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Inquiry into instruments deemed to be regulations—An examination of delegated legislation

Report of the Regulations Review Committee

FORTY-FIFTH PARLIAMENT
(RT HON JONATHAN HUNT, CHAIRPERSON)
July 1999

I. 16R

Presented to the House of Representatives

CONTENTS

Summary of recommendations
Introduction

What are deemed regulations?
Inquiry initiated in August 1998
Terms of reference

Background

Origins of delegated legislation committees
Committee conducts non-partisan scrutiny of regulations
Committee does not investigate policy issues

Distinction between regulations and deemed regulations

The term "deemed regulations"
Secondary and tertiary legislation
History of deemed regulations
Process of making deemed regulations

When should Parliament allow the making of deemed regulations?

Deemed regulations should be an exception to the general rule
General principles
Advantages of deemed regulations
Cabinet approval
Examination of regulation-making powers in bills

Printing and publication requirements for deemed regulations

Law must be accessible to the people
General principles
Amendment of existing Acts
Central record of all regulations
Internet access

Drafting standards for deemed regulations

General standards
Review by the courts

Consultation requirements

General principles
Consultation on land transport rules
Negotiated rule-making

Incorporation of material by reference

General principles

Advisory circulars and guidance sheets
Conclusion
Appendices

Appendix A—Committee personnel and conduct of the inquiry
Appendix B—Standing Orders 195 to 198
Appendix C—List of submissions
Appendix D—Extract from Chief Parliamentary Counsel submission on drafting standards

Summary of recommendations

Following its inquiry, the Regulations Review Committee makes the following recommendations to the Government:

  • That the principles identified in this report are taken into account when legislation is being developed, in order to whether traditional regulations or deemed regulations should be created. (Page 18)
  • That the Cabinet Office Manual—Format for Submissions to the Cabinet Legislation Committee on Draft Bills Ready for Introduction be amended to require that any power to make deemed regulations in legislation is identified and conforms with the principles stated in this report. (Page 18)
  • That all deemed regulations be approved by the Cabinet as part of the promulgation process. (Page 19)
  • That the general principles identified in this report for printing and publication be applied to all deemed regulations. (Page 23)
  • That existing Acts which empower the making of instruments deemed to be regulations for the purposes of the Regulations (Disallowance) Act 1989 but not for the purposes of the Acts and Regulations Publication Act 1989 be amended to comply with standard publication and notification requirements, consistent with the principles in this report. (Page 23)
  • That all new bills for introduction which empower the making of deemed regulations include standard printing and publication requirements, consistent with the principles in this report. (Page 23)
  • That the Government consider how public accessibility to deemed regulations can be enhanced, including an investigation of making them available for purchase and inspection from an identifiable source or requiring deemed regulations to be deposited with the National Library, or through public libraries. (Page 24)
  • That the Government address the limited public availability of deemed regulations and consider improving access by publishing a central list of deemed regulations on the Internet. (Page 25)
  • That the Table of Acts and Ordinances and Statutory Regulations in Force list all deemed regulations not published in the Statutory Regulations series. (Page 25)
  • That the Government ask the Chief Parliamentary Counsel to develop detailed drafting guidelines for deemed regulations in consultation with relevant government departments, regulation-making authorities and the Regulations Review Committee. (Page 27)
  • That the Government ensure that the criteria for good drafting practice identified in this report are applied to all deemed regulations. (Page 27)
  • That the general principles for effective consultation outlined in this report apply to all deemed regulations. (Page 30)
  • That the Government consider the proposal outlined in this report for extending the consultation process for land transport rules. (Page 31)
  • That the Government investigate opportunities for adopting a negotiated rule-making process. (Page 32)
  • That the general principles outlined in this report for the incorporation of material by reference into deemed regulations are adopted. (Page 34)
  • That the general principles outlined in this report for the use of advisory material and guidance notes are adopted. (Page 35)

Introduction

Without question, Parliament is New Zealand's supreme lawmaker. Parliament is not, however, always directly involved in the law-making process. It is well known that there are different types and levels of legislation, referred to generally as primary, secondary, and tertiary legislation. Primary legislation is enacted by Parliament itself in the form of Acts of Parliament, also known as statutes. Primary legislation represents a declaration of law made by the two constituent elements of Parliament—the Sovereign and the House of Representatives (the House).1

Parliament may also delegate its law-making power to other persons or bodies by authorising the making of delegated legislation, in the form of secondary or tertiary legislation. The distinction between primary legislation and delegated legislation is relatively uncomplicated. However, the recent proliferation of instruments at secondary and tertiary level has made it less clear what principles now govern the classification of different levels of delegated legislation. We are aware of several different views on the distinction between secondary and tertiary legislation. These issues involve rather academic arguments. While it is not appropriate for us to provide an authoritative pronouncement on the distinction between secondary and tertiary legislation, we have included a discussion of some of the issues involved in classifying different levels of delegated legislation in this report.

Generally speaking, neither Parliament nor the House are involved in making delegated legislation. Parliament plays its part by passing the primary legislation which confers the power to make delegated legislation. Parliament has traditionally delegated its legislation-making power by authorising the Governor-General (on the advice of the Executive Council) to make regulations. Once promulgated, regulations are notified in the Gazette and published in the annual Statutory Regulations series (the SR series) in accordance with the Acts and Regulations Publication Act 1989.

What are deemed regulations?

We are concerned about the increasing number of statutes which authorise the making of delegated legislation outside of the traditional regulation-making process. At the time of this report we have identified at least 50 such statutes. In 1998, 467 regulations were published in the SR series. An additional 118 statutory instruments were made and deemed by their empowering legislation to be regulations for the purposes of the Regulations (Disallowance) Act 1989, but not for the purposes of the Acts and Regulations Publication Act 1989. Instruments within this category we scrutinised in 1998 included—land transport rules, civil aviation rules, maritime transport and maritime safety rules, rating valuations rules, health sector codes of practice, privacy codes of practice, legal services instructions, New Zealand food standards, financial reporting standards, and penal operational standards.

Parliament intends that these statutory instruments (referred to for the purposes of this inquiry as "deemed regulations") be treated as if they are regulations. We are concerned that deemed regulations are not subject to the same controls as traditional regulations.

Parliament also appears to be delegating legislative authority to a broader range of persons and organisations than it has in the past. Deemed regulations are subject to separate printing and publication requirements from traditional regulations, some of which vary markedly from the model provided in the Acts and Regulations Publication Act 1989. It is timely for us to examine the use of powers authorising the making of deemed regulations. The traditional regulation-making process has a number of built-in safeguards and protections. We believe that these should not be diminished when Parliament authorises the making of subordinate legislation in non-traditional ways.

Inquiry initiated in August 1998

On 5 August 1998 we initiated this inquiry. We advertised for public submissions and issued a discussion paper setting out the inquiry's terms of reference and providing some background information for persons interested in making submissions. We identified and wrote to all persons and organisations empowered to make deemed regulations and requested information about their legislation-making processes. We sought information on the level of consultation undertaken, drafting arrangements, in-house approval processes, printing and publication arrangements and the degree of publicity or notification of each type of deemed regulation. We received 34 submissions and conducted several hearings of evidence in November and December 1998.

Terms of reference

The main objectives of our inquiry were, to consider:

  • the distinction between regulations and deemed regulations
  • when it is appropriate for legislation to provide the power to make deemed regulations
  • appropriate printing and publication requirements for deemed regulations
  • appropriate drafting standards for deemed regulations
  • appropriate consultation requirements for deemed regulations
  • the incorporation of material into deemed regulations by reference.

These issues are addressed in the main body of this report in the order they appear above. More information about our approach to the inquiry, and a full list of submissions received can be found in the appendices to this report.

Background

By way of background, it seems useful to discuss the origins of the committee and its role within the broader context of parliamentary scrutiny.

Origins of delegated legislation committees

We are a specialist delegated legislation committee appointed by the House at the beginning of each Parliament. Our powers and functions are defined in the Standing Orders of the House.2 Our role within New Zealand's constitutional framework is well established. However, compared to other Commonwealth countries, New Zealand is a relative newcomer to the scrutiny of regulations.

In 1961 the House established a committee to examine how Parliament could exercise some control over the regulation-making process.3 The committee recommended that a new select committee be established (the Statutes Revision Committee) with the authority to consider regulations. The Statutes Revision Committee was not a specialist delegated legislation committee because it also had the power to consider bills. Mindful of this the committee reported in 1985 that it had not been able to contribute to the effective control and scrutiny of delegated legislation because this aspect had formed only a minor part of its work. It recommended that a specialist Regulations Review Committee be established.4 These recommendations were adopted by the House and the first Regulations Review Committee was appointed in 1985.

Committee conducts non-partisan scrutiny of regulations

By convention, the Regulations Review Committee is chaired by an opposition member of Parliament. We essentially conduct the non-partisan scrutiny of delegated legislation, on behalf of Parliament. All regulations are automatically referred to us for examination and possible investigation. We review each promulgated regulation, including deemed regulations, as a matter of course.5 Our job is to determine whether to draw a regulation to the special attention of the House on any of the grounds set out in Standing Order 197(2). These grounds provide a check-list against which to ensure that regulations are consistent with the regulation-making authority delegated by Parliament, and are not otherwise objectionable. We also have the authority to examine complaints made by persons aggrieved at the operation of a regulation, to examine regulation-making powers in bills before other committees, to consider draft regulations referred to us by a Minister of the Crown, and to conduct inquiries into matters relating to regulations.

