With the housing affordability crisis square in the sights of the Key government, the recent launch of the Rules Reduction taskforce is welcome news.

Headed by MP Jacqui Dean and Auckland Chamber of Commerce CEO Michael Barnett*, the group is tasked with hacking through redundant layers of local government regulation that drag on the efficiency of the economy.

The group is sorely needed, particularly in the housing space. Based on the varied rules in evidence across the country, local councils appear to have been blithely unaware of the impact that excessive regulation has on the costs of construction.

This attitude is at odds with the vast array of research out there, showing that over regulation leads to higher costs. Economists Edward Glaeser and Joseph Gyourko, for example, found that excessive red tape not only raised house prices and reduced the rate of home construction, but distorted labour markets and urban forms as well.

The reverse is also true. In the mid-2000s the Dutch went on a red tape slashing spree in the mid-2000s, and reduced the total costs that regulation placed on their economy by EUR4.1 billion (from EUR16.4 billion).

The question then, is can we expect the same results from the Rules Reduction taskforce? Well, that depends on central government’s appetite for regulatory reduction.
The Barnett-Dean taskforce has only been tasked with looking at unnecessary regulation at a local level, and councils only accounts for about 10% of public spending. Central government spends the rest.

However, it must be recognised that a significant proportion of the local bylaws and rules come about as a result of central government policy, which councils have to enact.

Examples include the Resource Management Act, the Build Act, and decrees like the Ministry for the Environment’s air quality regulations, which recently prompted Auckland Council to crack down on open fireplaces and old wood burners.

Presumably the taskforce will expose the areas where the root cause of stupid and excessive regulation at the local level stems from central government. But it will only be worthwhile if Wellington officials are willing to follow this though to its natural conclusion.

Gauging the appetite for a regulatory clean-up is tricky because it is so easy for politicians to pay lip service to these initiatives, and the process seems to run counter to what legislators do: legislate.

One way would be to see if National carries the Regulatory Standards Bill (which has been gathering dust since 2011) into this parliamentary term when it tables the Continuance Bill. We live in hope.

*Full disclosure: Michael Barnett chairs the Local Government Business Forum, of which the Initiative is a member.