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11 March
07
Regulatory
Zeal
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I
recently received the following email from a Newman Weekly
subscriber:
"I've
just returned from our local pet shop to buy a replacement
mouse for my
12 year old.
$4.95.
I
had to fill out a form accepting a list of conditions
informing me of my responsibilities as a mouse owner.
The 12 year old wasn't allowed to sign, as you had to be over
16 or 18.
If
the pet shop was a Government agency I am sure that they would
have rangers driving around checking on the comfort of mice
and claiming that they need more resources as there are still
mice out there suffering."
This
message is real. It is a part of the new animal welfare codes
that are presently being developed and is but one small
example of the regulatory zeal that appears to have engulfed
our country (to view details of the animal welfare codes click
here >>>).
Government
on a daily basis is producing regulations of all shapes and
sizes, on all sorts of issues. The problem is that each comes
at a significant cost, not the least of which are the
unintended consequences.
Threats
to ban the sale of home cooking from fundraising events, due
to concerns about ‘food safety’, means that thousands of
organisations from playcentres to sports teams will
effectively miss out on vital funding.
The
healthy housing initiatives, presently being developed by
government, will identify home ‘hazards’ that are deemed
to be a ‘threat’ to health and safety, but if home owners
are forced to foot the bill for fixing and minimising these
so-called hazards, the cost of housing will increase. This
means home-ownership will become even more difficult for first
home purchasers.
Higher
water quality standards for school swimming pools have
significantly increased the costs of maintenance and operation
with the result that schools up and down the country have been
forced closed them down. As a result many children are no
longer learning to swim.
New
drinking water quality standards are imposing significant
costs onto local authorities, many of which are already
questioning whether these higher standards are even necessary.
This is yet another central government cost that is being
foisted onto local government, putting even more upwards
pressure on rates.
Bryce
Wilkinson, in “Constraining Government Regulation”, a
discussion paper prepared for the Business Roundtable in 2001,
identified a myriad of regulatory excesses, from the debacle
for wheelchair access on buses, to the hairdresser who was
taken to task for offering a lower priced haircut for male
pensioners, to the boy scouts group that was told to get a
building consent for a tree hut, to claims that a white water
rafting operation was abusing the river’s
‘spirituality’. (To view the report click
here >>>.)
The
Institute of Chartered Accountants has estimated the annual
cost to families and businesses of complying with regulations
is a massive $25 billion. But with a public service that
continues to expand and new government regulators being
established across many industries, over-regulation is set to
become a bigger problem in the future.
It
isn’t just the cost to taxpayers of the salaries, cars, and
offices of the bureaucracy that is the biggest problem - the
biggest harm is the debilitating effect that regulation has on
New Zealand’s productive sector.
Through
the imposition of excessive taxation, increasingly restrictive
employment laws, and mountains of bureaucratic red tape, small
businesses face a debilitating future: more rules to read,
forms to fill in, questionnaires to complete, reports to
produce, not to mention endless meetings, phone calls, and
lawyers visits.
The
problem is that succeeding in business in a competitive free
market environment is tough enough without being hobbled by
government regulation. To be successful businesses must be
entrepreneurial, focussing their energy and effort into
continual innovation: anticipating trends, identifying needs,
and improving the quality and range of products and services
they offer.
While
there is a legitimate role for government in the proper
functioning of a market economy - creating a regulatory
framework to protect private property rights and enforcing
contract law, for example - free markets are largely able to
police themselves. Because free market are dynamic systems in
which buyers and sellers enter into voluntary associations
with each, good operators will thrive while poor operators
will eventually go out of business.
The
almost instantaneous speed with which markets adjust to
competition, prices, supply and demand, serves to highlight
the fundamental reason why governments should not be in
business – they simply cannot adjust fast enough to the
demands of their customers, and nor will they be allowed to
fail, no matter how badly they perform.
This
week’s NZCPD Guest Commentator is Richard Epstein, a
Distinguished Professor of Law at Chicago University. In his
article entitled “A Return of the Corporatist State”, he
looks at the dangers of state interference in the free market:
"The
market model believes that competition in labour, product and
capital markets is the surest road to economic prosperity.
The purpose of the state is to provide a stable
platform on which these private activities can take place."
(To read the full article click
>>>).
With
the budget coming up on May 17th it will be
interesting to see whether Labour intends to honour the
commitment it made during the last election to reduce the
regulatory burden on small business. I wouldn’t hold your
breath though!
The
poll this week asks whether
you believe New Zealand is over-regulated and if so, what are
your greatest concerns?
Take
part in poll
>>>
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