Committee does not investigate policy issues

Since its inception, the committee has taken the view that the House and other subject select committees are the proper forum for debate on policy. We, along with previous committees, concentrate our attention on the implementation of the policy behind regulations, rather than allowing ourselves to call into question the merits, or otherwise, of the basic policy itself. Neither do we make direct findings on whether the regulations are within the powers of the principal Act. Ultimately such questions are for the courts to decide.6 The grounds on which we examine regulations are wider than those used by the courts.

Distinction between regulations and deemed regulations

The distinctions between traditional regulations and deemed regulations arise from their method of promulgation and their printing and publication arrangements. All regulations, regardless of how they are made, are required to be tabled in Parliament and are subject to post-promulgation scrutiny by this committee.

The term "deemed regulations"

The Law Commission submits that use of the concept of "deemed regulations" should be discontinued and instruments should receive their proper description— whether as a rule, a standard, a bylaw, or other.7 We adopted the term "deemed regulations" as a short-hand reference during this inquiry, to distinguish regulations which are promulgated by the Governor-General in Council from other instruments we are responsible for scrutinising. Instruments which are deemed to be regulations are a category of regulations, as defined in section 2 of the Regulations Act 1989. The definition is carried over into the Standing Orders to define the supervisory jurisdiction of the Regulations Review Committee.

Secondary and tertiary legislation

As indicated in our introductory comments, it is not a straightforward matter to distinguish between secondary and tertiary legislation. The principal focus of this inquiry is deemed regulations. As such, the primary issue for our purposes is whether deemed regulations are classified alongside traditional regulations as secondary legislation, or whether they are of a lower status and therefore properly described as tertiary legislation.

Traditionally, all delegated legislation fell into one of two categories. Regulations made by the Governor-General by Order in Council fell into the first category and were referred to as secondary legislation. Any delegated legislation that did not have the character of regulations fell into the second category, known as tertiary legislation. Tertiary legislation is not subject to the statutory or parliamentary controls that apply to secondary legislation.8 The proliferation of deemed regulations and other statutory instruments over the past 10 to 15 years has blurred the line between secondary and tertiary legislation.

One view is that tertiary legislation is created when regulations themselves delegate law-making authority.9 An example of this form of sub-delegation is contained in regulation 8A of the now revoked Civil Aviation Regulations 1953. That regulation authorised the Director of Civil Aviation to issue Civil Aviation Safety Orders, Notices to Airmen, The New Zealand Aeronautical Information Publication, New Zealand Civil Airworthiness Requirements and Civil Aviation Information Circulars. These instruments provided information but also contained requirements and procedures regulating the aviation industry. Any requirement or publication issued by the Director came into operation as if it had been issued under regulation 8A itself. This amounted to true third generation delegated legislation. Deemed regulations fall outside this definition of tertiary legislation.

An alternative view is that deemed regulations are tertiary instruments and traditional regulations are the only instruments properly classified as secondary legislation. It appears to us that the line should be drawn somewhere between these two descriptions. In our view, deemed regulations are properly included alongside traditional regulations. Parliament has expressed an intention that deemed regulations should be treated as if they are regulations. Deemed regulations are subject to the same post-promulgation scrutiny as traditional regulations. They are automatically referred to the Regulations Review Committee for examination when they are tabled in Parliament and can be investigated under our scrutiny of regulations function.

History of deemed regulations

Prior to 1990 there were few examples of statutory instruments which were deemed to be regulations. Over the past 10 to 15 years, our regulation-making processes have evolved to the extent that deemed regulations are now an established legislative feature. The next section of this report outlines the origins of deemed regulations.

On the establishment of the first Regulations Review Committee in 1985, the House instructed the committee to pick up an inquiry first referred to the Statutes Revision Committee in October 1983.10 The committee was to consider and recommend to the House "such amendments to Acts of Parliament, Regulations, Standing Orders and other procedures relating to delegated legislation as would enable the effective and comprehensive scrutiny and control of such legislation consonant with the principle of the supremacy of Parliament".

The committee's 1986 report noted that the definition of "regulation" not only determines which instruments appear in the SR series and are tabled in Parliament, but also which instruments fall within the investigatory powers of the committee.11 The committee stated:

It is important that, in any cases where doubt can arise as to whether an instrument is a "regulation" for the purposes of the Regulations Act, the matter be resolved by an appropriate provision in the relevant empowering provisions.12

The committee referred to recent legislative examples including clause 7 of the Airport Authorities Bill 1986. Clause 7 provided that bylaws made by an airport authority which was not a local authority were to be approved by the Governor-General by Order in Council. The Order in Council, including the bylaw, was deemed to be a regulation for the purposes of the Regulations Act 1936. The committee recommended that:

When draft legislation is being prepared in which legislative powers are to be delegated, consideration should be given to the desirability of including a provision making it clear whether the exercise of those powers falls within or outside the provisions of the Regulations Act. (There may also be particular instances in which the delegation of an executive power should be brought within the ambit of the Regulations Act by an express provision to that effect.).13

The second report of the first Regulations Review Committee was presented to Parliament in February 1987.14 The report examined the provisions of the Regulations Act 1936 and recommended proposals for a bill that might replace that Act.

The first substantive issue considered was the statutory definition of "regulations". The committee referred to the discussion in its initial report and noted that the definition took on more practical significance given the committee's focus on developing procedures for enhancing parliamentary scrutiny and control of delegated legislation. The definition of "regulations" adopted in a new regulations Act would determine what instruments would fall within the scrutiny powers of the committee under the Standing Orders, and therefore, within the scope of parliamentary control.

The committee's view was that if statutory instruments are made by a person other than the Governor-General or a Minister, have a legislative character, and are intended to apply generally to a class of persons (whether at a delegated or subdelegated level) they should be brought within the scope of parliamentary control. They believed that a provision to this effect should be included in the statutory authority.15

The committee recommended a new definition of "regulations" based on that in section 2 (1) of the Regulations Act 1936 but with significant modifications. One of the amendments recommended brought deemed regulations within the definition:

The definition of "regulations" should include any instruments deemed by any Act, regulation or other instrument of authority to be regulations for the purposes of the Regulations Act 1936 or its replacement. A provision along these lines is needed to pair up with the wording of the definition of "regulation" in S.O. 3 (para 4.1 above). It could also be used to clarify the status of new instruments made under existing Acts (para 15.3 above), or to bring subdelegated legislation under the Regulations Act (para. 7 above).16

The definition of "regulations" recommended in the report formed the basis of the definition that now appears in section 2 of the Regulations (Disallowance) Act 1989 and is carried over into the Acts and Regulations Publication Act 1989 and in Standing Order 3.

The advent of the rules process, now established in the transport sectors, came several years later. The rules process for land transport and maritime transport is modeled on the process initially developed for civil aviation and introduced in the Civil Aviation Act in September 1990. The main reason for adopting the rules process was to translate a large body of delegated legislation into one set of coherent rules for each transport mode. The Minister of Transport's submission listed the following reasons for adopting the rules process in the aviation context:

  • A three tier scheme of legislation (Act, regulations and tertiary instruments) was inadequate for dealing with major growth and technological change in the industry.
  • Processing regulations and numerous amendments was time consuming and difficult.
  • Tertiary instruments had grown considerably in volume and complexity over time and the overall body of legislation was confusing, out of date, overlapping, and difficult to understand by both regulator and industry.
  • The process of developing regulations and orders was inadequate, often lacking appropriate consultation and suitable cost/benefit analysis.17

Another early example of deemed regulations is found in the Legal Services Act 1991. In March 1990 the Regulations Review Committee reported to the Justice and Law Reform Committee on the regulation-making powers in the Legal Services Bill. The bill gave the Legal Services Board the power to issue instructions to district legal services committees for the setting of guideline rates of remuneration for civil and criminal legal aid. The guidelines were not regulations and no publication requirements were proposed in the bill. The Regulations Review Committee recommended that the instructions be deemed to be regulations so they would be subject to parliamentary scrutiny. The Justice and Law Reform Committee accepted the committee's advice and recommended to the House that the instructions be deemed to be regulations for the purposes of the Regulations (Disallowance) Act 1989.18

Since the early 1990s the number and variation of deemed regulations has increased each year. References to instruments "deemed" to be regulations will soon disappear from our statute books in a move towards plain English drafting. Parliament is currently considering the Interpretation Bill 1998. The bill updates the law stating the principles and rules for interpreting legislation. Clause 28 proposes an amendment to the definition of "regulation" in the Regulations (Disallowance) Act 1989. If clause 28 is enacted, the reference in paragraph (f) of the present definition, to "instruments deemed by any Act to be regulations for the purposes of the Regulations Act 1936, the Regulations (Disallowance) Act 1989 and the Acts and Regulations Publication Act 1989, will be substituted with the following paragraph:

An instrument that is a regulation or that is required to be treated as a regulation for the purposes of the Regulations Act 1936 or the Acts and Regulations Publication Act 1989 or the Regulations (Disallowance) Act 1989. (emphasis added)

Both versions of wording are already starting to appear in primary legislation. For example, section 21 of the Taxation (Parental Tax Credit) Act 1999 provides that every Order in Council made by the Governor-General under subsection (1) is "treated as being a regulation" for the purposes of the Regulations (Disallowance) Act 1989 and the Acts and Regulations Publication Act 1989. Similarly, the Nuclear-Test-Ban Act 1999 provides in section 22 (3) that any Order in Council made by the Governor-General amending the Schedule to the Act "is a regulation" for the purposes of both Acts.

