Part 5: External review of charging powers
5.1
In this Part, we discuss the external parties with a role in ensuring that public organisations are setting fees and levies lawfully. They are:
The Regulations Review Committee
5.2
The Regulations Review Committee (the Committee) considers, on behalf of Parliament, whether a regulation falls outside certain criteria. It uses Standing Orders of the House of Representatives to assess that.17
5.3
The Committee will consider whether a regulation setting a fee or levy ought to be drawn to Parliament’s attention, based on one or more of the rules set out in Standing Order 327(2). You need to consider these rules. You can find more detail in the Regulations Review Committee Digest.18
Not in accordance with the general objects and intentions of the statute
5.4
Standing Order 327(2)(a) states that a regulation that “is not in accordance with the general objects and intentions of the enactment under which it is made” should be brought to Parliament’s attention.
5.5
The Committee considers whether a regulation setting fees or levies is consistent with the intentions of the enactment as a whole and whether the legal authority in the Act authorises the making of such a regulation.
5.6
Fees and levies must be imposed under clear legal authority. A fee or levy could be objectionable if it is so high that it defeats the purpose of the enabling Act. A fee or levy would also not be in keeping with the enabling Act if it is not based on the costs you incur and would result in over-recovery.
Trespasses unduly on personal rights and liberties
5.7
Standing Order 327(2)(b) states that a regulation that “trespasses unduly on personal rights and liberties” should be brought to Parliament’s attention. The Committee considers whether a regulation setting fees and levies:
- is unjustified in the circumstances;
- clearly reflects unacceptably inefficient operation by the relevant organisation; or
- includes a component irrelevant to the person paying unless there is enough justification for doing so.
Unusual or unexpected use of powers
5.8
Standing Order 327(2)(c) states that a regulation that “appears to make some unusual or unexpected use of the powers conferred by the enactment under which it is made” should be brought to Parliament’s attention.
5.9
If consumers are paying for something that they do not receive, then the regulation setting the fees or levies could constitute an unusual or unexpected use of the power. This is how the Committee considers the need for equity between current and future fee and levy payers.
5.10
For example, the Committee reviewed the license fees that flight crews and aircraft maintenance engineers must pay.19 A portion of the fees goes towards research into training methods for pilots.
5.11
The Committee concluded that this was an unreasonable and unexpected use of the regulation-setting authority because current pilots would not benefit from the research and should not have to pay for it. An individual should not have to pay if they are not going to get the benefit of the resource they are paying for.
5.12
The Committee’s review of licensing fees for gaming machines was another example.20 The fees, based on full cost recovery, substantially increased. The Committee thought that requiring all licence holders to pay the same fee regardless of their size was an unusual or unexpected use of authority.
More appropriate for parliamentary enactment
5.13
Standing Order 327(2)(f) states that a regulation that “contains a matter more appropriate for parliamentary enactment” should be brought to Parliament’s attention. This is based on the principle that Acts should set out the policy and substance of the law and that regulations should be limited to detail and implementing the policy.
5.14
The Committee can bring increases to fees or levies that are so significant that they represent a substantive shift in policy to the attention of Parliament. This could also happen if the money recovered is more than the cost (because the presumption is that Parliament could not have intended to levy a charge that amounts to a tax through regulations). For the same reason, a charge imposing a penalty (such as a late payment penalty) would need specific authority.
5.15
The Committee considered regulations from 1990 that significantly increased civil aviation fees.21 One of the fees was an international operator’s fee charged to the aviation industry, which partly covered the cost of New Zealand’s membership of an international governmental organisation. The Committee concluded that taxpayers should pay for the cost of this membership because it benefits the wider community.
Judicial review
5.16
You should also be aware of the grounds on which a regulation could be challenged through judicial review proceedings. The High Court can review the decision-making process and invalidate a fee set by regulation if it is unfair, unreasonable, or unlawful.
Review by the Auditor-General
5.17
The Auditor-General can examine the process you used to set fees or levies and manage memorandum accounts. This is part of the Auditor-General’s role in providing assurance to Parliament and the public that public organisations are operating consistently with Parliament’s intentions.
5.18
Looking at the process to set fees or levies and manage memorandum accounts could be part of the annual audit. We may also do it through one of our other functions, such as carrying out a performance audit or inquiry.
17: Our references in this Part are to the 2020 edition of the Standing Orders.
18: For details on matters considered by the Committee under Standing Order 327(2), see Clark, E and Knight, D R (2020), Regulations Review Committee Digest, seventh edition, New Zealand Centre for Public Law, Wellington, at wgtn.ac.nz.
19: Report of the Regulations Review Committee (1989), Inquiry into the Civil Aviation Regulations 1953, Amendment No. 30, AJHR I16.
20: Report of the Regulations Review Committee (1998), Investigation into the Gaming and Lotteries (Licence Fees) Regulations 1997, AJHR I16H.
21: Report of the Regulations Review Committee (1990), Inquiry into the Civil Aviation Charges Regulations 1990, AJHR I16B.