Richard Prebble Speech: "Labour's Law-making Machine"

Speech to the Institute of Directors Ferrybank Reception and Conference Centre Grantham Street Hamilton

The job of being a director of a company has become very risky. Directors often have their own money at risk and always their reputational capital at risk. Just look at the attacks on Lindsey Payne, who in my observation of the BNZ, certainly was not responsible for the bank failing and did more than most to save the bank.

In addition to these risks of business, directors face additional risks imposed by government.

Every year, under both old parties, more and more laws and regulations are passed.

Bryce Wilkinson has estimated that over the last two decades, on average about 4,000 pages of statutes and regulations are passed each year.

No Minister, no M.P. has ever read every one of those 4,000 pages. How can any businessman? How can every director?

It's true that not every law affects business but many do. Under Labour the responsibility placed on directors has greatly increased. Directors now face having criminal penalties for things that no director can possibly know.

The Health and Safety Act makes directors liable for incidents that occur any where in the firm.

These types of laws have resulted in a new industry of consultants. The only defence in court is to show that a firm has good systems; to prove this you have expert consultants to give a report.

Next we will have to have safety guards on potato peelers.

These regulations hit small business the hardest.Survey after survey shows that small business spends a day a week on government compliance.

Some small businesses just ignore the regulations, hoping if they stay small they will never come to the attention of the authorities. Other areas of the economy small business have to abandon because the cost of compliance is just too great.

The cost of carrying out storing dangerous goods is enormous. The storage brokers costs millions of dollars. Most of the goods are very stable. They are only dangerous if you decide to eat them.

The Labour government's response has been spin. Setting up panels to examine compliance costs. The business compliance panel produced a report with 162 recommendations. Minister Swain proudly announced government would implement 139 of the 162 recommendations. It sounds dramatic.

The reality is very different. IRD, ACC, OSH, the Resource Management Act all get harder to comply with.

Labours legislative machine is picking up pace, passing even more law. Between 1999 and 2002 the Labour government passed 221 government acts, 8 private members laws, 8 local bills and 6 private acts for a total of 243 new statutes.

In the year since the election, Labour has passed 115 government acts, 2 private members bills, 4 local bills and 3 private acts for a total of 124 new statutes.

If Labour continues at this pace, the government will have passed over a third more laws in this term.

Then we come to regulations. There's more than one new regulation passed every day.

In 1999 Labour passed 94 - just in the last two months. In 2000 - 286, 2001 - 422, 2002 - 423, and so far this year, 286.

A massive total of 1511 since they have been in government.

In this anti business environment, you have to ask, why would any one go into business? Why would any one be a director?

So let me leave you with some hope.

ACT is advocating a Regulating Responsibility Act. Every new law and every new regulation should have to pass a cost benefit test. Most would not pass. The compliance cost of most new laws is greater than any benefit.

Then we advocate a bonfire of regulations. Lets go through the regulations and statutes book applying the cost benefit test. Most laws would go.

Early on our list are laws that place responsibility on business for things that are not the responsibility of the employer.

Lets bring back the concept of personal responsibility.

ACT would be very tough on those whose recklessness hurts others. But laws that penalise the law abiding just bring the law into disrepute. Lets have fewer laws. Let them be able to be understood and followed. Lets have more personal responsibility.

Lets create a country that is business friendly. You and the nation will be amazed at how the economy will take off in a business friendly environment, creating prosperity, growth, and jobs. Now that's a New Zealand we would like to work in.

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