Process of making deemed regulations

All traditional regulations, regardless of their subject matter, go through a very similar process in the lead up to promulgation. They are drafted by the Parliamentary Counsel Office, approved by the Cabinet, made by the Governor-General in Executive Council, notified in the Gazette and published in the SR series. In contrast, the process for making deemed regulations varies significantly for different types of instruments. They are generally made by a single authority, such as a Minister of the Crown or other official, are not usually subject to Cabinet approval nor submission to the Governor-General in Executive Council. They are not usually drafted by the Parliamentary Counsel Office or published in the SR series. The drafting, printing and publication of deemed regulations is often the responsibility of the person or organisation making them, although specific notification and consultation requirements may be set out in the empowering statute.

By way of example, compare the process for making codes of practice issued under section 50 of the Privacy Act 1993 with operational standards authorised by section 10A of the Penal Institutions Act 1954. The authority to make privacy codes of practice is delegated to the Privacy Commissioner. Codes of practice are drafted by in-house lawyers within the Office of the Privacy Commissioner. On the Office's own initiative, the codes generally follow the style and layout recommended by the Law Commission.19 Proposed privacy codes are not taken to the Cabinet for approval. The Commissioner may not issue a code of practice unless he has given public notice (usually by way of a notice in the Gazette) of the intention to issue a code.20 The notice must provide certain details about the proposed code including:

  • notice that a draft of the proposed code may be obtained from the Commissioner
  • notice that submissions on the proposed code may be made in writing to the Commissioner within the period specified in the notice.

The Commissioner is required to do everything reasonably possible to advise all persons who will be affected by the proposed code, or representatives of those persons, of the proposed terms of the code, and the reasons for it. As part of the consultation process, the Commissioner is required to consider any submissions made. Once a code has been issued, the Act requires public notification of the availability of the code. Codes must be available for inspection by members of the public free of charge and for purchase at a reasonable price.

In addition to minimum legal requirements, the Commissioner makes codes of practice available in other ways. The text of codes of practice is placed on the Office's website; and the Privacy Commissioner allows commercial publishers to include the text of codes of practice in their own materials.

The authority to issue penal operational standards is delegated to the Chief Executive of the Department of Corrections. Operational standards are drafted by a specialist consultant employed by the Department of Corrections. Operational standards are not taken to the Cabinet for approval. There are no consultation or pre-promulgation notification procedures prescribed in the empowering statute. Because operational standards are heavily focused on the operational aspects of running prisons, the department has consulted with the Public Prison Service but not with outside agencies.

As soon as practicable after standards are issued, the Act requires the Chief Executive to publish a notice in the Gazette indicating that standards have been issued and showing a place where copies are available for inspection, free of charge, and purchase at a reasonable price. Currently, copies are available at all Community Probation Service Offices and at prisons. Because the operational standards are not considered by the department to be of wide interest, they are not available in Government Bookshops. Those who have an interest, such as the Ministry of Justice, are supplied with copies of operational standards.

When should Parliament allow the making of deemed regulations?

The power to promulgate deemed regulations is a statutory power. It exists only where Parliament has specifically authorised the delegation of a law-making power to the agency exercising it. There are two key issues in determining when it is appropriate for legislation to provide the power to make deemed regulations. The first is whether it is appropriate for Parliament to delegate the law-making power at all. The second is a matter of deciding, if delegated legislation is seen as appropriate, what form should be used and to whom should the power be delegated. Currently there is some attention paid to the first issue,21 but there are few principles or guidelines to assist those promoting legislation to identify what kind of subordinate legislation is appropriate. Parliament has a choice between providing the power to make traditional regulations, deemed regulations, or an instrument which is not deemed to be a regulation.22

Deemed regulations should be an exception to the general rule

The Law Commission suggests that a number of factors should be considered in deciding whether delegated legislation is appropriate. These include whether Parliament has maintained tight control over the ambit of the delegated authority, the significance of the delegated legislation, who the authority is delegated to, and the subject matter of the delegated legislation.23

One criticism of deemed regulations is that there is no provision for the instruments to go before the Cabinet. This is because the Cabinet has the confidence of and is answerable to the House. The Law Commission suggests that the further the law-making power is removed from Parliament and the greater its effect, the more "constitutionally obnoxious" it becomes. Where, however, Parliament has given precise directions on the scope of the delegated authority, the law-maker is expert and accountable and there are proper procedures for reviewing the result, there can be justification for allowing legislation of this kind.24

We consider that traditional regulations are the most appropriate way for Parliament to delegate its legislative authority. The creation of deemed regulations should be an exception to the general rule and exercised only when it can be demonstrated that the following general principles have been taken into account.

General principles

Some useful general principles were identified in submissions we received from the Legislation Advisory Committee, the Law Commission, and the Chief Parliamentary Counsel. In general terms, we endorse the suggestions contained in those submissions. We consider that the following principles should be taken into account when legislation which delegates law-making powers is being developed:

The importance of the delegated power

There are some law-making powers that should not be delegated. For example, the amendment of primary legislation by delegated legislation is generally objectionable. Similarly, the Constitution Act 1986 explicitly states that only Parliament can impose taxes.

In determining whether a delegated power is appropriate, an assessment should be made of the effect of the delegated legislation on the rights and interests of individuals. Our preference, as a matter of principle, is that criminal offences not be created by delegated legislation. Criminal offences carry significant consequences in terms of the sanctions that may be imposed. Offences also raise issues concerning civil liberties and are of general application to the public. We agree with the Law Commission that Parliament is the most appropriate body to determine whether particular behaviour should constitute a criminal offence, and for determining the appropriate penalty.

The Land Transport Safety Authority asks whether primary legislation should allow deemed regulations such as rules to contain their own offence and penalty provisions. Currently, obligations are set out in rules but offences for breaching those obligations are set out in regulations. In our view it would not be appropriate for rules to specify their own offences and sanctions. Where Parliament has determined that offences can be imposed under delegated legislation we believe that instrument should be a regulation made by the Governor-General by Order in Council, rather than a deemed regulation.

The subject matter of the power

There may be circumstances where the subject matter of delegated legislation suggests that an alternative process to the traditional regulation-making process is appropriate. For example, if the delegated legislation concerns relatively detailed, technical matters, not subject to criminal sanctions, it may be appropriate for that subject matter to be regulated by a Minister of the Crown acting alone or by some other agency. The speed of technological developments in an industry and the need to respond rapidly to changes in operational techniques and practices may make the subject matter suitable for an alternative process. Where an instrument is used to implement New Zealand's obligations under an international agreement, traditional regulations may be unnecessary, particularly where there is an agreement which has been the subject of a consultative process between governments.

As an example of this, we consider that the characteristics of civil aviation rules make them more suitable for deemed regulations than a number of other instruments. Ordinary civil aviation rules specify technical requirements for the regulation of aviation safety and security in New Zealand. The rules impose obligations and requirements on only a limited class of persons, those operating in the aviation industry. Civil aviation rules often implement New Zealand's obligations under international civil aviation agreements into our domestic law.

The application of the power

If the delegated legislation will affect a narrowly defined or clearly identifiable group it may be more appropriate for deemed regulations than if the legislation would apply to the public at large. For example, while individuals may be interested in the requirements of civil aviation rules from time to time, in general terms, the rules impose obligations on a much smaller group including pilots and others involved in the aviation industry. It is much easier to engage in a meaningful consultation process with a narrowly defined group and to ensure that the promulgated rules are accessible to all parties. Compare the application of civil aviation rules with a land transport rule containing the requirements for obtaining and renewing a drivers licence. Such a rule has the potential to affect most adult New Zealanders and some overseas drivers. In our view, regulatory requirements intended to apply to the public at large are less suitable for deemed regulations.

The agency to whom the power is delegated

Whether it be the Governor-General in Executive Council, an individual Minister of the Crown, an official, or some other agency, the most appropriate legislator should be chosen for the particular delegated legislation. The legislator should have qualified and competent personnel to draft the delegated legislation and be able to demonstrate that it has developed and followed an appropriate process for making the legislation. The Minister of Transport believes that the process of drafting civil aviation, maritime and land transport rules "in-house", in collaboration with technical specialists, has advantages over the traditional regulation-making process by ensuring that the rules are technically correct and user friendly.25

In summary, there are a number of considerations to be taken into account in making a decision whether to authorise the making of deemed regulations in a particular case. We do not take the position that delegated legislation other than traditional regulations should never be used. We accept that deemed regulations can be a useful tool in regulating activity in appropriate circumstances. However, we consider that the Government should establish some principles for the use of deemed regulations and take a more considered approach in determining whether deemed regulations are appropriate.

Recommendations
  1. We recommend that the principles identified in this report are taken into account when legislation is being developed, in order to determine whether traditional regulations or deemed regulations should be created.
  2. We recommend that the Cabinet Office Manual —Format for Submissions to the Cabinet Legislation Committee on Draft Bills Ready for Introduction be amended to require that any power to make deemed regulations in legislation is identified and conforms with the principles stated in this report.

