its report raises as many questions as it answers.

Over the coming months, the Initiative will be doing its best to fill the gaps. Do not hesitate to contact us if you have the answer to a piece of the puzzle.

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