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Home / Business / Economy

Why cutting red tape is so difficult – Richard Prebble

Richard Prebble
By Richard Prebble
NZ Herald·
29 Apr, 2025 10:00 PM5 mins to read

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Act leader David Seymour had a win last week after Cabinet approved the Ministry for Regulation's proposal to rewrite pre-school regulations. Photo / Mark Mitchell

Act leader David Seymour had a win last week after Cabinet approved the Ministry for Regulation's proposal to rewrite pre-school regulations. Photo / Mark Mitchell

Richard Prebble
Opinion by Richard Prebble
Richard Prebble is a former Labour Party minister and Act Party leader. He holds a number of directorships.
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THREE KEY FACTS

  • David Seymour‘s Ministry for Regulation’s proposal to rewrite pre-school regulations was approved by Cabinet.
  • The review found current regulations outdated and burdensome.
  • The new regulations aim to reduce costs and increase quality.

David Seymour had a win last week.

Cabinet approved his Ministry for Regulation’s proposal to rewrite the regulations covering pre-school centres.

In December, the ministry published the Regulatory Review of Early Childhood Education, which found that the regulations are “outdated”, “confusing” and “are imposing undue compliance burdens”.

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To get a licence, children must be unable to exit centres unsupervised. The fire regulations require an exit to be unlocked so children can leave unsupervised.

Regulations capable of being followed are important. About 62% of preschool-aged children attend preschool, about 191,000 kids.

A shortage of places means 47% of the 1941 providers have a waiting list. Many children are unable to attend preschool because there is no place.

Making it cheaper and easier to set up and run an early childhood centre will result in more places.

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The new regulations are a practical test of Act policy – that all regulations should pass a cost/benefit test.

The report found the sector needs to be regulated because parents cannot judge a centre’s safety, the care standards or the learning.

Many regulations are not needed, such as requiring the centres to hold children’s immunisation records already held by the health sector.

The cost of unnecessary paperwork is significant. The penalty for failure to complete paperwork is closure.

The review concluded that new regulations based on cost/benefit analysis would mean fewer regulations, lower costs and higher quality care.

The review is a template for reviewing all regulations, but it is too little and takes too long.

The current regulations have been in place since 2008. Reviewing the regulations is relatively inexpensive, and the benefits significant, so why wait 17 years?

There is no incentive. New regulations are always criticised and can be career-ending.

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One day, there will be a fire in a preschool. A child will wander out through an unlocked door and be hurt. If the civil servants and ministers have not changed the regulations then they will not be held at fault.

This is why I never changed safety recommendations.

While the sector has widely praised the proposed reforms, those who benefit will take it for granted and those who lose will never forgive.

The union is opposed. The recommendation to make it easier to get qualified will be resented by those who qualified the hard way.

Politicians want to be able to respond to any issue by passing a law, even if the costs outweigh any benefit. This coalition is no exception.

Would the ban on gang patches pass a cost/benefit test? There must be a significant benefit in organised crime self-identifying.

Bad laws are easy to pass. Cost/benefit analyses takes time.

The new preschool regulations require empowering legislation. It will be after the next election before the new regulations come into effect. By then, another generation of preschoolers will have graduated.

The ministry has a programme of regulatory reviews ranging from hairdressing to telecommunications.

It is unlikely any review will result in better regulations before the election.

The coalition passed 19 bills under urgency in one day. The Department for Regulations in three years will have reformed just one set of regulations.

To cut red tape, more is needed.

If department heads’ bonuses were linked to the reduction in red tape, the civil service would discover that many regulations are not needed.

When pay was linked to departmental numbers, the general manager of the railways was the second-highest-paid civil servant.

There were 24,000 railway workers and the railways lost $1 million a day. When the general manager’s pay was linked to efficiency, railways needed just 6000 people to haul four times more freight, at half the freight rate, and make a profit.

US President Donald Trump in his first term did successfully reduce red tape. Trump made reducing red tape every minister’s priority. He signed an executive order that for every new regulation, two had to be repealed.

If Prime Minister Christopher Luxon’s action plans made reducing red tape the priority and adopted two regulations repealed for every new regulation, then red tape would be reduced.

The coalition Government’s Q2 Action Plan has over twice the number of proposed new laws as repeals.

The action plan does include the introduction of Act’s Regulatory Standards Bill. The bill will require that all laws, not just regulations, meet a set of principles for “responsible regulation”.

The principles included the rule of law, protecting liberties, the taking of property, setting taxes, fees and levies, the role of courts, and having greater benefits than costs.

A Regulatory Standards Bill would make a difference. The bill would limit the unbridled power to make bad laws and create red tape.

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