Advantages of deemed regulations

Several submissions expressed concern that deemed regulations can be made with less scrutiny than traditional regulations. Other submissions consider that the use of deemed regulations enhances the scrutiny and control of delegated legislation when they are replacing material previously contained in tertiary legislation. For example, in the civil aviation context rules replaced a three-tier legislative scheme comprising the Civil Aviation Act 1964, the Civil Aviation Regulations 1953 and a large body of tertiary level standards, requirements and orders issued by the Director of Civil Aviation. Those tertiary level instruments were not subject to any parliamentary or executive scrutiny. Civil aviation rules made under the Civil Aviation Act 1990 must comply with the detailed rule-making procedures in the Act and are scrutinised by us.

We recognise that there are some positive aspects to the use of deemed regulations. It is an improvement to have tertiary level instruments elevated to the status of deemed regulations and subject to greater scrutiny and control. However, we are uncomfortable with the practice of transferring large quantities of material previously contained in regulations into rules, potentially lowering the degree of scrutiny and control over that delegated legislation.

The process of converting regulations into rules (other than for fees and minor offences and penalties) is now complete in civil aviation. The Minister of Transport made the following comments in support of the rules process in the transport sector:

In general, rules have proved to be an effective and flexible means of translating a large volume of outdated and often complex technical standards and requirements (including diagrams and drawings) into a more readily accessible and user friendly form and of bringing the regulation of New Zealand transport sectors into line with international standards. There may be room for fine tuning the model, but the experience to date in aviation and maritime is that the rule-model is working satisfactorily. In land transport it is still too early to assess success.26

We acknowledge that there have been significant improvements in the regulation of the aviation industry as a result of the comprehensive review of legislative requirements involved in the conversion from regulations to rules. However, as the Minister identifies, it is too soon to tell whether the model will be successful for other sectors, such as land transport. We believe that some of the objections to deemed regulations would be minimised by aligning the process for making regulations and deemed regulations.

Cabinet approval

Regulations drafted by the Parliamentary Counsel Office and made by the Governor-General in Council are submitted to the Cabinet and considered by the Cabinet Legislation Committee. Regulations must comply with the requirements of the Cabinet Office Manual. The requirements include certification by the Parliamentary Counsel Office that the regulations are within the regulation-making powers of the Act under which they are made, a formal submission setting out information on compliance with legal and other obligations, the application of the 28-day rule for the coming into force of regulations, consultation (involving The Treasury for fees and the Ministry of Justice on compliance with New Zealand Bill of Rights Act 1990) and steps to publicise the new regulations. It is not clear to us why deemed regulations are presently excluded from this process. These instruments are still regulations and represent executive law-making, even if promulgated by a Minister or other agency.

The Motor Trade Association (MTA) and the New Zealand Chapter of the International Window Film Association believe that deemed regulations have an even greater need for executive control than traditional regulations because they are made and drafted outside the usual process. While individual Cabinet Ministers are unlikely to scrutinise each regulation in detail, the process required by the Cabinet Office Manual ensures there is consideration given to matters such as consultation, compliance with legal obligations, the 28-day rule and good drafting practice.

In our view, deemed regulations should have a similar level of executive scrutiny as traditional regulations. We believe that Cabinet scrutiny and approval would give effect to the intention of Parliament that deemed regulations are to be treated as regulations. Subjecting deemed regulations to standard Cabinet processes would also act as a safeguard for the Government. Costly and potentially embarrassing mistakes are less likely to occur if there is a greater degree of pre-promulgation scrutiny of deemed regulations.

Recommendation
  1. We recommend that all deemed regulations be approved by the Cabinet as part of the promulgation process.

Examination of regulation-making powers in bills

Under the Standing Orders we may examine any regulation-making power in a bill before another committee and report to that committee. We intend to adopt a new standard procedure for reviewing regulation-making powers in bills. We will consider any power in a bill creating deemed regulations and may request departments to report to us explaining why deemed regulations are necessary and whether the regulation-making provisions in the bill conform with the general principles and recommendations in this report. We will then report any concerns we have about the appropriateness of creating deemed regulations instead of traditional regulations to the committee considering the bill.

Printing and publication requirements for deemed regulations

The Parliamentary Counsel Office (or its predecessor, the Law Drafting Office) has drafted all regulations since the Attorney-General first directed it to undertake this work in the early 1950s. Before that time regulations were drafted within Government departments. The direction was given to ensure that regulations are drafted in a consistent style. The Chief Parliamentary Counsel's responsibilities for the printing and publication of regulations are now contained in the Acts and Regulations Publication Act 1989. The requirements of the Act can be summarised as follows:

  • All regulations shall be forwarded to the Chief Parliamentary Counsel for printing and publication soon after they are made.
  • The Chief Parliamentary Counsel shall ensure that all printed regulations include references to the Act or other Authority pursuant to which they are made; the date on which they were made; and the date on which the regulations come into force.
  • The Chief Parliamentary Counsel shall make copies of regulations available for purchase by members of the public (at places designated by the Attorney-General under section 9 (1)) at a reasonable price.
  • All copies of regulations shall be identified by a number as part of an annual series of regulations, known as the SR series.
  • The Chief Parliamentary Counsel shall ensure that notice of the promulgation of regulations, and other information about the regulations, is published in the Gazette.

A significant number of deemed regulations are exempt from the requirements of the Acts and Regulations Publication Act 1989. Exempt instruments have their own publication and notification requirements. In our experience not all of these requirements are consistent. For example compare the following requirements:

Section 448 (2) of the Maritime Transport Act 1994 requires notice of the making of maritime rules to be given in the Gazette. The rule must be available for purchase by members of the public at a reasonable price and the notice must state where the rule is available for inspection free of charge and for purchase. The requirements of the Civil Aviation Act 1990 in relation to civil aviation rules, the Legal Services Act 1991 in relation to instructions issued by the Legal Services Board, and the Privacy Act 1993 in relation to privacy codes of practice apply similar publication and notification requirements. The same procedures apply to some customs rules made by the Chief Executive of the New Zealand Customs Service under the Customs and Excise Act 1996 but others must be published in the Gazette in full.

In contrast, under the Financial Reporting Act 1993, the Accounting Standards Review Board is required to give notice of approved financial reporting standards in the Gazette and in other publications it considers appropriate. There is no requirement that copies be made available at a reasonable price or that notice be given of the place where they can be inspected free of charge or purchased. The Airport Authorities Act 1966 deems guidelines made under regulations to be regulations for the purposes of disallowance but not for publication. Guidelines do not have to be notified or made available for inspection or purchase.

Law must be accessible to the people

It is a basic element of the rule of law that the law should be readily accessible to those who are required to comply with it. Ignorance of the existence of an obligation created by delegated legislation does not excuse a failure to observe it. Public accessibility is of particular concern when the obligations created by delegated legislation are of general application to the public.27 The Law Commission believes the principle that every citizen is deemed to know the law will bring the law into disrepute if it is impossible or impracticable to comply with.28 "People must be made aware of what Parliament is doing and be able to read the letter of the law".29 These are basic constitutional principles that should apply to all deemed regulations.

General principles

In our view, the following general principles should apply to the printing and publication of all regulations and deemed regulations:

  • All regulations should comply with the Acts and Regulations Publication Act 1989, unless there is good reason for them being exempt from those requirements.
  • The reasons for exempting regulations from the Acts and Regulations Publication Act 1989 should be identified in submissions to the Cabinet seeking approval for the introduction of a bill and in the explanatory note of a bill for introduction.
  • Where the obligations created by deemed regulations are of general application or interest to the public, the instrument should be required to comply with the Acts and Regulations Publication Act 1989 and should be published in the SR series.
  • Separate printing and publication requirements may be appropriate where the instrument contains technical matters relevant to identifiable individuals or groups, implements detailed provisions of international agreements or standards, or is of a short-term or emergency nature. We consider that many civil aviation rules and some maritime rules fit into this narrow exception to the general rule.
  • Any separate printing and publication requirements should specify:
    • that notice must be given in the Gazette and any other publication relevant to the individuals or organisations affected
    • that the deemed regulations are available for inspection free of charge and for purchase at a reasonable price (wherever possible)
    • that notice is given of the places where the deemed regulations can be inspected or purchased.
  • Wherever practicable, modem technology should be utilised to enhance public accessibility.
  • We endorse making the text of published deemed regulations available on the Internet.

We note that section 14 (1) of the Acts and Regulations Publication Act 1989 already empowers the Attorney-General or the Chief Parliamentary Counsel to direct that any instrument that is not a regulation should be printed and published as if it were a regulation. A recent example of the exercise of this power was the publication in the SR series of the Land Transport (Driver Licensing) Rule 1999. Section 160 (6) of the Land Transport Act 1998 deems the rule to be a regulation for the purposes of the Regulations (Disallowance) Act 1989 but not for the purposes of the Acts and Regulations Publication Act 1989. The Ministry of Transport and the Chief Parliamentary Counsel agreed that the Driver Licensing Rule should be published in the SR series due to its broad application and significance to most adult New Zealanders and some overseas drivers. The Chief Parliamentary Counsel directed that the rule should be easily accessible to the public and drafted in the same style as regulations.

We are pleased that the Chief Parliamentary Counsel's power to give directions under section 14 (1) was exercised on this occasion. However, we consider that compliance with the requirements of the Acts and Regulations Publication Act 1989 for a rule of very broad application should be mandatory rather than discretionary. In our view, the greater the class of persons affected by regulations, the greater the need for ready access. We question the appropriateness of this type of material being the subject of a rule rather than a regulation.

