Commercial regulatory agencies wield enormous power. They can take away a business’s licence to operate; impose restrictions on how it operates; and take enforcement action by exercising powers of interrogation, search and seizure that the police can only dream of.
How regulators exercise their power really matters. A good regulator can make sense of a bad regulation. A bad regulator can make good regulation senseless.
Poor regulatory decision-making creates risk and uncertainty, stifling innovation and efficiency. Ultimately, consumers suffer through higher prices for the goods and services they consume.
Yet legislators spend much more time thinking about what powers regulatory agencies should be given than about how to govern regulatory agencies to make sure they exercise their powers wisely.
The New Zealand Initiative’s 2017 survey of New Zealand’s largest businesses revealed that many of the country’s commercial regulators – including important regulators like the Reserve Bank of New Zealand (RBNZ) and the Commerce Commission commanded neither the respect nor the confidence of many of the businesses they were tasked with regulating. Conversely, we found other important regulators, including the Financial Markets Authority (FMA), which were well-respected.
Regulators should, at times, be unpopular. After all, it is their task to regulate. And no one wants regulators who are captured by those they are tasked with policing. But just as we expect communities to respect the police, we should also expect those policing commerce to have the respect of the businesses they regulate. Unfortunately, our survey showed that this respect cannot be taken for granted. We reported on the results of our 2017 survey and of other related research in our 2018 report, Who guards the guards? Regulatory governance in New Zealand.
Four years later, we repeated the survey between September and October 2021. As in 2017, we asked New Zealand’s largest businesses to rank the regulatory agencies they deal with from most to least respected. And we asked them to rate the performance of their three most important regulators against 23 KPIs. The KPIs ranged from consistency of decision-making to commercial expertise, and from clarity of objectives to learning from mistakes.