Office of the Minister for Economic Development
Chair, Cabinet Legislation Committee
Regulatory Systems Amendment Bills: Approval for Introduction with additional provisions
1 This paper seeks Cabinets approval to introduce three Regulatory Systems Amendment Bills: Regulatory Systems (Building and Housing) Amendment Bill, Regulatory Systems (Commercial Matters) Amendment Bill, and Regulatory Systems (Workplace Relations) Amendment Bill (the Bills) into the House of Representatives.
2 I am proposing that the Bills be introduced under Standing Order 269, which provides that the Business Committee may determine any two or more bills are cognate bills. The Committee agreed to introduce the Bills as cognate bills on 13 September 2016.
3 I also seek additional minor clarifications to be included in the Regulatory Systems (Workplace Relations) Amendment Bill, pertaining to the Employment Relations Act 2000, the Parental Leave and Employment Protection Act 1987 and in the Regulatory Systems (Commercial Matters) Amendment Bill the Construction Contracts Amendment Act 2015.
4 The three Regulatory Systems Amendment Bills are are omnibus bills that contain amendments to legislation to improve regulatory systems that the Ministry of Business, Innovation and Employment (MBIE) is responsible for. The Bills will make minor amendments to 20 statutes falling under the Building and Housing, Commerce and Consumer Affairs, Communications, Energy and Resources, and Workplace Relations and Safety portfolios.
5 The proposed changes to the individual statutes are uncontroversial and do not warrant stand-alone bills. However, the benefits of the changes across all portfolios taken together are sufficient to justify the Bills. Together, the amendments will make a significant improvement to the effectiveness and efficiency of the regulatory systems affected.
6 Cabinet approved the majority of the three Bills policies in 2014 [CAB Min (14) 21/5] and CAB Min (14) 23/6 refer]. The approvals in the Commerce and Consumer Affairs portfolio included:
a. amending the Companies Act 1993 and the Insolvency Act 2006 so that it is certain that trusts are able to obtain the benefits available to companies and individuals under the netting provisions in those Acts;
b. amending the Insolvency Act 2006 to provide the Official Assignee with the power to apply to the court to challenge the validity of a trust, regardless of whether the bankrupt could have done so prior to the bankruptcy;
c. transferring jurisdiction for resolving expense disputes relating to failed takeover offers made under the Takeovers Code from the courts to the Takeovers Panel;
d. and 28 minor and technical changes to ten statutes contained in Annex 1 to the paper under EGI (14) 127.
7 In December 2015, as a result of further consultation during the drafting process, Cabinet approved additional policy changes, rescinded previous decisions, and approved the release of the Exposure Draft of the Bill for public consultation [CAB (15) Min 0274 refers].
8 The additional policy changes were to:
a. amend the Friendly Societies and Credit Unions Act 1982 to permit friendly societies to use electronic and postal voting for general and special resolutions;
b. make minor amendments to the Financial Markets Conduct Act 2013 to improve consistency within that Act and ensure it applies as intended;
c. amend the Companies Act 1993, in line with a proposed amendment to the Financial Markets Conduct Act 2013, and clarify the information provision requirements of directors from specific overseas jurisdictions that have been recognised for enforcement purposes;
d. amend the Unit Titles Act 2010 to extend incidental rights as between the common property and units as provided under a unit plan, and clarify requirements relating to the assessment and reassessment of ownership or utility interests by a body corporate;
e. amend the Financial Service Providers (Registration and Dispute Resolution) Act 2008 to extend the Registrars power to initiate deregistration of a financial service provider; and
f. make four minor changes to the Building Act 2004.
9 Cabinet also approved to rescind amendments relating to:
a. two amendments to the Financial Advisers Act 2008, which are no longer deemed to be necessary following consultation with the Financial Markets Authority; and
b. proposed amendment to the Unit Titles Act 2010 which was incorrectly described (a replacement proposal is outlined above).
10 As a result MBIE released an Exposure Draft of the Regulatory Systems Amendment Bill and targeted consultation on specific technical amendments, further additional policy matters and the withdrawal of the credit unions related provisions required Cabinet approval in May 2016 [CAB-16-MIN 0211].