Recommendation
  1. We recommend that the general principles identified in this report for printing and publication be applied to deemed regulations.

Amendment of existing Acts

The Chief Parliamentary Counsel's submission states that while some deemed regulations must be published in full in the Gazette, others are only required to be notified. There are some instances where there is no requirement for deemed regulations to be notified or made available for public inspection or purchase. For example, the Institute of Chartered Accountants publishes financial reporting standards and sells them as part of its professional handbook for members. There is no requirement in the Financial Reporting Act 1993 for public notification or free inspection of financial reporting standards. The Accounting Standards Review Board told us that when one copy of a financial reporting standard is requested from the Institute's head office, it is provided free of charge. While this approach is commendable, we consider, as a matter of principle, that more formal arrangements are required to ensure that the law is freely accessible.

We agree with the Chief Parliamentary Counsel that all regulations and deemed regulations should be available for public inspection free of charge, for purchase at a reasonable price, and that notice should be given of the places where copies can be inspected or purchased. We consider that these should be included as standard notification and publication requirements in all Acts which authorise the making of deemed regulations. Existing Acts which do not comply with the standard requirements, such as the Financial Reporting Act 1993, should be identified and amended by way of a statutes amendment bill. In addition, all primary legislation introduced should comply with the standard printing and publication requirements identified in this report.

Recommendations
  1. We recommend that existing Acts which empower the making of instruments deemed to be regulations for the purposes of the Regulations (Disallowance) Act 1989 but not for the purposes of the Acts and Regulations Publication Act 1989 be amended to comply with standard printing and publication requirements, consistent with the principles in this report.
  2. We recommend that all new bills for introduction which empower the making of deemed regulations include standard printing and publication requirements, consistent with the principles in this report.

Central record of all regulations

We are concerned that there is currently no published list of all regulations and deemed regulations. The Legislation Advisory Committee suggests that it would also be useful to have a record of who made the legislation, under what authority, and where the legislation may be inspected and purchased.30

In its 1996 report on an Investigation into Access to Regulations,31 the Regulations Review Committee recommended that the Tables be extended to include all delegated legislation not published in the SR series. The Government agreed in principle with the committee's recommendation and instructed the Parliamentary Counsel Office to investigate the issues involved. The Parliamentary Counsel Office acknowledges that this matter has been under consideration for some time. There are ongoing issues with increasing the size and cost of the Tables and some implications under the Government's current printing contract. One of the factors being considered is whether the publication of expanded Tables should be produced as a result of a new compilation process. In September 1998 the Parliamentary Counsel Office invited public comment on some of these issues in a discussion paper entitled Public Access to Legislation Following consideration of submissions received, the Parliamentary Counsel Office will make recommendations to the Government.32

The absence of a central point of purchase of all deemed regulations raises issues relating to public accessibility and awareness of the law. We endorse the recommendations of the previous Regulations Review Committee in its Investigation into Access to Regulations. We are pleased to see that the Parliamentary Counsel Office now makes copies of the Tables available to public libraries at no cost. We note the previous committee's recommendation that all issuers of delegated legislation not published in the SR series should deposit copies with the National Library for inclusion in the Depository Library Scheme. We are pleased to see that the Parliamentary Counsel Office is discussing giving effect to this recommendation with the National Library.

Recommendation
  1. We recommend that the Government consider how public accessibility to deemed regulations can be enhanced, including an investigation of making them available for purchase and inspection from an identified source or requiring deemed regulations to be deposited with the National Library, or through public libraries.

Internet access

Another issue widely discussed in submissions is the availability of deemed regulations on the Internet. Some organisations already publish deemed regulations electronically. For example, the Civil Aviation Authority includes published civil aviation rules on its web-site and the Office of the Privacy Commissioner makes the text of codes of practice available on the Internet. The Land Transport Safety Authority makes the full text of draft land transport rules available but has not yet made a decision on the availability of published rules.33 We encourage organisations to make use of the Internet to enhance the public accessibility of delegated legislation. However, the Government bears the ultimate responsibility for ensuring that the law is publicly accessible.

We consider that a list of regulations and deemed regulations must be available on a central Government web-site and regularly updated. The Chief Parliamentary Counsel informed us that GP Legislation Services is currently developing an electronic version of the Tables for the Internet which could be updated on a daily basis. There is potential to extend this process to incorporate delegated legislation not published in the SR Series. We hope to see this work progressed as soon as possible.

Recommendations
  1. We recommend that the Government address the limited public availability of deemed regulations and consider improving access by publishing a central list of deemed regulations on the Internet.
  2. We recommend that the Table of Acts and Ordinances and Statutory Regulations in Force list all deemed regulations not published in the Statutory Regulations series.

Drafting standards for deemed regulations

Any deemed regulations which are not subject to the Acts and Regulations Publication Act 1989 are drafted within the departments and organisations which promulgate them and not by the Parliamentary Counsel Office. Our experience in reviewing deemed regulations makes us aware that, given the variety of subject areas they cover, it is inevitable that there will be some differences in drafting style. Flexibility is one of the advantages of making deemed regulations. However, we consider there are some basic drafting standards which should be met in all cases.

Several submissions suggested we should recommend standards or guidelines for drafting deemed regulations and that the Parliamentary Counsel Office should have a role in setting these standards. The Law Commission's view is that the Chief Parliamentary Counsel should have oversight of all legislation—both statutes and delegated legislation at whatever level. We do not consider that it would be desirable for the Parliamentary Counsel Office to be responsible for drafting all delegated legislation. Where an appropriate organisation has been delegated the authority to make deemed regulations, there are advantages in them being able to draft the instruments in a way that suits the subject matter and meets the particular needs of their users. However, we do believe that the Parliamentary Counsel Office has an important contribution to make in providing drafting guidance to the makers of deemed regulations.

The Law Commission emphasises the critical importance of the Parliamentary Counsel Office to the democratic process and, in particular, its role in expressing the law "with precision as a seamless whole, consistent in all its parts".34 We agree that the Parliamentary Counsel Office is the expert in this area. We greatly appreciate the contribution the Chief Parliamentary Counsel has made to this inquiry.

General standards

The Chief Parliamentary Counsel's submission sets out broad criteria which should apply to all legislative instruments.35 General guidance is provided for organising material clearly, selecting appropriate language, deciding when visual or graphic aids should be included, and some specific advice on the drafting of offences. This portion of the Chief Parliamentary Counsel's submission is reproduced in Appendix D of this report. All deemed regulation-makers should review their own drafting arrangements against these standards.

We can see benefits from the development and publication of more detailed drafting guidelines for deemed regulations. Many of the issues we have raised with departments and other agencies about deemed regulations could have been avoided if those delegated law-makers had been issued with standard drafting guidelines. There are some particular requirements we would like to see included in such guidelines. The guidelines should specify minimum formatting requirements for deemed regulations, such as the provision of explanatory material, the definition of key terms and the use of page and clause numbering. In addition, the empowering provisions for deemed regulations should be required to be cited in the same manner as traditional regulations. Guidance should also be provided for amending deemed regulations. In particular, if a deemed regulation is amended and then re-issued, the consolidated instrument should clearly indicate when the amendments came into force and where the amendments appear in the text of the instrument.

We consider that this work should be undertaken by the Parliamentary Counsel Office in consultation with relevant departments, authorities and our committee.36

Recommendation
  1. We recommend that the Government ask the Chief Parliamentary Counsel to develop detailed drafting guidelines for deemed regulations in consultation with relevant government departments, regulation-making authorities and the Regulations Review Committee.

Review by the courts

The Legislation Advisory Committee suggested that one way of providing a greater degree of scrutiny and control over deemed regulations, in recognition of the danger that they may stray from the standards set for the drafting of traditional regulations, would be to extend the jurisdiction of the courts to review bylaws on the grounds of "unreasonableness" to deemed regulations.37 The courts have greater powers to review bylaws than they have in relation to the review of regulations, which is confined to an inquiry whether the regulations are within the powers conferred in the authorising Act.

While this proposal has some merit it would have the effect of categorising deemed regulations with tertiary legislation rather than with regulations proper. In our view it is desirable to raise the standards of drafting and promulgation of deemed regulations to be on a par with other regulations rather than treating deemed regulations as a lesser form of delegated legislation.

Recommendation
  1. We recommend that the Government ensure that the criteria for good drafting practice identified in this report are applied to all deemed regulations.

Consultation requirements

A consultation process is required by some empowering Acts prior to regulations and deemed regulations being made. There is no general requirement to consult before making regulations. The extent of consultation required depends on the specific provisions of the empowering statute. Given the less formal pre-promulgation scrutiny and approval of deemed regulations, we consider that prior consultation with persons likely to be affected by or interested in delegated legislation is always desirable.

Complaints about regulations often relate to the adequacy of consultation undertaken by the department prior to making the regulations. In several reports to the House we have endorsed the legal requirements for consultation set out in the High Court decision of Air New Zealand Limited and others v The Wellington International Airport38 and the subsequent Court of Appeal decision.39 Those requirements can be summarised as follows:

  • The essence of consultation is the communication of a genuine invitation to give advice and genuine consideration of that advice.
  • The effort made by those consulting should be genuine, not a formality; it should be a reality, not a charade.
  • Sufficient time should be allowed to enable the tendering of helpful advice and for that advice to be considered. The time need not be ample, but must be at least enough to enable the relevant purpose to be fulfilled.
  • It is implicit that the party consulted will be (or will be made) adequately informed to enabled it to make an intelligent and useful response. The party obliged to consult while quite entitled to have a working plan in mind, should listen, keep an open mind, and be willing to change and if necessary start the decision making process afresh.
  • The parties may have quite different expectations about the extent of consultation.
  • Consultation does not mean the same thing as negotiation.

Some submissions are critical of statutory consultation undertaken by government departments in the past. They do not believe their views were listened to or adequately taken into account. We heard evidence that public consultation is not a sufficient substitute for pre-promulgation scrutiny by the Cabinet or the Parliamentary Counsel Office. Furthermore, some submissions suggest that the negotiated-rule-making process used in the United States of America may be a more suitable way of determining the appropriate content of some rules. We address these issues in more detail later in this report.

Submissions expressed different views on whether there should be a general requirement to consult before making deemed regulations. The New Zealand Law Society submits that "soundly framed and well-directed protocols governing the issue of rules should include meaningful consultation with interested or affected parties over content, context and form."40 This suggests that consultation should be a requirement for all deemed regulations. The Chief Parliamentary Counsel states that "Consultation will be desirable in some cases, but not in all. A legal requirement applicable in all cases goes too far".

General principles

We endorse the following general principles, identified in the submission from the Chief Parliamentary Counsel, in relation to the requirement for consultation in subordinate legislation:

  • Whether consultation is appropriate depends on the type of instrument, the effect it will have, and the persons who will be affected by it.
  • If the instrument deals with technical or industry specific matters, a requirement to consult with industry participants or groups is desirable. If it imposes fees, levies, or charges, consultation with affected parties would normally be expected.
  • If the range of persons likely to be affected or on which obligations will be imposed is narrow, consultation with those likely to be affected is also desirable.
  • If the regulation or instrument is likely to affect only a specific class of persons or organisations, consultation with that class or a representative organisation may be all that is necessary. For example, section 52 (1) (a) of the Rating Valuations Act 1998 provides for regulations relating to fees and charges. Regulations cannot be made unless the responsible Minister has consulted the New Zealand Local Government Association.
  • If the regulation or instrument will apply to the public in general or to a wide section of the public, notice inviting public submissions may be more appropriate than formal consultation with selected interest groups.
  • In some cases, a combination of public notice and a formal consultation requirement may be appropriate.
  • If there is to be a formal consultation requirement, the Act should also afford those consulted a reasonable time to make submissions and require the person recommending the making of the regulation or making the instrument to have regard to any submissions.
  • If there is to be a requirement for notice, the Act should afford persons wishing to make submissions a reasonable time to do so and require the person recommending the making of the regulations or making the instrument to have regard to any submissions.
  • Where an instrument needs to be made in an emergency or urgently and both public notice and consultation would ordinarily be required, either public notice or both public notice and consultation may be unnecessary. If only consultation would ordinarily be required, consultation may be dispensed with or retained in some limited form.
  • Where there is a requirement to consult with a potentially wide class, an instrument should not be treated as invalid because of a failure to consult with all the persons who make up that class. In such cases, it may be appropriate to include in an Act a provision stating that a failure to consult does not affect the validity of the instrument.
Recommendation
  1. We recommend that the general principles for effective consultation outlined in this report apply to all deemed regulations.

Consultation on land transport rules

Most submissions we received from transport industry groups were critical of consultation undertaken by the Land Transport Safety Authority during the rule-making process. The main concern is that significant changes can be made to a draft rule after public consultation has occurred. Interested persons may be unaware of the final shape of a rule until after it has been made. There is a view that industry groups participate in a consultation process on draft rules at considerable expense but have no guarantee that their views are taken into account. Those groups are frustrated that the outcome of the consultation process is unknown until a rule emerges at the end of the process.

The Land Transport Safety Authority states that "Consultation is essential in the rule-making process". The formal requirement to consult in the transport rule-making process is seen as one of the distinct advantages of the rule-making process over the regulation-making process. The Minister of Transport provided the following general comment on consultation:

It can be challenging to carry out a statutory requirement to consult properly and within a reasonable time period. The experience to date with the Land Transport Rules, where the industry is more disparate [than the aviation industry] and the general public is more likely to be affected by the rule, has illustrated these challenges. However proper consultation is time consuming and it can be seen as advantageous that law changes via rules are notified to, and thoroughly worked through by, affected parties well in advance of the rule being made. This can be contrasted with system for making regulations where sometimes the first public notification of a regulation is when it is notified in the Gazette.41

Several industry groups recommended there be a formal requirement to report back to interested persons on significant changes made to a draft rule after public consultation has occurred. The MTA submits that interested and affected parties should be given the opportunity to review the white draft of a land transport rule. This is the final draft before the proposed rule is presented to the Minister of Transport for signature. The MTA envisages that an extended consultation process would only be necessary in a small number of cases where significant variations are proposed in the final rule-making stages. Most issues dealt with under the rule-making process are considered to be operational and therefore, unlikely to be controversial.

Where necessary, the MTA contends that interested groups should also be able to refer the white draft of a land transport rule to the Transport and Environment Committee for consideration. We note that the House refers business to the Transport and Environment Committee and this proposal might require a change in the terms of reference of that committee under the Standing Orders.

The following extended consultation process was proposed by the MTA:

  • When a registered interest group makes submissions on the initial draft of a rule, the group may also declare its intention to review the final white draft of the rule before it is presented to the Minister of Transport. In the LTSA rule-making process, this could occur at the red or yellow phase.
  • The process will then continue as usual until the white draft of the rule is produced.
  • Any party who expressed an intention to review the white draft will be given the opportunity to do so at this point. It may be that wider public consultation is recommended by a registered interest group, and this will occur at this point also.
  • If necessary, the rule will be referred to the Transport and Environment Committee for scrutiny.
  • A new white draft will then be prepared, taking into account comments from registered interest groups, and further public consultation, and the outcome of any review by the Transport and Environment Committee.
  • The rule will be reviewed by the Ministry of Transport and given to the Minister of Transport for signature. The rule then becomes law.42

In our view, the idea of providing interested persons with opportunities to comment on transport rules after the public consultation phase has occurred deserves further consideration. We draw this proposal to the attention of the House and ask the Government to consider the circumstances in which it might be appropriately adopted.

Recommendation
  1. We recommend that the Government consider the proposal outlined above for extending the consultation process for land transport rules.

Negotiated rule-making

The MTA also raised the issue of negotiated rule-making. Negotiated rule-making is a procedure that has been adopted at a Federal and State level in the United States of America. The idea behind negotiated rule-making is that a government agency considering making delegated legislation first brings together representatives of the affected parties to discuss the proposal. The process seeks to bring about cooperative solutions to regulatory issues. Both the Government and industry work together to determine the content and scope of the rule. The process adopted by the United States Congress establishes the following framework for negotiated rule-making:

An agency can establish a negotiated rule-making committee to negotiate and develop a proposed rule, where:

  1. The process is considered to be in the public interest after considering a number of factors, for example, whether there are "a limited number of identifiable interests that will be significantly affected by the rule"; and
  2. There is a reasonable likelihood that the committee can reach a consensus.

When an agency decides to establish a negotiated rule-making committee the agency must publish a notice of the committee, the scope of the rule to be developed and a list of the interests likely to be significantly affected, a work agenda, and a solicitation for comments on the proposal and proposed membership.

Membership of a committee is restricted to 25 persons. The agency provides administrative support and technical assistance. In the deliberations, agency representatives participate and have the same rights and responsibilities as other members. Facilitators can be used. If the committee reaches a consensus on the proposed rule it must transmit a report containing the proposed rule to the agency. A committee terminates on promulgation of the final rule.43

The MTA believes that agreement will be possible in the majority of cases. However, if consensus cannot be reached, the MTA considers that a regulation rather than a rule should be passed to address the issue in question, because regulations are subject to considerably more constitutional safeguards than rules are.44

We are aware that the negotiated rule-making process has limitations, particularly in its need to achieve consensus. We seek to do no more than raise this as a matter for further consideration by the Government. We do not suggest that negotiated rule-making is an appropriate process in every instance or for all topics. However, where workable, there may be advantages in adopting a more co-operative approach. The Minister of Transport's submission indicates that, in some cases (where a rule may only affect a very limited aviation audience), the Civil Aviation Authority and aviation industry representatives can continue to discuss a proposed rule right up to the final signature stage.45 It seems logical to suggest that negotiated rules may achieve better industry acceptance and therefore be easier to enforce. In our view, the negotiated rule-making process is worthy of further consideration in the New Zealand context.

Recommendation
  1. We recommend that the Government investigate opportunities for adopting a negotiated rule-making process.

Incorporation of material by reference

In many cases the power to make deemed regulations in legislation may include the power to incorporate by reference other material which is not actually set out in the regulation itself. Overseas standards or codes of practice are commonly incorporated into New Zealand delegated legislation in this way, especially in transport rules. Aircraft, vehicles and ships are all built to international standards over which New Zealand law has limited influence. It is also considered necessary for New Zealand to meet the increasing globalisation of legal requirements in the transport sector.46 The incorporation of material by reference can be an efficient way of utilising already existing standards or guidelines, thereby avoiding the need for repetition of large volumes of technical material. This approach also eliminates any potential problems with incorporating material directly, such as breaches of copyright.