New proposed clarifications
11 Since Cabinets policy approvals in May 2016, four new proposed minor and technical clarifications have been included in the Regulatory Systems (Workplace Relations) Amendment Bill under the Workplace Relations and Safety portfolio. The proposed clarifications are required to reflect the original policy intent of the changes to the
Employment Relations Act 2000 and the Parental Leave and Employment Protection Act 1987, as approved by Cabinet [CAB Min (15) 8/9, CAB-15-Min-0237].
12 These clarifications are drafting adjustments to clarify the agreed intent of certain provisions in the Acts as amended by the Employment Standards Legislation Bill, which came into force on 1 April 2016. The changes are to:
a. amend the Employment Relations Act 2000 to clarify the intended purpose of the provision which extends liability for breaches of employment standards to persons other than the employer through the concept of a person involved in a breach[Cab Min (15) 8/9];
b. three minor and technical amendments to the Parental Leave and Employment Protection Act 1987 to improve clarity and certainty in the legislation with respect to preterm payments and parental leave payments [CAB-15-MIN-0237], and to allow the Parliamentary Counsel Office to update the payment rates in the legislation each year.
13 In addition, I recommend amending the Construction Contracts Amendment Act 2015 so that the provisions relating to retentions only apply to new contracts entered into after 31 March 2017. Although this was the policy intention [EGI Min (14) 20/7], the Act has been interpreted as applying to existing as well as new contracts. If the Act applied to existing contracts as of 31 March 2017, the implications for the construction industry would be significant and negative. There is likely to be widespread non-compliance, with many firms being unable to meet their obligations, and therefore being technically insolvent.
Regulatory impact analysis
14 Three changes under the Commerce portfolio were sufficiently material to justify regulatory impact analysis. A regulatory impact statement (RIS) for those proposed policy changes relating to netting and trusts; sham trusts under the Insolvency Act 2006; and expense disputes under the Takeovers Act 1993 was prepared in accordance with the necessary requirements and was submitted to Cabinet at the time that approval for those changes was sought and Cabinet approved the changes [EGI Min (14) 14/6 refers].
15 Under Standing Order 269 the House or the Business Committee may determine any two or more bills are cognate bills. Such a determination may be made in respect of bills before or after their introduction, and may relate to any or all of the first, second, and third readings of the bills concerned.
16 Cognate bills that are set down on the Order Paper for the same stage are taken as one question for the purpose of the debate, provided that the member in charge of a cognate bill or bills may require the bill or bills to be set down separately.
17 The three Regulatory Systems Amendment Bills are omnibus bills and are being introduced as a cognate bill to be considered by the following select committees:
a. Regulatory Systems (Commercial Matters) Amendment Bill to be considered by the Commerce Select Committee
b. Regulatory Systems (Building and Housing) Amendment Bill to be considered by the Local Government and Environment Select Committee
c. Regulatory Systems (Workplace Relations) Amendment Bill to be considered by the Transport and Industrial Relations Select Committee.
18 The Bills comply with the:
a. principles of the Treaty of Waitangi;
b. rights and freedoms contained in the New Zealand Bill of Rights Act 1990 and the Human Rights Act 1993;
c. principles and guidelines set out in the Privacy Act 1993;
d. Legislation Advisory Committee (LAC) Guidelines on Process and Content of Legislation; and
e. the disclosure statement requirements (attached to this paper).
Public sector organisations
19 The following departments and public bodies have been consulted on the development of the Bills: the Ministry of Justice, the Treasury, Land Information New Zealand, Inland Revenue Department, Financial Markets Authority, Reserve Bank, and the Commission for Financial Capability.
20 The Department of the Prime Minister and Cabinet has been informed.
Private sector organisations
21 Details of the proposed amendments have been published on MBIEs website and the Exposure Draft of the Regulatory Systems Bill was released for public consultation in December 2015.
22 Several private sector organisations have provided comments through MBIEs targeted and public consultation processes, incl