There are several issues the Government should consider when primary legislation empowers the incorporation of material into deemed regulations by reference. Firstly, the incorporated material must be publicly accessible. Transport legislation requires material incorporated by reference to be made available at a central point for inspection free of charge (and in the case of maritime rules, for purchase at a reasonable price). Secondly, the primary legislation should anticipate a process for dealing with any amendments to the incorporated material. In the case of maritime rules and land transport rules, amendments are made available for inspection or purchase as required under the relevant primary legislation. In the case of aviation rules, the Director specifies by notice in the Gazette a date on which any amendment will take effect.

Adoption of overseas material into New Zealand regulations has the potential to make our delegated legislation more difficult to follow. For example, in our report on a complaint about the window glazing requirements of Land Transport Rule 32012, we concluded that the incorporation of international glazing standards meant that the actual glazing requirements were not apparent on the face of the rule. We found the window glazing rule difficult to interpret and recommended that the rule be reviewed.47 We consider that some general principles for the incorporation of material should be applied to all deemed regulations.

General principles

In general terms, we endorse the following principles set out in the Chief Parliamentary Counsel's submissions:48

  • The power to incorporate material by reference should be expressly authorised in the empowering statute. While the absence of an explicit power to incorporate material does not necessarily affect the validity of the deemed regulation, it does raise questions about the status of the incorporated material and whether it forms part of the regulation.
  • The power to incorporate material should be exercised in limited cases where the document is appropriate for that purpose. The material and any amendments to it must be reviewed by the lawmaker to ensure that it is appropriate for incorporation.
  • The material should be technical in nature.
  • The material should be expressed in terms that impose clear obligations.
  • Material incorporated by reference should be available for inspection free of charge and for purchase at a reasonable price.
  • There should be a clear statement endorsed on the face of the material itself that the material has been incorporated in regulations or rules made under an Act, that it has the force of law, and that amendments to it may also have the same status. This should be made the responsibility of the person required to make the material available.
  • The material should be consistent with and not overlap the relevant Act, regulations, or rules.

We also consider the material should include text in an official language of New Zealand.

Recommendation
  1. We recommend that the general principles outlined above for the incorporation of material by reference into deemed regulations are adopted.

Advisory circulars and guidance sheets

Advisory circulars and guidance sheets may be prepared by government agencies and distributed to users to supplement or clarify deemed regulations. This material does not form part of a deemed regulation itself. Undoubtedly, advisory material can be useful in clarifying complex technical requirements and assisting in the interpretation of deemed regulations. Problems can occur, however, when users are unclear about the status of advisory material. The risk of this increases if advisory material appears to prescribe requirements that have to be met. Users may believe that if they follow the advisory material they will be complying with the rule itself.

We believe the lawmakers must state in the advisory material itself that the legal requirements are set out in the deemed regulation or in the Act. Advisory material should clarify a deemed regulation but should not contain additional requirements.

We heard evidence about the use of advisory material and guidance sheets, particularly in relation to land transport rules. The Director of Land Transport Safety stated: "By making rules as comprehensive and explicit as possible, we can reduce the amount of guidance and interpretation that is necessary.49 The Land Transport Safety Authority considers that land transport rules are often more transparent than the regulations they replaced because much of the material previously contained in guidance notes (or which did not appear in written form at all) is now included in the rule itself. However, even with a better legal framework, the Director of Land Transport Safety stated: "it will be impractical to operate a coherent vehicle safety regime without issuing guidance material to certifiers and inspectors. We have been working hard with the MTA and our other partners over the past year to improve both the content and the presentation of the guidance material so that it meets the needs of certifiers."50

We consider that the following general principles should apply to the use of advisory material:

  • Deemed regulations should be detailed and comprehensive so as to avoid the need for advisory or guidance material where possible.
  • Advisory material should explain how requirements imposed in regulations may be complied with but should not impose actual requirements.
  • Advisory material should not contain any provisions which are essential to the implementation of the deemed regulation.
  • Advisory material should not contain any provisions which if not complied with would be a breach of a regulation.
  • The advisory nature of the material should be made clear on the face of the document.
  • The purpose of the advisory material should also be stated in the material (For example, to inform, to assist with the interpretation of technical terms, to educate, or to provide examples, as the case may be).
Recommendation
  1. We recommend that the general principles outlined above for the use of advisory material and guidance notes are adopted.

Conclusion

Deemed regulations were originally created so that Parliament could specify in primary legislation whether a statutory instrument was a regulation or not.51 When an otherwise tertiary level instrument is deemed to be a regulation, Parliament expresses its intention to exercise some control over the instrument. The purpose of deemed regulations was to elevate tertiary instruments (such as civil aviation safety orders) to the same status as traditional regulations for the purposes of parliamentary scrutiny. As deemed regulations have become more widely used, that purpose appears to have been overlooked. Material that was once contained in traditional regulations is being shifted into deemed regulations. We believe that most delegated legislation should be in the form of traditional regulations. Deemed regulations should only be created if there are special reasons for doing so. They should be the exception and not the rule.

Scrutiny by our committee is the only form of parliamentary control over many deemed regulations. This has become an increasingly onerous responsibility. It is extremely difficult for us to keep track of deemed regulations because of the rapid increase in their use, the lack of a central record of deemed regulations and the inconsistent printing and publication requirements for deemed regulations. We spend a greater proportion of our time examining deemed regulations and investigating complaints about deemed regulations than any previous committee. Post-promulgation scrutiny of regulations is no substitute for effective pre-promulgation control.

There are some important constitutional issues in this report for the Government to address. Issues such as the quality of drafting, formatting, and the clarity of deemed regulations should be resolved long before deemed regulations are tabled in Parliament and referred to our committee. It is our view that, wherever possible, the same pre-promulgation processes should be applied to deemed regulations as to traditional regulations, including approval by the Cabinet and publication requirements equivalent to those in the Acts and Regulations Publication Act 1989.

This inquiry has highlighted a widespread lack of understanding about delegated legislation and the role of the Regulations Review Committee. Effective parliamentary scrutiny of delegated legislation is especially important in a mixed member proportional representation electoral system because the executive decisions of a minority government may not reflect the views of a majority of the House. Generally speaking, neither Parliament nor the House are involved in making delegated legislation. If a minority government experienced difficulty passing legislation through the House, it could seek to use regulations to achieve policy outcomes that would not have majority support in the House. The work of the Regulations Review Committee takes on greater significance in such an environment. In addition, the Regulations (Disallowance) Act 1989 provides a mechanism for the automatic disallowance of regulations. If a disallowance motion is lodged by a member of the Regulations Review Committee and is not disposed of by the House within 21 sitting days, the regulations referred to in the motion are automatically disallowed. In the absence of a government majority in the House, these disallowance procedures become more significant because they ensure the ultimate parliamentary control of delegated legislation.

The Government is required to table a response to the recommendations in this report within 90 days of the report's presentation to the House. We encourage the next Regulations Review Committee to re-examine the issues raised in this inquiry during the next parliamentary term. This would serve a dual purpose. It would allow the new committee to follow-up any undertakings from the Government in response to this report, and it would provide an opportunity to examine any further issues that emerge in the interim.

We are mindful of the challenges future delegated legislation committees will face with the development of more flexible and market-sensitive means of regulation to meet rapidly changing situations. Our counterpart committee in the New South Wales Parliament predicts that:

The challenge for scrutiny committees will be to preserve their independent role in this more flexible regime.52

We believe the Regulations Review Committee is equipped to meet these challenges. We hope that by setting out our views and some general principles in relation to deemed regulations, a more considered and consistent approach will be taken in the future to the development and continued expansion of deemed regulations. We believe it is time for Parliament to consider whether it is necessary to take steps to regain some control of delegated legislation. It is important to remember that while Parliament has delegated the authority to make delegated legislation it has not relinquished its ultimate law-making responsibility.

Appendix A

Committee personnel
Members of the Regulations Review Committee

Rt Hon Jonathan Hunt (Chairperson)
Shane Ardern
Arthur Anae (Deputy Chairperson)
Frank Grover
Marian Hobbs
Nanaia Mahuta
Rana Waitai
Annabel Young

On 18 March 1999, Shane Ardern replaced Hon Georgina te Heuheu as a permanent member of the committee.

Officers of the Regulations Review Committee

Shelley Banks, Clerk of the Committee
Debbie Angus, Legislative Counsel
Peter Papadopoulos, Parliamentary Officer (Committee Support)

Conduct of the inquiry

We advertised in major daily newspapers for submissions on the inquiry on 14 August 1998. We also requested submissions from all persons and organisations authorised to make deemed regulations. The closing date for submissions was 15 October 1998. We received 34 submissions and numerous supplementary submissions. Nineteen submissions were heard orally in Wellington.

We met eighteen times between 29 July 1998 and 30 June 1999 to consider the inquiry. Hearing evidence took 6 hours and we spent a further 2 hours in consideration.

Appendix B

Standing Orders 195 to 198
195 Regulations Review Committee

The House appoints a Regulations Review Committee at the commencement of each Parliament.

196 Functions of the committee
  1. The committee examines all regulations.
  2. A Minister may refer draft regulations to the committee for consideration and the committee may report on the draft regulations to the Minister.
  3. The committee may consider any regulation-making power in a bill before another committee and report on it to the committee.
  4. The committee may consider any matter relating to regulations and report on it to the House.
197 Drawing attention to a regulation
  1. In examining a regulation, the committee considers whether it ought to be drawn to the special attention of the House on one or more of the grounds set out in paragraph (2).
  2. The grounds are, that the regulation—
    1. is not in accordance with the general objects and intentions of the statute under which it is made:
    2. trespasses unduly on personal rights and liberties:
    3. appears to make some unusual or unexpected use of the powers conferred by the statute under which it is made:
    4. unduly makes the rights and liberties of persons dependent upon administrative decisions which are not subject to review on their merits by a judicial or other independent tribunal:
    5. excludes the jurisdiction of the courts without explicit authorisation in the enabling statute:
    6. contains matter more appropriate for parliamentary enactment:
    7. is retrospective where this is not expressly authorised by the empowering statute:
    8. was not made in compliance with the particular notice and consultation procedures prescribed by statute:
    9. for any other reason concerning its form or purport, calls for elucidation.
198 Procedure when complaint made concerning regulation
  1. Where a complaint is made to the committee or to the chairperson of the committee by a person or organisation aggrieved at the operation of a regulation, the complaint must be placed before the committee at its next meeting for the committee to consider whether, on the face of it, the complaint relates to one of the grounds on which the committee may draw a regulation to the special attention of the House.
  2. Unless the committee decides, by leave, to proceed no further with the complaint, the person or organisation concerned is given an opportunity to address the committee on the regulation. The committee decides whether to examine the regulation and the complaint further.

Appendix C

List of submissions

We received the following submissions during the course of the inquiry. We wish to extend our thanks to all those who made written and oral submissions.

1, 1A Office of the Privacy Commissioner
2W Legal Services Board
3 Department of Corrections
4W New Zealand Customs Service
5W Auckland International Airport Limited
6 Wellington International Airport Limited
7W Land Information New Zealand
8 New Zealand Automobile Association Incorporated
9 Medical Council of New Zealand
10, 10A, B, C Motor Trade Association (Incorporated)
11, 11A New Zealand Chapter, International Window Film Association (Australasia)
12, 12A Institute of Chartered Accountants
13 Accounting Standards Review Board
14 New Zealand Lotteries Commission
15 Chief Parliamentary Counsel
16W Minister of Health
17W Legislation Advisory Committee
18W Australia New Zealand Food Authority
19 Minister of Transport
20, 20A Civil Aviation Authority of New Zealand
21W Maritime Safety Authority of New Zealand
22, 22A, B, C, D Land Transport Safety Authority
23W Inland Revenue Department
24W Imported Motor Vehicle Dealers Association Incorporated
25 Roger Hay
26 DPA (New Zealand) Incorporated
27W Crown Law Office
28 New Zealand Law Society
29W New Zealand Motor Caravan Association Incorporated
30 Law Commission
31W Minister of Conservation
32W Ministry of Agriculture and Forestry
33W Regulation Review Committee, New South Wales Parliament, Australia
34W, 34WA Wellington Taxi Forum

Appendix D

Extract from Chief Parliamentary Counsel submission on drafting standards
Good organisation of material
  • Material should be arranged in a logical order.
  • General provisions should be followed by specific provisions and exceptions.
  • Provisions that relate to the same subject should be grouped together.
  • Provisions should be arranged in temporal sequence.
  • Provisions that are significant should come before provisions of lesser importance.
  • Clauses should be limited in the number of subclauses they contain. As a general rule, a clause should have no more than 6 subclauses.
  • Division into Parts and the use of headings and subheadings breaks up a long document and aids comprehension.
  • Clauses should be numbered.
Use of clear language
  • The drafting should be as simple as possible. It should also be precise so that the document has its intended effect. The instrument must be workable but at the same time be drafted in language and in a style that ensures it can be readily understood by its readers.
  • Sentences should be short and well structured.
  • Sentences should not contain excessive embedded and relative clauses.
  • The active rather than the passive voice should be used.
  • Archaic language and expressions should be avoided.
  • Gender neutral language should be used.
  • The drafting should be consistent. Words should be used in the same sense. If the sense is changed, this should be made clear.
  • Overuse of capitals should be avoided.
  • Propositions should be expressed in positive rather than negative terms. Similar propositions should be expressed in similar language.
  • Repetition and unnecessary words should be avoided.
  • Excessive cross-references and qualifications should also be avoided.
  • Expressions in common or everyday use should be used wherever possible. Jargon should be avoided. However, technical terms will be necessary in tertiary legislation that deals with technical subject matter.
  • Paragraphs and subparagraphs can break up blocks of text but multiple paragraphs and subparagraphs, while having the appearance of clarity, can often involve several ideas or concepts and be difficult to understand.
Use of visual or graphical aids
  • The use of examples, diagrams, tables, and graphics can aid understanding particularly in tertiary legislation where the subject matter is technical. Part 77 of the Civil Aviation Rules relating to objects and activities affecting navigable airspace and Part 47 of the Maritime Rules relating to load lines illustrate this.
Guidance for drafting offence provisions
  • If a breach of a provision contained in tertiary legislation is an offence against the Act under which it is made or will be an offence against regulations, the provision must clearly impose an obligation. It is not satisfactory for a provision to state that a person should act or refrain from acting in a particular way if a breach of the provision is an offence. The provision must state that the person must or must not act in that particular way. This can frequently be a problem when other material is incorporated by reference.
Footnotes

1 Constitution Act 1986, sections 15 (1) and 16.
2 See Appendix B for the full text of the relevant Standing Orders.
3 Report of the Committee on Delegated Legislation, 1962, Appendices to the Journals of the House of Representatives, 1.18, pp 11 and 12.
4 Statutes Revision Committee, First Report on Delegated Legislation, 1985, Appendices to the Journals of the House of Representatives, I.5A.
5 "Regulation" is defined in Standing Order 3 as 'a regulation within the meaning of the Regulations (Disallowance) Act 1989'.
6Supra, note 4, para 8.4.
7 Law Commission (Sub 30), p 2.
8 David McGee, Parliamentary Practice in New Zealand (2 ed), Wellington, 1994, p 408.
9Supra, note 8.
10 The terms of reference of the initial inquiry lapsed with the dissolution of Parliament in June 1984.
11 Report of the Regulations Review Committee on an Inquiry into Regulation Making Powers in Legislation,1986, Appendices to the Journals of the House of Representatives, I.16A.
12Supra, note 11, para 7.3.
13Supra, note 11, para 7.5.
14 Report of the Regulations Review Committee 1986, Proposals for a Regulations Bill, 1987, Appendices to the Journals of the House of Representatives, I.16B
15Supra, note 14, para 8.4.
16Supra, note 14, para 15.5.
17 Minister of Transport (Sub 19), p 2, Swedavia McGregor Report, 1988.
18 The relevant section of the Act was subsequently amended by the Legal Services Amendment Act 1992 (No. 84).
19Legislation Manual Structure and Style, Law Commission, Report 35, May 1996.
20 Privacy Act 1993, section 48.
21Legislative Change: Guidelines on Process and Content (1991 ed), Legislation Advisory Committee, paras 111 to 118; and Cabinet Office Manual, paras 5.48 and 5.49, p 12.
22 Legislation Advisory Committee (Sub note 17W), para 9.
23Supra, note 7.
24Supra, note 7.
25Supra, note 17, p 25.
26Supra, note 17, p 1.
27 Chief Parliamentary Counsel (Sub 15), p 5.
28Supra, note 7, p 3
29VUWSA v Shearer (Government Printer) [1973] NZLR 21, p 23, per Chief Justice Sir Richard Wild.
30Supra, note 22, para 21.
31 1996, Appendices to the Journals of the House of Representatives, I.16J.
32Supra, note 27, paras 36-45.
33 Land Transport Safety Authority (Sub 22), p 26.
34Supra, note 7, p 4.
35Supra, note 27, para 48.
36 Section 4 (1) (e) of the Statutes Drafting and Compilation Act 1920 confers on the Chief Parliamentary Counsel "such other duties relating to the drafting and preparation of statutes and regulations made under the authority of statutes as the Prime Minister or the Attorney-General may from time to time assign."
37Supra, note 22, paras 30-37.
38 Unreported judgment 6.1.92 CP403/91 (Wellington).
39 [1993] 1 NZLR 671, p 675.
40 New Zealand Law Society (Sub 28), p 3.
41Supra, note 17, p 22.
42 Motor Trade Association (Sub 10C), p 4.
43Negotiated Rule-Making Act 1990, Public Law No. 101-648, 104 Stat. 4970 (1990); 5 United States Code sections 561 to 570 (1994).
44Supra, note 42, p 6.
45Supra, note 42, p 12.
46Supra, note 17, p 24.
48 Report of the Regulations Review Committee on a Complaint relating to Land Transport Rule 32012—Vehicle Standards (Glazing), 1998, Appendices to the Journals of the House of Representatives, I.16K.
48Supra, note 27, para 75.
49 Oral hearing (Sub 22), 4 March 1999.
50Supra, note 49.
51Supra, note 11.
52 Regulation Review Committee, Parliament of New South Wales (Sub 33W), p 3.

WELLINGTON, NEW ZEALAND: Published by Order of the House of Representatives—1999

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